The Commission adopted on 24 February a proposal to interconnect business registers within the EU. Company registers provide company information that is essential for consumers and business partners alike, such as information on a company’s legal form, its seat, capital and legal representatives. Today’s proposal will help to facilitate cross-border electronic access to business information, by ensuring business registers are updated, and business information is more easily and readily accessible. These changes are crucial for companies when setting up branches, conducting cross-border trade or providing cross-border services in the EU. Business registers are currently organised at national, regional or local level, and lack the capacity to share information in an efficient and transparent manner. The proposal will now pass to the Member States and the European Parliament for consideration.
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What are business registers?
Business registers provide information on a company’s legal form, its seat, capital and its legal representatives. This information is essential for consumers and business partners.
How are business registers currently organised, and how many registers are there in the EU?
All 27 Member States have business registers. They are organised at national (e.g. Sweden, Ireland and Denmark), regional (e.g. Austria) or local level (e.g. Germany). Across the EU, business registers vary tremendously with respect to their content, the frequency of their updates, their legal checks, the legal value of their information, the ability access their documents, and which languages you can access their information in. Throughout Europe, business registers offer a range of services, which may vary from one country to another. The core services provided by all registers, however, are broadly similar. They examine and store company information, such as information on the company’s legal form, its seat and its legal representatives, and they make this information available to the public.
Why has the Commission put forward this proposal?
1. At the moment, any business wishing to find out about another business elsewhere in the EU, or wishing to establish a branch in another Member State, is faced with diverse national registration systems. This makes things complicated for businesses and generates high administrative costs. Facilitating cross-border electronic access to business information could generate annual savings of more than 69 million euro according to a study referred to in the impact assessment on administrative burdens in the area of company law (see link below).
2. The current system also requires that in addition to the minimum list of documents and particulars determined by the First Company Law Directive (1st CLD Council Directive of 9 March 1968 (68/151/EEC)), Member States usually require companies to submit additional items to the business register at the time of their registration (1). The information maintained by business registers, above and beyond the minimum requirements, is not yet standardised (2). Some of these differences can create problems for the users of business information, for example, the difference in the frequency of registers’ updates which may entail that information on the appointment of a director reaches concerned parties with delays creating misleading information on the company status. This legal insecurity may create a riskier business environment.
3. Improving access to business information and making it available for citizens in their own language could create a safer and more transparent online shopping environment for consumers, particularly those shopping cross-border.
What are the objectives of the Commission’s proposal?
They key objectives are to:
1. Facilitate cross-border access to official business information by defining a common minimum set of up-to-date company information to be available to third parties in all EU languages.
2. Develop a framework for cross-border cooperation between business registers.
3. Ensure that business registers provide up-to-date information on the status of their companies to the business registers of companies’ foreign branches all across Europe.
Furthermore, the proposal prescribes the use of a unique company identifier allowing a registered entity to be identified by a number that is unique at EU level. This is a necessary component of this project making it easier to track companies in cross-border situations through centralised searches by electronic systems. Business information will be kept up to date more easily, it will be less complicated to identify legal entities uniquely over time and it will also have a positive impact on collection of statistics. The unique company identifier will not change the registration numbers in the national business registers. It will rather be composed of the national registration number with an international prefix.
Who will benefit from the proposal and why?
Reliable up-to-date information on companies is crucial for consumers, existing or potential business partners, and public administrations. This information serves companies that set up branches or subsidiaries which conduct cross-border trade or provide cross-border services in the EU, for example this is useful when the register of a branch is not notified of the dissolution or insolvency of the company as the branch legally depends on the company. Misleading information in the register of a branch may also create riskier business environments. The lack of credibility of the registered data is adversely affecting the interests and the legal security of creditors and consumers who are in contact with the branch.
Will the proposal put new burdens on companies?
No, companies will not be obliged to file more information or to provide additional translations. Language-neutrality will be assured from the European network. On the contrary, it is estimated that the savings of more efficient updating of business registers’ content through cross-border cooperation between registers could add up to EUR 69 million. Improving interoperability between countries in the area will create the possibility of reducing not only the administrative costs but also waiting time.
Will the proposal create a central EU database?
No, the proposal does not create a central EU database. Instead it favours a decentralised model that relies on the capacities of existing national business registers and better cooperation between them. A central part helping to ensure the interoperability between the registers will be limited to strictly necessary technical elements for the business register communication such as a directory of registers.
Is there not some sort of cooperation already in place between business registers in Europe?
Since 1992, there has been voluntary cooperation between business registers in Europe called the European Business Register (EBR) (3). As of 2011, the EBR’s members included 19 Member States and six other European jurisdictions (4). This platform provides a good basis for cross-border cooperation of business registers. As such, it has significant coverage in the Member States and offers a range of services. However, its membership fees are costly and it remains an under-used resource. In 2009, only 330 000 searches were carried out, and while the number of requests is increasing, the format is unsatisfactory from a user’s perspective. This is due to a combination of factors: lack of overall coverage in the EU, varying levels of service and information, lack of a single access point, lack of commitment of members to the EBR, and insufficient funding.
Are there any annual figures on the number of company information requests made in the Member States?
Recent figures show that the UK, for example, receives about 185 million (domestic and cross-border) requests for free business information per year. Formal information requests amount to an additional 365 million searches or downloads. In Austria, Finland or Sweden, business registers receive, on average, between 10 and 15 requests per company per year and in Ireland around three. The German electronic business register records more than 2.6 million hits per month.
When will the proposal be fully implemented?
The proposal will now pass to the Member States and the European Parliament for their consideration.
Is there any link between this proposal and the Single Market Act, or any other Commission proposals?
The interconnection of business registers is one of the proposals in the Commission’s Communication on the Single Market Act, which aims to create a more business-friendly legal and fiscal environment. The initiative is also linked to the European e-Justice Action Plan, which is the umbrella project of the European e-Justice Portal (https://e-justice.europa.eu/home.do?action=&lang=en). This online portal, which is currently being developed, will serve as the single access point for legal information in the EU, and will include information on registers and databases. The Commission will ensure that both of these initiatives are fully compatible and, where possible, will develop synergies to ensure maximum efficiency.
Business registers, Commission website
Notes
1 : The requirements vary from one Member State to another. Typical examples are, e.g., an indication if the company belongs to, or is a dominant of, a recognised group of companies, including the names, addresses and registration numbers of the companies belonging to the group, the national tax number, or the list of the members of the company.
2 : The fees charged by the registers also vary. But the 1st CLD prescribes that the price of obtaining a copy of registered documents and data shall not exceed the administrative costs thereof. Consequently, the different fees applied by the registers are not perceived as a problem.
3 : European company information online
4 : Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Netherlands, Slovenia, Sweden, Spain, UK, Guernsey, Jersey, the former Yugoslav Republic of Macedonia, Norway, Serbia, Ukraine. The evolution of EBR is explained in details in the progress report on the interconnection of business registers, SEC(2009) 1492, page 8.
Source: European Commission
