[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 17.4.2008

SEC(2008) 466

COMMISSION STAFF WORKING DOCUMENT

accompanying the Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Council Directives 68/151/EEC and 89/666/EEC as regards publication and translation obligations of certain types of companies and the Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Council Directives 78/660/EEC and 83/349/EEC as regards certain disclosure requirements for medium-sized companies and obligation to draw up consolidated accounts

Impact Assessment

{COM(2008) 194}{COM(2008) 195}{SEC(2008) 467}

INTRODUCTION

The EU acquis in company law, accounting and auditing

The EU company law directives establish disclosure requirements for limited-liability companies and for the branches of these companies that are established in another Member State (First and Eleventh Directive), set minimum requirements concerning the capital of public limited-liability companies (Second Directive) and concerning the procedures for domestic mergers and divisions (Third and Sixth Directives) and for cross-border mergers (Tenth Directive). Furthermore, the Twelfth Company law Directive introduced the possibility to found limited-liability companies with a single member and more recent directives dealt with the procedure to follow in the case of a takeover bid (Takeover bid Directive) and with shareholder voting (Shareholders' rights Directive).

In the fields of accounting and auditing one directive establishes minimum requirements for the annual accounts of mainly limited-liability companies (Fourth Directive) and a second one deals with group accounts (Seventh Directive). The Eighth Directive sets up requirements for the audit of the annual accounts.

Those directives that were adopted between the 1960s and the 1980s have been updated several times in order to adapt them to new developments[1]. However, with the exception of the 2006 revision of the Eighth Directive[2] none of these amendments touched on the scope or the basic content of the directives concerned. They have remained fundamentally unchanged since their adoption.

Fast track simplification actions 2007

In 2007, the Commission adopted a number of proposals in the context of its Action programme for the reduction of administrative burdens[3] that were submitted to the European Parliament and the Council for consideration by way of a fast track procedure in order to achieve rapid progress on administrative burden reduction in areas where this was possible through relatively minor, technical changes.

European company law, accounting and auditing had been identified as priority areas within the administrative burden initiative. First analyses carried out by a number of Member States had shown that administrative costs caused by EU rules in these areas are particularly high[4]. Part of the first fast track package was therefore a proposal for a directive in the area of company law that aimed at repealing the requirement for an expert report in the context of a merger or a division of public limited companies where all shareholders of the companies concerned renounce to such report. The directive was adopted by the European Parliament and the Council on 13 November 2007[5].

Commission initiative to simplify company law

In parallel to the fast-track action described above, the Commission launched an initiative for a broad simplification exercise in the areas of company law, accounting and auditing. On 10 July 2007, it adopted a communication ("the Communication") setting out its ideas[6].

The Communication outlined two options for the simplification of the company law acquis :

Option 1 considered keeping only the directives that cover cross-border issues. It proposed, therefore, the repeal of the directives on companies' capital (Second Directive), domestic mergers and divisions (Third and Sixth Directive), and single member companies (Twelfth Directive).

Option 2 limited the exercise to some key simplification measures related to specific provisions of the directives. This limited approach would also give possibility to review e.g. the rules on the documentation of a merger or a division (management reports, expert reports, etc.) or the creditor protection rules of the directives.

Both options were complemented by some other measures (in particular the proposals to abolish certain publication obligations in the national gazettes and to facilitate the registration of branches).

In the areas of accounting and auditing, the communication focused on the possibilities of reducing costs for SMEs. While it was clarified that it was the intention to maintain the overall goal of keeping and improving accounting and auditing quality in the EU, it was also acknowledged that the existing requirements under those directives entail administrative work for companies, particularly SMEs.

PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES

The content of the July Communication was submitted to the debate by the European Parliament, the Council and stakeholders.

On 22 November 2007, the Competitiveness Council adopted conclusions welcoming the simplification initiative in broad terms and stressing the importance of reducing administrative burdens in order to improve the competitiveness of companies. The Council called on the Commission to expedite consideration of responses to its communication and, where appropriate and preferably before the end of 2008, bring forward proposals, accompanied by impact assessments[7].

On 27 March 2007, a report was adopted by the committee in the lead in the European Parliament, the Legal Affairs Committee, which expresses broad support for the simplification exercise but also a clear preference, on the side of the Parliament, for option 2 (limited simplification) of the communication and resistance to the idea of a (partial) repeal of the EU company law acquis[8]. The opinion adopted by the Economic Affairs Committee on the same subject on 26 February followed the same line[9]. The adoption of the final EP report is expected for May 2008.

In addition, eighteen Member States' governments, the government of one EEA country and 110 stakeholders reacted to the invitation, in the communication, to submit comments on the proposals in writing, by mid-October 2007. These contributions from governments and stakeholders originated from 23 countries in total, including 22 Member States. A number of contributions were also submitted by European bodies and associations. A report on the reactions received from Member States and stakeholders between July and December 2007 is available on the website of the Directorate-General for Internal Market and Services (DG MARKT) at http://ec.europa.eu/internal_market/company/simplification/index_en.htm[10].

Also among those who reacted to the Communication, option 2 (limited simplification) was clearly preferred to option 1 (repeal/partial repeal). The main argument put forward was that these directives provide legal certainty and that their repeal would rather cause additional costs than lead to savings for companies. However, about three quarters of those who took a position on the question whether individual simplification measures should be proposed supported the idea. They considered that the Company Law Directives are in some parts overly descriptive and restrict the flexibility of Member States and companies beyond what is really necessarily.

Concerning the proposals in the areas of accounting and auditing, apart from the idea of exempting micro-entities from the scope of the accounting directives, in particular the proposals for more minor simplification measures for all companies were supported (introduction of audit exemptions under specific circumstances, a clarification of the Regulation (EC) 1606/2002 on the application of international accounting standards (IAS) as well as the deletion of certain disclosure requirements).

In July 2007, furthermore, a measurement exercise was launched in order to determine the costs created by the information obligations (IOs) contained in the EU company law acquis (for details see below section 3.1.). The consortium carrying out the measurement started its work in early August 2007 and is expected to finalize it, in the area of company law, accounting and auditing in April 2008.

The proposals that should follow-up the results of the communication and of the measurement were entered into the agenda planning of DG Internal Market and Services under reference no. 2006/MARKT/044.

CONTEXT AND PROBLEM DEFINITION

Reduction of administrative burdens

In the EU’s approach to better regulation, the preparation of new legislation and simplification of existing legislation take into account the overall benefits and costs. Therefore, regulatory costs, of which administrative costs are only one element, must be analysed in a broader context, encompassing in an integrated way the economic, social and environmental costs and benefits of regulation[11].

Administrative costs, i.e. costs incurred by enterprises, the voluntary sector, public authorities and citizens in meeting legal obligations to provide information on their activities or production[12], are inherent in the business of companies. They do not always entail administrative burdens but only in the cases where the information would not be collected by the business without a corresponding legal obligation.

Unnecessary and disproportionate administrative costs severely hamper economic activity. In 2005, the Commission therefore launched a programme for measuring administrative costs and reducing administrative burdens in order to improve the business environment for EU companies and to make the EU economies fit to meet the challenges of a more competitive global business environment in which they have to operate.

The Commission outlined the way for achieving this by adopting, on 14 November 2006, an updated simplification programme[13] and the main elements for measuring administrative costs and reducing administrative burdens[14]. Both programmes emphasised the need to generate tangible economic benefits. They were complemented by the Action Programme adopted on 24 January 2007[15] which fixed the aim of reducing administrative burdens on businesses in the EU by 25% until the year 2012 and launched the first package of fast-track proposals.

The Action Programme was endorsed by the Spring European Council in March 2007[16]. The European Council underlined that reducing administrative burdens is important with a view to boosting Europe's economy, especially given the potential benefits this can bring for small and medium-sized enterprises (SMEs). It stressed that a strong joint effort of the European Union and the Member States is necessary to reduce administrative burdens within the EU.

A key part of the Action Programme consisted of a large-scale measurement of administrative costs incurred by businesses in meeting legal obligations to provide information. This baseline measurement is carried out by the consortium Deloitte/Capgemini/Ramboll on behalf of the Commission and covers obligations stemming from EU legislation and from national measures transposing that legislation. The methodology used is based on the ‘EU Standard Cost Model’, inspired by different variants of the Standard Cost Model (SCM) currently used for measurements at national level by a number of Member States. The EU measurement focuses on the areas with the most burdensome information obligations, which included, among others, the area of company law/auditing. The results of the entire measurement exercise will be delivered by the end of 2008.

In order to ensure that the concrete experience of stakeholders would be fully taken into account, outside expertise was made available for the implementation of the Action Programme. Stakeholder involvement was structured on the basis of (1) an online consultation in 22 EU official languages; (2) local workshops with businesses in Member States; and (3) the High Level Group of Independent Stakeholders on Administrative Burdens[17].

Administrative burdens in company law, accounting and auditing

The national measurements carried out in the years until 2006 and the results of the stakeholder consultation identified company law, including the fields of accounting and auditing, as one of the most burdensome areas of the EU acquis. Consequently, these areas were designated as one of the priority areas for the administrative burdens reduction programme[18].

As set out already in the Commission Communication of 10 July 2007, one reason for these findings has to be seen in the directives' age. In the last twenty to thirty years, the business environment of European companies has changed at high speed, with globalisation of economies and radical developments in technology. The EU has grown from nine or twelve Member States at the time of the adoption of the directives in question to 27 Member States as of today. In the light of these recent, and deep, changes some of the administrative requirements of the EU directives in the field of company law have become obsolete, excessive or duplicative.

