Czech Business Today

In October 2018 the EESC´ Plenary session discussed and adopted its opinion on a comprehensive set of measures for fair, enabling and modern company law rules in the EU. Currently EU company law includes already certain elements of digitalisation, such as the obligation for Member States to make available online information about limited liability companies.

However, these requirements are limited and lack precision, leading to a very diverse implementation at national level.  The new EC proposal aims to provide more digital solutions for companies in the Single Market and more equal opportunities for companies in the EU while ensuring that Members States have the necessary flexibility to adjust their national systems and to maintain their legal traditions. The proposal sets out common procedures at the EU level on how a company can move from one EU country to another, merge or divide into two or more new entities across borders. The rules will stimulate the growth potential of European companies by digitalising the process of setting-up and running a business. The new rules for cross-border conversions and divisions will now also include specific measures that will help national authorities fight against abuse. Transfers of this kind will include effective safeguards against abusive arrangements to circumvent tax rules, undermine workers’ rights or jeopardise creditors’ or minority shareholders’ interests.

Under the new rules, in all Member States, companies will be able to register, set up new branches or file documents to the business register online. To prevent fraud and abuse, national authorities will be able to rely on each other’s information about disqualified directors. If they suspect fraud, authorities can still request the physical presence of company owners. They will also be able to require the involvement of bodies, such as notaries, in the process.

The EESC supports the proposals that enhance the international competitiveness of SMEs, reduce costs and that harmonise and simplify processes for the registration and filing of company changes and conversions. It welcomes the “once-only principle”, so that SMEs will avoid multiple registrations and multiple official publications while at the same time national registers ensure the reliability and trustworthiness of the documents and information which they publish and stresses the importance of the cost factor for micro SMEs and SMEs, since they have neither the capacity nor the necessary instruments to cope with the digital society. The EESC is against loopholes enabling letter box companies to abuse legislation for fraud, tax evasion, money laundering, reduction of labour standards or social protection and increase unfair competition. The EESC believes as well that the new procedure for the transfer of the company seat (cross-border conversion) will establish legal certainty through its ex-ante control in the Member State of origin and in the Member State of destination.

Vladimíra Drbalová

Vice-President of the EESC Employers Group