COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on single-member private limited liability companies
Date: 2014-04-09
Institutions: European Commission
Subjects: business management, company member, partnership, private limited company, registration of a company, share capital













EUR-Lex - 52014SC0124 - EN











|



52014SC0124

COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on single-member private limited liability companies /* SWD/2014/0124 final  */









Contents
Executive
Summary. 3
1. Introduction.. 5
2. procedural issues and consultation of interested
parties. 6
2.1. Procedural
issues. 6
2.2. External
expertise and consultation of interested parties. 6
3. Policy context. 7
3.1. Scope. 7
3.2. Nature and
size of the market concerned. 8
4. Problem definition.. 10
4.1. Context. 12
4.2. PROBLEM:
Burden for SMEs to set-up a subsidiary or a group of subsidiaries abroad. 13
4.2.1.
Problem and its drivers. 13
4.2.2. Costs
of establisHing subsidiaries abroad. 15
4.3. CONSEQUENCE:
Low participation of SMEs in the Internal Market. 17
5. Baseline scenario, the EU's right to act and
justification.. 19
5.1. Baseline
scenario: expected developments if no action is taken. 19
5.2. EU’s right
to act, subsidiarity and proportionality. 22
6. Objectives. 23
7. Policy Options and the analysis of IMPACt. 23
7.1. Discarded
options. 24
7.2. Retained
options. 25
7.2.1.
Registration process. 27
7.2.2.
Minimum capital 33
8. The Preffed options. 39
8.1. the Prefferd
options and their Impacts. 39
8.2. the choice
of instrument. 41
9. Monitoring and evaluation.. 42
Annex. 43
1. Tables. 43
2. Calculations. 45
3. The legal
requirements for the establishement of single-mebmer companies across the eu
and recent national reforms  49
4. Summary of
Responses to the Public Consultation on the Single-Member companies. 59

Executive
Summary

 Executive Summary Sheet 
 IA on Single-Member Limited Liability Company  
 A. Need for action 
 Why? What is the problem being addressed? 
 SMEs still find it costly and difficult to be active across borders and only a small number of SMEs invests abroad. This is due to many factors, including the diversity of national company laws. Establishing a subsidiary abroad involves costs of meeting legal and administrative requirements in other countries, which are frequently different to what companies are used to “at home”. These include, for instance, necessary legal advice and translation costs. Those costs are likely to be particularly high for groups of companies since any SME parent company is faced with different requirements for each subsidiary it tries to establish in another MS. 
 What is this initiative expected to achieve? 
 The overall objective would be, through changes to national company law, to make it easier for SMEs to create subsidiaries, in particular abroad. This should encourage more entrepreneurial activity and, in turn, have a positive impact on growth, innovation and jobs in the EU. 
 What is the value added of action at the EU level? 
 It is very unlikely that MS would provide without EU intervention for national company law forms with identical set-up and operational conditions. Despite the reforms of national company laws, legal differences between MS still remain with regard to, for instance, the amount of minimum capital, articles of association or registration time and fees. This acts as a constraint on SMEs’ investment abroad. Only an EU-wide regime could help to overcome these problems. 
 B. Solutions 
 What legislative and non-legislative policy options have been considered? Is there a preferred choice or not? Why? 
 The IA discards at the beginning a number of options due to the lack of their feasibility and/or support from stakeholders. The retained options concern the creation of national company law forms for single-member private limited liability companies with harmonised conditions, in particular with regard to the registration process and minimum capital. The preferred choice are the policy options that provide for the possibility of on-line registration with the uniform template of articles of association and with minimum capital requirement of  €1 accompanied by balance sheet and solvency statement. Compared to the other policy options it provides the best balance of effectiveness in achieving the objectives (reduction of costs for companies), efficiency and coherence with EU policies   
 Who supports which option? 
 In the 2012 consultation on the European company law a majority of stakeholders (including public authorities, trade unions, business, investors, academics) were in favour of exploring alternative measures to the European Private Company (SPE) Statute to help SMEs. These included harmonised legislation to promote EU SMEs, a revision of the European Company Statute or the creation of a simplified single-member company charter. In the 2013 consultation on single-member companies 74% of companies and business federations considered that the harmonisation of rules for single-member private limited liability companies could facilitate cross-border activities of SMEs. 79% of companies and 68% of business federations considered that such an initiative should include rules for on-line registration with one standard registration form throughout the EU. 
 C. Impacts of the preferred option 
 What are the benefits of the preferred option (if any, otherwise main ones)?                                      
 The preferred policy option would increase uniformity of requirements across the EU and, therefore, provide more legal certainty with respect to the establishment of single-member private limited liability companies. It would also reduce costs of setting up and operating such subsidiaries abroad. According to the estimates carried out for the purpose of this IA, the cost reduction for the founders of single-member private limited liability companies in one year in the EU could range from €236 to 653 million. 
 What are the costs of the preferred option (if any, otherwise main ones)? 
 The preferred policy option would lower the minimum capital requirement in 12 MS that currently have requirements higher than €1. In some of those countries it could result in a decrease in national revenue from the registration process. This option would also introduce costs (between de minimis up to €100,000 or more) for MS with regard to the establishment of a direct on-line registration procedure and making the single template for articles of association available to companies. However, this should not lead to an unreasonable burden as national authorities would need to adapt the already existing national on-line registration systems rather than creating new ones. In addition, costs would be one-off versus the resulting permanent benefits for companies. 
 How will businesses, SMEs and micro-enterprises be affected? 
 This initiative aims at facilitating cross-border business for SMEs by reducing costs they face when setting up and operating subsidiaries abroad and by providing them with more legal certainty. At the same time, bigger companies could also profit as "parents" of groups of subsidiaries across the EU. 
 Will there be significant impacts on national budgets and administrations? 
 The costs of implementing the proposed rules at national level would depend on the existing level of minimum capital and the digitalisation of national company registration processes. For many MS that already have direct on-line registration procedures and minimum capital requirements of €1, the costs should be low. The costs for other MS should not be excessive and are described in the section on costs above. 
 Will there be other significant impacts? 
 All the relevant impacts of the preferred policy option are described above. 
 D. Follow up 
 When will the policy be reviewed? 
 The Commission will monitor the implementation of the preferred policy option, gather information on the relevant issues and will assess in due time the progress achieved according to the objectives set (including, for instance, how the proposal was implemented in national laws, changes in the costs of set-up and operation of subsidiaries abroad and any remaining practical problems). 

1. Introduction  

European SMEs - small and
medium-sized enterprises - have an essential role to play in strengthening the
EU economy. However, they still face a number of obstacles, which hamper their
full development within the Internal Market, and therefore, their full
contribution to the EU’s economy. 
Improving the business
environment for companies and notably for SMEs is one of the key priorities in
the EU’s ten-year growth strategy, the Europe 2020[1]. In particular, a
number of SME-relevant actions were set out in the Communication on “An
Integrated Industrial Policy for the Globalisation Era”[2], one of the Europe
2020’s seven key flagship initiatives. The review of the Small Business Act[3] and the Single Market
Acts I[4]
and II[5]
also included actions focused on improving access to finance and making further
efforts to reduce the costs of doing business in Europe. 
From the perspective of
company law, SMEs still find it costly and difficult to be active across
borders and only a small number of SMEs invests abroad. The reasons include the
diversity of national legislations, including differences between national company
laws, and the lack of trust in foreign companies among customers and business
partners. The lack of trust is one of the reasons why SMEs establish in other Member
States (MS). They often establish subsidiaries as these provide customers with
the brand and reputation of the parent company but also offer the security of
dealing with a national, and not a foreign, company law form. Establishing
abroad involves the costs of meeting legal and administrative requirements in
other countries, which are frequently different to what companies are used to “at
home” (including the necessary legal advice and translation costs). Those costs
are likely to be particularly high for groups of companies since any SME parent
company is faced at present with different regulatory requirements in relation to
each subsidiary that it tries to establish in different MS. 
The Commission aimed to
address these obstacles in its 2008 proposal for a European Private Company Statue
(SPE). In view of the withdrawal of the SPE proposal, the Commission continued
to reflect on the potential follow-up or alternative measures to provide
simple, flexible rules across the EU specifically suited to the needs of small
and medium companies. The 2012 Action Plan on European company law and
corporate governance[6]
reaffirmed the Commission’s resolve to build on the work carried out in the
preparation of the SPE proposal by further initiatives to enhance cross-border
opportunities for SMEs. 
This Impact Assessment
(IA) analyses options for overcoming some of the above-mentioned problems that
SMEs, and other companies, face when doing business within the Internal Market.
It focuses, in particular, on difficulties in relation to the establishment and
operation of subsidiaries abroad.

2. procedural
issues and consultation of interested parties 
2.1. Procedural issues    

This IA was drawn up by
Directorate-General for Internal Market and Services (DG MARKT)[7]. An IA
Steering Group (IASG) was set up to bring in views of other services of the
Commission. DG Research and Innovation, DG Justice, Secretariat General, DG
Taxation and Customs Union, DG Health and Consumers, DG Enterprise and Industry
and DG Communications Networks, Content and Technology accepted the invitation.
The IASG met 3 times. The first meeting took place on 18 April 2013, the second
- on 16 September and the third - on 30 September 2013. 
The draft IA report was
discussed with the IA Board (IAB) of the Commission on 20 November 2013. The
comments received from the IAB are reflected in the updated report by the
modification of the sections regarding:
- the problem definition
and problem tree 
- the size of the market
- the policy options and
their impacts by using the criteria of efficiency, effectives and coherence.
In addition, the
description of the situation in Member States was converted into tables and the
summary of the results of the 2013 on-line consultation was added. The
explanations and the tables on which calculations of impact are based were
moved into the Annex.

2.2. External expertise and consultation of interested parties

This IA builds on the research
gathered in the preparation of previous EU initiatives such as the 2008 SPE
proposal and a number of relevant consultations and discussions which took
place since then.
As a part of the
reflection process on the future of EU company law, in April 2011 the
Reflection Group of company law experts published a report with a number of
recommendations.[8]
The report called for intensified efforts to simplify the legal regime
applicable to SMEs. In this context, it mentioned the need to simplify the
formalities before a company can be established (e.g. registration, access to
electronic procedures). It also proposed to introduce a simplified template for
single-member companies across the EU, which could allow both single
shareholder start-ups and holding companies with wholly owned subsidiaries to
save on transaction costs and unnecessary formalities. 
On that basis, the
Commission launched a broad public consultation on the future of European
company law in February 2012. Among others, it asked for stakeholders’ opinions
regarding potential measures to provide further support at EU level to European
SMEs. Nearly 500 responses were received, from a broad range of stakeholders
including public authorities, trade unions, business federations, investors,
academics and individuals. A vast majority were in favour of Commission actions
supporting SMEs, but differed as to the means to achieve it. For instance,
stakeholders were hesitant about the political feasibility of continuing SPE
negotiations. For them the alternative measures were, in order of preference,
new legislation which could promote EU SMEs (e.g. via labelling), a revision of
the European Company (SE) Statute and a review of 12th Company Law
Directive to create a simplified single-member company charter.
The Commission has also
benefited from input from company law experts involved in the Reflection Group,
e.g. as regards advice on the key aspects of the potential future Directive on
single-member companies.
A more focused public
on-line consultation was launched in June 2013[9]
on whether the harmonisation of national rules on single-member companies could
provide companies, and in particular SMEs, with simpler and more flexible rules
and reduce their costs (the 2013 on-line consultation). 242 responses were
received from a broad range of stakeholders including companies, public
authorities, trade unions, business federations, universities and individuals.  62%
of respondents who expressed an opinion (including 75% of companies and 52% of
business federations) answered positively to the question whether a
harmonisation of requirements concerning single-member private limited legality
companies at EU level would encourage and facilitate cross-border activity of
SMEs within the EU.  
On 13 September 2013, DG MARKT
met a number of EU business representatives[10].
Most participants supported the initiative emphasising the positive impact it
could have on companies in the EU. However, they stressed that this initiative
should not be considered as a fully-fledge alternative to the SPE and that the
efforts to adopt the SPE should continue. Other stakeholders, such as notaries,
were generally supportive of the initiative, but raised specific points with
regard to the security of on-line registration of companies and the need to
guarantee the appropriate level of control. In addition, in view of some
stakeholders, the reduction of minimum capital should be accompanied by appropriate
measures e.g. solvency test or restrictions on the distribution of dividends. 

3. Policy context      
3.1. Scope

In order to understand the focus of this
initiative on single-member limited liability companies as a company law form
suitable for the needs of SMEs participating in the Internal Market, it is essential
to present the broader context in which SMEs and other companies operate across
borders. This is covered in sections 3.2 and 4 of this IA.
Single-member companies have a sole
member either already when they are formed or when all their shares come to be
held by a single person.[11] 

Single-member companies are often “wholly-owned subsidiaries”
of other companies, i.e. those companies are their sole shareholders (members).
Generally, a company is a “subsidiary” of another company if the latter:
·       holds a majority of the
voting rights in it, or 
·       has the right to appoint
or remove a majority of the members of its administrative, management or
supervisory bodies, or
·       has the right to exercise
a dominant influence over the former company.[12]


3.2. Nature and size of the market concerned 

SMEs are the backbone of
EU economy. The Commission’s annual report on SMEs in the EU estimated that in
2012 there were around 20,7 million SMEs, constituting more than 98 % of all
enterprises[13].
They accounted for 67 % of total EU employment and for 58 % of EU gross value
added.  
SMEs, and other companies,
can choose legal forms through which they develop their economic activities and
participate in the Internal Market. The principal choice depends on the scope
of protection of private assets against risks related to conducting business. Businesses
can operate with limited liability or with unlimited liability (sole traders,
civil partnerships etc.). Limited liability companies can have two types: 

 private limited liability (e.g.
     GmbH, SARL, spółka z.o.o.) or 
 public limited liability (joint
     stock, e.g. AG, SA, NV). 

The form of a public
limited liability company was originally developed with bigger companies in
mind. Those companies are often subject to more detailed internal organisational
rules and higher minimum capital requirements, and can be listed on the stock
exchange or on other platforms where shares are traded publicly.  
The private limited
liability company form was originally designed for smaller companies and its requirements
are usually less demanding. Therefore, the latter tends to be more often used
by smaller businesses, although this might vary across MS. In some countries a public
limited liability company law form might be practically not accessible to SMEs
and in others, a large number of SMEs might use it.[14]
Private and public limited
liability companies are national company law forms, different in each MS, that
have only been partially harmonised at EU level. In addition, there exists to
date only one truly European company law form – Societas Europeae (SE). It
provides a European equivalent to national public limited liability companies
and therefore, an alternative to national rules. 
Both private and public limited
liability company forms, including SE, can have one shareholder and be
single-member companies. 
The diagram below
illustrates different company law forms and provides an approximate overview of
how many companies are likely to be SMEs. However, it needs to be stressed that
there is no official estimation of how many out of 20.7 million SMEs in the EU
are established as limited liability companies (private or public). Therefore,
the below diagram makes some assumptions about numbers of SMEs on the basis of statistics
available in other contexts and the data gathered from national authorities specifically
for  the purpose of this Impact Assessment. In 2010 it was estimated that there
were 7.3 million SMEs with limited liability.[15]
Currently, it is estimated that there are around 13.9 million private limited
liability companies in the EU.[16]
In 2010 the proportion of SMEs among limited liability companies was very high
(around 90%)[17]
and it is assumed that this proportion has not changed in the meantime.
Therefore, one could assume that around 12.5 million companies with limited
liability are likely to be SMEs. The remaining 8.2 million SMEs are likely to
be unlimited liability enterprises (mainly civil partnerships or sole-traders).
The proportion of public
limited liability companies among all limited liability companies is low. The
2005 survey of the European Commerce Registers’ Forum, prepared by the Swedish
Companies Registration Office[18],
estimated that only around 6% of all limited liability companies were public in
the EU (25). This percentage is also used in the diagram above to show how many
public limited liability SMEs are likely to exist. More recent information (from
2011 and 2012) shows that this proportion still remains low.
For instance,
in Germany it is around 1.5% (16.400 public limited liability companies out of
1 million of all limited liability companies). The proportion is even lower in
the UK – 0.3%.[19]

With regard to the number
of single-member companies, it is difficult to obtain precise figures since in
some MS single-member companies are not a separate company law type and,
therefore, are not independently listed in business registers. In the UK, for
instance, there are around 1.2 million single member companies out of around 2.5
million of all limited liability companies[20].
In Austria, there are 66,500 single-member companies out of 127,400 private
limited liability companies[21].
Although the percentage of single-member companies out of all limited liability
companies varies significantly among MS – from very low in Spain and in Malta
(less than 15%) to more than 70% in the Netherlands - it is estimated on the
basis of the data provided by national authorities from 24 MS that around 44% of
all private limited liability companies are single-member. Therefore, assuming
that there are 13.9 million private limited liability companies in the EU,
around 6.1 million of those are likely to be single-member (including both SMEs
and bigger companies). Similarly, as regards SMEs, assuming that there are
11.75 million private limited liability SMEs, 5.17 million of those are likely
to be single-member.
The
percentage of single-member public limited liability companies among all
single-member limited liability companies is very low (around 1% at EU level)[22] which corresponds to
the generally low proportion of public limited liability companies among all
limited liability companies, as mentioned above.

4. Problem definition

The problem tree below illustrates
the context of the initiative, its main drivers, the problem and its
consequences. 