In the areas of accounting and auditing, a further factor needs to be taken into account. Here, the emphasis, during the last years, has been on raising the quality of accounts of limited-liability companies and on increasing transparency. While these objectives continue to be of paramount importance the increase in obligations on companies has to be counterbalanced by a specific sensitivity for the needs and the special situation of small businesses for which these obligations often are particularly burdensome ("think small first"). In the line of this thinking, the Commission has launched, on 6 February 2008, an online-consultation on a Small Business Act designed at providing specific tools to unlock the full business potential of SMEs[19]. However, looking at the indications obtained from the national measurements it seems appropriate to explore the potential for reducing administrative costs in the accounting area in the short term.

In view of this situation, it was decided to accelerate the measurement in the areas of company law, accounting and auditing in order to achieve quickly important reduction results, in the interest of EU businesses. The final results of the measurement exercise in those fields are therefore already expected for spring 2008.

SUBSIDIARITY

Action at EU level is necessary to the extent that the obligations that impose administrative burdens derive from EU directives. Under those conditions, the reduction of administrative burden requires the modification of the EU rules. Action at EU level is therefore justified.

OBJECTIVES

The objective of the initiative is to contribute to enhancing the competitiveness of EU companies in the short term by reducing administrative burdens where this can be done without major negative impact. Therefore, information obligations in the area of company law, accounting and auditing that do not provide a significant added value for the users of the information have been identified.

SCOPE FOR RAPID ACTION

Whereas certain measures envisaged in the Communication of 10 July 2007 necessitate a thorough examination and discussion, it appeared already from that Communication that others might allow achieving improvements for European companies rapidly, both in the areas of company law and of accounting and auditing. This assumption was confirmed by the reactions received to the Communication.

On 30 January 2008, the Commission adopted its "Second strategic review of Better Regulation"[20], which was accompanied by the Commission working document "Reducing administrative burdens in the European Union"[21] and announced a second package of fast track measures for 2008.

Possible fast track measures in the fields of company law and accounting in 2008

In the area of company law , the measures that were spotted as possible fast track actions for 2008 were proposals contained in the Communication concerning the First and the Eleventh Company law Directives.

In relation to the First Company law Directive, the Communication highlighted the obligation for companies to publish, in the national gazettes, certain information that has to be entered into the Member States' commercial register. This concerns information linked to the company's setting up, to its capital and its financial information. In most cases, this publication entails additional costs for the companies that in particular in the case of the yearly produced annual accounts can be significant. At the same time, the publication in a national gazette does nowadays not provide real added value any more given that company registries, since beginning of 2007, have to make their information available online. A few Member States even require that the information is published, in addition to the national gazette, also in one or more newspapers which leads to a further increase of company's costs.

The proposal concerning the Eleventh Company law Directive addressed the translation requirements, in national law, for documents to be filed to the branch's register. When registering a branch, companies need to file certain information contained in the companies register file also with the register of the branch. This often leads to a double cost for companies as they not only have to ensure the translation of certain documents into the language of the Member State where the branch is situated but also have to comply with sometimes excessive requirements for certification and/or notarisation of that translation.

In the area of accounting and auditing most measures addressed in the Communication require an in-depth analysis and are already for that reason not suited for a fast track procedure. However, rapid progress seems possible with a view to some minor measures set out in the communication. These measures concern the proposals to abolish, in the Fourth Company Law Directive, the requirement, for medium-sized companies, to provide the explanation on formation expenses and the breakdown of turnover into activity and geographical markets. Whereas there is already a possibility to exempt small companies from these requirements - and most Member States have made use of them - medium-sized companies still need to disclose these costs. Another proposal identified concerns the need to clarify the relationship between the International Financial Reporting Standards (IFRS) and the Seventh Directive, with a view to immaterial subsidiaries. The current state of EU law imposes the obligation to prepare consolidated financial statements in accordance with IFRS on companies where the only subsidiary or all subsidiaries as a whole are not material. This is regarded as burdensome and should therefore be amended accordingly.

Results of the consultation process on the possible fast track measures

The reactions from stakeholders to the Communication confirmed that it should be possible to agree in the short term on the measures set out above. Thus, support for the proposals concerning the First and the Eleventh Company law Directives arrived at between 80 and 90% of those that took a position on these issues and also in the area of accounting and auditing certain proposals were supported by a similar share of respondents.

The proposal to process these measures in the fast track procedure was therefore submitted to the High Level Group of National Regulatory Experts[22] where a majority of Member States that commented on the proposals supported the idea. While France and Germany were not in favour of dealing with the company law issues in a fast track procedure, Denmark, the Netherlands, Estonia, Sweden and Latvia expressed their support in principle. The Czech Republic, Poland and Austria supported the proposal concerning the First Directive but did not take a position on the Eleventh Directive ( CZ ) or considered that more work needs to be done in that area ( PL and AT ). On the accounting proposals, Germany, Poland, Latvia, Estonia and, partially, Austria expressed their support while Denmark and the Netherlands only supported a fast track procedure with a view to the Seventh Directive.

The High Level Group of Independent Stakeholders welcomed all the proposals in its opinion adopted on 26 February 2008.

This impact assessment has been prepared by the Commission staff. A draft of the impact assessment was submitted to the Commission's Impact Assessment Board, which provided its opinion on 19 March 2008[23]. The recommendations of the board led to changes in the draft impact assessment, in particular regarding the link with the measurement carried out by the consortium (section 5 below), the available options concerning the First Directive (section 1.4 of Annex 1), the problem definition and the available options concerning the Eleventh Directive (section 2.1 of Annex 1), the results of the stakeholder consultation in the field of accounting (section 1 of Annex 2) and the expected level of administrative burdens reduction in that area (section 5 of Annex 2).

EXPECTED IMPACT OF THE POSSIBLE FAST TRACK MEASURES

In view of the overall support for these measures, the proposals and their likely impacts are examined in the annexes 1 and 2 to this document.

The examination is based on data collected by DG MARKT with the help of the Member States. The results of the large-scale measurement of administrative costs, which was launched in July 2007, will only be available at a later stage so that they could not be taken into account in this impact assessment. However, the company law provisions addressed in this impact assessment are not measured as a priority in the measurement which focuses mainly on the Second, the Third, the Fourth and the Sixth Company law Directives, and the provisions addressed in the area of accounting constitute only a part of one data requirement of the Fourth Directive or – in the case of the question of the relationship with the IAS regulation – are not even included in the measurement at all. However, any additional information that might nevertheless result from the measurement will be used to quantify the potential savings more precisely and fed into the future discussion with the Council and the European Parliament.

The results of the examination in the annexes 1 and 2 can be summarised as follows:

Company law (Annex 1)

Publication requirements for limited-liability companies

The total minimum cost of the current rule in the First Directive on the publication in national gazettes is estimated at around 410 Mio €/year with a view to the publication of annual accounts and about 200 Mio €/year for publications of changes in the registers. To these costs have to be added the internal costs of companies for preparing the information for the publication, and in certain Member States costs of publishing the information in addition in newspapers. On these latter elements, however, no reliable figures are available.

The impact assessment presents four options with a view to the publication requirement:

- No policy change (option 1): This means that national requirements regarding publication in a national gazette and in newspapers remain in place.

- Abolition of all publication requirements at EU and at national level - full harmonisation (option 2): This means that companies, in future, would only be obliged to file the information required with the register, without any additional publication.

- Making the current alternative disclosure regime mandatory (option 3): This would mean relying exclusively on an electronic platform (which could also be an electronic national gazette) that gives chronological access to changes in the register.

- Obliging Member States to ensure that no specific fee can be charged for any mandatory publication (option 4): Under this option Member States would have to ensure that companies are not charged a specific fee for the publication. In order to ensure a cost effective and easily accessible publication, access to the information would be granted in first place via a central electronic platform. However, as long as Member States respect the restriction on fees that they have imposed, they would be free to provide for additional publication obligations.

Annex 1 concludes that option 1 will not change the current costs weighing on companies or are at least not likely to do so. Under option 2, there is a risk that valuable information will not be available to users any more. Whereas from the users' point of view, there is no significant difference between option 3 and option 4, from the companies' point of view, option 4 is preferable. The wording leaves Member States more flexibility to provide for additional publication duties provided there is no additional specific fee imposed on companies in connection with such duties.

The conclusions can be summarised as follows:

Comparison of options |

Reduction of companies' internal costs | Reduction of companies' external costs (fees) | Accessibility for users | Impact on publishers (national gazette/newspapers) |

Option 1: No policy change | ( | ( | ( | ( |

Option 2: Abolish publication requirement | + | ++ | - | - |

Option 3: make current alternative system mandatory | ( | + | ( | - |

Option 4: publication free of charge | ( | ++ | ( | - |

"(": No change "+": Positive impact "-": Negative impact

The conclusion in Annex 1 is that option 4 should be preferred.

Translation obligations of branches of limited-liability companies

The external costs of the current regime concerning translation obligations of branches is estimated, in Annex 1, on the basis of the information available, at 3.05 Mio € for the translation of articles of association and of the attestation on the existence of the company and at (yearly) 15.25 Mio € for the annual accounts. For the certification alone the respective figures are estimated to lie at 272,000 € and (yearly) 1.36 Mio €. To these external costs, the internal costs for ensuring that a translation/certification is obtained have to be added. On the level of these costs, no information is available at this stage.

