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  {SEC(2008) 466} {SEC(2008) 467}
Date: 2008-04-17
Institutions: European Commission
Subjects: auditing, branch, business management, company law, organisation, publication of accounts

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 17.4.2008 
COM(2008) 194 final 

2008/0083 (COD) 

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 

(presented by the Commission) 

{SEC(2008) 466} 
{SEC(2008) 467} 

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EXPLANATORY MEMORANDUM 

1. 

INTRODUCTION 

1.1. 

Context 

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 programme1 and the main elements for measuring administrative costs 
and  reducing  administrative  burdens2.  Both  programmes  emphasised  the  need  to  generate 
tangible  economic  benefits.  They  were  complemented  by  an  Action  Programme  adopted  on 
24 January 20073 which fixed the aim of reducing administrative burdens on businesses in the 
EU by 25% until the year 20124. 

The Action Programme was endorsed by the Spring European Council in March 20075. 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. In 
March 2007,  a  number  of  fast-track  proposals  were  adopted  by  the  Commission  in  order  to 
achieve a rapid reduction of administrative burdens through minor changes of the EU acquis.  

At  its  meeting  of  13/14  March  2008,  the  European  Council  called  on  the  Commission  to 
identify new  "fast  track" legislative proposals in order to reduce administrative burdens6. In 
the  fields  of  company  law,  accounting  and  auditing,  the  Commission  had  adopted,  on 
10 July 2007, a communication setting out its ideas for simplification in these areas.7 Whereas 
certain  measures  envisaged  in  that  communication  necessitate  a  thorough  examination  and 
discussion,  it  appeared  already  from  the  Communication  that  others  might  allow  achieving 
improvements  for  European  companies  rapidly,  by  way  of  a  "fast  track"  procedure.  These 
measures  that  relate  to  the  First  and  the  Eleventh  Company  law  Directives  are  presented  in 
this proposal.  

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Communication  from  the  Commission  to  the  Council,  the  European  Parliament,  the  European 
Economic  and  Social  Committee  and  the  Committee  of  the  Regions  -  "A  strategic  review  of  Better 
Regulation in the European Union" - COM(2006) 689, OJ C 78, 11.4.2007, p. 9. 
Commission  working  document  of  14/11/2006  –  "Measuring  administrative  costs  and  reducing 
administrative burdens in the European Union" - COM(2006) 691. 
Communication  from  the  Commission  to  the  Council,  the  European  Parliament,  the  European 
Economic  and  Social  Committee  and  the  Committee  of  the  Regions  on  "Action  programme  for 
reducing administrative burdens in the EU" - COM(2007) 23, not yet published in the Official Journal. 
COM(2007) 23. 
Presidency Conclusions of the Brussels European Council - doc. 7224/07 Concl 1. 
Presidency Conclusions of the Brussels European Council – doc 7652/08 CONCL 1. 
Communication from the Commission on a simplified business environment for companies in the areas 
of company law accounting and auditing - COM(2007) 394, not published in the Official Journal. 

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1.2. 

Justification and objectives of the current initiative 

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  on  other  stakeholders.  Therefore,  information  obligations  in 
the  area  of  company  law  that  do  not  provide  a  significant  added  value  for  the  users  of  the 
information need to be targeted. 

Under the First Company law Directive, companies need to publish, in the national gazettes, 
certain information that has to be entered into the Member States' commercial registers. This 
is, in particular, information about the company's foundation, later changes to this information 
and  the  annual  accounts  that  have  to  be  published  on  a  yearly  basis.  In  most  cases,  the 
publication in the national gazette entails additional costs for the companies without providing 
real added value in times where company registries make their information available online. 
The objective is therefore to remove any additional publication requirements in national law 
that cause additional costs to the companies. 

With  a  view  to  the  Eleventh  Company  law  Directive,  the  proposal  targets  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  their  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. The objective is to reduce 
the costs for translation and certification to the minimum. 

2. 

LEGAL BASE 

The legal base for the proposal is Article 44(2)(g) of the Treaty. Both directives that are to be 
modified by the proposal are based on this provision (former Article 54(3)(g)). 

3. 

SUBSIDIARITY AND PROPORTIONALITY 

Action at EU level is necessary to deal with these problems because, in the case of the First 
Directive,  the  obligations  entailing  administrative  burdens  derive  from  the  EU  rules.  In  the 
case of the Eleventh Directive, the directive explicitly allows Member States to impose such 
burdens  on  companies.  Under  these  conditions,  an  effective  reduction  of  administrative 
burden can only be achieved through the modification of the relevant EU rules. Action at EU 
level is therefore justified. 