4.1. Context 

The Internal Market opens up
possibilities for businesses to be active across borders and therefore, allows
consumers to choose from a wider range of products and services. At the same
time, due to imperfect knowledge, information asymmetry or information
overload, trust and familiarity with companies that customers know still play
an important role. 
In this context, a "country of
origin effect" can be observed among consumers who often compare foreign
firms with the service and reputation of the companies established in their own
country.[23]
The main reasons why consumers might not feel comfortable with foreign
companies include psychological and practical implications of applying foreign
consumer protection law, dealing with complaints, language issues and the costs
of return of products.[24]
This is confirmed by the results of the 2012 Commission Consumer Scoreboard[25]
according to which consumers trusted local retailers/providers more than the
ones from other MS. For instance, only 11% purchased
goods from retailers/sellers located in other EU countries, whereas 41% bought
from national operators.[26]
A similar picture emerges from the
business perspective and shows the need for companies to be close to the
markets in which they want to do business and in particular to be close to
consumers. In the 2007 European Business Test Panel survey of companies[27], 43% of respondents
indicated that operating in another MS under their domestic legal form made it
more difficult to penetrate markets and gain trust of consumers and business
partners. The same survey, as well as the 2011 study
on Internationalisation of European SMEs[28],
also show that the prime reason for SMEs investing abroad was geographic: to be
close to final customers or key business partners.[29]
Even with the
development of on-line sales (which, in principle, should help sellers to
operate without establishing a company abroad), a presence abroad still plays
an important role for companies. In fact, the current proportion of e-commerce
in retail sales of European SMEs - even if gradually rising - is at present
still limited (3,4 %[30]). Most retailers in the EU continue to
use direct sales as their main retail channel (66 %)[31] and still
treat the on-line business as a complementary one.[32] In addition,
as shown by the results of the 2012 Consumer Scoreboard, while the majority of the EU population (59.2%) feel
confident making domestic purchases via the Internet, a much lower percentage
(35.4%) expresses confidence about cross-border purchases. Moreover, as far as actual
purchases are concerned, the gap of consumers' trust between national and
foreign retailers is even bigger. For example, in Germany and in the UK
only 9 and 13% of consumers, respectively, purchased goods from a provider
located in another EU country. 
There are a number of ways in which
companies ensure their presence close to their clients. Many companies act via
subsidiaries, branches and joint ventures.[33]
Among those, the most popular form appears to be a subsidiary (42% of
investment abroad) since it allows companies to control activities and profits
gained abroad while creating a new legal form in the MS of investment.[34]
It shields a “parent” company from liability which is important in case of
entering a new market. 
In contrast to branches and joint
ventures, acting via subsidiaries offers clients the brand and reputation of
the parent company, but at the same time the security of dealing with “their
national” company. Subsidiaries, in contrast to branches, are separate
companies with their own legal personality which means that they are governed
by the laws of the place of registration as regards important issues for
consumers such as insolvency or consumer protection laws.  
It follows that companies
often need a presence in the foreign markets in order to be active abroad and
gain trust of consumers. For those reasons they mainly invest abroad through
subsidiaries. Therefore, this IA focuses on the problems that companies encounter
when they try to set up and run subsidiaries in other EU countries.

4.2. PROBLEM: Burden for SMEs to set-up a subsidiary or a group of
subsidiaries abroad 
4.2.1. Problem and its drivers

The founders of companies face internal
and external barriers when they attempt to establish a subsidiary or a group of
subsidiaries abroad. 
Internal barriers relate
to companies themselves, e.g. the lack of will or capability (financial, human resources,
language) to participate in cross-border activities.[35] However,
 these barriers remain outside the scope of this IA.
External barriers are
independent of companies and relate to differences in national regulatory
regimes, different legal, administrative and linguistic requirements across the
EU, and other issues such as accessibility of external funding. The former differences
concern company law but also rules relating to, for example, tax, social
security, insurance or labour laws which are outside the scope of this IA.
Within company laws sensu largo audit and accounting rules are also
outside the scope of this IA, since they have been subject to separate
initiatives.[36]
As regards the accessibility to funding, it seems from the results of the 2013
online consultation that it might not always have decisive influence on
establishing subsidiaries abroad. For instance, compliance costs, trust in
foreign company law forms or legal advice are seen by the companies as much
more important than difficulties in having access to finance due to
cross-border dimension.[37]

As regards company law in
particular, most aspects of relevance for private limited liability companies
(that constitute around 94% of all limited liability companies in the EU) have
not yet been harmonised at EU level. Therefore, there persist differences
between MS’ company laws and when founders establish companies abroad they face
different
legal and administrative requirements than “at home”. These differences result in costs for companies to set-up and run
subsidiaries abroad. Although all companies wishing to expand
cross-border are affected, these administrative and legal burdens are
proportionally much heavier for SMEs and their founders, who often have smaller
financial means and organisational resources than larger companies.
The costs can be direct
and indirect. In this IA direct costs are understood as set-up costs primarily being
generated by mandatory national legal and administrative requirements when
establishing a company in a given country. These costs usually include
administrative costs, and also notary fees and minimum capital requirements,
where relevant. 
Concerning the minimum capital
requirement, this normally depends on the sector in which a future company
would be active. In some sectors small or almost no capital is necessary to
start business whereas other sectors could be very capital intensive.
Therefore, a minimum capital requirement, at least, for some entrepreneurs,
could constitute a cost, even if the capital could be transformed into assets
and used by the company for running business. For some entrepreneurs this would
be the cost of borrowing the required sum; for others that do not have such a
possibility, minimum capital requirement would simply discourage them from
setting-up a business.
The direct costs apply
equally to national and foreign founders of companies but vary across MS, and
therefore, can be perceived as barriers to invest abroad if they are
significantly higher than what the founders of companies pay in their own country.
The indirect costs are
understood in this IA as those predominantly connected with the differences between
MS’ laws with regard to set-up and operational requirements on articles of
association, organisation and structure of companies, compulsory annual
meetings, reporting requirements, etc. These issues often necessitate legal
advice (and translation) and would usually have more impact on foreign than national
founders of companies, leading to higher costs for the former. Lengthy
registration procedures also result in costs for the company founders,
especially if they require dedicated travels from foreign countries to comply
with formalities in Member States of registration. 
The compliance with
foreign legislation and legal advice related to set-up costs were mentioned by
almost 62 % of companies and business federations in the 2013 on-line
consultation as one of the biggest “company law obstacles”[38] preventing
companies from expanding their activities abroad.[39] The trend
has not changed since 2007, when the survey conducted for the purpose of the SPE
initiative showed that for more than 60% of respondents the diversity of
national legislations and the difficulties in dealing with different company
law systems were the biggest obstacles to conducting business in other MS.[40]
The direct costs are,
therefore, the costs of regulation which applies to all founders who want to establish
a subsidiary in a given MS whereas the indirect costs are the costs of
differences in regulation among MS which are more relevant for foreign
founders. Ultimately, the expense of establishing a subsidiary abroad would be
the sum of direct and indirect costs.
All these costs are
generated if a founder wants to establish one subsidiary abroad. In case a parent
company would like to create a group of subsidiaries (“daughter-companies”) in
different MS, the costs would be bigger (the effect of scale). As a result of
divergence in MS’ regulatory requirements, the group cannot optimise its
structure across all subsidiaries and each of them has to have different
articles of association.[41] 
 Example: A company with subsidiaries in 6 MS would have 6 different company forms, each possibly with a different organisational/management structure and a different method of creation. In contrast, a domestic group of comparable size could follow only one model/template.   

4.2.2. Costs of establisHing subsidiaries abroad 

It is difficult to estimate
direct and indirect costs for establishing subsidiaries abroad, since they depend
on many factors, including:

 the legal form of the subsidiary (public or
     private limited liability)
 the complexity of its structure (one or many
     shareholders) and thus the complexity of its articles of association
 regulatory requirements in a given MS with regard
     to set-up and in particular, a possibility of on-line registration, need
     for a notary, a possibility to use a single-template, mandatory
     verification by the accountant, the level of minimum capital, etc. 
 founder’s experience in dealing with the legal
     system concerned, thus a need and a choice of legal advice (internal or
     external) and/or help of the registration agent
 knowledge of MS  language and thus a need for
     translation

Therefore, even the direct
and indirect costs of establishment of subsidiaries in the same MS can differ
significantly depending, for instance, on whether a parent company needed
external legal advice, had previous experience with the legal system concerned or
knew the language. 
This is demonstrated by different
experiences reported in the 2013 on-line consultation.[42] 
Two Estonian companies
reported different additional costs of setting-up a single-member subsidiary in
Finland (between €1 and 4,999 and between €5.000 to 9,999) as compared to
setting-up a company at home. A similar case, in terms of the difference in the
set-up costs, was also reported in case of two different Estonian companies
establishing subsidiaries in Spain. According to another example, one German
company setting-up a single-member subsidiary in Denmark incurred additional costs
below €5,000, whereas
another Germany company in the same case incurred no additional costs at all.  
According to some other respondents
to the consultation (a Czech parent company setting up a Slovak subsidiary, a
Czech parent company setting up a subsidiary in Belgium, an Estonian parent
company setting up a UK subsidiary), on the basis of their practical
experience, the differences between the costs of establishing a single-member
private limited liability company “at home” and “abroad” could be higher and
could amount to more than €20,000.
On the whole, the majority of responding
companies (53%) were not able to provide any figures as regards additional
costs when setting-up a single-member private limited liability company abroad.
From those respondents that replied to this question, 47% considered the costs
to be in the range between €1 and €4,999, whereas 25% in the range of between €5,000
and €9,999.
Some respondents provided examples of
specific additional costs of legal advice associated with the set-up of a
single-member private limited liability company abroad, which is one of the
sources of indirect costs. These costs were estimated by one Belgian parent
company which was setting up a subsidiary in France as being in the range
between €5,000 and 9,999, whereas another Belgian parent company did not
experience any additional costs of creating a single-member subsidiary in
Spain. 
The legal costs usually depend on whether companies use the standard template for articles of
association. In fact, a standard creation of a company in the UK does not
necessitate any legal advice since the template for articles of association is
provided (the same is the case of on-line registration in Poland). In contrast,
in France, according to the respondents to the 2013 on-line consultation, standard
costs of legal advice with regard to setting up a company (and its articles of
association) could amount to €1000. On the basis of the information submitted by
the Member States (see Annex), the average cost of minimum legal advice[43] with
regard to the set-up of private limited liability company can be prudently estimated
to be around €387 at EU level.[44]  
As regards direct costs,
the overall costs of creating limited liability companies, in particular
private limited liability companies, have been significantly reduced recently
in many MS[45].
However, in some countries, even after most recent reforms, the costs could
still be considered as high for the founders of companies.
 Example: In Austria, the set-up costs, of a private limited liability company amounted to around €36,500 including the full amount of minimum capital.[46] After the June 2013 reform of company law, the same costs decreased significantly but would still amount to €11,000. These costs include the minimum capital requirement, notary fees and register fees.[47] They include a simple legal advice by a notary but do not include the costs of any additional legal advice. 
Furthermore, according to
the information provided by the authorities, the direct set-up costs of limited
liability companies can differ depending on whether companies use on-line or
other type of registration. The set-up costs vary from €0 in
Slovenia (on-line registration) to up to more than €900 in Austria and in
Cyprus. In most countries on-line registration is cheaper than a paper one. 
In conclusion, it is difficult to provide exact figures on the standard amount of
direct and indirect costs since these costs vary significantly and depend on
concrete situations of companies, their size, the capital and the
knowledge it has of the foreign legal system. However, the above examples
provide an indication that there still exists important differences between MS
and that there is a potential of decreasing the unnecessary costs that hinder
the establishment of subsidiaries in at least some MS.

4.3. CONSEQUENCE: Low participation of SMEs in the Internal Market 

The above-described costs (and effort
in terms of time and energy) create burdens for SMEs and hinder their participation
in the Internal Market.  
According to the available
statistics, the SME participation in the Internal Market is low. For instance, according
to the report on Internationalisation of European SMEs, only around 2% of SMEs
establish companies abroad[48]
(in the form of a subsidiary, branch or joint-venture). This results in the
investment by around 500,000 companies from 20.7 million SMEs. Among all
companies that invest abroad, micro-enterprises[49] constitute
2%, 6% are small enterprises[50]
and 16 % are medium-sized[51]
enterprises.[52]
In addition, most of them limit their investment to only one country (71%)[53].

It is difficult to define what should
be the optimum level of investment, since it depends on many factors unrelated to
company law such as, for example, the economic growth or general business
climate. However, even without making a reference to the optimal level of
investment, it seems that companies are not investing enough on a cross-border
basis in the EU. For instance, the level of SME participation in the Internal
Market was considered as low in relation to their potential by around 86% of
respondents (77% of companies and 90% of business federations) to the 2013 on-line
consultation that had an opinion on the subject.[54] In
particular, 67% of companies and business federations considered that it was
difficult to expand commercial activities within the EU by setting-up a
subsidiary or opening a branch.
Moreover, such untapped potential can
be expressed not only directly in terms of the missed opportunities for cross-border
establishment but also indirectly in wider terms of missed opportunities for company
creation in the EU, and furthermore – for European growth and employment. Once
companies establish in a Member State, they sell their products and services within
the EU and interact across borders via different channels with companies and
individuals from other Member States, which has impact on growth and jobs
within the whole EU. 
 Example: There are around 10 times less limited liability companies in Poland than in the UK, even if the UK has only 1.7 times bigger population than Poland. Moreover, the establishment of a private limited liability company in Poland is more than 80 times more expensive than in the UK. This shows that at least in some MS there is a clear potential for company creation and the case for the reduction of costs. 
A low participation of SMEs in the
Internal Market can also have broader implications. The high costs of
internationalisation (such as direct and indirect costs described in the
previous section) were considered as one of the major barriers to expansion in
the recent study on Internationalisation of European SMEs[55]. The lower
the entry barrier to set up companies abroad, the more companies are able to
provide their goods and services in other countries and therefore the volume of
trade and competition in the Internal Market should increase. This should, in
turn, have a positive impact on innovation. 
The link between internationalisation
of SMEs and innovation is particularly striking. The results of the
above-mentioned study[56]
confirm that companies being active outside their home countries introduce
products/services and process innovations more often than non-internationally
active companies. Almost 50% of the internationally active companies introduced
new products or services in a given period whereas the average for all
companies was 32%. A presence in another market requires competitive products.
This effect is called “learning-by-internationalisation”.[57] Therefore, the expansion
abroad is directly linked with innovation: the more companies expand abroad,
the more innovative they have to become in order to compete with foreign
products or services. 
On the basis of the above, there appears
to be untapped potential for SMEs to expand their business activities beyond
national borders and to better take advantage of the opportunities offered by
the Internal Market. 

5. Baseline
scenario, the EU's right to act and justification   
5.1. Baseline scenario: expected developments if no action is taken

If no new initiative is taken at
European level, SMEs, and other companies, will continue to be able to create
subsidiaries according to national law and the currently available EU
instruments.
EU level 
As regards European legal forms,
there exists only one European company law form i.e. the European Company (SE).
The SE, being a public limited liability company with a minimum capital of €120,000, is not
well-suited for many SMEs.[58] Moreover, its methods of formation
require the founder to be or to convert itself into a public limited liability
company. This significantly reduces the attractiveness of the SE for SMEs,
which often consider SE formation as burdensome.[59]  
There is currently no European legal
form designed for small companies. The 2008 SPE proposal[60] aimed to
offer SMEs an instrument facilitating their cross-border activities, which
would be simple, flexible and uniform in all MS. It was a response to a number
of calls from businesses to establish a truly European form of a private
limited liability company. However, despite strong support from the business
community, it has not been possible to find a compromise allowing for the unanimous
adoption of the Statute among MS[61].
Some other options,
e.g. the
possibility of using enhanced cooperation, were also explored but have not been successful
either. The Commission finally decided to withdraw the SPE proposal as a part
of the REFIT exercise[62]
and to replace it by an alternative one, on which it might be easier to reach
compromise among Member States by changing the adoption procedure and reducing
the number of contentious issues.
The European Co-operative
Society Statute (SCE)[63] cannot be used either by capital
companies due to specificities of cooperatives and therefore is not suitable
for the creation of subsidiaries. 
As regards the EU
secondary legislation, many company law issues of relevance for companies are
already regulated, such as the constitution and maintenance of public
limited-liability companies’ capital, branches’ disclosure, mergers and
divisions, minimum rules for single-member private limited-liability companies
and shareholders’ rights. However, these rules often focus specifically on
public limited liability companies, and therefore do not simplify the rules for
SMEs, or they do not cover some of the issues which make establishing a
subsidiary abroad burdensome (e.g. registration procedure).
At EU level there is already a
directive on single-member private limited liability
companies adopted in 1989.[64] It was amended several
times[65]
and finally codified in 2009.[66] However, this directive provides only
for limited harmonisation of MS’ laws and does not address many key issues such
as: formation, registration requirements, creditors’ protection and minimum
capital requirements. It only requires that companies may have a
single-shareholder (member) in all MS and regulates in two articles the powers
of the sole-member in relation to a company (general meeting and contacts
recorded in writing). Therefore, this Directive, as it currently stands, has no
impact on the reduction of direct and indirect costs for companies.
Furthermore, the
implementation of the Services Directive[67] could help to establish subsidiaries
insofar as the Points of Single Contact, created by this Directive, would
provide the necessary information to the founders. These points could also be
used as a
single gateway to national web-sites which provide for on-line registration of
companies. Nevertheless, the existence of the Points of Single Contact would
not reduce the regulatory costs incurred by companies when creating
subsidiaries abroad. These Points do not provide companies with harmonised articles
of association and registration procedure. 
Finally, the implementation of
Directive 2012/17/EU on the interconnection of central, commercial and
companies’ registers[68]
will not have influence on the creation of subsidiaries. This Directive has a
different objective: to improve access to information contained in national
business registers for EU citizens. It does not facilitate the registration of
companies since it neither provides for any European on-line registration nor
creates a single European register of companies.
In conclusion, without any additional
action at EU level the problems for SMEs, and other companies, are likely to
persist and only partial and fragmented remedies are likely to be proposed at
national level.
National reforms of
company law
Recent policy
developments and trends at national level show the improvement of the business
environment for European companies, in particular SMEs. A number of MS have
introduced reforms simplifying the requirements for limited liability companies.[69] 
Many of the reforms
focused on reducing the minimum capital and on providing for a reduction of
incorporation costs. However, first, not all the reforms go in the same direction:
for instance, Slovakia and the Czech Republic plan to decrease the level of
minimum capital requirement for certain company types from 2014 onwards,
whereas Hungary plans to increase the level of required capital. 
Second, even if the reforms in
various Member States have, in most cases, a similar objective, the end results
differ significantly, as illustrated by national examples in the below box. 
 Example: In France there is no legal requirement of minimum capital and a company can be established without a notary, whereas in Austria the capital required, after the reform, is still 10,000 € and the involvement of the notary is required. In Poland, the so-called “company 24” (“spółka 24”)[70] can be registered online in 24 hours without any need for a notary, if standard articles of association are chosen as a template. The minimum capital of 5,000 PLN (around € 1,200)[71] should be paid in cash (no contributions in kind). The procedure is easy, but still minimum capital requirement is higher than in simplified company law forms in France, Germany or Italy. In Germany or in Austria there is no possibility of a direct online registration by the founder and the involvement of a notary is compulsory. In Italy the notary involvement is required but it is free of charge for certain founders. In Germany an UG company type can be established with the same minimum capital requirement as in France but there is an obligation to build a legal reserve, which does not exist in France. In the Netherlands there is no requirement of minimum capital for private limited liability companies such as Flexi BV. As a consequence, various formalities, such as a bank statement for cash payment on shares and an auditor’s statement for contributions in kind are abolished. 
Moreover, due to different legal
requirements, national digital administrative capacities and vested interests,
it is still impossible to cheaply and quickly register companies in all MS. The 2010 Council's
"Action Plan for a Small Business Act for Europe" already asked MS to
bring down start-up times of companies to 3 working days.[72] Similarly, the conclusions of the 31 May 2011
Competitiveness Council included a call to MS "to reduce the start-up
time for new enterprises to 3 days and the cost to € 100 by 2012".[73] Yet, in a
number of MS it is still not possible to register a company within that
deadline. Instead, in 2012 the average time of starting up a private limited
liability company was 5.4 days[74],
ranging from a few hours in case of an electronic registration up to more than
5 days in case of a paper one. The registration fees in a number of MS have not
yet been reduced to the level of €100 either. Even in situations where on-line registration is used, the
total fees vary between €0 in Slovenia to more than €150-360 in countries such as Poland or Portugal. Overall, in 2012 only
three countries complied with the targets regarding the time, costs and one
stop shop related to registering a business (Denmark, Romania and Slovenia).[75]
These examples illustrate that some
countries are very advanced and companies can be created cheaply and quickly
with low capital at the start whereas that is still impossible in other Member
States. They also show that actions are taken by MS autonomously in their own
national context, which means that the requirements concerning the formation,
registration and operating of companies still continue to differ. This is also
likely to remain the case with potential future national reforms. 
On the basis of the reforms
undertaken autonomously by Member States so far and any future planned
developments, it would still not be possible to have identical requirements for
a particular company type across the EU and award a label that would be
recognised across the EU.