In Annex 1, four options are presented on this issue:

- No-Policy Change (option 1): Under this option, Member States would continue to be able to require, in each case, certified translations of e.g. the instrument of incorporation, the articles of association, the accounting documents and the attestation on the company's existence, carried out by a translator sworn and appointed by their own public authorities and/or a notary;

- Complete abolition of the translation requirement at EU level (option 2): This option entails that Member States would not be able to request any more any (simple or certified) translations relating to the documents listed above;

- Mutual recognition of translations (option 3): This option entails ensuring that certified or approved translations produced in any EU Member State are considered sufficient for the purposes of the registration of a branch in another Member State.

The conclusion drawn in the annex is that option 1 would not lead to any savings of costs whereas option 2 fails to provide any specific mechanism to guarantee the accuracy of the documents disclosed in the Member State of the branch. Option 3 achieves a certain reduction in costs while ensuring the reliability of the translations.

The impacts of the different options can be summarised as follows:

Comparison of options |

Reduction of translation costs | Reduction of certification costs | Reliability | Accessibility for users |

Option 1: No policy change | ( | ( | ( | ( |

Option 2: Abolish translation requirement | ++ | ++ | -- | -- |

Option 3: mutual recognition of certified translations | (/+* | + | ( | ( |

"(": No change "+": Positive impact "-": Negative impact

* The impact would be positive in the cases in which the registries of the Member State where the company has its registered office is able to issue the relevant original certificates in an EU official language of the Member State of the branch.

The conclusion in Annex 1 is that option 3 should be preferred.

Accounting

In Annex 2, the emphasis is put on the burden that the accounting requirements of the Fourth and Seventh Company law Directives put in particular on the SMEs that fall within the scope of the directives.

The options that are presented are:

- No legislative action (option 1): This option would leave the current situation unchanged;

- Targeted, technical changes in order to achieve simplification in the short term (option 2): Under this option the Commission would limit itself to proposing a number of targeted changes in order to improve the situation of SMEs in the short term without causing a significant loss of information to the users of this information;

- General revision of the Accounting Directives (option 3): Under this option specific rules for SMEs would be adopted in the context of a general overhaul of the Accounting Directives, aiming at adapting them to the changes in the economic environment that have taken place during the last three decades.

Annex 2 concludes that while option 1 does not lead to any cost reduction, option 3 is not likely to deliver any improvements in the short term. The result of the assessment is that only option 2 is likely to provide improvements for SMEs in the short term.

The impacts of the different options can be summarised as follows:

Comparison of options |

Fulfilment of objectives | Effectiveness | Efficiency | Consistency | Information value of accounts |

Option 1 - No legislative action | ( | ( | ( | ( | ( |

Option 2 - Targeted, technical changes in order to achieve simplification in the short term | + | + | + | + | ( |

Option 3 - General revision of the Accounting Directives | ( | + | ( | + | ( |

Source: Commission Services analysis |

"(": No change "+": Positive impact "-": Negative impact

The conclusion in Annex 2 is that option 2 should be preferred and that the following measures should be proposed:

1. to remove the disclosure requirement for formation expenses for medium-sized companies;

2. to remove the disclosure requirement for breakdown of turnover into activity and geographical markets for medium-sized companies; and

3. to amend the Seventh Directive in order to clarify the relationship with the consolidation rules in IFRS.

About 240,000 medium-sized companies could benefit from the measures (1) and (2) that would reduce the reporting burden weighing on them and allow them to structure their internal reporting according to management needs. The expected savings from these measures are therefore estimated at between 2.5 and 5 Mio € for the first and between 5 and 10 Mio € for the second measure. The third measure would make sure that groups with non-material subsidiaries do not need to prepare IFRS accounts and could therefore save potentially significant amounts for these groups without users losing any relevant information. This potential is estimated to lie between 2 and 5 Mio € so that the overall savings from the three recommended measures lie between 11 and 21 Mio €.

MONITORING AND EVALUATION

The specific references to monitoring and evaluation are included in the relevant annexes.

ANNEX 1

Table of content

1. Publication obligations of limited-liability companies 16

1.1. Problem Definition 16

1.1.1. Purpose of the publication in the national gazette and recent developments 16

1.1.2. Costs caused by the requirement to publish in the national gazette 18

1.1.2.1. Frequency of mandatory publications in the national gazettes 18

1.1.2.2. Fees for publications in the national gazettes 19

1.1.2.3. Internal costs of the companies 22

1.1.3. Other national publication requirements 22

1.2. Objectives 22

1.3. Policy Options 23

1.3.1. Option 1: No-Policy Change 23

1.3.2. Option 2: Abolition of all publication requirements at EU and at national level (full harmonisation) 23

1.3.3. Option 3: Making the current alternative disclosure regime mandatory 23

1.3.4. Option 4: Oblige Member States to ensure that no specific fee can be charged for any mandatory publication 23

1.4. Analysis of Options 23

1.4.1. Option 1: No-Policy Change 23

1.4.2. Option 2: Abolition of all publication requirements at EU and at national level (full harmonisation) 24

1.4.3. Option 3: Making the current alternative disclosure regime mandatory 25

1.4.4. Option 4: Oblige Member States to ensure that no specific fee can be charged for any mandatory publication 26

1.5. Comparing the options 26

2. translation obligations of branches of limited-liability companies 27

2.1. Problem definition 27

2.1.1. Translations to be delivered by branches of companies 28

2.1.1.1. Certification requirements for documents to be provided by the branch that have been translated and certified in another Member State 29

2.1.1.2. Translation of other information to be provided by the branch 29

2.1.2. Costs caused by national translation requirements to companies 31

2.2. Objectives 33

2.3. Policy options 33

2.3.1. Option 1: No-Policy Change 33

2.3.2. Option 2: Complete abolition of the translation requirement at EU level 34

2.3.3. Option 3: Mutual recognition of translations 34

2.4. Analysis of options 34

2.4.1. Option 1: No policy change 34

2.4.2. Option 2: Complete abolition of the translation requirement at EU level 35

2.4.3. Option 3: Mutual recognition of translations 35

2.5. Comparing the options 35

3. Monitoring and Evaluation 36

Tables ………………………………………………………………………………………...38

The proposal that this impact assessment accompanies is part of the second fast track package for the reduction of administrative burden[24]. It proposes modifications to the First and the Eleventh Company Law Directives in order to reduce the number and extent of information obligations contained in these directives.

The two directives apply to the types of private and public limited-liability companies established in the EU that have been notified, by the Member States, as falling within the scope of the directives (Article 1 of the First Company law Directive[25]).

PUBLICATION OBLIGATIONS OF LIMITED-LIABILITY COMPANIES

Problem Definition

The limited-liability companies listed in Article 1 of the First Directive have to disclose certain documents by way of publication in the national gazette of the Member State.

This information concerns in particular:

- The instrument of constitution and/or the statutes of the company as well as any amendments to them;

- The appointment, the termination of office and the particulars of the persons who are authorized to represent the company in dealings with third parties and in legal proceedings and to take part in the administration, supervision or control of the company;

- The amount of the capital subscribed;

- The balance sheet and the profit and loss account for each financial year;

- Any transfer of the seat of the company, the winding up of the company and any declaration of nullity of the company by the courts, as well as the appointment of liquidators and the termination of the liquidation.

The requirement for publication of this information (or a reference to it) in the national gazette is imposed on these companies in addition to their general obligation to file these documents with the companies register[26].

Purpose of the publication in the national gazette and recent developments

In its original form, Article 3 of the First Directive provided for a registration of company information in the – paper-based and, in some Member States, decentralised – companies registers and for its additional publication in the (paper-based) national gazettes. This publication requirement was intended to make the information contained in the registers more accessible for stakeholders (i.e. investors, owners, creditors, public authorities and employees) and to draw their attention to the changes in the companies registers.

A modification of the First Directive in 2003[27] adapted these rules to the new technological possibilities. Thus the Member States, since January 2007, have to give companies the possibility to file their documents and particulars by electronic means. Also the national gazette can now be kept in electronic form, and Member States even have the possibility to replace the gazette by "equally effective means". Equally effective are means that give at least the possibility to access the information in chronological order via an electronic platform[28]. Only after the publication in one of these forms has taken place, can the information be relied on by the company against third parties[29].

The introduction of electronic registers has facilitated the access to the data contained therein. Furthermore, initiatives in the market have developed tools in order to make the information contained in the electronic registers accessible also to companies and third parties in other Member States.

- In particular the European Business Register (EBR) facilitates the access to national registers. The EBR is a European Economic Interest Grouping (EEIG) that was established under Council Regulation (EEC) No 2137/85[30] in 1993 and has since then been enlarged to connect today 21 information providers and allow to search for more than 20 million companies in 15 EU Member States and a number of other European countries, such as the Republic of Macedonia[31].

- Furthermore, the EBR runs the so-called BRITE project (Business Register Interoperability Throughout Europe), which was launched on 1 March 2006 as an Integrated Project (IP) funded by the Commission. This 36 month project, involving a consortium of 19 organisations including European business registers, Chambers of Commerce, IT companies, universities and SMEs, aims at developing an interoperability model, ICT service platform and management instrument for business registers in order to adapt the registers to recent developments in European law, such as the Cross-border Mergers Directive[32] and the Transparency Directive[33], and in order to prepare possible future simplification measures e.g. in the area of the registration of branches. The EBR and the BRITE project are also currently under discussion in the context of the "e-justice" project of the Council of the European Union[34].

This electronic availability of information has removed the added value that the publication in the national gazette brought about in times of paper based, local company registers, all the more so as the gazettes often do not reproduce the full information but only contain a reference to the register.

