For the JURI workshop on the future of European company law of 14 June 2016 Vanessa Knapp wrote an in-depth analysis with the title “What are the issues relating to digitalisation in company law?“. The key findings include the functionality of national business registries.
* There are many ways in which companies and those dealing with companies can use digitalisation to improve their communications and access to information.
* Currently some companies are unable to use digitalisation to the extent they would like to do so because company law requires them to use hard copies to provide information or communicate with others. Those dealing with companies cannot always access information digitally and this can make it harder for them to access information.
* The EU has already taken some steps to enable some companies to use digital technology, but these steps are fairly limited and in many cases only apply to companies whose shares are admitted to trading on a regulated market.
* It is important for any action to be technology neutral to allow companies and others to use the technology that is most appropriate to them and to take advantage of developments in technology. It may, however, be appropriate to require common standards in some cases, for example where information is to be provided to a national business registry or between national business registries.
* To reap the benefits of digitalisation some changes in law may be necessary. It would also be possible to improve matters by sharing best practice and developing standard approaches in some cases.
* The cost of requiring companies, registries or others to use digital technology needs to be considered as well as the benefits of using technology.
* Any proposal should consider which types of company it should apply to (all or only some).
* It is not always possible to form a company online. Some Member States allow some companies to be formed online. In some Member States it is necessary for a person to be physically present in the Member State where they wish to form the company. This can make it harder and more expensive to incorporate a company there if the person comes from another Member State. It would be helpful to gather more information about which companies can be formed online at present and why Member States do not allow online formation of other types of company.
* Online formation of companies is easier where national business registries provide a standard set of constitutional documents which can be personalised to some extent.
* It is not always possible to file documents with national business registries online. There is a core group of documents that registries must allow to be filed electronically, but companies are often required to file other documents and there is no requirement to allow electronic filing of these other documents.
* It is not always possible to access all information about companies online. National business registries must provide a core set of company information electronically. However not all information has to be provided in this way and electronic copies of information are only certified as “true copies“ if the applicant explicitly requests this.
* Safeguards for online formation and online filing of documents are important. National business registries could share best practice as to how best to provide safeguards for companies and others.
* Companies and others providing information about companies have to provide the same information more than once. Better use of digitalisation could simplify this.
* Companies cannot always use digital technology to communicate with shareholders or others. If a company wishes to use digital technology to communicate, there are many possibilities to do so.
* Shareholders should decide whether a company should use digital technology. The approval needed in any case should be a matter for national law.
* Shareholders of existing companies who do not wish to use digital technology should be protected so that they are not forced to do so.
* Uncertainties in existing company law may dissuade companies from using digital technologies for shareholder meetings.
* Standard formats for information provided digitally could improve information flow for shareholders and others.
* Better use of digitalisation could improve voting at shareholder meetings of listed companies.
* Companies with a website could use a registered URL to provide certain information to the public. This could make it more easily accessible and cheaper. It may be desirable to require some companies to do this and to specify minimum information that must be available.
* Companies should be able to keep required records digitally. Those with rights to access company information should be able to make requests digitally. There may be cases where it will not be appropriate for companies to provide information digitally or safeguards are needed to prevent information being used inappropriately.
* Companies should be able to have electronic signatures and to execute documents digitally and enter into contracts electronically.
More information: the full report