5.2. EU’s right to act, subsidiarity and proportionality

The EU competence in the area of
company law is based on Article 50 of the Treaty on the Functioning of the
European Union (TFEU) regarding freedom of establishment. In particular,
Article 50(2)(f) TFEU provides for progressive abolition of restrictions on
freedom of establishment as regards the conditions for setting-up subsidiaries.

The solutions adopted so far by
individual MS with regard to the reduction of set-up costs have not been so far
coordinated at EU level. Such coordination among Member States, which would aim
at introducing in national legal systems identical requirements for a
particular national company law form, although theoretically possible, also
appears unlikely in the near future. Instead, it is likely that individual
actions by MS will continue to result in divergent outcomes, as illustrated in
detail in the section on national reforms of company law above. 
In particular, individual actions by
Member States most often focus on their specific national context and usually
would not seek to facilitate the cross-border establishments. For instance, a
requirement of a physical presence before the notary or any other authority of
MS of registration, although not directly discriminatory, has a different
impact on residents and non-residents. The costs for foreign founders are
likely to be more significant than for domestic founders. Also, on-line
registration accessible in practice only to nationals or residents, which
appears acceptable in the national context, would generate costs for foreign
companies, which are not incurred by domestic ones. 
In the light of the above, it appears
that, without any action at EU level, with only non-harmonised national
solutions being available, SMEs would continue to face barriers making their
expansion abroad more difficult and the resulting costs would in particular
affect foreign founders. The simplification resulting from harmonised rules is
unlikely to be achieved by MS acting individually. In this context, the
targeted EU intervention appears to comply with the principle of subsidiarity. 
The principle of proportionality will
be analysed in sections dealing with policy options. 

6. Objectives

The general objective of the
future initiative would be – through changes to national company law rules - to
facilitate and encourage SMEs to carry out their activities in other MS and
therefore, seize the untapped opportunities offered by the Internal Market.
Allowing companies to more easily create subsidiaries abroad should encourage
more entrepreneurial activity and in turn, might have a positive impact on
growth and innovation in the EU.
The future initiative should
particularly benefit SMEs, given their economic importance and the difficulties
they face when trying to be active across borders. However, it should be
attractive not only to individual SMEs, but also to groups consisting of SMEs
and larger companies.
The specific objective would
be to contribute to the reduction of some direct and indirect costs related to
the set-up of subsidiaries in other MS.
The operational objective would
be to harmonise some relevant aspects of national laws in order to reduce the
differences in legal and administrative requirements between MS when setting up
subsidiaries abroad.
The hierarchy of objectives is
illustrated by the following graph.

7. Policy
Options and the analysis of IMPACt 

This section contains a description
of policy options that have been considered with regard to attaining the
objectives set out in the previous section: those that have been discarded
after an initial analysis and those retained for a more detailed evaluation.
For the latter, the analysis of impacts focuses on the extent to which they
would fulfil the targeted objectives, their proportionality, their efficiency
and coherence with EU policies.
These options follow the logic of
company law in which, at its present stage of development, the discussion on
the substance of the options is inseparably linked with the company form chosen
(e.g. public or private limited liability companies, single-member or
multi-shareholder). The options focus at the same time on the specific and
operational objectives i.e. on the comprehensive reduction of differences in
legal and administrative requirements between MS with regard to the set-up of
subsidiaries abroad, which should lead to a reduction of direct and indirect
costs for the founders. 

7.1. Discarded options

The following options have been
discarded:

 Establishment
     of a new European legal form or improvement of the existing ones (e.g. SE)
 Harmonisation
     of company law related to the establishment of subsidiaries limited only
     to SMEs as founders
 Harmonisation of company law related to the
     establishment of subsidiaries in the form of both public and private
     limited liability companies.

The current IA follows a similar
logic and considers similar policy options to the ones presented in the SPE IA
(e.g. harmonisation of various aspects of company law across the EU). However,
there are some differences. 
First, a starting point for this IA
is broader, since subsidiaries can be established both in the form of public
and private limited liability companies whereas the SPE IA focused specifically
on the latter. 
Second, the current IA does not
analyse the possibility of using European legal company forms adopted on the
basis of Article 352 TFEU - either improving the existing ones (SE or SCE) or
introducing new ones. The SE and SCE Statutes are not well-suited to the needs
of SMEs and it
has not been possible to find agreement allowing for the unanimous adoption of
the SPE
proposal among MS (see section 5.1).  
Third, an option providing special
rules only for SMEs is discarded. Introducing a distinction between SMEs and
other founders of companies would neither be practical nor desirable. It would
depart from the common practice in company law that different rules apply to
different company forms, but not to the size of enterprises which can change
from time to time.[76]
Moreover, excluding natural persons and bigger companies would unnecessarily
limit the scope of the measure without any reasonable justification. Finally,
since there is no one common legal definition of SMEs in EU law, the discussion
on the substance could be undermined by a difficulty to reach agreement on this
point. By providing rules suitable for SMEs in options 2 and 3 below, the
Commission would cater for the concern expressed in the 2013 on-line consultation
that a potential initiative should include special rules for SMEs. In any
event, 78% of companies were in favour of an initiative specifically for SMEs
but 52% of business federations and MS, all trade unions and 90% of
universities were against it. This is also in line with the developments in MS,
since if there are special rules being introduced at national level, they grant
favourable treatment to natural persons as the founders, and not to SMEs.
Fourth, the option aiming at the full harmonisation
of company law related to the establishment of subsidiaries is also discarded. Such an extensive harmonisation would
have to concern any company law form in which subsidiaries operate, e.g. both
private and public limited liability companies. Yet, the differences of rules
between public and private limited liability companies are significant since
public limited liability companies, in contrast to private ones, can and often
offer their securities to the public[77].

For example, as regards the minimum
capital requirement, according to Directive 2012/30/EU it shall not be less
than € 25,000 for a public limited liability company whereas much lower amounts
apply in general to private limited liability companies. Therefore, creating
one set of rules for both types would not be realistic or desirable. It was
also the view of the majority of stakeholders (business federations,
universities, trade unions and public authorities) in the 2013 on-line consultation.
They considered that the initiative should not cover public limited liability
companies.
In any event, such a harmonisation
would not be proportionate. It would go beyond what is necessary to achieve the
objectives set, i.e. to primarily benefit individual SMEs or groups consisting
of them, since SMEs in the overall majority of cases are private limited
liability companies (see section 3.2). Lastly, an extensive harmonisation would
require substantial changes in the national frameworks and would, therefore,
run into strong opposition from MS.

7.2. Retained options 

This section first focuses on the
scope of harmonisation and then analyses different policy options as regards
its content, since the substance is closely related with the chosen company law
form
Scope
In view of the above reasons for
discarding options in point 7.1., the retained options should concern the
company law form that would have the most impact with regard to the
establishment of subsidiaries abroad. 
One of the decisive factors when
establishing a subsidiary is the desire of a parent company to equip a
"daughter company" with a separate legal personality while keeping,
as a parent, the full control over the subsidiary and its profits. The
single-member (wholly-owned) subsidiary would be a natural choice for a
"parent" company if it wants to expand its business abroad or in its own
country. The "parent" company, being a single shareholder of a
subsidiary, would then exercise the fullest possible control over the
management and the profits. Due to these characteristics there is some evidence
that single-member (wholly owned) subsidiaries perform better than joint
ventures with local companies[78],
in which case the cooperation with foreign partners might be difficult due to
cultural differences or different business visions or strategies.
Single-member companies can be
established both by SMEs and larger companies and can be used for creating a
group/holding of SMEs with subsidiaries in many countries. In fact, studies
show that the probability of establishing a single-member company does not necessarily
increase with the size of a founding company.[79]
Instead, it is linked to the structure of the business, i.e. companies have to
rely upon suppliers and service providers and often take control of their
supply chain by establishing wholly-owned (single-member) subsidiaries. For
example, a car manufacturing company could have several wholly owned
subsidiaries supplying it with different car parts in order to be independent
of external contractors.[80]
The above explanation shows that it
would be appropriate to focus the harmonisation of company law related to the
establishment of subsidiaries on single-member private limited liability
companies in order to achieve the objectives of the measure, since, in most
cases, subsidiaries tend to be wholly-owned by a single-member being another
company. Such an initiative could also have a more general positive impact on
increasing entrepreneurship since, in addition to single-member private limited
liability companies being created by legal persons, some may also be created by
natural persons as start-ups.
Content
Such
harmonisation would ask Member States to provide in their national legal orders
for a national company law form that would follow the same rules in all Member
States and would have a common label - SUP (Societas Unius Personae). 57% of stakeholders in the 2013 on-line consultation (53% of companies
and 67% of business federations) supported such an EU-wide abbreviation.
In practice, it would depend on MS
whether a new national company law form would co-exist with other national
company law forms that could be used by the founders of single-member private
limited liability companies or whether the “harmonised form” would be the only
single-member form available in that MS. In case MS decide to have more than
one “single-member company law form”, it would depend on the founders
themselves whether they would find the SUP attractive to use. 
This approach is in line with the
views expressed by Member States in discussions with the Commission. The
majority of them would like to keep their national company forms, which would
be possible in the proposed model. The concerns of the other MS who were afraid
of “too much choice” in company law forms were also taken into account by
allowing MS to create only one form that would be available for single-member
private limited liability companies.
For this initiative, the following
policy options have been considered as regards its content:

 Registration process

1.     
No
policy change  – baseline scenario
2.     
Model
A – registration of an SUP only possible on-line 
3.     
Model
B – registration of an SUP possible both on-line and on paper
4.     
Model
C – the same as model B but with the compulsory use of the template of Articles
of Association when the company is registered on-line

 Minimum capital

1.     
No
policy change  – baseline scenario
2.     
Model
A – Minimum capital requirement equivalent to the EU average  
3.     
Model
B – Minimum capital requirement equivalent to € 1 
4.     
Model
C – the same as model B but with the introduction of balance sheet test and
solvency statement to protect creditors
The options will be compared by
listing their benefits and costs and using the following criteria. 

 Effectiveness - the extent to which options achieve the
     objective of the proposal
 Efficiency - the extent to which objectives can be
     achieved for a given level of resources/at least cost
 Coherence – the extent to which options are coherent
     with overarching objectives of EU policy, and the extent to which they are
     likely to limit trade-offs across the economic, social and environmental
     domain.


7.2.1. Registration process 

Option I. 1. No policy change
Description
In 16 MS there is a possibility of
direct on-line registration via digital accounts without the necessity of the
prior involvement of a notary/attorney. This is the case in Bulgaria, Denmark,
Estonia, Finland, France, Ireland, Latvia, Lithuania, Malta, Poland, Portugal,
Romania,[81]
Slovakia, Slovenia, Sweden and the UK.[82]

In most of these countries there
seems to be no formal, company law related restriction with regard to the
nationality or residence of the founder. However, in many cases the use of specific national
e-signatures or e-identification is necessary. In general, an on-line registration
procedure is quick and can be completed in 18 minutes (in Estonia) or 1 hour
(in the UK) in comparison to paper registration, which can take up to 5 days
(in Estonia). 
In the remaining 12 MS (Austria, Belgium, Croatia,
Cyprus, Czech Republic, Germany, Greece, Hungary, Italy, Luxembourg, the
Netherlands and Spain) there is no possibility of direct on-line registration.[83] The applicants have to
appear in person before a notary or a legal advisor who verifies, e.g. founder’s
identity, the chosen name and either prepares the articles of association
(Cyprus) or puts them in a notarial deed (the remaining MS). 
Assessment
Maintaining the status quo
would deprive the initiative of a significant part of its usefulness and
attractiveness. It would not allow for simple registration procedure based on
the same criteria in all MS. It would not decrease the differences in legal and
administrative requirements with regard to registration and would not generate
any decrease in costs for the founders of companies, therefore not meeting the
objectives set out above.
Option I. 2. Model A – registration of an SUP
only possible on-line
Description
In this option the SUP could only be
registered on-line by any founder resident or having a seat in the EU. The
paper registration would not be possible. The registration system (including the
verification of identity, checking the company name and signing the articles of
association) would need to make it possible for EU founders (legal and natural
persons) to establish a company in another MS directly from their computer
without a need for travel to the MS of registration for the purpose of
registering the company. The identification of the founder could be done
electronically by using e-signature or any other means as it is the case now in
those MS that have already direct on-line registration available to foreign
founders; in addition, the authorities of the place of registration of a company could, for
example, apply the technical solutions referred to in e-IDAS[84] proposal or provided under the Internal Market
Information system (IMI) in order to exchange information about the identity of
the founders.[85]
This policy option would require
changes in the registration procedure in those MS that require a physical
presence of the founder before the company can be registered but MS would be
free to choose the forms and means of introducing these changes as long as the
aim of direct on-line registration without physical presence was achieved. The registration would remain at
national level, since there is no common European register of companies.
Furthermore, it would be proposed to
harmonise the registration requirements (e.g. which information can be required
from the founder) so that the registration process would be simplified and
maximally uniform, allowing foreign founders to register a company in another
EU country without full proficiency in the foreign language. The registration
web-sites could be, for instance, accessed by the already existing Points of
Single Contact under the Services Directive. It would also be required that MS
provide on their registration web-sites the links to registration web-sites of
other MS. This should enable the registration of single-member private limited
liability companies in a number of MS in a few clicks. 
Assessment
This option would allow to decrease
the legal and administrative difference as regards the registration
requirements between MS and therefore, to diminish the costs for the founders
of companies. It would significantly simplify the registration process and make
it more uniform, having one registration form identical in all MS. 
Being able to directly
register online would benefit domestic company founders (in MS which did not
provide for online registration so far) by making the procedure simpler,
quicker and less costly. In addition, direct on-line registration could also
save travel and costs for foreign founders who would not need to travel
specifically to prove their identity before foreign authorities; these cost
savings would vary from MS to MS but could amount to hundreds of euros for a
company founder. 
Member States already now can request
the translations of documents from other MS, so in this respect nothing may
change for the foreign founders of companies. However, MS would need to ensure
that the registration process would allow founders to submit the documents electronically
directly to the registration body instead of sending them by post or being
required to sign them in person before the registration body.
It would also be in line with the
view of the stakeholders expressed during the 2013 on-line consultation, since
 64% of respondents (80% of companies, 67%
of business federations,) considered that a potential initiative on
single-member companies should include simple rules for on-line company
registration with one common standard registration form throughout the EU.[86]
The changes required in those MS that
do not currently have direct on-line registration would depend on how MS would like to
structure their registration process, on the existing level of digitalisation of registration
process, human resources available and MS choices with regard to the level and
intensity of control they would like to have over companies’ founders. These
costs could either be covered by the authorities themselves or by third parties
involved in the registration process, and they could be spread over a number of
years. 
For example, in Poland the cost of
introducing on-line registration for all private limited liability companies
with no need for the involvement of a notary was estimated to be around
€100,000. In other countries that introduced a direct on-line procedure,
the costs varied from €42,000 in Ireland, around € 120,000 in Latvia, around €1.1 million in Slovenia and around € 1.9 million for the
whole system of registration in Lithuania. The costs in Poland encompassed
building the whole on-line registration system which may not be the case for 12
MS (Austria, Belgium, Croatia, Cyprus, Czech Republic, Germany, Greece,
Hungary, Italy, Luxembourg, the Netherlands, and Spain[87]), since all of them
have already in place an "indirect electronic registration" i.e.
electronic registration by an intermediary (notary or legal advisor). Moreover,
these costs occur only once, while the benefits of an easy registration for
companies would continue in the years to come.
In addition, this initiative would
not impose on MS any requirements on how registration web-site should look like
or who could run it – registration courts, notaries, attorneys, private
companies, etc. Lastly, MS would, sooner or later, anyway need to adapt their registration
procedures for companies in order to implement the European eGovernment Action
Plan 2011-2015 and achieve its objectives (e.g. to make it possible to develop
cross-border business regardless of the place of residence of the company
founders, including through the use of Points of Single Contact under the
Services Directive).
There is evidence that in MS that
introduced direct on-line registration (in addition to paper one) companies
have experienced savings in terms of time and direct set-up costs. In the UK, for instance,
on-line registration is cheaper than paper one (£15 instead of £40)
and is 3 working days faster. If a “fast-track” paper registration is chosen
(the same day), then the costs increase nearly 7 times in comparison to on-line
registration (from £15 to £100). In Ireland[88]
and in Slovakia[89]
on-line registration is 50% cheaper than a paper one.
The risk of the misuse of direct
on-line registration procedure for fraudulent aims potentially exists, but it
must be offset against the benefits of the creation of companies and positive
economic and social impacts connected with the increase of entrepreneurship in
the EU. Each new company is a potential source of new jobs and growth.
Moreover, such risk already exists, and was taken into account, by those 16 MS
that already have a direct on-line registration procedure. There is not data
available that the fraudulent activity has increased due to the direct on-line
registration of companies in those MS.
This option, however, has a serious
drawback, since it limits the creation of SUPs. The founder of a company would
be obliged to create it on-line. On-line procedure may not be suitable for all
kinds of registrations, in particularly more complex ones with the
contributions other than in cash etc. Moreover, there is no reason to limit the
choice of the founders. Those MS that introduced direct on-line registration
procedure still left the possibility of "standard registration".
Option  I. 3. Model B – registration
of SUP possible both on-line and on paper
Description
This option would oblige MS to ensure
that there would be a possibility of registering SUPs directly on-line but
would not make it the only available registration procedure. The registration
on paper/via an intermediary, but also on-line via an intermediary, would also
be possible. The company founder would have the option to register a company
directly on-line or to do it on paper, and he could ask a notary or legal
advisor or any company creation agent for help in either case.
Assessment
This option would have the same
advantages for companies, both domestic and foreign, as Model A but would not
have its disadvantages of limiting the choice of registration procedures. It
would enable those founders (and in particular foreign ones) that would be
confident enough to use direct on-line registration procedure and save on the
registration costs but it would allow others (often domestic founders who have
become used to the existing procedures) to use standard registration procedures
if they so wished. 
In terms of the impact on Member
States, it would require them to introduce the same changes as Model A,
however, where the paper registration procedures were used, they would remain
in place with some necessary adaptations. The nature of changes would be more
incremental and more focused on the choice given to company founders that
should reassure MS and would not substantially change the situation of the
notaries or legal advisors who might be involved in both procedures. MS could,
for instance, decide to leave notaries as registration points in both
procedures (paper and on-line), as long as anyone from the EU who wanted to
complete all the formalities by electronic means and at a distance, would have
that possibility. 
Option I. 4. Model C – the same as
model B, but with the compulsory use of the template of Articles of Association
when the company is registered on-line
Description
This option would offer the same
choice for company founders as Model B. In addition, it would provide for a
harmonised template of articles of association which would be identical all
over the EU. It would be translated in all EU languages and would contain the
necessary elements to run single-member private limited liability companies.
The substance of the template would be determined by this initiative, but its
precise content and format would be established by the Commission in delegated
legislation, in close cooperation with MS, to guarantee that it would not get
outdated too quickly and that it could be amended in reasonable time without
the need of engaging the full ordinary legislative procedure.
The use of such template would be
compulsory when an SUP would be directly registered on-line. In other
registration procedures, where in many MS, as indicated above, the
participation of a lawyer is in one form or another compulsory, the use of the
template would not be obligatory but highly recommended.
Currently many MS provide templates
for articles of association for standard set-ups of private limited liability
companies. The use of templates in some countries is closely connected with the
on-line registration process, e.g. in Poland[90].
In other countries, including those that do not currently provide for direct
on-line registration, they are provided by business organisations such as the
Chambers of Commerce[91]
or can be downloaded from the relevant web-sites[92] but are not
considered an essential element of the registration process. 
Assessment
 This option would have all the
advantages of model B and it would provide additional savings for company
founders, especially in case they used the on-line registration procedure. It
would provide
founders in many MS with easier set-up procedures and gains in terms of costs
and time as
compared to the current situation. As the same template of articles of
association could be used for the registration of SUPs in all MS, it would in
particular decrease the costs (mainly of legal advice and translation costs)
for foreign founders and specifically for groups of companies with subsidiaries
to be established in many countries. Such a template would also provide more
legal certainty. 
The frequency of the use of the
template of articles of association would depend, first, on whether SUPs would
be the only available form for single-member private limited liability
companies in a given MS. Second, it would depend on the popularity of the
on-line registration procedure and also its perceived usefulness, as compared
to other registration procedures. As indicated to the Commission by some notaries,
they would see the uniform template as a big advantage which would enable them
to explain to their clients the requirements they need to follow to form a
company.
Naturally, a possible impact of this
option on companies would vary across the EU. The introduction of the single
EU-wide template would facilitate company set-ups across the EU but it would
have the biggest impact on the founders of companies established or wanting to
establish subsidiaries in MS that do not currently provide for direct on-line
registration and where there are no publicly available templates of articles of
association. It would also vary between domestic and foreign company founders,
to the extent that the latter might be more interested in using online
registration and the compulsory template as these would make establishing
subsidiaries abroad much easier, and therefore, would be likely to benefit from
the measures proposed to a larger extent. 
The costs of making the template
available by MS would just constitute a small addition to the costs of
introducing the direct on-line registration. MS would have to make changes to
their existing registration procedures allowing for direct on-line registration
with the template of articles of association.
Comparison of options
   || Effectiveness || Efficiency || Coherence 
 I. 1. No policy change || 0   || 0   || 0 
 I. 2. Model A - registration of an SUP only possible on-line || + Effective, decrease in costs for the founders of companies || + The objective can be achieved at a certain level of engagement of MS resources, but in some MS that already have on-line registration the costs should be de minimis  || - Not in line with EU polices, which do not usually require solely the use of on-line procedures, limitation of effects by excluding other forms of registration suitable at least for some companies   
 I. 3. Model B - registration of an SUP possible both on-line and on paper || + The same effectiveness as Model A || + The same as model A || + In line with the realisation of EU Digital Agenda, providing an on-line registration possibility 
 I. 4. Model C - the same as model B but with the compulsory use of the template of articles of association when the company is registered on-line || ++ Most effective, biggest cost reduction, a possibility of registration in a number of MS with the same template || + The same as model A || + In line with the realisation of EU Digital Agenda, providing an on-line registration possibility, with the single template 
Impacts on stakeholders
   || Companies || Member States || Notaries/Legal advisors 
 I. 1. No policy change || 0   || 0   || 0 
 I. 2. Model A - registration of an SUP only possible on-line || + Providing on-line registration would have positive impact, but excluding other forms of registration could have a negative one. The overall impact would probably be still positive || - No or de minimis costs for those MS that already provide for on-line registration. There would be costs for 12 MS that currently do not have direct on-line registration     || -/+ Only one form of registration excluding notaries or other lawyers would have negative impact on them, unless MS decided to that notaries would be the "points of single contact" or registration body for on-line registrations   
 I. 3. Model B - registration of an SUP possible both on-line and on paper || ++ Positive impact on companies in terms of cost reduction but also choice of registration process The same effectiveness as Model A || - The same as model A || -/+ Impact difficult to predict, depends on how MS would organise on-line registration procedures. Possible increase of income due to more company registrations, but also possible loss of income due to increased number of on-line registrations   
 I. 4. Model C - the same as model B, but with the compulsory use of the template of articles of association when the company is registered on-line || +++ Biggest positive impact with the a possibility of using the template and yet not being forced to use it in all circumstances || - The same as model A || -/+ The same as in model B   