This fact was already recognised in the framework of the 2003 revision of the First Directive. The reason why the requirement of a national gazette was nevertheless maintained at the moment is reflected in the explanatory memorandum of the 2002 Commission proposal for the amendment to the Directive[35]. There it reads as follows:

"The reference to a publication in the national gazette has not been removed from the Directive, because several Member States observed that their national provisions linked the legal value of company information to such a publication.

However, because this problem is not present in all Member States, a second subparagraph is added to paragraph 4 to allow Member States to replace the publication in the national gazette with equally effective means. This is subject to the provision of a central and chronological access to company information, which is the main function performed by a national gazette."

In the reactions to the Commission Communication of 10 July 2007, no comments were put forward giving reasons to assume that the argument put forward in 2002 today is still valid. Instead, a clear majority of those stakeholders that reacted to the Communication expressed themselves in favour of abolishing the current requirement of publishing in the national gazette to the extent that it creates additional costs for companies. Thus, 63 respondents (out of a total of 129) took a position on this question and 56 of them (89%) supported this proposal.

Costs caused by the requirement to publish in the national gazette

Frequency of mandatory publications in the national gazettes

Despite the possibility offered by the First Directive, to make recourse to "equally effective means", the national gazette is still used for the purposes of the First Directive in many Member States. This situation is problematic to the extent that this publication entails additional costs for the companies, which is the case in most of these Member States.

These publication costs do not only arise at the moment where the company is incorporated. Instead, these fees are, at least partially, charged to the company each time there is a change to one of the documents or particulars set out above under point 1.1. In particular, the annual accounts have to be published in regular intervals. Finally, the publication requirement does not only apply to the information deriving from the First Directive itself. Instead, many other EU provisions make reference to the disclosure rules of that directive. The occasions on which information has to be disclosed by filing to the register and publishing it, in addition, in the gazette are therefore numerous.

Examples for disclosure duties arising from provisions outside the First Directive are articles contained in the Second Company law Directive requiring that information on the capital of public limited companies and on changes to this capital are published and provisions in the Third, the Sixth and the Tenth Directives obliging public limited companies to publish draft terms of merger and division. Furthermore, the general disclosure system of the First Directive has been extended to the European legal forms such as the European Company (SE) and the European Cooperative Society (SCE)[36]. Table 1 attached to this annex contains a list of the relevant provisions in EU legal acts.

Fees for publications in the national gazettes

Information on the fees for the publication in the national gazette or on an electronic platform in those Member States that provided data at the request of DG MARKT is contained in table 2.

As can be concluded from this second table, in most Member States, registration and/or publication costs are charged in the form of flat rates. Thus, in Belgium a company is charged an amount of 251.81 € for the publication of its initial registration in the gazette, in addition to the registration costs of 71 € for public limited-liability companies. The fee for the publication of changes in the statutes is set at 131.16 €. In Greece , the costs of the initial registration depends on the subscribed capital of the company whereas 544 € are charged for the publication of the registration in the national gazette and 289 € for the publication of changes in the statutes. In Germany , while only 1€ is charged for the publication, on an electronic platform, of the initial registration, a flat rate depending on the size of the company is applied for the publication of the annual accounts of small and medium-sized companies (50€/70€) in the national gazette. For large companies, publication fees depend on the number of letters but can, on average, be assessed at 1000 €.

In other countries, publication costs depend on the length of the information to be published. Thus, the basic fee for publication in the national gazette in Austria is set at 40€, with an additional 6€ to be paid for each line beyond the first 5 lines.

In Cyprus, Ireland, Lithuania, Malta, the Netherlands, Finland, Slovakia and Sweden , the publication costs are covered by the registration fees so no additional fees are charged to the company in that context. In Denmark , both registration and publication are free of charge.

In order to give an idea of the total costs that are caused by the publication requirement, figure 1 below shows an estimation of the costs for the publication of the registration of two smaller private-limited companies[37], one with three members and a capital of 20,000 € (company 1), and the other one with one member and the minimum capital required in that Member State (company 2). Costs have been estimated for those Member States that have provided information at the Commission's request. The minimum capital requirements that the Member States impose on private limited companies established on their territory are contained in table 5.

Furthermore, costs of such companies for changes in their articles of association filed with the register are provided and for the yearly publication of their annual accounts (30 pages for company 1 and eight pages for company 2). In order to give the possibility to compare costs in particular with a view to those Member States where the publication is already covered by the registration fee, also an estimate of the registration costs is contained in the table.

Whereas the publication of annual accounts and also changes to the articles of association or details of the company (such as directors' names etc) occur regularly, most of the other procedures referred to in table 1 concern operations that only take place occasionally and not necessarily in all companies. For the purpose of the calculations they are therefore left out in the following.

Fig. 1 Assessment of external publication costs |

Country | Registration costs | Publication costs company 1 (national gazette/el. platform) | Publication costs company 2 (national gazette/el. platform) |

Initial registration | Initial registration | Changes | Annual accounts | Initial registration | Changes | Annual accounts |

Austria | 343 € | 40€ min | 40€ min | 40 € min | 40€ min | 40€ min | 40 € min |

Belgium | 71€ | 209,81€ | 131,16€ | 209,81€ | 131,16€ |

Bulgaria | 113€ | 15,33€ | 15,33€ |

Cyprus | 222€/106€ | 0 | 0 | 0 | 0 |

Czech Republic | 190€ | 95€ min. | 95€ min | 277€ | 95€ min. | 95€ min | 277€ |

Denmark | 0 | 0 | 0 | 0 | 0 |

Finland | 330€ | 0 | 0 | 0 | 0 |

France | 116,19€ | 100€ min | 100€ min |

Germany | 100€ | 1 € | 1€ | 50€ | 1 € | 1€ | 70€ |

Greece | 840€/252€ | 544€ | 289€ | 544€ | 544€ | 289€ | 544€ |

Hungary | 390€ | 98€ | 59€ | 98€ | 59€ |

Ireland | 100€ | 0 | 0 | 0 | 0 | 0 | 0 |

Lithuania | 57,42€ | 0 | 0 | 0 | 0 |

Malta | 350€ min. | 0 | 0 | 0 | 0 |

Netherlands | 54,05€ | 0 | 0 | 0 | 0 |

Poland | 277€ | 139€ | 69€ | 139€ | 69€ |

Romania | 160€ min. | 35,48 min | 27€ min | 35,48 min | 27€ min |

Slovakia | 282€ (141€ if el. reg.) | 0 | 0 | 0 | 0 |

Sweden | 212€ | 0 | 0 | 0 | 0 |

Blank fields indicate that no information was provided on this point.

The figures show that

- in most Member States the costs are about the same for these two companies;

- the costs for a publication of the initial registration of such companies lie around 100€ in those Member States that charge specific fees for the publication (with Bulgaria and Germany lying significantly below that amount and at least Greece and Belgium significantly above);

- about the same amount seems to apply with a view to the publication of the annual accounts;

- for changes to the articles of associations, the fees in those countries that charge them in form of a lump sum lie at around 50% of the costs of the initial publication.

ESTAT provides some data on the number of limited-liability companies in the EU (table 6). In the 17 countries covered, there were 4.8 Mio (private and public) limited-liability companies in 2005[38]. However, for Germany, France and Poland no figures are available, and the same goes for smaller countries like Austria, Belgium, Denmark, Greece, Ireland, Lithuania and Slovenia , so that the exact number is obviously above that figure. Those countries where currently the publication of information in the national gazette or on an electronic platform is not charged or at least not charged separately host about 660,000 of these companies. Even without taking account of the missing ten Member States just mentioned, at least 4.14 Mio companies in the EU are potentially concerned by the publication costs.

A rough estimate would therefore lead to setting the total publication costs for the annual accounts at about 410 Mio €/year. About half that sum per year could be estimated for the publication of changes to the register.

It is not clear why many Member States still prefer maintaining the information obligation in the national gazette to the alternative of an electronic platform, such as the register’s website, although table 2 and figure 1 show that the latter means of publication is much less costly for companies. Where a paper-based national gazette still exists, one reason may have been to allow users time for a smooth transition from the paper based medium to the electronic format. The modification to the First Company law Directive that introduced the electronic registers was adopted in 2003. According to Internetworldstats[39], the number of internet users has grown in the EU by 189% between the year 2000 and 2007 (to about 55% in 2008). Therefore, in 2004 when most Member States started to work on the transposition of the 2003 directive having access to the internet was less common than it is today.

However, as far as the national gazette is concerned there are no signs that Member States have the intention to adapt their rules in the near future in order to take account of the nowadays broad acceptance of electronic means by the information users. Furthermore, the national gazettes normally are legally entities that are independent from the registers so that changing the publication requirement would lead to a shift in revenue from the gazette to the register which might be a further reason for Member States' hesitance in the past to give up the publication obligations in the national gazettes.

Internal costs of the companies

To the external costs, internal costs for the preparation of the information have to be added. Given that the same information already has to be provided to the companies' register and therefore only has to be reformatted (if at all) and sent off, these costs can be expected to be limited. For the time being, however, no precise information on the level of the amounts involved is available.

The draft final report on the measurement of administrative costs in the areas of company law, accounting and auditing carried out by the consortium Deloitte/Capgemini/Ramboll which is due for the beginning of April 2008, might deliver some more precise information on this point. It might also provide some additional information on the population of companies concerned by the publication costs. Any such additional information that will be received will be used in order to quantify the total potential savings more precisely, in particular with a view to reaching the 25% reduction target.

Other national publication requirements

The First Directive only establishes minimum publication requirements. Member States are free to set up, at national level, additional publication requirements.

