New EU rules help companies move, merge or divide in the single market

New EU rules help companies move, merge or divide in the single market
European Commissioner Vĕra Jourovà © Arno Mikkor, Aron Urb

The European Commission has proposed new legislation to help companies move, merge or divide within the single market.

The current legislation governing how companies move, merge or divide in Europe is complicated by the fact that national laws differ greatly between member states. Some countries impose what the EU considers excessive administrative hurdles, and this combination of factors is currently responsible for discouraging businesses from pursuing changes.

This can also mean that the interests of employees, creditors and minority shareholders are not adequately protected when companies move, merge or divide. The new rules aim to stimulate growth potential of European companies by boosting the role of digital technology in setting up a business, while preventing tax abuse and protecting employees’ rights.

What do the EU’s proposals involve?

Under the new legislation, companies will be able to move their seat from one member state to another following a simplified procedure, and transfers will include effective safeguards against arrangements which seek to circumvent tax laws, undermine rights or jeopardise shareholders’ interests, the commission said.

Currently, only 17 member states provide a procedure for registering companies which can be fully completed online, but the new rules will ensure that all member states provide such a process. The commission estimates that online registration in this way will take half the time and be three times cheaper than a paper application, on average.

What has the commission said?

European Commissioner for Consumers, Vĕra Jourovà, said that the legislation would promote economic growth by making the processes of setting up a company easier and more efficient, while safeguarding against potential abuses of these rules.

She said: “Too often, European companies are prevented from looking for business opportunities abroad. I want to change this and modernise the company law rules. First, I want more online solutions for European businesses so that they cut costs and save time. Second, I want to offer the honest entrepreneurs the choice of where to do business and how to grow or reorganise their businesses.”

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