7.2.2. Minimum capital  

Option II. 1. No policy change
Description
Under this option, each company
founder would have to comply with a different system of minimum capital in each
MS in which it would like to set-up a company. 
In the last years many MS introduced
special sub-types of private limited liability companies with minimum capital
of €1 or even no minimum capital required at all. Since many existing SMEs were
concerned about the reputation of the legal forms in which they were
incorporated, the legislators introduced special sub-types to cater for this
concern.[93]
This leads to a situation in which there is still in the same country, on the
one hand, a mandatory capital requirement for the main types of private limited
liability companies (e.g. GmbH in Germany) and, on the other hand, the minimum
capital has been abolished by the introduction of a sub-type (e.g. UG in
Germany). Single-member private limited liability companies can, therefore, be
required to have thousands of euros of minimum capital if they choose a
standard type or just €1 if they choose a sub-type.
There are currently 16 MS in which it
is possible to establish a single-member company with minimum capital/share
value of €1 or less.[94]
In addition, it is likely that the number will be increased to 17 MS, since
Slovakia plans to lower its minimum capital requirements in 2014. Among the MS
that already provide for €1 or less, there is some variety of approaches, e.g.
there are MS which only provide for such a possibility with regard to founders
that are natural persons (e.g. Estonia, Latvia) and also MS (e.g. Belgium,
Germany) that allow to form companies with €1 but require that the capital be
paid or built gradually over the life of a company.
In the remaining MS the minimum
capital varies from around €45 in Romania to around €12,400 in Luxembourg. For
details see Annex.
Assessment 
Maintaining the status quo
would deprive the initiative of a significant part of its usefulness and
attractiveness. This option would not result in meeting the objectives of
decreasing the differences in legal and administrative requirements with regard
to minimum capital requirements and would not generate any decrease in costs
for the founders of companies.
Option II. 2. Model A – Minimum
capital requirement equivalent to the EU average 
 Description
In this option the level of minimum
capital required for the set-up of an SUP would be harmonised and would amount
to the EU average of €2200.[95]

Assessment
For the majority of MS that already
have a €1 or no minimum capital requirement, the obligation to introduce in
their legal system a requirement of €2200 would be a burden without any clear
advantage for companies. For those MS that have a significantly higher minimum
capital requirement, lowering it to €2200 might be difficult to accept in any
event since for some of them it would rather be a question of principle than a
question of a specific amount. 
The data shows that, under this
policy option, there would be a reduction in costs for the company founders in
9 MS with capital higher than €2200 and this requirement would be attractive to
entrepreneurs there. At the same time, the minimum capital requirement would increase in 19
MS (with Slovakia in 20 MS) and it
would result in a substantial cost increase for the founders in these countries.
This increase would not, most likely, be offset by the advantages that on-line
registration and the single EU template of articles of association could bring.
Therefore, it seems unlikely that a regime with this level of minimum capital
would be chosen by entrepreneurs in those MS.
Option II. 3. Model B – Minimum capital
requirement equivalent to € 1 
Description
In this option, the level of minimum
capital would be decided freely by a single-shareholder but cannot be less than
€1 (or
equivalent in the national currencies for those MS that do not have euro). This
option would be equivalent to the one preferred in the 2008 IA for the SPE proposal.
Assessment
This option would offer savings for
company founders in MS where the level of minimum capital is higher than €1.
There is available evidence that relatively small differences in minimum
capital requirements can make a large difference in the rate of new company
formation.[96]
The existing research also shows that MS reforms which cut the statutory
minimum capital requirements, stimulated start-up activities rather than
“attracting companies away from other legal forms”.[97] For example
in France, Germany and Poland there was a significant surge in incorporations
after the reforms which lowered the minimum capital.[98] The lowering of the
minimum capital requirement should have the effect on both foreign and domestic
founders, but on the basis of available data  it is difficult to predict  which
of them would benefit more.
This option would be in line with the ideas of stakeholders
expressed in the recently published 2013 “Manifesto for Entrepreneurship and Innovation
to power growth in the EU”[99],
which called for a possibility to create on-line companies with low minimum
capital and unified requirements across the EU in order to make it easier for
cross-border investments to flow from investors in one country to companies in
another.
As
explained in section 4.2.1., the founder of a company must have some capital to
run a business or needs to borrow it regardless of the level of minimum capital
required by national legislation. However, the minimum capital requirement can
constitute a barrier for many founders if they have to pay in more capital than
they would normally put into business if there had been no requirement.
Sometimes, due to difficulties in financing, especially cross-border financing,
a founder might not be able to easily borrow the capital needed to meet the
requirement. Moreover, MS rules differ significantly as regards the moment in
which the capital should be paid in and in which form. 
This option would be likely to be
acceptable to the majority of MS that already have a €1 minimum capital
requirement (or lower), since the initiative would propose the same solution
that these countries effectively have in place at national level. MS that have
not yet decreased minimum capital requirement might support it, if they planned
to do so anyway in the future (e.g. Slovakia). 
Some or all of 11 MS where the
minimum capital is still higher than €1 might be against, as was the case in
the negotiations on the SPE proposal. Some of MS that already have €1 for
natural persons may not be in favour of allowing the same conditions for legal
persons as the founders of companies. In addition, some of them may fear the
reduction in national revenue since in some MS the amount of registration
fees/tax is dependent on the amount of minimum capital. However, this impact
would be essentially limited to two MS (Austria and Poland) in which the state
revenue is dependent on minimum capital and which do not yet provide a
possibility of establishing a limited liability company with €1.
One of the other main reasons why
some MS could be against this option would be the lack of compensatory measures
for the protection of creditors. MS that still have high level of minimum
capital are usually of the view that minimum capital constitutes the adequate
protection of creditors and "the price to be paid" for limited
liability. However, it should be stressed that the lack of minimum capital
requirement should not have any effect on the amount of actual capital needed
to run the business. The capital necessary for normal operations would be
determined by a founder in the business plan. Second, there would not be any impact
on creditors and other stakeholders in MS where there is already no statutory
minimum capital requirement. 
Overall, this option would bring
advantages for companies in terms of the reduction of costs, but would have a
disadvantage of not taking into account the legitimate concerns of certain MS
and other stakeholders such as notaries with regard to the appropriate standard
of creditors’ protection.
Option II. 4. Model C – the same as
model B, but with the introduction of balance sheet test and solvency statement
to protect creditors
Description 
This option would provide for the
same requirement of minimum capital as Model B, but would introduce additional
instruments for the protection of creditors such as balance sheet test and
solvency statement.
In this option, the initiative would
require the management of the company to apply the balance sheet test before
any distribution of profits to the single member, i.e. to compare assets and
liabilities, prohibiting the distribution to the single-member resulting in
liabilities exceeding the assets. 
Moreover, it would require the
management to sign a solvency statement, in other words a liquidity statement
in which the management would guarantee that it had made a full inquiry into
the affairs and prospects of the SUP and formed the opinion that the SUP would
be able to pay its debts as they fall due in the normal course of business in
the year following the date of the proposed distribution.
Such a statement should be provided to the
single-member who should not order a distribution violating the balance sheet
test and/or solvency statement. The single member who received undue distributions would have to return
them to the SUP.  The decisions on the distributions could not be delegated by
the single-member to other parties.
Assessment
This option would offer the same
advantages for companies in relation to minimum capital as Model B. However, it
may generate additional costs with regard to the compliance with cumulative
balance sheet and insolvency test as companies would have to measure the future liquidity
which they may not do on regular basis. The cost of meeting the requirements of
the cumulative test would be partially mitigated by the lack of special format
imposed on companies. For instance, there would be no formal requirement of
consulting the auditor or an accountant before signing the solvency statement.
In certain circumstances the companies may want to do that, but for the purpose
of distributions it would be enough, if the statement was signed by the
management. Moreover, medium-sized and large companies may not bear additional
costs, since future solvency may be part of "a fair review of the
principal risk and uncertainties" a company is obliged to do under EU
Accounting Directive. 
At the same time, this option would
offer more security to creditors and for that reason it is likely to be more
acceptable to MS than Model B. Creditors are generally more interested in
whether they would get paid their claims rather than being an unsecured
creditor in insolvency proceedings in which the remaining assets would need to
be valued and distributed among creditors. Also, the regular measurement of
liquidity could be beneficial for the company and single-member as it would
allow the company to be run in a more sustainable way. 
The responsibility of management and
the duty of care of the single-member, which should promote  shareholders’
engagement in company affairs, would aim to guarantee the high standard of
creditors’ protection and, therefore, to offset the decrease in minimum capital
requirement in those MS where it is currently higher than €1. 
However, it should be remembered that
the existence of even high minimum capital at the time of set-up does not
necessarily ensure that the same level will be available to creditors at a
later date. For instance, even in the MS with high minimum capital requirement, the
capital does not have to be paid in full at the time of set-up. Moreover, in
principle, it does not have to be kept in the closed bank account. It can be
transferred into tangible and intangible assets and the real value of those
assets in case of insolvency proceedings might be different to the book value,
or these assets might be destroyed and never recuperated. 
Moreover, some creditors, such as
banks, often insist also on other means of additional protection be it a
personal guarantee, a mortgage or any other form of security. This happens in
dealings with businesses in all MS, including in those where the minimum
capital requirement is high. Therefore, high minimum capital requirement does
not seem have an impact on contractual terms faced by shareholders in dealings
with creditors who ask for guarantees no matter how high the minimum capital
requirement is. 
In MS which already have €1 minimum
capital, there usually already exist additional means to protect the creditors
either by the cumulative balance sheet and solvency test and/or the obligation
to introduce capital reserves built each year from companies’ profits, and
therefore the measures proposed would be in line with what is already included
in the national legislation and would not impose too much additional cost for
companies.
Comparison of options
   || Effectiveness || Efficiency || Coherence 
 II. 1. No policy change || 0   || 0   || 0 
 II. 2. Model A – Minimum capital requirement equivalent to the EU average || - Not effective, increase of costs for founders in 19 MS, capital not adapted to business needs || - Creditors are only partially protected by higher minimum capital requirement, since capital turned into assets does not guarantee the liquidity, which is important for creditors   || - Not in line with EU polices of encouraging entrepreneurship and not in line with Manifesto for Entrepreneurship and Innovation to power growth in the EU 
 II. 3. Option I. 3. Model B – Minimum capital requirement equivalent to €1     || ++ Very effective, decrease of costs of founders in 11 MS, flexibility as to the level of capital needed for business, no other burdensome obligations imposed || - The objectives could be fully achieved, but at the expense of adequate creditors’ protection || +/- In line with EU policies encouraging entrepreneurship and with Manifesto, but not in line with policies of high standard of consumer and creditors’ protection 
 II. 4. Model C – the same as model B, but with the introduction of balance sheet test and solvency statement to protect creditors   || + Less effective than model B for cutting the costs for companies, since additional burden of meeting the balance sheet and solvency test   || +  The objectives could be fully achieved, but guaranteeing at the same time the adequate creditors’ protection || + In line with EU policies encouraging entrepreneurship and with Manifesto and  with policies of high standard of consumer and creditors’ protection 
Impacts on stakeholders
   || Companies || Member States || Notaries/Legal advisors || Creditors 
 II. 1. No policy change || 0   || 0   || 0 ||   
 II. 2. Model A – Minimum capital requirement equivalent to the EU average || - Not effective, increase of costs for founders in 19 MS, capital not adapted to business needs || - Negative impact on those MS in which capital is below EU average (19 MS) – need to increase. Also negative impact on those MS (9) in which capital is above average – need to decrease. || +/- Depends on whether their fees are dependent on the amount of minimum capital   || +/- Positive impact on creditors if it is considered that minimum capital requirement is a creditors’ protection instrument. 
 II. 3. Option I. 3. Model B – Minimum capital requirement equivalent to €1   || ++  Very effective, decrease of costs of founders in 11 MS, flexibility as to the level of capital needed for business, no other burdensome obligations imposed || +/- Neutral impact in those MS having already minimum capital requirement equivalent to € 1, negative impact on MS having higher requirement   || +/- The same as model A     || - Negative impact, since there is no creditor’s protection instrument available 
 II. 4. Model C – the same as model B, but with the introduction of balance sheet test and solvency statement to protect creditors   || + Less effective than model B for cutting the costs for companies, since additional burden of meeting the balance sheet and solvency test   || +/- Neutral impact in those MS having already minimum capital requirement equivalent to €1 and having creditors’ protection measures, negative impact on MS having higher requirement and no other creditors’ protection measures || +/-   The same as in model A, but would generate more support than option B due to creditors’ protection mechanisms   || + Positive impact on creditors –  real creditors’ protection in terms of liquidity.   

8. The
Preffed options 

The policy options are chosen on the
basis of the comparison of their benefits and costs and their effects on
different stakeholders.