The  proposed  modifications  are  limited  to  what  is  necessary  in  order  to  remove  the 
unnecessary  administrative  burdens  in  the  areas  concerned  and  are  proportionate  to  this 
objective. 

4. 

CONSULTATION OF INTERESTED PARTIES 

The proposal and the impact assessment that accompanies it are based on a broad consultation 
process  which  followed  the  adoption  of  the  Communication  of  10  July  2007  by  the 
Commission. 

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The  Competitiveness  Council  adopted,  on  22  November  2007,  conclusions  welcoming  the 
simplification initiative8, and in the European Parliament, a report was adopted in the Legal 
Affairs Committee on 27 March 2008. The report reflects broad support for the initiative to 
simplify  European  company  law  and  reduce  administrative  burdens.  The  adoption  of  the 
European Parliament's final 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. 

The idea to process proposals concerning the First and the Eleventh Company law Directives 
in  a  fast  track  procedure  was  submitted  to  the  High  Level  Group  of  National  Regulatory 
Experts,  appointed  by  the  Member  States,  where  a  majority  of  those  representatives  who 
commented on it supported this approach. 

Also  the  High  Level  Group  of  Independent  Stakeholders  was  consulted  on  this  matter  and 
welcomed all the proposals in its opinion adopted on 26 February 2008. 

5. 

IMPACT ASSESSMENT 

The impact assessment to this proposal shows that there is a significant potential for savings 
for companies in the areas mentioned above. 

5.1. 

Publication requirements for limited-liability companies 

In  the  impact  assessment,  the  total  minimum  cost  of  the  current  rule  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, 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 
have to be added. On these latter elements, however, no reliable figures are available at this 
stage. 

In  the  impact  assessment,  it  is  acknowledged  that  the  publication  obligation  provides 
important  added  value  for  users  as  it  allows  them  to  follow  changes  in  the  register  in  a 
chronological  order.  However,  the  comparison  between  the  different  systems  used  in  the 
Member States shows that  achieving  this objective does not necessitate imposing additional 
costs on companies. With estimates indicating that more than 50% of all Europeans use the 
internet  nowadays9,  a  chronological  electronic  publication,  i.e.  on  the  register's  website,  is 

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Council document 15222/07 DRS 48. 
Source: Internetworldstats, www.internetworldstats.com/stats9.htm#eu. 
Already 
at 
Society  Benchmarking  Report" 
http://ec.europa.eu/information_society/eeurope/i2010/docs/benchmarking/051222_final_benchmarking
_report.pdf)  found:  "Internet  connectivity  has  grown  steadily  and  the  Community  Household  survey 
of 2004  showed  43%  of  households  in  the  European  Union  were  connected.  A  slightly  lower 

"Information 

(available 

2005 

the 

of 

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sufficient to reach this aim. As the example in a number of Member States (e.g. Denmark and 
Finland) shows, such publication does not have to entail additional fees being charged to the 
companies. 

In the impact assessment, it is therefore recommended to ensure that the publication in future 
does not lead companies being charged any additional fee. 

5.2. 

Translation obligations of branches of limited-liability companies 

The  external  costs  of  the  current  regime  concerning  translation  obligations  of  branches  are 
estimated, in the impact assessment, on the basis of the information available at 3.36 Mio € 
for the translation of the articles of association and of the attestation on the existence of the 
company  and  at  (yearly)  16.8 Mio  €  for  the  annual  accounts.  For  the  certification  alone  the 
respective figures are estimated to lie at 300,000 € and (yearly) 1.5 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. 

The conclusion drawn in the impact assessment is that, even if Member States, in the interest 
of  third  parties,  should  maintain  the  possibility  to  ask  for  certified  translations,  translations 
that have been certified in another Member State should be considered sufficient. Taking into 
account in particular that some Member States, in their national laws, have not made (full) use 
of the possibility to ask for certified translations it seems disproportionate to accept that other 
Member States require multiple certifications, sometimes even through a notary. A sufficient 
degree of reliability can be assumed where a translation has been certified by a translator who 
has  been  officially  appointed  and  sworn  in  another  Member  State  or  by  any  other  person 
authorised in that Member State to certify translations into the language required.  

6. 

COMMENTS ON SPECIFIC ARTICLES 

Article 1: Amendment of the First Company law Directive 

Article 1 sets a new minimum publication requirement on the basis of the alternative means of 
publication contained currently in Article 3(4) First Company law Directive. This minimum 
requirement takes account of the fact that the use of electronic means is becoming more and 
more common in all areas. 

