Documents considered by the Committee on 23 March - European Scrutiny Committee Contents

2   Interconnection of business registers



+ ADDs 1-2

COM(11) 79

Draft Directive amending Directives 89/666/EEC, 2005/56/EC and 2009/101/EC as regards the interconnection of central, commercial and companies registers

Legal baseArticle 50(2)(g) TFEU; co-decision; QMV
Document originated24 February 2011
Deposited in Parliament3 March 2011
DepartmentBusiness, Innovation and Skills
Basis of considerationEM of 15 March 2011
Previous Committee ReportNone, but see footnote
To be discussed in CouncilSee para 2.6 below
Committee's assessmentPolitically important
Committee's decisionNot cleared (see paras 2.7 and 2.8)


2.1  In their Report[15] of 9 December 2009, our predecessors drew to the attention of the House a Commission Green Paper on the interconnection of business registers. This highlighted the essential role these play in providing up-to-date and official information on companies, and the fact that minimum standards are set out in Directive 68/151/EEC (as amended), including a requirement that Member States must, since 1 January 2007, maintain electronic business registers. However, it noted that registers operate on a national or regional basis, and only store information on companies registered in the territory where they are competent, whereas businesses are increasingly expanding beyond national borders to take advantage of the single market.

2.2  In view of this, the Commission suggested that there was a need to ensure an appropriate degree of transparency and legal certainty in markets all over the EU, and that the cross-border cooperation of business registers was essential to achieve this. It therefore sought in its Green Paper to consider ways in which this might be achieved in relation to two distinct but related purposes — access to information, and cooperation on cross-border procedures (involving issues such as mergers, seat transfers, or insolvency).

The current proposal

2.3  The Commission has now proposed that existing EU legislation in this area should be amended in the following ways to take into account the responses it received to the Green Paper:

—  Directive 89/666/EEC[16]

This Directive requires companies to disclose some data and documents when they open a branch in another Member State, but the Commission says that they often fail to update this information. The proposal would therefore make it mandatory for the register of a branch to send by electronic means to the register of the parent company information about any changes to the branch, and it would also require each branch to have a unique identifier allowing their unequivocal identification in the European Economic Area.

—  Directive 2005/56/EC[17]

This Directive addresses cross-border mergers of limited liability companies, and the proposal would make it clear that business registries should send each other notifications by electronic means in cross-border merger procedures. It would also enable the Commission to specify the technical details in delegated acts (as provided for in Article 290 of the TFEU).

—  Directive 2009/101/EC[18]

This Directive coordinates the safeguards which companies are required to make available for third parties, and includes a provision providing access to documents and particulars stored on the register. The current proposal would (i) provide that information should be up to date, with any changes being notified to the register within 15 days, (ii) would introduce a unique company identifier at EU level, and (iii) increase cross-border access to company information by requiring Member States to make documents, such as accounts information, legal status, and certificate of registration, available through a single European platform allowing a search in all EU business registers.

The Government's view

2.4  In his Explanatory Memorandum of 15 March 2011, the Minister for Employment Relations, Consumer and Postal Affairs (Mr Edward Davey) says that the UK recognises the benefits which could arise from interconnecting registers, and supported such a course in its response to the Green Paper. He notes that this proposal would make amendments to existing company law Directives in order to facilitate the creation of an electronic network, which is in line with UK policy, but points out that it delegates to the Commission the power to prescribe technological solutions, making it impossible at this stage to assess the likely costs.

2.5  In the meantime, he says that, as regards the changes to Directive 89/666/EEC, Companies House holds the required information on branches and subsidiaries, and, subject to the detailed technical requirements, would be able to send information to registries: in the meantime, it is already working with other Member States on a European branch disclosure service. As regards the changes to Directive 2009/101/EC, he says that the first amendment would have no impact on UK companies as they are already obliged to notify amendments within 15 days; that the UK already has unique company indicators at a national level, and is working at a European level to agree a suitable EU marking; and that it is also working closely with other Member States on the interconnection of registers (and will encourage the Commission to build on this work, in order to keep any costs to a minimum).

2.6  The Minister says that negotiations on the proposal are due to begin in early April 2011, and that the Hungarian Presidency hopes to be able to report to the Competitiveness Council in June 2011. However, he adds that, because of the introduction of delegated legislation, agreement is unlikely until the second half of the year. He also points out that the proposed amendments would not in themselves impact on companies or public services, and that an Impact Assessment will therefore be produced when the detail of the proposed Delegated Acts is known.


2.7  As we have noted, this proposal stems from the related Commission Green Paper which our predecessors drew to the attention of the House in December 2009, and its broad thrust would appear to be in line with the UK's own approach in this area. Likewise, the detailed requirements which would be imposed are consistent with the measures already in place within the UK. Consequently, it seems to us unlikely that the document will give rise to any issues requiring further consideration, and that there is therefore a case for releasing it from scrutiny.

2.8  On the other hand, we have habitually been reluctant to clear documents before receiving a UK Impact Assessment, and it is evident that, as things stand, the production of such an Assessment depends upon the contents of Commission delegated legislation — which in turn cannot be enacted until the draft Directive has been adopted. We thus face something of a "Catch 22" situation, and we therefore propose to hold the document under scrutiny pending receipt of an Impact Assessment, but in the meantime to leave the Government free to agree the proposal, in accordance with paragraph 3(b) of the Scrutiny Reserve Resolution, if it is minded to do so.

15   (31121) 15801/09: see HC 5-iii (2009-10), chapter 9 (9 December 2009). Back

16   OJ No. L.395, 30.12.89, p.36. Back

17   OJ No. L. 310, 25.11.05, p.1. Back

18   OJ No. L.258, 1.10.09, p.11. Back

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