8.1. the Prefferd options and their Impacts

With regard to the question of
registration, the baseline scenario would not achieve the objective as it
would not reduce the costs for the founders of single-member private limited
liability companies. Any possible reforms of national company laws would not
provide for uniformity and coherence among all MS, and in particular, it is
unlikely that these reforms would result in direct on-line registration with
the uniform template of articles of association in all MS.
The highest level of effectiveness in
meeting the objectives would be ensured by option I. 4. (Model C). It would
bring about the biggest cost reduction as compared to the other options, with
savings from both the direct online registration procedure and the single
EU-wide template for those companies opting to register online. This option
would have similar impact as the other options in terms of efficiency and
coherence. It would ensure the availability of the on-line procedures with the
unified template without forcing MS and companies to accept it as the only
registration procedure for SUPs.  This option would have the biggest positive
impact on the founders of companies, whereas it would not have a more negative
impact on other stakeholders than the remaining options. Therefore, option
I. 4., asking MS to ensure that there would be a possibility of on-line
registration of SUPs with the use of the uniform template of articles of
association is preferred. 
In order to provide an indication of
the magnitude of potential avoided cost for the founders of single-member
private limited liability companies, high and low scenarios were calculated
(see Annex). The avoided costs for the founders of SUPs in the EU could vary
from € 21 million in the low scenario to up to € 58 million in the high
scenario in one year. 
The biggest impact on MS and other
stakeholders would come from the introduction of an on-line procedure. However,
this impact would differ from MS to MS and it would depend on how MS decided to
implement the result envisaged by the initiative, since the initiative would
not impose methods and means to achieve the desired result. MS would still be
fully responsible for the quality of necessary checks and the initiative would
not lower any existing standards in this regards. This should take away the
concerns of certain groups of stakeholders - such as the notaries - that the
standard of control in MS would decrease. The effective control could still be
performed without the physical presence of the founder of the company before
the notary as it is the case in many MS.  In most cases MS would need to adapt the
already existing national on-line registration systems rather than creating new
ones and the only cost related to the single template for articles of
association would involve making it available online. Furthermore, these costs
would be incurred by MS only once, whereas the benefits for the founders of
companies would continue in the future.  
With regard to the question of
minimum capital requirement, the baseline scenario would not be
effective in achieving the objectives as it is unlikely that MS would introduce
the reforms that would provide for the uniform minimum capital requirements
among all MS. Moreover, it is probable that national measures may take
different directions as illustrated, for example, by the increase in 2014 of
the minimum capital requirement in Hungary and at the same time its decrease in
the Czech Republic and Slovakia.
The highest level of effectiveness in
meeting the objectives would be ensured by option II. 3 (Model B3) with only €1 of minimum capital and
without any additional measures to protect creditors as it would lower costs of
minimum capital requirement for companies in a number of MS without imposing
any additional costs. However, this option would score worse in terms of
efficiency and coherence than option II.4 (Model C), which would, in addition,
introduce a balance sheet and a solvency statement to protect creditors. Option
II. 4. would be beneficial, even if to a lesser extent, for companies and at
the same time, would have more positive impact on creditors, the impact on MS
in terms of introducing new rules in their legal orders being comparable in
both cases. Therefore, option II. 4 is preferred. It could save company
founders in the EU €215-595 million in one year[100] (subtracting any
costs for the preparation of solvency statements in case of distributions), guaranteeing,
at the same time, the adequate protection for creditors.
This option would have an impact on
those MS that do not have €1 minimum capital requirement and/or do not provide for
solvency statements in their laws. However, the question of €1 minimum capital
requirement would be discussed in the different institutional context than in
case of the withdrawn SPE proposal and would not be linked to other sensitive
issues such as employee participation or the transfer of seat. This, and the introduction
of more robust creditors’ protection than in the SPE proposal, should
facilitate reaching an agreement between MS. 
As regards its impact on companies, these,
in exchange for low minimum capital requirement, would have to attach more
importance to liquidity questions prior to distributions (e.g. dividends/profits
to the single-member). However, the impact on companies would depend on whether
MS decided to make SUPs the only national company law form available for
single-member private limited liability companies or whether SUPs would be an
additional company law form, co-existing with other national forms. If all
single-member private limited liability companies were subject to the
harmonised rules, the impact on companies would be the biggest. 
The preferred options together: SUP
with on-line registration, the uniform template of articles of association, the
minimum capital requirement of €1 and a balance sheet test and an insolvency
statement would have positive impact on fundamental rights such as Article
15 and 16 of the Charter of Fundamental Rights of the European Union. They
would enlarge the scope of freedom to conduct business and choose occupation by
providing yet another possibility (more choice) for company founders to engage
in business activities, making it simpler and more straightforward.
The preferred options would also have
positive economic and social impacts in terms of facilitating entrepreneurial
activity, which should result in more choice of goods and services for
consumers, in more jobs created by increased business activities (directly in
companies and indirectly in trade with these newly created companies) and in creditors’
protection more adapted to business reality. As the preferred options would not
touch upon the question of the transfer of registered offices or employee
participation, and these would remain covered by national laws, it would not be
necessary to introduce measures to minimise  the potential circumvention of
applicable social and other rights, since anti-abuse measures, if necessary,
are laid down by national law.
The preferred options could bring together
the savings for company founders in the EU ranging from €236 to 653 million
in one year. How much of these costs could be saved by foreign founders versus
domestic founders is difficult to predict, since there is no available data on
this subject. However, the savings and rise of entrepreneurship would benefit
the EU as a whole and would allow SMEs to realise the untapped potential in the
Internal Market.  Although SMEs would still have to comply with other laws in
MS when doing business, the simplification of regulatory environment should
create a better business environment than currently available.

8.2. the choice of instrument 

To ensure legal certainty, a company law
form should be embedded in law and be enforceable in MS legal systems.
Self-regulation is, therefore, excluded. 
A recommendation would not succeed in
creating a harmonised national company law form with uniform set of rules in
all MS and would not be able to change already existing requirements which are
laid down in national laws (not in soft laws). Also at European level the
incorporation and registration of companies is regulated by legislation (directives)
and not by recommendations or communications.
Thus, in order to harmonise the
conditions related to the establishment of subsidiaries, the EU, if it acts at
all, must act via legislation. Moreover, the legal basis of Article 50 TFEU
does not leave a choice of instrument to the European legislator. The only
available instrument is a directive. 

9. Monitoring and evaluation 

The Commission will monitor the
implementation of the chosen policy option and will assess the progress
achieved according to the chosen objectives. In this activity, the Commission
will cooperate closely with national authorities e.g. the national company law
experts in the Company Law Expert Group (CLEG), European companies (including
through their European and national associations), company law experts and any
other relevant stakeholders in this area. The provision of information for
monitoring and evaluation should not impose any unnecessary administrative
burden on the stakeholders concerned.
Monitoring
Initially, the monitoring would focus
on the implementation of the chosen policy option to ensure that it was clearly
and consistently implemented by MS. In that context, the Commission may provide
assistance and guidance (e.g. by organising implementation workshops or
providing advice on bilateral basis). CLEG could also provide a good forum for
exchange of best practices. 
In addition, the monitoring activity
could focus on: 

 numbers of SUPs created following the entry into force
     of the proposal;
 trends in cross-border activities of SMEs, in particular
     SUPs;
 costs involved in the setting up and running of
     single-member subsidiaries, including SUPs, abroad (and any other obstacles
     encountered);
 availability of infrastructure for on-line registration
     across the EU.

Evaluation
An evaluation of the chosen policy
option should be carried out in order to assess its impact and verify if the
objectives have been achieved. It would be carried out by the Commission on the
basis of the information gathered during the monitoring exercise and additional
input collected from the relevant stakeholders, as necessary. 
In particular, this evaluation could
focus on whether, following the implementation of the chosen policy option: 

 start-ups and groups of companies use the SUP forms; 
 there has been any change in costs of setting up and
     operating single-member subsidiaries, including SUPs, abroad, and whether
     that had any impact on cross-border activity of SMEs;
 there remained any other practical problems for the
     setting up/operation of a subsidiary abroad;
 the chosen policy option was consistently implemented in
     MS legislation, with specific focus on key elements, such as on-line
     registration; and whether any additional relevant developments have taken
     place at national level.


Annex 
1. Tables

1.1. Minimum
Capital, Number of Private Limited Liability Companies and New Births 2011 and
2012
1.2. Notary
Involvement, Availability of Direct On-Line Set-Up, Set-Up Costs, Legal Costs
and Template Availability

2. Calculations

1)     
Option
I. 4. Model C – on-line registration with the use of the template of Articles of
Association 
It is assumed, for the purpose of
below calculations, that the average amount of costs, equal to minimum legal
advice costs, which could be avoided by the founders of companies is around €
387 per each company (referred as "average savings per company").[101] The average amount of
costs which could be avoided in the MS concerned, supposing that a founder of a
company would carry out all the formalities on-line (through e-identification)
and would not, in principle, need any legal advice for the articles of
association. 
Single-member private limited
liability companies established in the MS that do not have direct on-line
registration constitute around 44% of all EU single-member private limited
liability companies.[102]  Assuming that the same
percentage also applies to the “new births” of single-member private limited
liability companies, around 252.000 single-member private limited liability
companies would be established in MS concerned in one year. 
It is calculated in the following
way: 0.44 [percentage of single-member private limited liability companies
among all private limited liability companies[103]] * 1,299.491 [“new
births” of limited liability companies in 2012[104]] = 572,000 [“new births”
of single-member private limited liability companies]; 0.44 [percentage of
those MS not having direct on-line registration[105]]* 572,000 [“new births”
of single-member private limited liability companies] = 252,000 single-member
private limited liability companies.
It is difficult to predict: a) how
many of these 252,000 companies would be established according to the proposed
harmonised rules and b) whether the number of “new births” would increase as a
result of the initiative and, if so, by how much. 
First, it is assumed for the purpose
of these calculations that, as a result of the proposed rules, the number of
“new births” in MS concerned increase to balance out the decrease of 0,6% that
took place at EU level for limited liability companies in 2012 according to the
figures provided by MS. Therefore, it is prudently assumed that this option,
which only introduces changes to registration, but does not reduce minimum
capital requirement, would have a positive impact resulting in preventing the
reduction in the number of newly established companies in MS concerned. In
reality, the number of companies should actually rise, since more foreign founders
should be willing to establish companies abroad using the single EU-wide
template. 
Second, as regards the number of
companies that would actually take advantage of the direct registration with
the obligatory template, it would depend on the implementation choice made by
MS (whether SUP would be the only form or co-exist with other national company
law forms). 
In that context, in order to provide
an indication of the magnitude of potential avoided cost for the founders of
single-member private limited liability companies, two scenarios are
calculated.
In
the high scenario, it is assumed that 60% of single-member private limited
liability companies would opt for and be registered online with the harmonised template
of Articles of Association. This assumption is made on the basis of the evidence from
MS which introduced “lighter company law sub-forms". For instance, in
Germany, the percentage of Unternehmergesellschaften (UG) registrations in comparison to GmbH is estimated to be around 60%. 
This would mean around €60 million
avoided costs by the founders of single-member private limited liability
companies in the MS concerned in one year. It is calculated in the following
way: 0.60 [percentage of single-member private limited liability companies
established according to harmonised rules] * 252,000 [“new births” of
single-member private limited liability companies in those MS that do not have
direct on-line registration procedures[106]] = 151,000* €387 [average
savings per company[107]] = € 58 million avoided costs
in one year
In
the low scenario, it is assumed that 22% of single-member private limited
liability companies would opt for and be registered according to the proposed
harmonised rules. This assumption is made on the basis of the evidence in MS
which  introduced “lighter company law sub-forms". For instance, in
Poland, where minimum capital requirement remained the same, but the direct
on-line registration procedure have been recently introduced, around 22% of
private limited liability companies were established on-line in a "lighter
form". 
In
such a case, there would be around € 22, million avoided cost for the founders of single-member
private limited liability companies in the MS concerned in one year. The calculations follow
the same pattern as above: 0.22 [percentage of single-member private limited
liability companies established according to harmonised rules] * 252,000 [“new
births” of single-member private limited liability companies in those MS that
do not have direct on-line registration procedures[108]] = 55,000* €387 [average savings
per company] = € 21 million avoided costs in one year. 
Conclusion:
€ 58 million in high scenario, € 21 million in low scenario.
2)     
Option
II. 3. Model B – Minimum capital requirement equivalent to € 1 
Single-member private limited
liability companies in MS with minimum capital requirement of above € 1
constitute around 32% of all EU single-member private limited liability
companies. [109]Assuming, that the same
percentage also applies to “new births”, there would be around 183,000 private
single-member limited liability companies that would be established in MS
concerned in one year. 
It is calculated in the following
way: 0.44 [percentage of single-member private limited liability companies
among all private limited liability companies[110]] * 1,299.491 [“new births”
of limited liability companies in 2012] = 572,000 [“new births” of
single-member private limited liability companies]; 0.32 [percentage of those
MS having minimum capital requirement above €1[111]]* 572,000 [“new births”
of single-member private limited liability companies] = 183,000 single-member
private limited liability companies.
In this option it is also prudently
assumed that there would be an increase of the number of companies of at least
6%, as a result of the proposed rules, since national reforms lowering the
minimum capital requirement resulted in an increase in the number the number of
companies. This
is based on the following assumption: when Austria decreased the minimum
capital in 2013 the increase of number of new companies was estimated at 12% in
one year.[112] Since this assumed
increase concerned only one country[113], the increase at EU level
is estimated to be half of it (6%). However, taking into account the current
decrease of 0,6%, the “net” increase should be 5,4% in one year. This
assumption would result in the increase of the “new births” of single-member
private limited liability companies from 183,000 to 193,000.
As it was the case in the previous
option, it is difficult to predict how many of these 193,000 companies would be
established according to the proposed harmonised rules.
In
the high scenario, it is assumed that 60% of single-member private limited
liability companies would opt for and be registered according to the proposed
harmonised rules. 
This would result in around € 595
million costs avoided for the founders of single-member private limited
liability companies in one year in MS concerned. It is calculated in the
following way: 0.60 [percentage of single-member private limited liability
companies established according to harmonised rules] * 193,000 [“new births” of
single-member private limited liability companies in those MS have minimum
capital requirement above € 1] = 116,000* € 5126 [average savings per company[114]] = € 595 million avoided
costs in one year.
In
the low scenario, it is assumed that 22% of single-member private limited
liability companies would opt for and be registered according to the proposed
harmonised rules. In such a case, there would be around € 215 million avoided cost for the
founders of single-member private limited liability companies in the MS
concerned in one year. The calculations follow the same pattern as above: 0.22
[percentage of single-member private limited liability companies established
according to harmonised rules] * 193,000 [“new births” of single-member private
limited liability companies in those MS have minimum capital requirement above
€ 1] = 42,000* €5126 [average savings per company[115]] = € 215 million avoided
costs in one year. 
Conclusion:
€ 595 million in high scenario, € 215 million in low scenario.
3)     
Avoided
costs of combined options I.4. + II. 3. applied together
High scenario:
€ 595 + 58 =  € 653 million
Low scenario:
€ 215 +21 =  € 236 million 

