On 25 April 2018, the European Commission published two legislative proposals for European company law as part of its EU Company law upgraded Package. The proposals promote digital solutions throughout a company’s lifecycle and establish a comprehensive legal framework for cross-border transformations, introducing for the first time European rules on cross-border conversions and divisions.
The Notaries of Europe welcome the European Commission’s general approach to implement digitalization in company law without disruption by allowing Member States to build upon already existing, well-established systems of preventive control also in the digital age.
The Notaries of Europe appreciate that the proposal for a directive on digital tools in company law expressly recognizes the role of the notary to guarantee legal certainty and to prevent abuse in company law in today’s increasingly digitalized world. Notaries provide comprehensive legal advice and carry out a preventive legal control throughout a company’s lifecycle which ensures that companies are effectively set up, that their articles of association are tailored to the specific needs and requests of the founders and that subsequent structural changes during a company’s lifecycle are legally valid. Furthermore, the reliable identification of shareholders and directors by the notary allows businesses as well as governmental authorities to efficiently and reliably determine who stands behind a company and who can represent it in relation to third parties. In consequence, the data and information filed by the notary with the company register and displayed there for public information is reliable and can therefore be vested with public faith. At the same time, the abuse of corporate entities for illegal purposes such as money laundering and tax evasion is effectively prevented.
Dr. Marius Kohler, President of the C.N.U.E., states: “Building upon electronic procedures already in place for the interaction between notaries and company registers in many Member States, the Notaries of Europe are ready to perform their tasks also by digital means and will take the necessary steps to allow the fully online incorporation and registration of limited liability companies.”
The Notaries of Europe believe that the European Commission’s proposal on cross-border mobility will make it easier for European companies to merge, divide or transfer their registered office across national borders within the EU, provided that the operation is not artificial or abusive and that the interests of stakeholders (shareholders, creditors and employees) are sufficiently protected. The Notaries of Europe therefore welcome that the proposal expressly aims at promoting cross-border mobility of companies for genuine business purposes whilst, at the same time, calling for strong safeguards to protect the rights and interests of shareholders, creditors and employees. C.N.U.E will thoroughly analyze now whether the proposed safeguards are sufficiently waterproof or whether they still have loopholes that need to be closed by the European legislator during the legislative process.
Dr. Marius Kohler, President of the C.N.U.E, concludes: “We feel that the European Commission’s proposals on company law offer a good starting point to adapt company law to the needs of businesses, consumers and governmental authorities in today’s increasingly digitalized world. We look forward to a constructive dialogue between the stakeholders and the European institutions in the upcoming legislative process to reach the best solutions for European citizens and enterprises.”