Some Member States therefore require in particular that the information entered into the register or a reference to it is published not only in the national gazette but also in national and/or regional newspapers, in order to ensure a broad distribution of the information.

One example can be found in German law where information has, in addition, to be published in a newspaper under Article 61(4) of the Einführungsgesetz zum HGB. This provision, however, has transitional character and the obligation will cease to exist on 31 December 2008. Also in France, certain information to be published in the national gazette (e.g. registration of a new company, transfer of the company's seat, change of a director etc.) has, in addition, to be published in newspapers.

Such requirements, again, obviously cause considerable costs to companies. Their exact amount, however, cannot be quantified as only few Member States have provided information on this question. Furthermore, the costs depend on the tariffs of the newspaper chosen. However, it can be noted that, in principle, the administrative costs for companies linked to these requirements corresponds to the revenue generated by the newspapers so that reducing these costs could lead to a loss of income on the side of the newspapers.

Objectives

In order to enhance the competitiveness of EU companies, administrative burdens have to be reduced to a minimum. Information obligations also in the area of company law therefore need to be reduced where this can be done without any significant negative impact on the users of the information.

The obligation to file certain information in the companies' register and to publish it in addition in the national gazette (and, possibly, also in national and/or regional newspapers) causes considerable costs to companies. These costs should be eliminated to the extent possible.

Policy Options

As the requirement stems from EU Directives, any changes have to involve the EU-level to modify the relevant directives.

Option 1: No-Policy Change

This option means that the First Directive is not changed. The requirements regarding publication in a national gazette and any additional requirements for publication in newspapers remain in place.

Option 2: Abolition of all publication requirements at EU and at national level (full harmonisation)

This option entails a prohibition for Member States to require any publication of information entered into the companies register, be it in (paper-based or electronic) national gazettes or in national or regional newspapers and in paper-based national gazettes. Companies would therefore only be obliged to file the information required with the register, without any additional publication.

Option 3: Making the current alternative disclosure regime mandatory

The second option consists in relying entirely on the disclosure system that so far is offered to Member States as an alternative to the gazette ("[equally effective] means, which shall entail at least the use of a system whereby the information disclosed can be accessed in chronological order through a central electronic platform").

This means that Member States would be prevented from requiring publication of information in national or regional newspapers and in paper-based gazettes. The use of an electronic national gazette would remain possible as such an electronic gazette can be qualified as electronic platform.

Option 4: Oblige Member States to ensure that no specific fee can be charged for any mandatory publication

This option consists in providing that Member States have to ensure that companies are not charged a specific fee for the publication. In order to ensure a cost effective and easily accessible publication, access to the information would have to be granted via a central electronic platform. However, Member States would be free to continue to provide for additional publication obligations as long as they respect the restriction on fees.

Analysis of Options

Option 1: No-Policy Change

There is no additional negative impact to be expected if the current rule concerning publication in the national gazette is not changed.

However, there are also hardly any indications that give reason to assume that even if the status quo is maintained other factors will, in the longer run, lead to a reduction of the current costs.

Electronic registers have been introduced more than a year ago and one can expect the systems that have been established by the Member States to remain in place for the foreseeable future. On the basis of the information available, Germany seems to be the only case where already the current system provides for a change; there, the current obligation to publish information in addition in newspapers will cease to exist by the end of the year. With a view to the other Member States, nothing in the information made available by the Member States indicates that more of them will in future make use of the alternative offered by the second subparagraph of Article 3(4) than is currently the case, that more Member States will ensure that the publication in the national gazette does not entail any costs for the company or that other Member States also will repeal the requirement for additional information in newspapers.

This option therefore means that the current costs, as set out above in point 1.1.2 will remain largely unchanged.

Option 2: Abolition of all publication requirements at EU and at national level (full harmonisation)

In the second scenario, no fees at all can be charged to companies as there will be no publication requirement. This scenario will therefore reduce the publication costs for companies to 0 which, on the basis of the calculations set out under point 1.1.2.2. would lead to savings of about 600 Mio € per year.

From the users' point of view, however, this scenario will create in all Member States the risk that the possibility to follow the latest changes to the register is removed entirely.

This seems problematic as the publication, in addition to the filing with the register, fulfils an important function for third parties. This is first and foremost the case with a view to the information referred to in the First Directive – the attention of the public should be drawn to the fact that e.g. a legal representative of the company has changed or that the company has moved its seat. This information can be important for everyone who wants to enter into contact with it and in particular for persons that intend to conclude contracts with the company or are already in a business relationship with it. To force third parties to carry out, on a regular basis, a preventive check of the register in order to ensure that this information has not changed does not seem appropriate. The information of the public is even more important where insolvency proceedings have been opened against a company.

But also with a view to the information listed in table 1 publication continues to fulfil an important function. Changes to the capital of the company are of interest to third parties, as e.g. creditors, in a similar way as it is the case with a view to a forthcoming merger or division. In all cases the applicable directives provide the creditors with certain rights that these can only exercise where they are informed in time about the planned operations

The publication of all these changes to information contained in the register seems therefore indispensable. Under this option, however, publication would only continue to take place where the companies registers, by their own or at the Member State's initiative, decided to provide a service informing about the latest changes, without imposing any obligation on the companies in this context.

In addition, this option would have an impact on the newspapers in those Member States that require the publication of information there, in addition to the national gazette. As explained above (point 1.1.3), even if it is not possible to calculate the loss of revenue of the newspapers it can be noted that it would in principle correspond to the savings made by the company in this context.

Option 3: Making the current alternative disclosure regime mandatory

Under this option, companies will, firstly, be released from the costs that are caused by the publication in national or regional newspapers where such a requirement exists under national law. Secondly, they will be released also from fees they currently have to pay for the publication in paper-based national gazettes.

Instead, fees can be charged to them either for publication in an electronic gazette or for the publication on the electronic platform.

There is no information available that allows assessing the difference between costs of publication in a paper-based gazette and those for publication in an electronic format. However, table 2 shows that publication in countries where the national gazette is held exclusively in electronic format is not necessarily less expensive than where the national gazette exists in paper or both in electronic and paper format. There are therefore doubts that choosing the electronic national gazette for publication instead of a paper-based one will reduce the costs for companies in any significant way.

The difference in costs between publication in an electronic national gazette and on an electronic platform, if any, depends on the solution chosen for the electronic platform. Where the service is provided by the register, as it seems to be the case for most Member States that have chosen this alternative, the additional costs created can be assumed to be very limited.

This means that, under this option, the potential savings for companies will probably largely depend on the solution that is chosen by the Member State: where the Member State decides to maintain the current solution using an electronic gazette, savings can be expected to be relatively low, whereas they could go up to the amount referred to under option 2 where the Member State decides in favour of using the register's website.

From the users' point of view, the effect will be that users in Member States where, so far, additional publication in newspapers is required will normally not be able to find information in these newspapers any more. Many users can be expected to buy the newspapers at the moment not only with a view to the information from the registers but also for other reasons. For these users, the access to the information from the registers currently is therefore provided for "free" in the sense that they obtain the information for expenses they would make anyway. If the newspaper stop publishing the information, this "free" access to the information will cease to exist. However, it needs to be noted that in most cases newspapers only provide a reference to the publication in the register. Also in the present situation they therefore do normally not provide a substitute for accessing the register but function only as a pointer to the publication.

As far as the access to the electronic information is concerned, it can be expected that costs for users will remain unchanged. Currently there is no Member State that provides free access to information via the national gazette if fees need to be paid for downloading the same information from the companies' register. Instead, in Member States where fees are charged for the use of the gazette and for downloads from the register these fees seem to be aligned (see table 3). As to the level of these costs, it should be recalled that according to the rules of the First Directive fees to be paid for copies from the content of the register cannot exceed the administrative costs linked to this service[40].

While the impact of this option on the users therefore would be limited, it would be more significant with a view to newspapers in those Member States that require the publication of information there, in addition to the national gazette. Here, the situation would be the same as under option 2.

Option 4: Oblige Member States to ensure that no specific fee can be charged for any mandatory publication

It would not be possible to ensure a publication in a national or regional newspaper free of charge for the companies. With a view to the printing costs, the same will probably apply with a view to paper-based national gazettes. Member States, for this reason, would in practice normally not choose to prescribe these two ways of publication under this option. Option 4 is therefore likely to have de facto a similar effect as option 3, i.e. that Member States could either require disclosure via an electronic national gazette or another electronic platform or through both. The differences compared with option 3 is that Member States would be free to maintain more far reaching requirements but that in any case they would not be allowed to require additional fees being charged to companies.

The prohibition to charge additional fees for the publication will normally mean that the (relatively minor) publication costs should be considered as being covered by the registration fee. Instead of reducing the total fees on companies, this solution could be seen as encouraging Member States simply to raise the current amount of the registration fee by the amount of the current fee for the publication. However, table 2 shows that, in Member States where the registration fees include the costs of publication, registration fees are not necessarily higher than in Member States where an extra fee is charged for the publication. It should, therefore, be difficult for Member States to justify an increase in registration fees against this background.

This means that under this option, all external costs of companies for the publication (fees) should, in principle, be reduced to 0. As in option 2, the potential for savings could then be estimated at about 600 Mio € per year. Possible costs for the preparation of the information to be published will however remain, as well as costs of publication to be charged by newspapers, in Member States where such publication obligation is maintained, which are however difficult to measure.

From the users' point of view the impact will be similar to that under option 3.