3. The legal requirements for the establishement of single-mebmer
companies across the eu and recent national reforms

                   
1. BE
Belgian company law provides the legal form of a
"société privée à responsabilité limitée unipersonnelle", SPRLU
(single-member limited liability company) or of a "société personnelle à
responsabilité limitée 'starter'", SPRL-S ("starter" limited
liability company) for the foundation of an SMC. The registration of the
company can be carried out through electronic submission by the notary (e-depot
application). The e-depot application allows the notary to fulfill all the
formalities electronically (submission to the register, requesting publication
in the Belgian official Gazette and the company number). Through this system
the company receives in a few minutes its company number. The whole process of
setting-up a company can be completed within 3 working days (bank, notary,
activation of the company number). The set-up costs amount to about 785 euros
for an SPRLU with minimum capital. The initial capital required for the
foundation of a SPRLU is 18.550,00 €, but only 12.400,00 € are to be provided
on foundation. The capital required for the foundation of a SPRL-S amounts to
at least 1,00 €. However, the founder is severally responsible after 3 years
for the difference between the capital of the SPRL-S and 18,550 €. The number
of private limited liability companies in October 2013 was around 413,761. The
number of "new births" of private limited liability companies in 2012
was around 20,000.
2. BG 
In Bulgaria an SMC can be founded either in the legal
form of an "eднолично
дружество с
ограничена
отговорност",
ЕООД (single-member private liability company),
or of an "eднолично
акционерно
дружество",
ЕАД (single-member stock exchange company). The foundation
can be carried out online and doesn’t require the assistance of a public
notary. There is no obstacle for on-line registration of a non-resident
foreign EU citizen though it is not explicitly provided for. In the form for
on-line registration the ID number of the foreign citizen has to be put and the
same rules as for nationals apply. This means a foreign EU citizen must comply
with the requirements for registration of a single member company as prescribed
in the Commercial Act and in the Act for the Commercial Register. The name
chosen for the company shall be submitted to the Commercial Register, which verifies
if there is a violation of third parties` IP rights. The initial capital
required for the foundation of an ЕООД amounts to not
less than 2,00 BGL (about 1,00 €), for the foundation of an
ЕАД – to at least 50.000,00 BGL (about 25.000,00 €). The
number of private limited liability companies in October 2013 was around
231.282, thereof around 150.000 single-member companies. The number of
"new births" of private limited liability companies in 2012 was
around 44.000, thereof 34.000 single-member.
3. CZ
An SMC can be founded in
the legal form of a "spolecnost s rucenim omezenym", s.r.o. (limited
liability company) or as a "akciova spolecnost”, a.s. (stock exchange
company). The articles / memorandum of association of the company shall be
drawn up in the form of a notarial deed. The application to the territorially
competent regional court to register the company may be submitted
electronically provided that a "recognised electronic signature"
(advanced electronic signature based on a qualified certificate issued by an
accredited certification service provider) is used. From 1 January 2014 also
the notary who drew up the notarial deed about the articles /memorandum of
association will be able to register the company himself. The set‑up and
related costs for a s.r.o. do not usually exceed 14.000 CZK (about €530) – around 120 - 220 € for
notarial deed and related costs, 240 € as judicial fee for registration of the
company, 50 € for trade licence, 20 € extracts from other registers (criminal
records, land register). The current regulations require the provision of
200.000,00 CZK (about 7.000,00 €) initial capital on foundation. However, the
new Act on Commercial Corporations taking effect on 1st January 2014 stipulates
a reduction of the initial capital requirement to 1,00 CZK (less than 1,00 €).
The set-up costs for an a.s. (costs of a notarial deed and judicial fee) are
around 19.000 CZK (about 720 €), initial capital amounts to 20.000.000 CZK
(around 800.000 €) for a company founded with a public offering of shares /
2.000.000 CZK (around 80.000 €) for a company founded without a public offering
of shares. The new Act on Commercial Corporations introduces only one amount of
initial capital – 2.000.000 CZK (80.000 €). The number of private
limited liability companies in October 2013 was around 332.000, thereof around
182.000 single-member companies. The number of "new births" of
single-member private limited liability companies in 2012 was around 13.500.
4. DK
In Denmark an SMC can be
founded as an "Anpartsselskab", ApS (private limited liability
company), or as an "Aktieselskab", A/S (public limited
liability company). There is a possibility for online registration
as regards the formation of the company, including a verification procedure for
the name chosen for the company. The online registration is done using a digital
signature, which is used to verify the identity of the applicant in real
time. The digital signature is issued by one central entity (not the Business
Register) in DK, and used for various applications. The capital requirements
amount to between 80.000,00 DKK (about 10.730,00 €, will be reduced in 2014 to
50.000 DKR) for the foundation of an ApS. In order to establish an A/S, one has
to provide 500.000,00 DKK (about 67.040,00 €) as a contribution of initial
capital. It
will be possible to establish an IVS (entrepreneurial private limited company) –
with the minimum registered capital of 1 DKR – equivalent 0,13 Euro in 2014.
This will however await the executive order (and the necessary adaptations to
the online registration system). It is expected to start at the beginning of
2014. It is
possible for foreign natural persons to act as founders, members and
participate in management in an online registration of the creation of the
company. This requires a proof of identity, an upload of a copy of the passport
of the person. As for a legal foreign person acting as founder, it is currently
not possible to perform an online registration of the creation of the company.
However, currently a new solution for online registration is developed, which
is expected to be implemented in the second half of 2014, including also
considerations regarding this situation. The number of private limited
liability companies in October 2013 was around 188.209. The number of "new
births" of private limited liability companies in 2012 was around 14.000.
5. DE
In Germany an SMC can take
the legal form of either a "Gesellschaft mit beschränkter Haftung",
GmbH (private limited liability company), an
"Unternehmergesellschaft", UG (a sub-form of private limited
liability company) or an "Aktiengesellschaft (stock exchange
company). The registration of the company cannot be carried out online
as a public notary has to verify the identity of the applicant,
notarize the articles of association (in the case of an SMC usually in standardized
form) and electronically submit the application to the local court for final
checking and execution of entry into the Company Register. This entry is
subsequently publicised online. The set-up costs for the establishment
of a UG (single-member, initial capital 1,00 €) amount to 305,00 €. The initial
capital of a GmbH has to be at least 25.000,00 €, but only 12.500,00 € are
to be provided on foundation. The minimum initial capital for the establishment
of an UG is 1,00 €. However, the company has to indicate its status as a UG by
using the legal term "Unternehmergesellschaft (haftungsbeschränkt)"
or its abbreviation in its name and also has to ensure the accumulation of a
restricted reserve in order to reach the minimum capitalization of a GmbH. The
initial capital required for the foundation of an AG amounts to 50.000,00 €.
The foundation of an AG (single-member) incurs costs of 847,00 €. The number of
private limited liability companies in as of January  2013 was around
1,098.000. The number of "new births" of private limited liability
companies in 2012 was around 84.000.
6. EE 
An "Estonian
SMC" can be founded as a " Osaühing", OÜ (private limited
liability company) or as an "Aktsiaselts", AS (public limited
liability company). For holders of (mobile) Estonian, Finnish, Portuguese,
Belgian and (mobile) Lithuanian ID-cards there is a possibility to set up a
company online by using an electronic registration portal. Otherwise the
incorporation process shall be assisted by a public notary who uses a
special information system ("e-notary") to submit the required
documents. The registration process takes 5 working days. Besides, there
is an expedited procedure which is performed within 1 working day (in
practise 2 hours). The set-up costs amount to at least 140,60 € (state
registration fee) or 185,34 € (fee for the use of the electronic procedure). If
a public notary is involved, there are notary fees to be paid. The initial
capital required for the foundation of an OÜ is 2.500,00 €. If the capital
of OÜ is planned to be less than 25 000 euros, it is possible for a natural
person to found an OÜ without the initial capital payment. The number of
private limited liability companies in November 2013 was around 134.000. The
number of "new births" of private limited liability companies in 2012
was around 13.000, thereof 11.500 single-member.
7. IE
In Ireland an SMC can take
the legal form of a private limited liability company. The company can
be registered online within 5 working days, provided that certain pre-approved
templates for a memorandum and articles of association (so called Fé Phráinn
Scheme) are being used. The Fé Phráinn Scheme can also be used for non-online
applications and in this case the process can take up to 10 working days. 
Online and paper based Fé Phráinn company incorporation is only suitable for
presenters who file documents regularly and not for once-off applicants. The
latter should rather use the ordinary incorporation process  provided for the
registration of a company, which can take  up to 15 working days. There
is no obligatory name-verification but applicants are advised to check
the uniqueness of the company name themselves in order to avoid a violation of
third parties` IP rights. The registration costs amount to 100,00 € for
the ordinary incorporation process and to 50,00 € for the online and paper
based Fé Phráinn registration process. The initial capital to be
provided  is normally not less than 1,00 €. The number of private limited
liability companies in October 2013 was around 157.356, thereof around 51.320
single-member companies. The number of "new births" of private
limited liability companies in 2012 was around 13.000, thereof 5.300
single-member.
8. EL
In Greece an SMC can be
founded as an "etairia periorismenis efthinis", EPE (single-member
limited liability company), as an IKE (recently introduced form of a
private limited liability company, often described as "private capital
company") or as an "anonimi etairia", AE (public limited
liability company). The possibility to register a company online and
the use of e-signatures have not been provided yet. For the foundation
of an EPE or an AE a public notary should be involved who proceeds the
necessary formalities to establish a company through an online platform. The name
chosen for any form of company is to be approved by the Chamber of Commerce.
The set-up costs for a private limited company start from 185,50 €, for
a public limited company from 444 €. The capital requirements vary
according to the legal form of the SMC: for an EPE the minimum capital is 0,01
€ and IKE there is no minimum capital requirement, for an AE at 24.000,00 €.
Furthermore, contrary to the other company types, called "non-capital
contributions" (works, labour etc.) and "contributions of
guarantee" (the shareholder declares to be a warrant for the company`s
debts) are also possible. The number of private limited liability companies in
October 2013 was around 55.000, thereof around 26.000 single-member companies.
The number of "new births" of private limited liability companies in
2012 was around 2.000.
9. ES
Spanish Company Law
provides following legal forms for the formation of an SMC: "Sociedad
Anónima Unipersonal", SAU (public limited liability company),
"Sociedad Limitada Unipersonal", SLU (private limited liability
company) and "Sociedad Limitada Nueva Empresa Unipersonal", SLNEU
(another type of a private limited liability company which can be
registered within 1 day="express company" and can only be
established by natural persons). A possibility for online
registration of all company types is granted as well as the use of e-signatures.
The foundation of the company can only be completed under the assistance of a public
notary. The identity of the applicants as well as the name
chosen for the company are to be verified by the Registration Court and
by a public notary. The initial capital to be provided for the
foundation of a SAU amounts to at least 60.000,00 €; for the foundation of a
SLU at least 3.000,00 € should be contributed. Besides, the initial capital of
a SLNEU shall amount to at least 3.012 euros and shall not exceed 120.000,00 €.
The number of private limited liability companies in October 2013 was around
1,125.000, thereof around 157.000 single-member companies. The number of
"new births" of private limited liability companies in 2012 was
around 82.000, thereof around 14.900 single-member.
10. FR
In France an SMC can be
established in the legal form of an "entreprise unipersonnelle à
responsabilité limitée", EURL (private limited liability company, a
subtype of SARL) or of a "société par actions simplifiée
unipersonnelle", SASU (simplified public limited liability company).
The possibility for online registration is granted provided that the
applicant uses a so called electronic certificate. The identity of
the founder and the name chosen for the company should be verified
by the registrar. The use of e-signature is provided. The set-up costs
for an EURL amount to about 300 €, for a SASU to about 350,00 – 450,00 €. The initial
capital to be provided for the establishment of both a EURL or a SASU
amounts to at least 1,00 €. The number of private limited liability companies
in October 2013 was around 1,720.000, thereof around 430.000 single-member
companies. The number of "new births" of private limited liability
companies in 2012 was around 130.000, thereof 49.700 single-member.
11. IT
In Italy an SMC can be
established as a "società a responsabilità limitata unipersonale",
s.r.l.u. (single‑member private limited liability company), as a
"società responsabilità limitata semplificata unipersonale",
s.r.l.s.u. (a subtype of a private limited liability company) or as a
"società per azioni unipersonale", s.p.a.u. (single-member joint
stock company). There is a possibility for online registration.
However, only a public notary can file the incorporation documents and
is also responsible for the required ID-verification. The set-up
of a s.r.l.s.u. costs about 722,00 € as the applicant should use a standardized
memorandum and articles of associations and the public notary is required to
proceed the incorporation of the company free of charge. The foundation of a
s.r.l.u. costs about 2.100,00-2.400 €. Around 3.000,00 € are to be planned for
the set-up of a s.p.a.u. The initial capital to be provided for the
establishment of a s.r.l.s.u and of a s.r.l.u amounts to at least 1,00 €, for
the s.r.l.s.u. it should not exceed the amount of 10.000,00 €. The initial
capital for the foundation of a s.p.a.u. amounts to at least 120.000,00 €
and has to be entirely paid upon signing the memorandum of association. The
number of private limited liability companies in October 2013 was around
1,380.000, thereof around 205.499 single-member companies. The number of
"new births" of single-member private limited liability companies in
2012 was around 14.400.
12. CY
Cyprus` Company Law
provides the legal form of a private limited liability company for the
foundation of an SMC. The registration process should be assisted by a lawyer
licensed by the Cyprus Bar Association or by a service provider cooperating
with a lawyer. There is a possibility for online registration. The name chosen for the
company should be verified at the Company Register. The set-up costs
amount to around 400,00 €; the drafting of a memorandum and articles of
association by a lawyer arise costs of about 1.000,00 €. There are no real capital
requirements, the company`s capital should be at least 0,01 €. The number
of registered companies in Cyprus in October 2013 was around 273.000, the
number of single-member private limited liability companies around 138.000.
13. LV
In Latvia an SMC can be founded in the legal form of a
"sabiedriba ar ierobe otu atbildibu", SIA (private limited liability
company). There is a possibility for online registration, which is less
costly than the ordinary registration process. Also, the use of a so called secure
electronic signature is provided. In this case the assistance of public
notary is not required. The initial capital should amount to at
least 1,00 LVL (about 1,43 €). Currently, the technical solution of the online
registration e-service (via www.latvija.lv) provides an opportunity to sign the application
and documents enclosed to only with a secure electronic signature issued in
Latvia (eSignature in Smart Card or eID Card). A foreign citizen can obtain an
electronic signature issued in Latvia if he/she has a personal identity number
allotted by the Republic of Latvia. Personal identity number is allotted to a
foreign citizen who has received a residence permit of the Republic of Latvia. The
set-up costs for the on-line registration of a single-member private limited
liability company with reduced core capital is € 33.
There is also an option to
submit documents signed with an electronic signature issued abroad. This option
can be used by using the official e-mail of the Register of Enterprises: info@ur.gov.lv. An application and
documents enclosed to shall be filled in in Latvian and each of them shall be
signed with a secure electronic signature. The number of private limited
liability companies in October 2013 was around 143.000, thereof around 107.000
single-member companies. The number of "new births" of single-member
private limited liability companies in 2012 was around 13.600.
14. LT
Lithuanian Company Law
provides the legal forms of an "Uždaroji akcinė bendrovė",
UAB (private limited liability company), of a "Mažoji bendrija", MB
("small partnership") and of an "Individuali įmonė",
IĮ ("individual enterprise", sole proprietorship) for the
foundation of an SMC. A MB or an IĮ can only be founded by a natural
person. There is a possibility for online registration, by using an
e-signature, described as a "qualified electronic certificate". In
this case the assistance of a public notary is not a requirement for completing
the registration process. The set-up costs amount to around 270,00 LTL (around
78,00 €). The initial capital to be provided should amount to at least
10.000,00 LTL (about 2.900,00 €) for the foundation of an UAB. There are no
capital requirements for the foundation of a MB or an IĮ. The number
of private limited liability companies in October 2013 was around 106.228,
thereof around 60.000 single-member companies. The number of "new
births" of single-member private limited liability companies in 2012 was
around 8.400.
15. LU
A SMC governed by
Luxembourg law can be constituted either in the legal form of a "société
unipersonnelle à responsabilité limitée", SURL (single-member private
limited liability company, subtype of Sàrl) or of a “société anonyme
unipersonnelle”, SAU (public limited liability company). It is possible to
carry out an online registration through the use of an e-signature. However,
the incorporation of the company always requires the assistance of a public notary
who verifies that all the conditions for the formation of the SAU or SURL have
been fulfilled as well as the legal identity of the founders. The initial
capital to be provided in order to establish a SURL amounts to at least
12.394,68 and at least 30.986,69 € for the constitution of a SAU. From the
information collected by the Commission the set-up costs amount from 750 - 800
€. The number of private limited liability companies in October 2013 was around
45.000, thereof around 29.000 single-member companies. The number of "new
births" of single-member private limited liability companies in 2012 was
around 3.400.
 16. HU
In Hungary an SMC can be
founded as a "korlátolt felelősségű társaság", kft.
(private limited liability company) or as "zártkörűen működő
részvénytársaság", zrt. (stock exchange company, whose shares are not
traded publicly). There is a possibility for online registration, but not for
the use of an e‑signature. Founders must sign the company's constitutive
document, which, together with other documents must be countersigned by a
Hungarian attorney. Applications for registering or amending details must be
submitted electronically via a legal representative. The court of registration
electronically records documents relating to the company and provides an
electronic certificate of registration as well as confirmation of any changes
made. In the electronic procedure of company registration it is necessary for
the legal representative (notary/attorney) to use electronic signature and time
stamp. The identity of the applicant and the chosen company name are to be
verified during the registration process. The registration fee is 168 € in case
of simplified registration proceeding, and 336 € in non-simplified registration
proceeding. The initial capital required to establish a kft. is 1.700,00 €, for
the zrt. it is 16.000,00 €. All new set-up Kfts as from March 15, 2014 will
have to start with 10.000 € (though a Kft could be formed with less than 10.000
€ - as of October 2013 the amount has not been fixed yet -  but with a
duty to fill up the capital from profits. As long as the capital of 10.000 €
has not been filled up, no distribution (dividends) may be payable to members).
Existing Kfts would have to bring the minimum capital up to 10.000 € before
March 15, 2016. The number of private limited liability companies in October
2013 was around 418.000, thereof around 167.000 single-member companies. The
number of "new births" of single-member private limited liability
companies in 2012 was around 18.400.
17. MT
In Malta an SMC should
take the legal form of a single-member private limited liability company.
The possibility of online registration is provided. During the
registration process the Company Register verifies the availability of
the company name chosen by the applicant. The set-up costs start
with 215,00 € for on-line registration (245,00 for paper) depending on the
amount of initial capital. The minimum initial capital to be provided is
1.165,00 €. The number of private limited liability companies in October 2013
was around 40.000, thereof around 5.200 single-member private limited liability
companies.
18. NL
The legal framework of the
Netherlands provides two legal forms for the foundation of an SMC: the
"Besloten vennootschap", B. V. (private limited liability company)
and the "Naamloze vennootschap", N. V. (public limited liability
company). The incorporation of the company should be assisted by a public
notary, who also verifies the identity of the applicants and
the name chosen for the company. The registration can also be carried
out online but the possibility to use an e-signature is not
provided. The set-up costs vary according to the notary fees
required but amount to not less than 500,00 €. The establishment of a B. V.
does not require the provision of minimum capital, it may be
incorporated with one single share with the nominal value of 0,01 € (so called
"Flex B.V."). The initial capital required for the foundation
of a N. V. amounts to at least 45.000,00 €. The number of private limited
liability companies in October 2013 was around 843.000, thereof around 665.000
single-member companies.
19. AT 
Austrian Corporate Law
provides the legal forms of the "Gesellschaft mit beschränkter
Haftung", GmbH (private limited liability company) and of the
"Aktiengesellschaft", AG (stock exchange company) for the
establishment of an SMC. The registration of the company cannot be carried out
entirely online as a public notary has to assist the registration
process and verify the identity of the applicant. The name chosen
for the company is to be verified by the Enterprise Register. The set-up
costs amount to at least 300,00 € for a GmbH, provided that the applicant
uses standardized articles of association. Otherwise they go up to 1.000,00 €.
The foundation of an AG costs approximately 2.500,00 – 3.000,00 €. According to
the most recent amendments of the Private Limited Liability Companies Act,
which have entered into force on 1st July 2013, the initial capital
required for the foundation of a GmbH has been reduced from 35.000,00 € to
10.000,00 €. Besides, only 5.000,00 € are to be paid upon foundation. For the
incorporation of an AG the initial capital shall amount to at least 70.000,00
€. The number of private limited liability companies in October 2013 was around
127.400, thereof around 66.500 single-member companies. The number of "new
births" of single-member private limited liability companies in 2012 was
around 3.900.
20. PL
In Poland an SMC can be incorporated either as a
"Spółka z ograniczoną odpowiedzialnością", sp. z 
o.o. (private limited liability company) or as a "Spółka
akcyjna", S.A. (public company limited by shares). Since 1st January 2012
the establishment (the drawing up and registration of the articles of
association) of a sp. z o.o. can be carried out online with the possibility of
on-line registration of non-resident foreign EU citizens. The use of an e
signature is possible. If the registry court does not call upon shareholders to
remedy any defects arising out of failure to meet any provisions of law, the
company will be registered within 24 hours since the notification was received
by the court. The assistance of a public notary is still required for the
foundation of a S.A. or if a sp. z o.o. is registered in the "ordinary
way" (not online). By the end of August 2013 there were 8788 companies set
up online. The set-up costs for a sp. z o.o. and S.A. (i.e. court fees and
maximum notary fees) amount to a maximum of 11.000 PLN / approx. 2.589 € (the
maximum notary fees, i.e. 10.000 PLN / 2.353 €, shall apply when the share
capital exceeds 3.300.000 PLN/approx. 777.471 €). The respective minimum cost numbers for a registration
in the ordinary way are: S.A. – approx. 415 € (court fees and notary fees) and
Sp. z o.o. - approx. 180 € (court fees and notary fees). For an online
registration of a Sp. z o.o. (S24): approx. 140 € (court fees).
The initial capital
required for the foundation of a sp. z o.o. amounts to at least 5.000,00 PLN
(around 1.200,00 €); for a S. A. it is 100.000,00 PLN (around 24.000,00 €). The number of private
limited liability companies in October 2013 was around 226.000, thereof around
74.000 single-member companies. The number of "new births" of
single-member private limited liability companies in 2012 was around 11.800.
21. PT
Portuguese Company Law
provides following legal forms for the foundation of an SMC: (1) the
"Sociedade por Quotas Unipessoal", SQU (private limited liability
company), (2) the "Sociedade Anónima", S. A. (joint stock company)
provided that the single member is another “Sociedade Anónima” or “Sociedade
por Quotas”, (3) the "Estabelecimento Individual de Responsabilidade
Limitada" (neither a company nor a legal person but a special assets fund,
"Sondervermögen"/"patrimoine autonome"). There is a possibility
to register a SQU online (so called "Empresa Online"). The use of
e-signature is granted. Currently Portugese, Spanish and Estonian citizens are
able to create a single-member private limited liability company on-line using
their respective digital certificate from their national identity card, but no
other foreign EU citizens. In case that the single member is a legal person or
another company, the identity of its founder is to be verified by the
registration authorities. For the electronic registration process the costs vary
between 220 € (pre-approved bylaw model) or 360 € (custom bylaw - drawn up by
the interested parties). The set-up costs for the paper registration process
amounts to 447,50  €.The initial capital required for the foundation of a SQU
amounts to at least 1,00 €. The number of private limited liability companies
in October 2013 was around 376.000, thereof around 120.000 single-member
companies. The number of "new births" of single-member private
limited liability companies in 2012 was around 14.400.
22. RO
In Romania an SMC can be
founded as a "societate cu raspundere limitata", SRL (private
limited liability company). The incorporation process should be assisted by
a public notary only when among the goods subscribed as contribution
to the registered capital there is an immoveable property. The estimated
costs for the set-up of a single-member company are Lei 540 (around € 122).
Registration can be done online, through an authorized person or in a paper
form. The minimal initial capital should amount to at least 200,00
RON (around 55,00 €). The number of private limited liability companies in
October 2013 was about 950.000, thereof about 529.000 private limited liability
single-member companies.
23. SI
In Slovenia one can found
an SMC either in the legal form of a "družba z omejeno
odgovornostjo", d.o.o. (private limited liability company) or in
the legal form of a "delniška družba", d.d. (public limited
liability company). The minimal initial capital required for the
foundation of a d.o.o. amounts to 7.500,00 € and 25.000 € for a d.d. The
possibility to register the company online is available through e-VEM
portal and does not require the assistance of a notary. One stop shop portal –
OSS portal), a state portal where companies or entrepreneurs (solo proprietors)
may carry out electronic services that are necessary for the entry of companies
or entrepreneurs in the Court/Business Register. The registration of
single-member d.o.o. can be done on-line by the company (its single member)
itself, whereas in other cases the company (its members) must visit one of VEM
offices (OSS contact points) or public notary. Regardless of the entry point
(e-VEM, VEM offices, public notary) registration is carried out via the e-VEM
portal which connects all institutions involved in the registration procedure
and other relevant procedures. 
For registering a single-member d.o.o. on-line, the
applicant needs to obtain a qualified digital certificate provided by a
certification authority in Slovenia. The applicant has to use a prescribed
electronic form and open an electronic book of decisions. On-line registration
is possible also for non-resident foreign EU citizen. For registering on-line,
the applicant needs to obtain a personal identification number (Slovenian
citizens already have it) which is a prerequisite for obtaining a qualified
digital certificate provided by a certification authority in Slovenia. He/she
also needs a tax number and capital wholly paid up in cash. 
The result of completed
procedures through e-VEM portal is digitally signed electronic application with
all required attachments in electronic form. All obligatory supporting
documents (attachments) are automatically generated by e-VEM system. This
electronic application is safely and reliably sent to the relevant institutions
through the e-VEM system, and the applicant can get delivered a decision into
safe mail box. The number of private limited liability companies in November
2013 was around 65.000. The number of single-member private limited liability
companies in 2013 was around 40.000, in 2012 "new births"
single-member account to 4.800 companies.
24. SK
Slovak Commercial Code
provides the "spoločnosť s ručením obmedzeným", s.r.o.
(private limited liability company) as a legal form for the foundation
of an SMC. The company can be registered online. The incorporation
process should be assisted by a public notary, but only regarding the
validation of identity (no need for notarisation of articles of association,
etc.). The on-line registration requires an advanced electronic signature based
on a qualified certificate. The registration fee for online registration
is 165,75 € which is only 50% of the standard registration fee.  The initial
capital required for the foundation of a s.r.o. should amount to at least
5.000 €, nevertheless, it is sufficient to pay-up 2.500 € upon the registration
if there is more than 1 founder. Pursuant to a government resolution there is a
plan to reform the s.r.o. legal framework by the end of 2014. This reform shall
include inter alia also lowering the minimum capital to 1 €. The number of
private limited liability companies in October 2013 was around 211.000, thereof
around 127.000 single-member companies. The number of "new births" of
single-member private limited liability companies in 2012 was around 13.200.
25. FI
In Finland an SMC can take
the legal form of a private limited liability company (osakeyhtiö, oy). The
company can be registered online, provided that pre-approved templates
for a memorandum and articles of association are being used and the founders
have Finnish Identity Numbers and electronic identification using
Finnish Webbanking identification. The set-up costs amount to 330
€ in case of online registration (otherwise 380,00 €). The minimal initial
capital to be provided for the foundation of an oy is 2.500,00 € (in
comparison for a "julkinen osakeyhtiö" oyi - public limited
liability company it is 80.000,00 €). The number of private limited
liability companies in October 2013 was around 238.000, thereof around 119.000
single-member companies. The number of "new births" of single-member
private limited liability companies in 2012 was around 6.000.
26. SE
In Sweden an SMC can take
the legal form either of an "aktiebolag", AB (private limited
liability company) or of a "publikt aktiebolag", ABP (public
limited liability company). The applicant has the possibility to register
the company online if they have a Swedish Identity Number and a special electronic
identification which can be obtained from most Swedish banks. There are more than ten
different issuers of electronic identifications.The set-up costs correspond to
1.900,00 SEK (about 221,00 €). The minimal initial capital required for
the establishment of an AB amounts to 50.000,00 SEK (about 5.800,00 €) and to
500.000,00 SEK (about 57.900,00 €) for the establishment of an ABP. The number
of private limited liability companies in October 2013 was around 445.000,
thereof around 289.000 single-member private limited liability companies. The
number of "new births" of private limited liability companies in 2012
was around 39.300.
27. UK
In the UK an SMC can be
incorporated as a "single-member private limited liability company"
or as a "single-member public limited company". There is a
possibility to establish a private company limited by shares using model
articles online. A non-resident foreign EU
citizen can incorporate a UK company online. On-line registration of a
non-resident foreign EU citizen is possible. The name chosen for the
company is to be verified by the registration authorities upon
registration. The set-up costs for online registration are 15,00 £, for
paper 40,00 £, average electronic incorporation takes 7 hours. There is no
minimum initial capital required to incorporate a private or public company
limited by shares - but it has to be greater than zero. For the public
limited company it is 50.000 £. The number of private limited liability
companies in October 2013 was around 2,500.000, thereof around 1,400.000
single-member companies. The number of "new births" of private
limited liability companies in 2012 was around 451.300.
28. HR
A Croatian SMC can take
the legal form of a "društvo s ograničenom odgovornošću",
d.o.o. (private limited liability company) or simple d.o.o. (s.Ltd). A
possibility for online registration is granted. The incorporation process
should be assisted by a public notary who shall use the "advanced
electronic signature" to sign the required documents in case that the
applicant opts for the online registration of the company. Though, the notary
is still obliged to deliver all documents in paper (original) form to the court
registry within 3 days. The set-up costs amount to around 7.000,00 HRK (about
925,00 €), for a simple d.o.o. 109 € in total. The initial capital to be
provided amounts to at least 20.000,00 HRK (around 2.600,00 €) for the
foundation of a d.o.o. and to at least 200.000,00 HRK (about 26.500 €) for the
foundation of a "dioničko društvo", d.d. (public limited
liability company). For s.Ltd. the minimum capital amounts to 1,3 € (10,00
HRK), with a maximum up to 2 599 € (19,999,00 HRK).  The Company Law Act
prescribes minimum obligatory information to be given in the “Statement/Contract
of establishment” (documents by which establishment of s.Ltd. is possible)
regarding the name (of the natural or legal person establishing the s.Ltd),
company name, seat, business area, amount of minimum capital, rights and duties
of the founder(s) against s.Ltd., etc. The number of private limited liability
companies in October 2013 was around 124.000. The number of "new
births" of single-member private limited liability companies in 2012 was
around 5.300.


