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EU Company Law to be Adapted to the Digital Era

The EU has announced a draft directive to facilitate company formations and other company matters entirely online.


The European Council has announced that it has reached a provisional agreement with the European Parliament on a draft directive that will facilitate and promote the use of online solutions in a company's contact with national regulatory authorities throughout its life cycle. The draft directive provides for the amendment of EU company law rules to allow for greater efficiency, transparency and legal certainty in company matters through the use of digital tools.

The European Council has announced that the draft directive provides the following:

  • Persons may register limited liability companies, and file company documents with national regulatory authorities entirely online;

  • Information explaining national requirements for registration must be made available online and must be drafted in a language which can be generally understood by the majority of cross-border users;

  • Rules on fees for formalities available online must be transparent and applied in a non-discriminatory manner;

  • Online registration fees must not exceed the overall costs incurred by the respective Member State;

  • A 'once-only' principle will be introduced, meaning that a company would only need to submit the same information to the national regulatory authority once;

  • Any documents submitted by a company must be stored and exchanged by the national regulatory authority in machine-readable and searchable formats;

  • Further information about companies must be made available to all interested parties free of charge in the respective national register operated by the respective regulatory authority.

    • In its statement, the Council said that the draft directive provides for safeguards against fraud and abuse in online procedures, including the control of the identity and legal personality of a person setting up a company, and the possibility of requiring physical presence before the competent regulatory authority. The involvement of notaries or lawyers in company law procedures will be maintained, provided that the said procedures can be entirely completed online.

    The Council announced that the draft directive does not harmonise substantive requirements for setting up companies or doing business across the EU. The draft directive must now be approved by the relevant bodies of the European Council and the European Parliament. Following approval, it will be formally adopted after legal and linguistic scrutiny.

    The Council said that studies made by the European Commission show that there are circa 24 million companies in the EU, 80% of which are limited liability companies. Approximately 98% of limited liability companies are small and medium-sized enterprises, which are most likely to be affected by the draft directive.

    The draft directive complements Directive (EU) 2017/1132 relating to certain aspects of company law and the Single Digital Gateway, which provides online solutions to facilitate the interaction between citizens, companies and national regulatory authorities.

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