The fact that the provision sets only a minimum requirement means that Member States have 
to  provide  for  an  electronic  chronological  access  to  the  information  but  remain  free  to 
prescribe, in addition, the use of the additional means of publication (e.g. paper based national 
gazette,  national  or  regional  newspapers).  However,  the  new  second  subparagraph  of 
Article 3(4)  clarifies  that  Member  States  have  to  make  sure  that  the  publication  in  any  case 
does not lead to any specific fees being charged to the companies. 

Article 2: Amendment of the Eleventh Company law Directive 

Paragraph  1  maintains  the  current  possibility,  for  Member  States,  to  require  the  translation 
and certification of that translation with a view to certain documents concerning the company. 

proportion, 38% of the population aged 16-74, was found to be regular users, going online at least once 
per week". 

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It clarified that also the attestation pursuant to Article 2(2)(c) can be required in the language 
of  the  host  Member  State  of  the  branch  which in  practice  is  already  done  by  most  Member 
States today. The second sentence then stipulates, however, that any such requirement shall be 
deemed  fulfilled  where  a  translation  is  submitted  that  has  been  certified  by  a  person  that, 
under the rules on certification in force in another Member State, is entitled to issue such a 
certificate.  

Paragraph  2  states  that  attestations  that  have  been  issued  in  the  language  required  by  the 
Member State of the branch have to be accepted by the register in that state.  

Paragraph 3 clarifies that Member States, apart from the formalities described in paragraphs 1 
and 2, cannot impose any other formal requirements. This provision covers in particular any 
requirements for notarisation of already certified documents or their legalisation, for instance 
by  an  Apostille  under  under  Hague  Convention  of  5 October  1961  Abolishing  the 
Requirement of Legalisation for Foreign Public Documents. It is, however, without prejudice 
to any rules requiring Apostille for the attestation on the existence of the company. 

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2008/0083 (COD) 

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 

(Text with EEA relevance) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Article 44(2)(g) thereof, 

Having regard to the proposal from the Commission10, 

Having regard to the opinion of the European Economic and Social Committee11, 

Acting in accordance with the procedure laid down in Article 251 of the Treaty12, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

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11 
12 
13 

The  European  Council  agreed,  at  its  meeting  on  8  and  9  March  2007,  that 
administrative burdens on companies should be reduced by 25% by the year 2012 in 
order to enhance the competitiveness of companies in the Community. 

Company  law  has  been  identified  as  one  area  that  contains  a  high  number  of 
information obligations for companies, some of which seem outdated or excessive. 

These  information  obligations  need  to  be  reviewed  in  order  to  reduce  the  burdens 
weighing  on  companies  within  the  Community  to  the  minimum  that  is  necessary  to 
ensure the protection of the interests of other stakeholders. 

Under  First  Council  Directive  68/151/EEC  of  9  March  1968  on  co-ordination  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,  with  a  view  to  making  such  safeguards  equivalent 
throughout the Community13, limited-liability companies need to disclose, by way of 
publication, certain information that has to be entered into the Member States' central 

OJ C , , p. . 
OJ C , , p. . 
OJ C , , p. . 
OJ L 65, 14.3.1968, p. 8. Directive as last amended by Directive 2006/99/EC (OJ L 363, 20.12.2006, 
p. 137). 

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(5) 

(6) 

(7) 

(8) 

(9) 

register, commercial register or companies register. This publication, in many Member 
States,  has  to  take  place  by  using  the  national  gazette  and  sometimes,  in  addition, 
through the national or regional newspapers. 

In  most  cases,  the  publication  obligations  entail  additional  costs  for  the  companies 
without  providing  real  added  value  given  that  company  registers  make  their 
information  available  online.  Initiatives  aimed  at  facilitating  the  Community  wide 
access  to  such  registers  further  reduce  the  need  for  publishing  this  information  in  a 
national gazette or in other print media. 

In order to allow for a cost effective publication that provides users with easy access to 
the information Member States should make mandatory the use of a central electronic 
platform.  They  should,  furthermore,  ensure  that  this  publication  and  any  additional 
publication duties they may impose on companies in this context, do not lead to any 
specific fees, in addition to those that may be charged for entries in the register. 

Under  Eleventh  Council  Directive  89/666/EEC  of  21  December  1989  concerning 
disclosure  requirements  in  respect  of  branches  opened  in  a  Member  State  by  certain 
types  of  company  governed  by  the  law  of  another  State14,  certain  information 
concerning the company has to be disclosed. The Member State in which the branch is 
situated,  hereinafter  "host  Member  State",  currently  is  able  to  require  that  a  limited 
number  of  documents  in  that  context  have  to  be  translated  into  another  official 
language of the Community.  