4. Summary of Responses to the Public Consultation on the
Single-Member companies

A.
General Overview
On 6 June
2013, DG Internal Market and Services of the European Commission launched a
public consultation on single member limited liability companies (‘SMCs’) which
ended on 15 September 2013. In total, 242 responses have been received, the
majority of which was provided by private sector companies. Also, other
stakeholders such as e.g. business federations, trade unions, research
institutions and public authorities have taken the opportunity to share their
views with the Commission.
Of the
private sector companies that participated, more than 75 % are established as
private limited liability companies. Out of those private limited liability
companies, again nearly 75 % of the respondents were single member private
limited liability companies. Also, the overwhelming majority of the companies
that responded described themselves as micro- to small size.
Responses
have been received from a large number of EU Member States. The highest number of
responses by far came from Germany, but the consultation has also sparked
strong interest among respondents e.g. in Estonia, Italy, France and Romania. 
  
B.
Detailed Analysis of Responses 
Section
II: Need for harmonization
In this
section of the questionnaire respondents were asked to provide their insights
on the need for regulatory harmonization due to the difficulties encountered by
companies when expanding their commercial activities abroad. 
QUESTION 1
Do
you agree with the finding that the overall participation of SME's in
cross-border trade/activities in the EU is low in relation to their potential?
The
overwhelming majority of respondents (86 %) who had an opinion on this agreed
with the finding. Especially business federations (80 %), notaries/lawyers (77
%) and private sector companies (76 %) answered in the affirmative. However,
the majority of trade unions (57 %, which is equivalent to four respondents in
total) did not agree.
QUESTION 2
Is
it difficult for SMEs to expand their commercial activities/trade by setting-up
a branch or subsidiary abroad (within the EU)?
Nearly
13% of respondents did not have a view on this. Among those who had an opinion,
60% answered in the affirmative and 40% in the negative. The negative vote was
backed not only by the trade unions (71 %) but also by an overwhelming majority
of notaries/lawyers (91 %) and a notable amount of business federations (33 %).
However, most of the private sector companies (66 %) agreed that such
difficulties exist.
QUESTION 3
Is
it difficult for SMEs to move their registered office, headquarters or
principle place of business abroad (within the EU)?
Nearly 20
% of respondents did not express an opinion on this. Of those who did, again 60
% answered in the affirmative and 40 % in the negative. The respondents were
split along similar lines as with Question 2, with notaries/lawyers (86 %) and
trade unions (71 %) mostly disagreeing, and private sector companies mostly
agreeing (55 %).
QUESTION 4
Why
is it difficult to move or expand a commercial activity/trade, by setting-up a
branch or subsidiary, abroad (within the EU)?
This was a multiple choice question. Among those who
gave an answer, compliance costs were identified as the biggest difficulty (55
% of respondents). The respondents further identified legal advice costs (48
%), difficulty of financing (47 %) and a general lack of knowledge and/or trust
in foreign company law forms (46 %) as key drivers of difficulties. Also,
nearly 30% of respondents indicated that there are “other” reasons for this.
Looking at the different groups of respondents, the
private sector companies mostly identified compliance costs (60 %), legal
advice costs (48 %) and lack of knowledge and trust in foreign company law
forms (48 %) as main drivers of their difficulties. However, the notaries/lawyers mostly
pointed to difficulty of financing (68 %) and “other” reasons (45 %). The
business federations’ respondents put most emphasis on compliance costs (58 %),
difficulty of financing (50 %) and legal advice costs (48 %). The majority of
public authorities (62 %) did not have an opinion on this.
QUESTION 5
Within
compliance costs, which do you consider as being the biggest obstacle to moving
or expanding the commercial activity/trade, by setting-up a branch or subsidiary,
abroad (within the EU) ?
This also was a multiple choice question. The biggest
obstacle that was identified was the annual running and operational costs of a
branch or subsidiary abroad (73 %). Also, more than half of the respondents
identified “other” costs such as costs stemming from labour law, health and
safety issues as big obstacles (52 %). Apart from that, other large parts of
the compliance costs were attributed to translation (33 %), registration fees
(27 %) and initial capital (18 %).
Looking at the different groups of respondents, the
biggest obstacles for the private sector companies are by far the annual
running/operational costs (76 %). Secondary are “other” costs such as costs
stemming from labour law, health and safety issues (43 %). For business
federations however, both types of costs are of similar importance (operational
cost: 68 %, other cost: 63 %). Public authorities on the other hand attribute
much higher weight to “other” costs (92 %), but operational costs are also
identified as being of second biggest importance (62 %).
QUESTION 6
Would
the legislative harmonisation of requirements concerning single-member private
limited liability companies at the EU level encourage/facilitate an increase in
cross-border activity of SMEs within the EU? 
What
would otherwise increase such activity? 
Of the respondents who expressed their opinion on this
question nearly 63 % agreed with the notion that legislative harmonisation at
the EU level would encourage and/or facilitate an increase in cross-border
activity of SMEs, only 37 % disagreed. The negative vote was comprised of the
majority of trade unions (71 %) but also notaries/lawyers
(80 %). The majority of
Yes-votes stemmed not only from the private sector companies (74 %) but also
from the universities and researchers (78 %) as well as the responding
individuals (79 %). Public authorities were split on the matter, with 4 out of
13 responses in favour, 5 against and 4 abstaining.
The second part of the question allowed for multiple
answers. The use of a single point of contact was supported by 43 % of
respondents, including the majority of private sector companies (55 %). An
information campaign was deemed helpful by 30 %, including the majority of
business federations (50 %). However, 25 % of respondents requested “other”
types of activities to increase SMEs cross-border activity, including the
majority of public authorities (46 %).
Section
III: Quantifiable data
This
section set out to collect quantifiable data on the number of SMCs in the Member
States and the costs they face at home (Question 1-8) and abroad (Question
9-12). Questions 1-8 were addressed to Member States’ authorities directly.
However, since a large group of Member States did not respond to this
consultation, DG Markt has collected information from them directly. This
information can now be found in the Annex to the Impact Assessment on SMCs. 
It should
also be noted, that Questions 9-12 unfortunately did not yield the
representative results the Commission had hoped for since most of the
respondents did not express their views on those issues.
QUESTION 9
What
are, in your experience/knowledge, the total additional costs incurred in
relation to the setting up of a single-member private limited liability
company abroad (within the EU) in comparison to setting-up the company in your
own country?
Most of
the respondents (54 %), including the majority of public authorities (85 %),
notaries/lawyers (80 %), business federations (55 %) and private sector
companies (44 %), did not have a view on this. Among those who did, 47 % deemed
the total additional cost to be between 1-4.999 Euro. Another 25 % placed the
cost in a range between 5.000-9.999 Euro. Still, more than 13 % of respondents
said there would be no additional cost incurred at all. 
QUESTION 10
What
are, in your experience/knowledge, the total additional costs incurred in
relation to the setting up of a single-member public limited liability
company abroad (within the EU) in comparison to setting-up the company in your
own country?
Nearly 63
% of respondents did not express an opinion on this, including the majority of
public authorities (85 %), notaries/lawyers (82 %), private sector companies
(60 %) and business federations (55 %). Among those who did, the majority
identified 1-4.999 Euros as the additional cost for setting up a single member
public limited liability company abroad instead of at home. However, there are
also a significant number of other respondents that put the costs either at
5.000-9999 Euro (19 %), or 10.000-20.000 Euro (16 %) or more than 20.000 Euro
(12 %). Also, 19 % of respondents, including a notable amount of universities
(33 %) and trade unions (29 %), are convinced there will be no additional cost
at all. The results may thus be best described as mixed.
QUESTION 11
What
are, in your experience/knowledge, the additional legal advice costs associated
with the setting-up of a single-member private limited liability company
abroad (within the EU) in comparison to setting-up the company in your own
country?
Again,
the overall majority of respondents did not provide an answer for this question
(55 %), including the majority of public authorities (92 %), notaries/lawyers
(70 %), business federations (65 %) and trade unions (57 %). Among those who
did, a large majority of 47 % placed the additional legal advice costs at
1-4.999 Euros. However, another large group of respondents placed them at
5.000-9.999 Euro (26 %). Only 13,6 % said there would be no additional cost,
including 7 out of 108 private sector company respondents.  
QUESTION 12
What
are, in your experience/knowledge, the additional legal advice costs associated
with the setting-up of a single-member public limited liability company
abroad (within the EU) in comparison to setting-up the company in your own
country?
62 % of
respondents did not provide an answer to this question, including the majority
of public authorities (85 %), notaries/lawyers (75 %), business federations (65
%), private sector companies (61 %) and trade unions (57 %). Among those who did,
38, 5 % deemed the additional legal advice costs to be again around 1-4.999
Euro, 25 % placed them at 5.000-9.999 Euro and 11 % at 10.000-20.000 Euro.
Still, 18, 6% of respondents said there would be no additional cost at all. 
Section
IV: Substance – A potential initiative on single-member limited liability
companies
This last
section covered the substance of a potential initiative on single-member
limited liability companies.
QUESTION 1
Should
the potential initiative include simple rules for company registration on-line
with one common standard registration form throughout the EU?
An online
registration with a common standard registration form was approved by a large
majority of all respondents (61,2 %). Only, 33, 5 % of respondents disagreed
and 5, 3 % did not give an opinion. The ‘No’-vote consisted again of the
majority of trade union respondents (86 %) and notaries/lawyers (82 %).
However, the majority of private sector companies (79 %) and business
federations (68 %) as well as universities (78 %) answered in the affirmative.
Public authorities are split on the issue with five out of thirteen respondents
in favour, five against and three abstaining.  
QUESTION 2
Should
the potential initiative include rules on on-line creation of branches abroad (within
the EU) via the central platform of interconnection of national business
registers?
Among the
respondents who had an opinion on this, 66 % agreed that online creation of
branches abroad should be handled via the central platform of interconnection of
national business registers; 34 % spoke out against. As before strong
opposition came from the notaries/lawyers (80 %) as well as the trade unions
(71 %, which equals five respondents). The majority of private sector companies
(78 %), business federations (63 %) and universities (78 %) spoke out in
favour. Public authorities were again split on the issue, but this time leaning
slightly to the Yes-Vote (with six respondents in favour).
QUESTION 3
Should
the potential initiative harmonise the amount of minimum legal capital required
for the setting-up of a single-member private limited liability company? 
What
should be the harmonized amount of the minimum legal capital?
On the
first question, 52,1 % agreed that the potential initiative should cover the
amount of minimum legal capital required for the setting up of an SMC. However
39,7 % of respondents disagreed; 8, 2 % did not give an opinion. Whilst private
sector companies (68 %) and individuals (64 %) were largely in favour of such a
provision, the business federations as well as public authorities responded
cautiously with their votes being nearly split on the issue but leaning more
towards the negative (business federations: 50 %, public authorities: 54 %).
The
second part of the question was answered by half of the respondents only. Among
the answers given, no clear consensus on the harmonized amount of the minimum
legal capital was found with 27 % voting for 5.000 Euro and more, 24 % voting
for 1-999 Euros and 21 % in favour of 1.000-4.999 Euros. A strong minority of
17 % also favoured a 1 Euro requirement. 
QUESTION 4
Should
the potential initiative include rules on distributions/dividends if a company
would be unable to continue paying its due debts after the distribution/paying
the dividends?
Among the
respondents who gave a clear answer to this question, roughly 64 % voted in the
affirmative and 36 % in the negative. Strong support for such rules was voiced
not only by the majority of trade unions (86 %) but also by universities (67 %)
and private sector companies (60 %). Also, public authorities tended to be in
favour (Yes: 46 %, No: 31 %, I don’t know: 23 %). The notaries/lawyers were
more reluctant on the issue with 61 % of votes cast against such a measure. 
QUESTION 5
In
case of minimum capital being more than 1 euro, should the potential initiative
include rules on the opposition of creditors to a significant reduction of
capital?
The
results for this question are more closely tied than before with 44 % of
respondents agreeing and 40 % disagreeing (and 16 % abstaining). Among the
sceptical respondents is a notable amount of private sector companies (33 %)
and business federations (33 %) as well as the majority of the notaries/lawyers
(64 %). Trade unions (86 %) and university respondents (56 %) however are in
favour of such a rule.
QUESTION 6
Should
the potential initiative include rules on the transfer of registered office?
Among the
respondents who had an opinion on this, 57 % voted in favour and 43 % against a
rule on the transfer of registered office. The majority of private sector
companies (59 %) and business federations (58 %) agrees with such an approach,
as does the majority of public authorities (54 %, which equals seven
respondents). However, trade unions (71 %) and notaries/lawyers (66 %) are
mostly against it.
QUESTION 7
If
the number of members in a single-member private limited liability company
increases to more than one, should the potential initiative provide for
recourse to national laws to convert the single-member private company into
another national company law form?
Responses
are again very much split on the question with 44 % agreeing, 33 % disagreeing
and 23% of respondents not giving any answer at all. Among those who are in
favour are the majority of trade union (57 %) and university respondents (56
%). Business Federations are evenly split on the subject (15 out of 40
respondents in favour, 15 against, 10 abstaining) and most of the private
sector companies are either against it or undecided (35 % against, 19 %
abstaining).
QUESTION 8
Should
the potential initiative provide for limits as to how many single-member
private limited liability companies one natural or legal person can create?
The
result for Question 8 is remarkably clear however, with 71.4 % of respondents
speaking out against such a limit and only 28.6 % agreeing with the
proposition. The majority of notaries/lawyers (86 %), business federations (73
%), public authorities (69 %), private sector companies (64 %) and universities
(56 %) voted against such limits. The only group of respondents that was
heavily in favour of such a provision was the trade unions (86 %). 
QUESTION 9
Should
the potential initiative include special rules for SMEs which would make the
setting-up of single-member private limited liability companies easier and
cheaper for them than for bigger companies?
Among
those who answered, the majority was in favour of such special rules (54 %),
especially most of the private sector companies (77 %). However, 46 % of
respondents also disagreed. This ‘No’-Vote was not only comprised of trade
union respondents (86 %) and notaries/lawyers (86 %) but also of a majority of
public authorities (62 %).
QUESTION 10
Should
the potential initiative provide for a new common abbreviation (like SEUP –
Societas Europea UniPersonam ) for all single-member private limited liability
companies in the EU in order to increase the trust in “foreign” company law
forms?
The vote
on a new common abbreviation was also close with 42 % in favour, 31 % against,
7 % abstaining and 20 % opting for another abbreviation. Amongst the ones in
favour were the majority of university respondents (67 %), business federations
(53 %) and private sector companies (52 %). A notable amount of public
authorities (38 %) as well as the trade unions (86 %) spoke out against. Half
of the notaries/lawyers would prefer to have another abbreviation.
The
respondents were also invited to give suggestions for other possible
abbreviations. Some of these were close to the original as e.g. SEP, SPEU
(Societas Privata Europaea UniPersonam) or simply UP (Unipersonam). Others were
more creative like e.g. SRLU, EUC (European Company) or SMB. And some tried to
link the European with the national name like e.g. Euro-GmbH or SMC-GmbH. 
QUESTION 11
Should
the potential initiative cover, not only single-member private limited
liability companies, but also single-member public limited liability companies?
Nearly
one third of respondents did not have an opinion on that, including a notable
amount of private sector companies (33 %). Amongst those who answered there was
a strong majority against public SMCs to be included in the proposal (62 %).
Most of the business federations (60 %) were reluctant about this. The same is
true for the majority of notaries/lawyers (75 %), trade unions (71 %), the
public authorities (69 %) and university respondents (56 %).
[1] COM(2010) 2020, 3.3.2010.
[2] COM(2010) 614.
[3] COM(2011) 78, 23.2.2011.
[4] COM(2011) 206, 13.4.2011.
[5] COM(2012) 573, 3.10.2012.
[6] COM(2012) 740, 12.12.2012; “Action Plan: European company law and
corporate governance – a modern legal framework for more engaged shareholders
and sustainable companies”.
[7]
Http://ec.europa.eu/governance/impact/planned_ia/docs/2014_markt_003_single_member_company.pdf.
[8] The Report of the Reflection Group:
http://ec.europa.eu/internal_market/company/docs/modern/reflectiongroup_report_en.pdf.
[9]
http://ec.europa.eu/internal_market/consultations/2013/single-member-private-companies.
[10] Business Europe, Council of Notaries of the EU, European Small
Business Alliance, Council of Bars and Law Societies of Europe, Chambre de
Commerce et d’Industrie de région Paris et Ile-de-France, Association Nationale
des Sociétés par Actions and Eurochambers.
[11] Article 2 of Directive
2009/102/EC of the European Parliament and of the Council of 16 September 2009
in the area of company law on single-member private limited liability
companies, OJ L 258, 1.10.2009, p. 20–25.
[12] There is no specific definition of a
“subsidiary” in the EU acquis. The definition referred to above stems from
Directive 83/349/EEC (the Seventh Council Directive) on consolidated accounts
(currently Directive 2013/34/EU).
[13] Estimated figure for 2012. Source: The report “EU SMEs in 2012: at
the crossroads. Annual report on small and medium-sized enterprises in the EU”,
2011/12, p. 9,
http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/performance-review/files/supporting-documents/2012/annual-report_en.pdf.
[14] The Report of the Reflection Group, p. 57.
[15]IA on financial statements; SEC (2011) 1289 final, p. 19, available
at: http://ec.europa.eu/internal_market/accounting/docs/sme_accounting/review_directives/SEC_2011_1289_1_en.pdf.
Since each SME that is obliged to follow accounting rules has to have limited
liability, the number of SMEs subject to accounting rules is identical with the
number of limited liability SMEs.
[16] Data provided by national authorities in 2013 for all MS. For more
detailed information see Annex.
[17] 7,3 million out of 8,1 limited liability companies in the EU
(EUROSTAT estimates from 2010).
[18]
http://ec.europa.eu/internal_market/company/docs/shareholders/ia_transfer_122007_part2_en.pdf.
[19] http://www.companieshouse.gov.uk/about/pdf/companiesRegActivities2012_2013.pdf.
[20] This data was provided by national authorities in the framework of
the on-line consultation on single-member companies and is also available on http://www.companieshouse.gov.uk/about/pdf/companiesRegActivities2012_2013.pdf.

