Roadmap on the proposal for a Directive to modernize company law in the digital environment
The COVID-19 pandemic has demonstrated that digital tools are essential to ensure the continuity of business operations and interactions with authorities on issues related to corporate law. Authorities need to adapt their working methods and forms of cooperation among themselves, as well as with companies and other stakeholders, to use digital technology. Companies, in particular SMEs, should be able to make full use of digital tools when conducting their operations in the single market. In addition, there is a growing need for stakeholders, such as creditors, legal professionals or authorities, to easily access and use reliable business information on a cross-border basis.
Directive 2019/1151/EU on the use of digital tools and processes in company law (Digitization Directive) carried out the first step to promote digital tools and procedures in scope. However, further modernization of EU company law is needed for several reasons:
- Currently, corporate data transparency in the EU is still insufficient.
- The exchange of information between commercial registers and the application of theonce-only principle is still limited to a few situations under the Company Law Directive.
- Some of the existing EU company law procedures are also not yet adapted to the digital age, as some still require physical presence or paper filing.
Consequently, the purpose of this proposal for a Directive is to:
- Improve the transparency of EU companies by providing more information on a cross-border basis: This could include making the most comparable company data centrally available at the EU level and introducing new disclosure requirements to provide transparency on additional types of companies.
- Enable cross-border use of reliable company data: this could address the use of company information available in business registers through BRIS (Business Register Interconnection System) in cross-border administrative and judicial proceedings and extend the application of the one-time principle in cross-border exchanges between business registers.
- Further modernizing EU company law rules to adapt them to the digital age: this could refer to enabling online filing of all documents and information under company law procedures and ensuring that physical presence is not required except in exceptional cases; enabling the creation of a company other than a limited liability company entirely online, as well as assessing the need to address developments such as virtual companies in EU law.
We offer regulatory advisory services in a business environment in which it is essential to have as much information as possible to support decision making.
From the Regulation & Public Policy Group we are able to help manage business regulatory risk through our regulatory monitoring and regulatory intelligence services.
Contact us if you have any questions.