That possibility should be maintained as well as the one, for the host Member State, to 
require  in  some  limited  cases  that  the  translation  be  certified  as  the  interest  of  third 
parties can render it necessary to ensure, through the certification, a sufficient level of 
reliability of the translation. 

A translation, however, can be deemed sufficiently reliable if it has been certified by a 
translator who has been officially appointed and sworn in another Member State or by 
any  other  person  authorised  in  that  Member  State  to  certify  translations  into  the 
language required. The host Member State should, in this case, not have the possibility 
to require an additional certification under its own rules. 

(10)  The same applies where a document required for the registration of the branch can be 
produced, by the register where the company's file is held, in the official language of 
the  Community  required  by  the  host  Member  State.  Also  in  this  case,  an  additional 
certification does not seem justified. 

(11)  Member  States,  also,  should  not  be  able  to  impose  any  formality  relating  to  the 
language  of  the  document  that  goes  beyond  the  certification.  In  particular, 
requirements for notarisation of an already certified translation exceed what is required 
to guarantee a sufficient degree of reliability. 

(12)  Since the objectives of this Directive, namely reducing administrative burdens relating 
to  publication  and  translation  obligations  of  certain  types  of  companies  within  the 
Community, cannot be sufficiently achieved by Member States and can therefore, by 
reason of the scale and effects, be better achieved at Community level, the Community 

14 

OJ L 395, 30.12.1989, p. 36. 

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may  adopt  measures  in  accordance  with  the  principle  of  subsidiarity  as  set  out  in 
Article 5 of the Treaty. In accordance with the principle of proportionality, as set out 
in that Article, this Directive does not go beyond what is necessary in order to achieve 
those objectives. 

(13)  Directives 68/151/EEC and 89/666/EEC should therefore be amended accordingly, 

HAVE ADOPTED THIS DIRECTIVE: 

Article 1 
Amendment of Directive 68/151/EEC 

Article 3(4) of Directive 68/151/EEC is replaced by the following: 

"4. Disclosure  of the documents  and  particulars  referred to in Article 2 shall be effected by 
publication  through  a  central  electronic  platform  that  allows  access  to  the  information 
disclosed in chronological order. 

Member  States  shall  ensure  that  companies  are  not  charged  a  specific  fee  in  respect  of  the 
publication  obligation  through  a  central  electronic  platform  or  any  additional  publication 
obligation imposed by Member States relating to those documents and particulars." 

Article 2 
Amendment of Directive 89/666/EEC 

Article 4 of Directive 89/666/EEC is replaced by the following: 

"Article 4 

1. The Member State in which the branch has been opened may stipulate that the documents 
referred to in points (b) and (c) of Article 2(2) and in Article 3 must be published in an official 
language of the Community other than the official language of the register referred to in point 
(c) of Article 2(1), and that the translation of such documents must be certified. A translation 
shall  be  deemed  certified  where  it  has  been  certified  in  a  procedure  accepted  by  the 
administrative or judicial authorities of any other Member State.  

2.  Member  States  shall  accept  the  attestation  referred  to  in  point  (c)  of  Article  2(2)  in  the 
language in which it is published in accordance with paragraph 1 of this Article. 

3.  Member  States  shall  not  impose  any  formal  requirement  relating  to  the  translation  of  the 
documents referred to in paragraph 1 other than those laid down in paragraphs 1 and 2." 

Article 3 
Transposition 

1. 

Member  States  shall  bring  into  force  the  laws,  regulations  and  administrative 
provisions  necessary  to  comply  with  this  Directive  by  30  April  2010  at  the  latest. 
They  shall  forthwith  communicate  to  the  Commission  the  text  of  those  provisions 
and a correlation table between those provisions and this Directive. 

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When  Member  States  adopt  those  provisions,  they  shall  contain  a  reference  to  this 
Directive  or  be  accompanied  by  such  a  reference  on  the  occasion  of  their  official 
publication. Member States shall determine how such reference is to be made. 

2. 

Member States shall communicate to the Commission the text of the main provisions 
of national law which they adopt in the field covered by this Directive. 

Article 4 
Entry into force 

This Directive shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union. 

Article 5 
Addressees 

This Directive is addressed to the Member States. 

Done at Brussels,  

For the European Parliament 
The President 

For the Council 
The President 

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