This option could therefore mainly have an impact on these additional means of publication such as the national gazette or the newspapers. Where the national gazette is maintained, the gazette might have to provide its services for free in future. However, given that information entered into the register after 1 January 2007 is available, in its entirety, in electronic form (according to the third subparagraph of Article 3(2) of the First Directive also information filed in paper form has to be converted into electronic format) the provision of these services does not imply huge costs for a gazette that itself is issued in electronic form. The impact on newspapers, who would still be able to provide any additional publication imposed by the State on behalf of companies on a contractual basis, would be more limited, although it could be negative.

Comparing the options

Option 1 set out above will not change the current costs weighing on companies or are at least not likely to do so. Under option 2, there is a risk that valuable information will not be available to users any more. Therefore, none of these options seems to provide an appropriate solution for companies.

For the newspapers, all options apart from option 1 have negative impact, although option 4 might have a more limited impact than option 2 and option 3 depending on what Member States choose in relation to additional means of publication.

From the users' point of view, there is potentially no difference between option 3 and option 4. Both these options also have the advantage of blending in with the general trend to use less and less paper-based media, also with a view to the environmental aspects.

From the companies' point of view, however, option 4 is preferable as it should guarantee that the possibility of the Member States to choose the appropriate medium of publication and any additional publication requirement Member States may want to impose do not involve additional specific fees for them.

The impacts of the different options can therefore be summarised as follows:

Figure 2: Comparison of options |

Reduction of companies' internal costs | Reduction of companies' external costs (fees) | Accessibility for users | Impact on publishers (national gazette/newspapers) |

Option 1: No policy change | ( | ( | ( | ( |

Option 2: Abolish publication requirement | + | ++ | - | - |

Option 3: make current alternative system mandatory | ( | + | ( | - |

Option 4: electronic publication without charging a specific fee | ( | ++ | ( | ( |

"(": No change "+": Positive impact "-": Negative impact

Option 4, therefore, is the preferred option.

TRANSLATION OBLIGATIONS OF BRANCHES OF LIMITED-LIABILITY COMPANIES

Problem definition

For branches of companies that are set up in a Member State other than that where the company has its registered office itself, the Eleventh Company law Directive[41] lays down special disclosure requirements.

Branches of (public and private) limited-liability companies need to have certain information about the branch itself and the company registered in the register of the host state[42]. This information concerns:

- the registration details of the company;

- its name and legal form;

- the names of the persons authorized to represent the company;

- information on winding-up and insolvency procedures; and

- the accounting documents.

In addition, the Member State where the branch is opened may require that additional information is published, in particular the company's instrument of incorporation and its articles of association. This Member State can, furthermore, require that the instrument of incorporation, the articles of association and the accounting documents be translated in another official language of the EU and that this translation is certified[43].

The same rule on translations and certification applies also to branches of companies established in a country outside the EU[44].

Translations to be delivered by branches of companies

The instrument of incorporation, the articles of association and the accounting documents of the limited-liability company normally are established in the official language of the Member State where the company has its registered office.

The Eleventh Directive recognises that persons who are located in the Member State where the branch has been opened have a legitimate interest in accessing these documents before entering in business relations with the branch. It therefore seems appropriate to provide that Member States can require these documents to be translated in their official language or in one of their official languages (where there are several official languages within one Member State). The reason is that the objective of the filing requirement, i.e. to allow interested parties in the branch's Member State to access certain information concerning the company, arguably can only be met where the information is available in a language that the third party in that Member State can reasonably be expected to understand.

Also the possibility for Member States to require a certified translation serves a legitimate purpose as it aims at ensuring the necessary reliability of the translation. Certified or approved translations are formally verified to provide solid guarantees of accuracy for their use as official documents. For this reason, Member States in general have mechanisms for verification and certification of translations in place.

The current rules, however, leave scope for requirements that go beyond those which are needed in order to ensure a reasonably reliable translation. The effects of this provision, in practice, are much more far reaching, in particular due to the differences in the certification procedures of the Member States.

Certification requirements for documents to be provided by the branch that have been translated and certified in another Member State

Currently Member States have the possibility to require an (additional) certified translation where there is already a certified translation that, however, has been established in the country where the company is established or in another EU Member State.

As already mentioned above, the reason for this lies in the differences between the mechanisms that are used by Member States. In some Member States certified translations have to be carried out by sworn translators (i.e. specifically qualified to that end) who translates the document and signs a certificate. In others, a translation has to be certified by a public notary, in the presence of a translator. But even where two Member States provide e.g. for sworn translators to certify a translation, they can still require that this sworn translator is admitted to their own public authorities, and to reject certifications carried out by a sworn translator from another Member State. Finally, some Member States seem to impose additional requirements on top of the certified translation (i.e. notarisation of an already certified translation).

This can create additional costs to companies where these companies are unaware of the different legal requirements in the Member State where the branch is to be opened. In these cases, they might have translations carried out in their own country and realise only then what additional procedures precisely they have to go through in the Member State of the branch. Furthermore, additional costs are also created where the translation plus certification can be obtained at a lower price in the Member State where the company has its registered office or in any other Member State. This will in particular be the case where the certification procedure is particularly burdensome in the Member State of the branch. Finally, translations into certain languages (e.g. French, English, Dutch) in principle could be used to register branches in different Member States (like France/Belgium, UK/Ireland, the Netherlands/Belgium) without any additional costs. Under the current system, the Member States concerned can however force companies to have the translation certified twice, under two different procedures.

This situation creates excessive costs for companies. Even if the certification mechanisms in Member States are different, each of them seems to offer sufficient guarantees for the correctness of the translations in question. It therefore is questionable whether requirements for additional certification of a translation or even notarisation of a certified translation can be justified with the need to ensure a reliable translation.

Translation of other information to be provided by the branch

Member States can require that an attestation concerning the existence of the company is submitted with the request for registration of the branch. This certificate has to be issued by the register of the Member State where the company has its registered office[45].

Given that the Eleventh Directive is silent on the language in which an application to the branch's register has to be made, in principle the general rule applies that the Member State is free to determine the language for procedures before its authorities. This does not create any problems for the company as far as information like the address and activities of the branch or the name of the company is concerned, given that this information by nature does not necessitate any translation.

The situation, however, is different with a view to the attestation on the existence of the company. A look at the transposition measures of the Member States (table 4) shows that most Member States interpret the directive as allowing for a translation requirement also in the case of the attestation. An explanation for this interpretation could be that the attestation is to be issued specifically in view of the establishment of the branch (and, contrary to the articles of association and the accounting documents, is not a document that is already included in the company's file).

On the basis of the information made available by the Member States, it seems that at least fourteen Member States at the moment require that the attestation is translated into their official language and ten Member States, that this translation is certified (see table 4).

The first question is whether the current legal situation allows Member States to set up such a requirement.

The original Commission proposal (COM(86) 397)[46] and the amended Commission proposal (COM(88) 153)[47] do not provide any assistance in this respect as in both proposals translation requirements were limited to the accounting documents of the company. This proposed requirement was extended to the instrument of incorporation and the articles of associations in the course of the negotiation process which also led to introducing the requirement for submitting the attestation of the company's existence.

Also the case law of the European Court of Justice does not deal explicitly with this question. However, it should be noted that the Court, in case C-167/01 ("Inspire Art"), ruled that it " is contrary to Article 2 of the Eleventh Council Directive [ … ] to impose on a branch of a company formed in accordance with the laws of another Member State disclosure obligations not provided for in that directive "[48].

The second question is whether there is any objective justification for such requirement.

Taking into account the case law of the European Court of Justice quoted above, at least this question should be answered in the negative. It is true that, traditionally, public authorities only issued documents in the official language of their Member State which was not understood by the authorities of other Member States. However, with today's technological possibilities it is relatively easy to enable company registers to issue original certificates and other documents in foreign languages. The standard text of the attestation on the existence of the company has to be translated only once and then fed into the register's database so that all attestations can be issued on the basis of that translation. When issuing a specific certificate, only the details of the company – name, number of the file etc. - have to be filled in that do not necessitate any further translation.

At the moment, examples for countries where attestations can be obtained also in other languages are Sweden where the attestation can also be issued in English, and Latvia where it can be issued also in English and in German. The Finnish register, finally, is not only able to issue the attestation in Finnish and Swedish but also in English, French and German. These documents can be deemed reliable since they are produced by an official source on the basis of electronic templates. Therefore, a need for a (certified) "translation" in this case can hardly be justified.

In the light of what has just been said it seems that, independently from how the current rule of the Eleventh Directive has to be interpreted, it is in any case not necessary to ask the branch of a company to provide a certified translation of an attestation which has been issued in the language of the Member State of the branch.

Costs caused by national translation requirements to companies

The articles of association of limited-liability companies often have a size of only between 10 and 20 pages but in some cases the document can reach up to almost 100 pages (see e.g. the articles of association of Shell and Vodafone). They have to be filed once, afterwards only the modifications made have to be filed and therefore translated.

A yearly translation and, in most Member States, certification of that translation is needed with a view to the annual accounts. Whereas for smaller companies also these annual accounts often are limited to a couple of pages (see point 1.1.2.2.) for bigger companies (that are in general more likely to set up branches than small ones) they often have a size of between 200 and 300 pages.

Table 2 contains an overview of the information received from the Member States on the costs of translation and certification. In only few cases the information for certification alone has been made available. However, the average cost of translation seems to lie around 12€ per page with around 2€ on average to be added for the certification.

On the basis of this information figure 3 below sets out, by way of example, the translation costs for a company with articles of association of 10 pages and annual accounts of 50 pages that wants to register a branch in another Member State.

