3 Single-member private limited liability
companies
| Committee's assessment
| Legally and politically important |
| Committee's decision | Not cleared from scrutiny; further information requested
|
| Document details | Draft Directive on single-member private limited liability companies
|
| Legal base | Article 50 TFEU; ordinary legislative procedure: QMV
|
| Department
Document numbers
| Business, Innovation and Skills
(35953), 8842/14 + ADDs 1-5, COM(14) 212
|
Summary and Committee's conclusions
3.1 This proposal would require Member States to establish, as
part of their national law, a specific form of single member private
liability company (SUP, standing for Societas Unius Personae)
which would be subject to standard and simplified rules for its
formation and governance. A business, particularly any small
and medium sized enterprises, would then have the option of using
this form of company with a view to alleviating the extra burdens
of carrying out cross-border business.
3.2 In our last Report on 10 December 2014 we drew
attention to the fact that the Government accepted an internal
market legal basis and we supported the Government's negotiating
objectives. We asked for an update — particularly on the
views of stakeholders and other interested parties — and
on the Government's further consideration of the power for the
Commission to adopt implementing legislation.
3.3 In a letter of 18 December the Minister for Employment
Relations and Consumer Affairs and Minister for Women and Equalities
(Jo Swinson) informed us that, being an optional company form,
the SUP was unlikely to have any adverse consequences for UK business,
that it would likely benefit companies looking to set up business
in other Member States, and confirmed that anyone wishing to start
a single member company in the UK would continue to be able to
register in here.
3.4 She now provides further information on the views
of stakeholders and on the subordinate legislation powers for
the Commission envisaged in this proposal.[18]
There continues to be little interest from stakeholders. Whilst
the Government continue to argue against conferring delegated
legislation powers on the Commission, the Government's analysis
is that this power "would not present significant risks to
subsidiarity". The conferral of implementing legislation
powers on the Commission is central to the current ongoing negotiations.
3.5 We are grateful for the prompt and helpful
updates provided by the Minister. We should be grateful for a
further update on the progress of negotiations if there are substantive
matters to report or when a general approach in the Council becomes
imminent.
3.6 We retain this document under scrutiny.
Full details of
the documents: Proposal for a Directive
on single-member private liability companies: (35953), 8842/14
+ ADDs 1-5, COM(14) 212.
Background
3.7 The key elements of the proposal are:
· Member
States would be required to provide in their national legislation
a company law form for single-member private limited liability
companies. Member States would have the choice of how to introduce
such a company form, e.g., by creating an additional form of single-member
companies or by replacing an already existing form with SUP;
· Member
States would be obliged to allow for direct on-line registration
of SUPs, without the need for a founder to travel to the country
of registration for this purpose;
· The
proposal would provide for a standard template of articles of
association, which would be identical across the EU, available
in all EU languages and would contain the necessary elements to
run a single-member private limited liability company. The use
of the standard articles of association would be required if the
SUP is registered electronically. If another form of registration
is allowed by national law, the template would not have to be
used, but the articles of association would need to comply with
the requirements of the Directive; and
· Protection
for creditors would be ensured, through a balance sheet test and
a solvency statement.
The Minister's letter of 28 January 2015
3.8 The Minster expands on the views of stakeholders:
"There still appears to be little interest
from the business community. They remain of the view that they
would be unlikely to use the SUP company form, particularly if
setting up a company in the UK. They have confirmed that gaining
access to markets and working in other Member States does not
present a significant problem to them, although acknowledged that
simplification of other Member States' rules would be of benefit.
"One of the key elements of the proposal
is that founding members of the company would not be required
to physically meet with a notary or similar abroad prior to incorporation
on line. Agreement to such a change would reduce costs for any
UK companies wishing to set up an SUP in some Member States."
3.9 On the issue of subordinate legislation power
conferred on the Commission:
"Negotiations are on-going in relation to
the conferral of powers on the Commission to make both delegated
and implementing acts.
"The proposal includes one power for the
Commission to make delegated acts. Certain provisions of the Directive
will apply to the types of private limited company listed in Annex
1 to the Directive. The proposed power would enable the Commission,
where a Member State makes any change to the types of private
limited company provided for in their national law affecting the
contents of that Annex, to adapt the list of companies contained
in the Annex.
"The UK continues to argue against the inclusion
of this power. However, our analysis is that such a power does
not present significant risks to subsidiarity.
"Under the current proposal, two powers
would be conferred on the Commission to make implementing acts:
(a) to adopt a uniform template of articles of association which
can be used for the on-line registration of SUPs and (b) to establish
a template to be used for the on-line registration of SUPs. These
two issues are central to the current negotiations with a number
of options under consideration."
Previous Committee Reports
Twenty-fifth Report HC 219-xxiv (2014-15), chapter
1 (10 December 2014); First Report HC 219-i (2014-15), chapter
3 (4 June 2014).
18 The delegated legislation procedure, set out more
fully in Article 290 TFEU, essentially allows either the European
Parliament or the Council to reject a Commission proposal for
legislation. The implementing legislation procedure, set out in
Article 291 and Regulation 182/2011, requires the Commission proposal
to undergo scrutiny by a comitolgy Committee of the representatives
of the Member States. In this case the Committee can, ultimately,
reject a proposal if there is a qualified majority of Member States
opposed to it. Back
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