Directive 2019/1151, the most recent European company law directive, entered into force on 31 July 2019. With this directive, the EU is taking further steps towards the digitalisation and modernisation of company law in its Member States. The most notable innovation concerns the obligation for the Member States to enable online formation of at least certain types of companies, without the founder having to leave his computer screen, by 1 August 2021 at the latest. Does this mean the end of the mandatory visit to the notary?
Modernisation and digitalisation of company law
Directive 2019/1151, which was adopted by the European Parliament on 20 June 2019 and entered into force on 31 July 2019 (the "Directive"), is the first of two directives in the "company law package". The Directive aims to promote the use of digital tools and processes in the context of company law. The Member States need to transpose the Directive into their national legislation by 1 August 2021 (or, in case of particular difficulties, 1 August 2022).
The promotion of digital tools and processes envisaged by the Directive involves three different aspects:
- to enable online filing and accessing of company information;
- to enable online formation of (at least) certain types of companies; and
to enable online registration of branches.
Online filing and accessing of company documents and information
There are currently significant differences between Member States when it comes to the availability of company information that they make available through an electronic register. These differences concern not only the amount of documents and information contained in the electronic register, but also to the fees charged for accessing these documents and information.
In order to achieve a certain degree of uniformity between Member States, the Directive now imposes certain minimum requirements. Specifically, the Directive stipulates:
- that it must be possible for the documents and information disclosed by companies to be filed online with the register; and
- which of these documents and which information should be made available free of charge.
Additionally, the Directive provides for interaction between the registers of the different Member States, building on the existing system of interconnected registers.
Online formation of companies
Although the online filing and accessing of company documents and information are undoubtedly important steps towards the digitalisation of company law, it is mainly the online formation of companies provided for in the Directive that catches the attention.
The Directive requires Member States to ensure that the formation of at least the types of companies included in a non-exhaustive list in the Annex may be carried out entirely online without the need for the founders to appear in person before any authority, person or body. For the Belgian types of companies, the BV was included in this list. In other words: Belgium must make it possible for the founder, at least of a BV, to complete the entire formation process at his/her own computer screen.
The rationale for this innovation is the concern that travelling and physical presence requirements often discourage potential founders of start-ups from setting up a (foreign) company. Incidentally, it is not surprising that this is not the first time that the EU, which attaches great importance to the freedom of establishment and the freedom to provide services, has tried to introduce the online formation of companies. A similar possibility of online formation was planned for the Societas Unius Personae, a European company form which unfortunately never saw the light of day.
In order to further facilitate the online formation of (foreign) companies, Member States must make templates available for the instrument of constitution of the types of companies listed in the Annex. The founders will then be able to choose between using these templates or forming a company with bespoke instruments of constitution.
Online registration of branches
Similarly to the online formation of companies, the Directive requires Member States to ensure that the registration in a Member State of a branch of a company that is governed by the law of another Member State may be fully carried out online without the need for the founders to appear in person before any authority, person or body.
The rationale is virtually the same as for the online formation of companies: the aim is to reduce the costs, time and administrative burdens associated with the registration so that (smaller) companies would not feel inhibited from registering a branch in another Member State.
What about the notary?
The digitalisation of company law envisaged by the Directive, and in particular the introduction of a fully online system for formation of certain companies, raises important questions about the future role of notaries. It is clear from the text of the Directive that the current system, where a visit to a notary is always required to set up a limited liability company, will have to undergo significant changes.
According to the Directive, the physical presence of the founder before any authority, person or body can only be required in certain cases where this is justified by reasons of public interest. This is the case, for example, when there are reasons to suspect identity falsification or non-compliance with the rules on legal capacity and on the founders' authority to represent a company.
These reasons of public interest must be assessed on a case-by-case basis. The obligation to visit a notary, or any other body, may therefore not be required systematically. Moreover, even where there are considered to be reasons of public interest, the verification of identity or legal capacity will not necessarily entail appearance in person, but may also be carried out by videoconference or similar means.
The fact that a physical visit to the notary will be limited to exceptional cases (at least for certain types of companies) should not detract from the fact that the notary can still have an important role to play. The digitalisation of company law envisaged by the Directive does not attempt to undermine the powers currently vested in notaries. The Directive therefore offers the legislator the necessary flexibility to involve notaries in dealing with (certain aspects of) the fully online system for formation of companies, registration of branches and filing of documents and information.