5 Single-member private limited liability
companies
Committee's assessment
| Legally and politically important |
Committee's decision | Not cleared from scrutiny; further information requested; scrutiny waiver granted to agree a General Approach at the 28 May Competitiveness Council
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Document details | Draft Directive on single-member private limited liability companies
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Legal base | Article 50 TFEU; ordinary legislative procedure: QMV
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Department
Document numbers
| Business, Innovation and Skills
(35953), 8842/14 + ADDs 1-5, COM(14) 212
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Summary and Committee's conclusions
5.1 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 forming an SUP with a view to alleviating the extra burdens
of carrying out cross-border business. Fuller details of the
proposal are set out in our Report of 4 June 2014 and some key
features are outlined below.
5.2 The Committee has sought the views of stakeholders.
The Minister has reported little interest from the business community,
but it sees some benefit in the simplification of the rules of
other Member States.
5.3 The Committee has also supported the Government's
negotiating objectives of:
· seeking to ensure simplified registration
across the EU;
· keeping the proposal as close as possible
to UK law;
· removing or limiting the articles relating
to the management and control of the SUP, and rules on distributions
and dissolution; and
· removing the power of the Commission to
determine by the delegated legislation procedure[11]
the type of company in each Member State which must conform to
the coordinating measures of the proposed Directive.
5.4 In addition the Government has been considering
options in relation to powers conferred upon the Commission using
the implementing legislation procedure to adopt uniform templates
for the articles of association of an SUP and to register it on
line.
5.5 The Minister for Employment Relations and Consumer
Affairs and Minister for Women and Equalities (Jo Swinson) reports
confidence on the part of her officials that "the proposal
is now heading in the right direction" and seeks clearance
from scrutiny to agree a prospective "General Approach"
at the Competitiveness Council of 28 May 2015.
5.6 We are grateful for the further prompt and
helpful update provided by the Minister.
5.7 Given the progress of negotiations and the
optimistic forecast for future progress we are prepared to give
a waiver to enable agreement to be given to a prospective General
Approach of the Council at the May Competitiveness Council.
5.8 The document is otherwise retained under scrutiny
pending future negotiations with the European Parliament. We should
be grateful for a copy of any General Approach agreed with an
update covering this and any issues that she anticipates will
arise in the trialogue negotiations.
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
5.9 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 2 March 2015
5.10 The Minster indicates that negotiations are
at an advanced stage and the good progress has been made in streamlining
the proposal. She continues:
"We are still hoping to achieve some significant
changes to the proposal, particularly to Articles 11 (to remove
the Commissions' power to adopt a uniform template for the articles
of association via an implementing act). Article 13 (to ensure
we can ask for various other items during the registration process).
Article 18 (to remove all provisions on distributions and share
capital reduction).
"The UK has worked hard collaboratively
within the working group and also bilaterally with the Commission,
Presidency and individual Member States to successfully gain support
and agreement in simplifying the dossier.
"As a result most of Chapter 7 of Part 2
(Organisation) has been removed from the proposal and other Articles
have been amended. We continue to push in the negotiations for
further streamlining of the proposal and for the proposal to concentrate
on registration requirements and ensuring that online registration
is offered in all Member States.
"This will offer benefits to UK businesses
seeking to establish single member private limited liability companies
in other Member States.
"The issue of powers to make delegated and
implementing Acts remains and negotiations are progressing. The
UK continues to argue against the conferral on the Commission
of the power to make delegated acts and of the power to adopt
a uniform template for an SUP's articles of association via an
implementing act.
"There is some support from other Member
States within the working group for the removal of the power to
make delegated acts, and we have made it clear that the UK is
opposed to the conferral of such a power in principle.
"We are continuing in the negotiations to
push for amendments which will ensure that any template produced
by the Commission (by means of an implementing act) for the online
registration of SUPs will enable the online registration process
for UK SUPs to be as consistent as possible with the online registration
process for other UK private limited liability companies."
Previous Committee Reports
Thirty-second Report (2014-15) HC 219-xxxi, chapter
3 (4 February 2015); 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).
11 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 comitology Committee of the
representatives of the Member States scrutinise it. 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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