Press Release

Proposal for Directive on creation of single-member private limited liability companies not acceptable as it stands

Brussels,

Having taken note of the European Commission’s proposal for a Directive on single-member private limited liability companies (SUPs), the Notaries of Europe call for the proposal to be thoroughly revised in the interests of the legal and financial protection of creditors, consumers and, ultimately, the European economy. While the international community is committing to enhancing the transparency of companies and legal structures to reduce the risks associated with global economic criminality[1], the proposal lowers the controls in the foundation process aimed at mitigating money laundering and terrorist financing. 

The proposal includes the obligation for Member States to provide the possibility to register SUPs by electronic means, without the physical presence of the founder in the country of registration. This rules out any possibility to perform checks, on the identity of the founders for example. Yet this control is an obligation imposed by international and EU anti-money laundering rules. The Notaries of Europe are also concerned that it will not be possible to make registering the SUP conditional on obtaining certain licences and authorisations, such as for carrying out financial activities. They observe that instead of building solid preventive mechanisms to obtain checked information, the proposal will unavoidably lead to increased anonymity for national and transnational company structures, under a veneer of technical modernity.  

Furthermore, the Commission’s proposal will weaken considerably the quality of business registers in the Member States that use the authentic instrument for the creation of companies and therefore a real legality check conducted by public authorities like judges and notaries. The economic operators have confidence in the data held in these registers. The Commission’s proposal could therefore have a negative impact on the economy of Member States having taken the side of legal certainty.

Finally, the Notaries of Europe regret that the proposition reintroduces the principles of separating the actual place of business and the registered office, and the absence of a minimum capital. These principles had already been included in the proposal for a European Private Company (SPE). For the Notaries of Europe, these measures will weaken consumer and creditor protection and will favour systems that are less stringent with respect to social law and employee participation regimes.

Mr André Michielsens, President of the Council of the Notariats of the European Union, declared, “Encouraging the mobility of businesses is a good thing. But this must not be to the detriment of third parties and the State. The right balance therefore needs to be struck between the freedoms and the protection of these interests. To this end, I urge the European Commission to engage in constructive discussions during the forthcoming procedure”.

[1] “The Puppet Masters” by the World Bank, on the risks posed by the misuse of transnational company structures (https://star.worldbank.org/star/publication/puppet-masters)

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The Council of the Notariats of the European Union (CNUE) is an official body representing the notarial profession in dealings with European institutions. Speaking for the profession, it expresses the joint decisions of its members to the institutions of the European Union.

The CNUE includes 22 notarial organisations in the European Union. The European notariats are represented in the CNUE by the presidents of the national notariats. The CNUE operates under the authority of a President, the CNUE’s spokesperson, who has tenure for one year.

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Guillaume Casanova - Communications Officer - Company

Guillaume Casanova

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