Documents considered by the Committee on 11 March 2015 - European Scrutiny Contents


5 Single-member private limited liability companies

Committee's assessment Legally and politically important
Committee's decisionNot cleared from scrutiny; further information requested; scrutiny waiver granted to agree a General Approach at the 28 May Competitiveness Council
Document detailsDraft Directive on single-member private limited liability companies
Legal baseArticle 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

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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