Figure 3: Assessment of translation costs |

Country | Translation of | Certification |

Articles of association | Annual accounts | Articles of association | Annual accounts |

Austria | 152€ | 760€ | Included | included |

Estonia | 9,60€ | 48€ |

Greece | 140€ | Included | included |

Hungary | 130€ | Included | included |

Lithuania | 100€ | 500€ | 14.50€ | 72.50€ |

Slovakia | 169,29 | 846€ | Included - ca. 42€ for certification of already translated document | Included - ca. 212€ for certification of already translated document |

Blank fields indicate that no information was provided on this point.

To these costs the internal costs of the companies have to be added (i.e. the costs for ensuring that a translation and/or certification is received from an outside translator).

According to the 2006 Survey of the European Commerce Registers Forum[49] there are currently about 28,000 branches of limited liability companies in the Member States where data were available (see table 7). No data are provided for Austria, Belgium, France, Greece, the Netherlands and Romania, so that the total number in reality obviously is above that figure.

On the basis of the information contained in table 4, all Member States, in principle seem to require translations, even if there are some differences concerning the documents that need to be translated. Regarding the certification, it seems that Finland, Hungary and Sweden are countries where normally no certification is required. In some others (e.g. Belgium ) no legal requirement exists but the decision whether to ask for a certifications seems to be left to the register. Of the total of at least 28,000 branches therefore all but the 2,580 branches located in Finland, Hungary and Sweden are potentially concerned by the certification requirement.

On the basis of the information available, the external costs of translations can roughly be estimated at 3.05 Mio € for the articles of association and the attestation and (yearly) 15.25 Mio € for the annual accounts. For the certification alone the respective figures would be 272,000 € and (yearly) 1.36 Mio €.

Concerning the internal costs to companies, no information is available at this stage. Again, the draft final report on the measurement carried out by the consortium might deliver some indications on these costs even if provisions establishing Member States’ options are not measured as a priority in that exercise. Any such additional information costs will be used for quantifying the potential savings more precisely, also with a view to reaching the 25% reduction target.

With a view to these costs, a clear majority of those stakeholders that reacted to the Commission Communication of 10 July 2007 expressed themselves in favour of abolishing any translation and certification requirement in national laws, at least where there is already a certified translation accepted or issued by the public authorities of a Member State. 46 respondents (out of a total of 129) took a position on this issue and 43 of them (93%) supported this idea.

Objectives

In order to enhance the competitiveness of EU companies, administrative burdens have to be reduced to a minimum. Information obligations also in the area of company law therefore need to be reduced where this can be done without any significant negative impact on the users of the information.

It should therefore be ensured that the costs for translation and certification caused at the occasion of the registration of a branch are limited to what is necessary to achieve the objective pursued. Third parties' interest in having access to a reliable translation of the information referred to in Article 4 of the Eleventh Directive should not be jeopardised.

Policy options

Option 1: No-Policy Change

Under the "no-policy change" option, the current situation would not be modified. Member States would still be able to require certified translations made by one of their own sworn translators even where there is already a certified translation established by a sworn translator of the country where the company has its registered office or of any other Member State. Member States would also be able not to accept attestations which have been issued directly in the required EU official language of the Member State of the branch.

This would apply to the following documents:

- the instruments of constitution, the memorandum and articles of association (if they are contained in a separate document), as well as the amendments to these documents for those documents; and

- the accounting documents of the company as drawn up, audited and disclosed pursuant to the law of the Member State by which the company is governed;

- the attestations from the register in which the company is registered relating to the existence of the company.

Notarisation and other formalities imposed alongside the obligation to submit certified translations would stay in place in those Member States that provide for such requirements.

Option 2: Complete abolition of the translation requirement at EU level

The abolition of the possibility for Member States to require certified translations as referred to in Article 4 of the Eleventh Directive entails that Member States would not be able to request any more any simple or certified translations of the documents listed above.

Moreover, the additional formalities imposed alongside the requirement of certified translations would also be abolished.

Under this option, attestations on the existence of the company in the required EU official languages of the Member State of the branch would have to be accepted by the authorities of that Member State, without need of any translation.

Option 3: Mutual recognition of translations

This option entails ensuring that certified translations produced in any EU Member State are considered sufficient for the purposes of the registration of a branch in another Member State. Moreover, the certification could be obtained through different means, depending on the particularities of each national system. It could therefore be a translation made by a sworn translator, but also one certified by a public notary or by a national competent authority. Member States would have to recognise certified translations if they would be accepted as certified translations by the administrative or judicial authorities of the relevant Member State. Under this option, also the possibility to issue attestations relating to the existence of the company in EU languages other than that of the Member State where the company's register is situated would be taken into account. This kind of document would have to be considered as sufficient by the Member State of the branch, without need of any further linguistic verification.

This option is therefore similar to the current UK system where a translation that was made outside the United Kingdom is accepted if it was certified either by (i) a notary public, (ii) a person authorised in the place where the translation was made to administer an oath, (iii) any of the British officials mentioned in section 6 of the Commissioners of Oaths Act 1889; or (iv) a person certified by a person mentioned above known to him to be competent to translate the document into English (see table 4).

Member States would not be allowed to impose any additional requirement or formality (as notarisation) with a view to recognising the certified translations, or the originals produced in an EU official language of the Member State of the branch.

Analysis of options

Option 1: No policy change

This option would mean that the current requirements would not be changed and that the relevant administrative burdens would remain in place.

There is no direct negative impact to be expected if the current requirement is not changed other than the opportunity cost of foregoing the better use of mainly financial resources.

However, the "no policy change option" would entail that companies continue to be confronted with duplicative costs for certifications. Also the costs derived from the additional formalities (as e.g. notarisation) could continue to be imposed.

Option 2: Complete abolition of the translation requirement at EU level

This scenario entails that the current requirements for the certification of a translation and even the translation requirement itself would be abolished.

If only the certification requirement was abolished, this option would reduce the costs of translations, in particular where documents would be translated in-house by the company, and even eliminate them in the cases in which the original of the document can be obtained directly in an official language of the Member State of the branch. Abolition of the certification requirement would lead to yearly savings of about 1.36 Mio € (see point 2.1.2.). Where all translation requirements were to be repealed, translation costs would be reduced to zero. This could lead to annual savings of around 16 Mio €. To both figures, savings with a view to the companies' internal costs and, potentially, notarisation fees would have to be added which, however, cannot be quantified on the basis of the information available.

However, with a view to the legitimate objective pursued with the translations, a complete repeal of all translation requirements seems problematic. Also the complete repeal of certification requirements could have an important negative impact in the cases in which the original documents have been established in a language other than that of the Member State of the branch. In those cases, the savings obtained for the companies would be accompanied by a loss of legal guarantees as to the accuracy of the information contained in the translated documents that are disclosed. The objective of the disclosure requirements would only be achieved partially since the accuracy of the relevant information could not be formally guaranteed.

Option 3: Mutual recognition of translations

The mutual recognition of certified or approved translations, as well as of the original documents issued in an EU official language of the Member State of the branch would save costs linked to certifications in the cases in which certified or approved translations have already been produced in an EU Member State or where originals are produced in an official language of the Member State of the branch. These savings will be below the 1.36 Mio € of the estimated total annual costs of certification. However, also in this case any existing additional requirements (i.e. notarisation) would have to be abolished. This limitation would lead to further savings and at the same time, it would simplify the underlying administrative procedures.

Comparing the options

Option 1 does not have any negative effect and guarantees the accuracy of the documents disclosed in the Member State of the branch. However, it does not entail any savings of costs. For its part, option 2 offers the possibility to eliminate or at least reduce the costs linked to certified translation. However, it does not provide any specific mechanism to guarantee the accuracy of the documents disclosed in the Member State of the branch.

The choice of option 3 will reduce the costs linked to the need of disclosing some documents in an EU official language of the Member State of the branch. At the same time, option 3 guarantees, to a satisfactory degree, the accuracy of the documents disclosed. The overall objectives of limiting the administrative burdens by keeping costs to an acceptable level and guaranteeing the accuracy of the information contained in the relevant documents are fully attained with this option.

The impacts of the different options can therefore be summarised as follows:

Figure 4: Comparison of options |

Reduction of translation costs | Reduction of certification costs | Reliability | Accessibility for users |

Option 1: No policy change | ( | ( | ( | ( |

Option 2: Abolish translation requirement | ++ | ++ | -- | -- |

Option 3: mutual recognition of certified translations | (/+* | + | ( | ( |

"(": No change "+": Positive impact "-": Negative impact

* The impact would be positive in the cases in which the registries of the Member State where the company has its registered office issue the relevant original certificates in an EU official language of another Member State.

Option 3 therefore is the preferred option.

MONITORING AND EVALUATION

Two years after the transposition of the amendments, the effect of the measures should be evaluated.

This evaluation should look, in particular at the following questions:

- Whether the overall costs for companies for registration and publication related to the First Directive have been reduced and, in particular, whether any savings from the abolition of publication fees have been reduced or even compensated by increases in registration fees;

- Whether users' access to the information is provided easily and at a reasonable cost;

- Whether progress in the area of interoperability of business registers allows a revision of the publication requirements for branches, in particular by providing that companies can choose where to file the information related to the branch.

Tables

TABLE 1: REFERENCES TO ARTICLE 3 OF DIRECTIVE 68/151/EEC

LEGAL ACT | RELEVANT ARTICLE | TEXT OF ARTICLE |

SECOND COUNCIL DIRECTIVE 77/91/EEC OF 13 DECEMBER 1976 ON COORDINATION OF SAFEGUARDS WHICH, FOR THE PROTECTION OF THE INTERESTS OF MEMBERS AND OTHERS, ARE REQUIRED BY MEMBER STATES OF COMPANIES WITHIN THE MEANING OF THE SECOND PARAGRAPH OF ARTICLE 58 OF THE TREATY, IN RESPECT OF THE FORMATION OF PUBLIC LIMITED LIABILITY COMPANIES AND THE MAINTENANCE AND ALTERATION OF THEIR CAPITAL, WITH A VIEW TO MAKING SUCH SAFEGUARDS EQUIVALENT | ARTICLE 3 | THE FOLLOWING INFORMATION AT LEAST MUST APPEAR IN EITHER THE STATUTES OR THE INSTRUMENT OF INCORPORATION OR A SEPARATE DOCUMENT PUBLISHED IN ACCORDANCE WITH THE PROCEDURE LAID DOWN IN THE LAWS OF EACH MEMBER STATE IN ACCORDANCE WITH ARTICLE 3 OF DIRECTIVE 68/151/EEC […] |

ARTICLE 10 | 3. THE EXPERT'S REPORT SHALL BE PUBLISHED IN THE MANNER LAID DOWN BY THE LAWS OF EACH MEMBER STATE, IN ACCORDANCE WITH ARTICLE 3 OF DIRECTIVE 68/151/EEC. 4. MEMBER STATES MAY DECIDE NOT TO APPLY THIS ARTICLE WHERE 90 % OF THE NOMINAL VALUE, OR WHERE THERE IS NO NOMINAL VALUE, OF THE ACCOUNTABLE PAR, OF ALL THE SHARES IS ISSUED TO ONE OR MORE COMPANIES FOR A CONSIDERATION OTHER THAN IN CASH, AND WHERE THE FOLLOWING REQUIREMENTS ARE MET: […] (B) SUCH AGREEMENT HAS BEEN PUBLISHED AS PROVIDED FOR IN PARAGRAPH 3; […] (e) THE GUARANTEE REFERRED TO IN (D) HAS BEEN PUBLISHED AS PROVIDED FOR IN PARAGRAPH 3 […]; |

ARTICLE 11 | 1. IF, BEFORE THE EXPIRY OF A TIME LIMIT LAID DOWN BY NATIONAL LAW OF AT LEAST TWO YEARS FROM THE TIME THE COMPANY IS INCORPORATED OR IS AUTHORIZED TO COMMENCE BUSINESS, THE COMPANY ACQUIRES ANY ASSET BELONGING TO A PERSON OR COMPANY OR FIRM REFERRED TO IN ARTICLE 3 (I) FOR A CONSIDERATION OF NOT LESS THAN ONE-TENTH OF THE SUBSCRIBED CAPITAL, THE ACQUISITION SHALL BE EXAMINED AND DETAILS OF IT PUBLISHED IN THE MANNER PROVIDED FOR IN ARTICLE 10 AND IT SHALL BE SUBMITTED FOR THE APPROVAL OF THE GENERAL MEETING. Member States may also require these provisions to be applied when the assets belong to a shareholder or to any other person. 2. Paragraph 1 shall not apply to acquisitions effected in the normal course of the company's business, to acquisitions effected at the instance or under the supervision of an administrative or judicial authority, or to stock exchange acquisitions. |

ARTICLE 25 | 1. ANY INCREASE IN CAPITAL MUST BE DECIDED UPON BY THE GENERAL MEETING. BOTH THIS DECISION AND THE INCREASE IN THE SUBSCRIBED CAPITAL SHALL BE PUBLISHED IN THE MANNER LAID DOWN BY THE LAWS OF EACH MEMBER STATE, IN ACCORDANCE WITH ARTICLE 3 OF DIRECTIVE 68/151/EEC. 2. NEVERTHELESS, THE STATUTES OR INSTRUMENT OF INCORPORATION OR THE GENERAL MEETING, THE DECISION OF WHICH MUST BE PUBLISHED IN ACCORDANCE WITH THE RULES REFERRED TO IN PARAGRAPH 1, MAY AUTHORIZE AN INCREASE IN THE SUBSCRIBED CAPITAL UP TO A MAXIMUM AMOUNT WHICH THEY SHALL FIX WITH DUE REGARD FOR ANY MAXIMUM AMOUNT PROVIDED FOR BY LAW. WHERE APPROPRIATE, THE INCREASE IN THE SUBSCRIBED CAPITAL SHALL BE DECIDED ON WITHIN THE LIMITS OF THE AMOUNT FIXED, BY THE COMPANY BODY EMPOWERED TO DO SO. THE POWER OF SUCH BODY IN THIS RESPECT SHALL BE FOR A MAXIMUM PERIOD OF FIVE YEARS AND MAY BE RENEWED ONE OR MORE TIMES BY THE GENERAL MEETING, EACH TIME FOR A PERIOD NOT EXCEEDING FIVE YEARS. |

ARTICLE 29 | 3. ANY OFFER OF SUBSCRIPTION ON A PRE-EMPTIVE BASIS AND THE PERIOD WITHIN WHICH THIS RIGHT MUST BE EXERCISED SHALL BE PUBLISHED IN THE NATIONAL GAZETTE APPOINTED IN ACCORDANCE WITH DIRECTIVE 68/151/EEC. HOWEVER, THE LAWS OF A MEMBER STATE NEED NOT PROVIDE FOR SUCH PUBLICATION WHERE ALL A COMPANY'S SHARES ARE REGISTERED. IN SUCH CASE, ALL THE COMPANY'S SHAREHOLDERS MUST BE INFORMED IN WRITING. THE RIGHT OF PRE-EMPTION MUST BE EXERCISED WITHIN A PERIOD WHICH SHALL NOT BE LESS THAN 14 DAYS FROM THE DATE OF PUBLICATION OF THE OFFER OR FROM THE DATE OF DISPATCH OF THE LETTERS TO THE SHAREHOLDERS. 4. The right of pre-emption may not be restricted or withdrawn by the statutes or instrument of incorporation. This may, however, be done by decision of the general meeting. The administrative or management body shall be required to present to such a meeting a written report indicating the reasons for restriction or withdrawal of the right of pre-emption, and justifying the proposed issue price. The general meeting shall act in accordance with the rules for a quorum and a majority laid down in Article 40. ITS DECISION SHALL BE PUBLISHED IN THE MANNER LAID DOWN BY THE LAWS OF EACH MEMBER STATE, IN ACCORDANCE WITH ARTICLE 3 OF DIRECTIVE 68/151/EEC. |

ARTICLE 30 | ANY REDUCTION IN THE SUBSCRIBED CAPITAL, EXCEPT UNDER A COURT ORDER, MUST BE SUBJECT AT LEAST TO A DECISION OF THE GENERAL MEETING ACTING IN ACCORDANCE WITH THE RULES FOR A QUORUM AND A MAJORITY LAID DOWN IN ARTICLE 40 WITHOUT PREJUDICE TO ARTICLES 36 AND 37. SUCH DECISION SHALL BE PUBLISHED IN THE MANNER LAID DOWN BY THE LAWS OF EACH MEMBER STATE IN ACCORDANCE WITH ARTICLE 3 OF DIRECTIVE 68/151/EEC. |

ARTICLE 35 | WHERE THE LAWS OF A MEMBER STATE AUTHORIZE TOTAL OR PARTIAL REDEMPTION OF THE SUBSCRIBED CAPITAL WITHOUT REDUCTION OF THE LATTER, THEY SHALL AT LEAST REQUIRE THAT THE FOLLOWING CONDITIONS ARE OBSERVED: (A) WHERE THE STATUTES OR INSTRUMENT OF INCORPORATION PROVIDE FOR REDEMPTION, THE LATTER SHALL BE DECIDED ON BY THE GENERAL MEETING VOTING AT LEAST UNDER THE USUAL CONDITIONS OF QUORUM AND MAJORITY. WHERE THE STATUTES OR INSTRUMENT OF INCORPORATION DO NOT PROVIDE FOR REDEMPTION, THE LATTER SHALL BE DECIDED UPON BY THE GENERAL MEETING ACTING AT LEAST UNDER THE CONDITIONS OF QUORUM AND MAJORITY LAID DOWN IN ARTICLE 40. THE DECISION MUST BE PUBLISHED IN THE MANNER PRESCRIBED BY THE LAWS OF EACH MEMBER STATE, IN ACCORDANCE WITH ARTICLE 3 OF DIRECTIVE 68/151/EEC; |

ARTICLE 36 | 1. WHERE THE LAWS OF A MEMBER STATE MAY ALLOW COMPANIES TO REDUCE THEIR SUBSCRIBED CAPITAL BY COMPULSORY WITHDRAWAL OF SHARES, THEY SHALL REQUIRE THAT AT LEAST THE FOLLOWING CONDITIONS ARE OBSERVED: …. (e) THE DECISION ON COMPULSORY WITHDRAWAL SHALL BE PUBLISHED IN THE MANNER LAID DOWN BY THE LAWS OF EACH MEMBER STATE IN ACCORDANCE WITH ARTICLE 3 OF DIRECTIVE 68/151/EEC. |

THIRD COUNCIL DIRECTIVE 78/855/EEC OF 9 OCTOBER 1978 BASED ON ARTICLE 54 (3) (G) OF THE TREATY CONCERNING MERGERS OF PUBLIC LIMITED LIABILITY COMPANIES | ARTICLE 6 | DRAFT TERMS OF MERGER MUST BE PUBLISHED IN THE MANNER PRESCRIBED BY THE LAWS