[21] Http://ec.europa.eu/internal_market/consultations/2013/single-member-private-companies/. 

[22] Http://ec.europa.eu/internal_market/consultations/2013/single-member-private-companies/.
[23] See e. g. N. H. Jimenez, S. San Martin, The role of
country-of-origin, ethnocentrism and animosity in promoting consumer trust. The
moderating role of familiarity, International Business Review 19 (2010)
34–45.
[24] On the general trend see European Cross-border E-commerce,
The Challenge of Achieving Profitable Growth, http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture-ERRT-Brochure.pdf#zoom=50.
[25] See The Consumer Conditions Scoreboard, SWD(2013) 291 final,
available at: http://ec.europa.eu/consumers/consumer_research/editions/docs/9th_edition_scoreboard_en.pdf
(9th edition, July 2013).
[26] Ibidem, p. 23.
[27] Observatory of European SMEs, Analytical Report May 2007, available
at: http://ec.europa.eu/public_opinion/flash/fl196_en.pdf,
referred to in the SPE impact assessment, SEC(2008) 2098, p. 11 (available
at: http://ec.europa.eu/internal_market/company/
docs/epc/impact_assesment_en.pdf).
[28] Internalisation of European SMEs – http://ec.europa.eu/enterprise/policies/sme/market-access/files/internationalisation_of_european_smes_final_en.pdf.

[29] Moreover, the relevant markets are often still national due to
different consumer preferences, brand perception, demand structure, prices set
at national level, regulatory differences or even different “medical views”
among stakeholders. See Case No COMP/M.3751 - Novartis/Hexal, Commission
Decision of 27 May 2005, M.2283 (10/10/2001) Schneider / Legrand.
[30] The EU and SMEs: A contract for new growth, brochure by the
Commission (2012), p. 8, available at:
http://ec.europa.eu/internal_market/publications/docs/sme-brochure/sme-brochure-web_en.pdf.
[31] Flash Eurobarometer 331, Retailers' attitudes towards cross-border
trade and consumer protection, June 2012, p. 5, available at http://ec.europa.eu/public_opinion/flash/fl_331_sum_en.pdf.
[32] Bieron, J & Ahmed, U., Regulating E-commerce through
International Policy: Understanding the International Trade Law Issues of
E-commerce, Journal of World Trade: law, economics, public policy (2012),
pp. 545-570 (546).
[33]Internationalisation of European SMEs, p. 22.
[34] Internationalisation of European SMEs (ibd), p. 22. 
[35] Internationalisation of European SMEs, (ibd.), p. 58.
[36] For example
Directive 2013/34/EU on the annual financial statements, consolidated financial
statements and related reports of certain types of undertakings, amending
Directive 2006/43/EC of the European Parliament and of the Council and
repealing Council Directives 78/660/EEC and 83/349/EEC.
[37] Only 32 % of companies considered access
to finance as a barrier as compliance costs or trust in foreign company law
forms.
[38] Obstacles not related to company law and answers where stakeholders
did not take any position were not counted.
[39] Results of the 2013 on-line consultation -
http://ec.europa.eu/internal_market/consultations/2013/single-member-private-companies/.
[40]SEC(2008) 2098, p. 11.
[41]The Report of the Reflection Group, p.57.
[42]
http://ec.europa.eu/internal_market/consultations/2013/single-member-private-companies/.
[43] Minimum legal advice means advice given by notaries or other
lawyers compulsory participating in the process of registration of companies.
The average costs of legal advice could be much higher.
[44] see p. 44 
[45] Annex 3. provides the summary in relation to all MS.
[46] These costs were calculated for the founder who is a legal person
and does not qualify for any start-up aid.
[47] If instead of a full amount of minimum capital, the actual minimum
capital paid in is taken into account the comparison is the following: (before
July 2013) – around € 19,000; (after July 2013) – around € 6,000
[48] Final Report on the Opportunities for the Internationalisation of
European SMEs (2011), p. 21, available at:
http://ec.europa.eu/enterprise/policies/sme/market-access/files/web_internationalisation_opportunities_for_smes_final_report_aug_2011_en.pdf.
[49] Micro-enterprises have below 10 employees and have a turnover or
balance sheet total below or equal to € 2 million. 
[50] Small enterprises have below 50 employees and have a turnover or
balance sheet total below or equal to € 10 million. 
[51] Medium-sized enterprises have below 250 employees and a turnover
below or equal to €50 million or balance sheet total below or equal to €43
million.
[52]Http://ec.europa.eu/enterprise/policies/sme/market-access/files/web_internationalisation_opportunities_for_smes_final_report_aug_2011_en.pdf,
p. 38.
[53] Internationalisation of European SMEs, (ibd.), p. 21.
[54]
Http://ec.europa.eu/internal_market/consultations/2013/single-member-private-companies/
[55] See: Final Report on the Opportunities for the Internationalisation
of European SMEs (2011), p. 57-63.
[56] Internationalisation of European SMEs, (ibd.), p. 47.
[57] Internationalisation of European SMEs, (ibd.), p. 47.
[58]According to the available data, there were only 56 SEs in Germany
in 2012 that had less than 500 employees (http://www.boeckler.de/pdf/bb_mitbestimmung_se_2013_07_01.pdf)
among 1 million private limited liability companies and 16.000 public limited
liability companies. 
[59] COM(2010) 676, 17.11.2010, “Report on the application of Council
Regulation 2157/2001 on the Statute for a European Company (SE)”, p. 6.
[60] Proposal for a Council Regulation on the Statute for a European
private company, COM(2008) 396.
[61] Technical negotiations had been finalised under the Swedish
Presidency. However, political agreement could not be reached at the
Competitiveness Council meetings in December 2009 and later in May 2011. The
three most contentious issues, on which it was difficult to reach agreement,
included the possibility to separate the registered office and the headquarters
in two different Member States, the amount of the minimum capital required and
the regime for employee participation. Recent contacts with MS delegations
during 2012 showed that, despite their general support for the objectives of
the initiative, their respective positions were unlikely to evolve in the near
future. For instance, at the meeting of the Company Law Expert Group on 1 June
2012, although some MS were willing to continue the work on the SPE, a number
of delegations claimed that they reached their limits as regards possible
further concessions in the context of unanimity. Several others had doubts as
they found the latest version of the Presidency compromise not sufficiently
ambitious or argued that alternatives should be explored instead. 
[62] The withdrawal of the SPE proposal was announced in the Annex to
the Communication on “Regulatory Fitness and Performance (REFIT): Results and
Next Steps”, COM(2013)685, 2.10.2013.
[63] Council Regulation (EC) No 1435/2003
of 22 July 2003 on the Statute for a European Cooperative Society (SCE).
[64] Directive 89/667/EEC of 21 December 1989 on single-member private
limited-liability companies, [3] OJ L 395, 30.12.1989, p. 40.
[65] Council Directive 89/667/EEC (OJ L 395, 30.12.1989, p. 40), Annex
I, point XI.A of the 1994 Act of Accession (OJ C 241, 29.8.1994, p. 194), Annex
II, point 4.A of the 2003 Act of Accession (OJ L 236, 23.9.2003, p. 338),
Council Directive 2006/99/EC (OJ L 363, 20.12.2006, p. 137) | Only point A.4 of
the Annex.
[66] Directive 2009/102/EC of the European Parliament and of the Council
of 16 September 2009 in the area of company law on single-member private
limited liability companies, OJ L 258, 1.10.2009, p. 20–25.
[67] Directive 2006/123/EC of the European Parliament and of the Council
of 12 December 2006 on services in the internal market OJ L 376, p. 36–68. 
[68]Directive 2012/17/EU of the European Parliament and of the Council
of 13 June 2012 amending Council Directive 89/666/EEC and Directives 2005/56/EC
and 2009/101/EC of the European Parliament and of the Council as regards the
interconnection of central, commercial and companies registers.
[69] See Annex. 
[70] https://ems.ms.gov.pl.
[71] Minimum capital depends on whether it is a private or public
limited liability company. There are reforms envisaged to further reduce the
minimum capital.
[72] See: Council Conclusions on the review of the "Small Business
Act" for Europe, 2011, p. 3, available at:
http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/intm/122326.pdf.
[73] Council Conclusions (ibd.), p. 3.
[74] Start-up procedures: progress in 2012, available at:
http://ec.europa.eu/enterprise/policies/sme/business-environment/start-up-procedures/progress-2012/index_en.htm.
[75] Start-up procedures: progress in 2012 (ibd.).
[76] Exceptional distinction is made in the Accounting Directives.
[77] Davies, P., Gower and Davies: Principles of Modern Company Law,
8th edition, 2008, p. 13.
[78] Chang, S.J., Chung, J.,
Moon, J.J., When do wholly owned subsidiaries perform better than joint
ventures?, Strategic Management Journal (2013), Volume 34, Issue 3, p.
317–337.
[79] Youssef, K.B. &
Hoshino, Y., The Choice between Joint Ventures and Wholly Owned
Subsidiaries: the Case of Japanese Direct Investment in Europe, Japanese
Journal of Administrative Science (2003), Volume 17, No. 1, p. 31-46.
[80]"http://www.investinflanders.be/EN/Sector/Renewable-energy/chapter/Setting-up-your-business/page/Types-of-business-entities".

[81] In Romania the presence of a notary is required if a contribution
in kind is an immovable property.
[82] Modus operandi of these systems vary significantly among MS. For
example, in Romania the presence of a notary is required if a contribution in
kind is an immovable property. In Slovakia, in case of lack of Slovak
e-signature the involvement of a notary is required, in Finland the on-line
registration system is only available for natural persons.
[83] Here also the differences among MS are significant. For instance,
in Spain single-member can register personally a company on-line, but the prior
involvement of a notary in the form a notarial deed is still necessary.
[84] COM(2012) 238, Proposal for a Regulation of the European Parliament
and the Council on electronic identification and trust services for electronic
transactions in the internal market, p 4. eIDAS provides for a regulatory
environment for the mutual recognition at EU level of electronic identification
schemes and of electronic trust services (including electronic signature). 
[85] http://ec.europa.eu/internal_market/imi-net/index_en.html.

[86] Http://ec.europa.eu/internal_market/consultations/2013/single-member-private-companies/.
[87] On Spain see remarks in the footnote above.
[88] Information provided to the Commission by the Irish Department of
Jobs, Enterprise and Innovation.
[89] Information provided to the Commission by the Permanent
Representation of the Slovak Republic to the European Union.
[90] https://ems.ms.gov.pl.
[91] For instance, in Austria a template for a single member private
limited liability company set up by a natural person is provided by the
Economic Chamber of Commerce: "Erklärung über die Errichtung einer
Gesellschaft mit beschränkter Haftung", http://portal.wko.at/wk/format_detail.wk?angid=1&stid=739157&dstid=686&cbtyp=1&titel=GmbH-Reform%2cbeschlossen.
[92] For instance in Germany the templates for single-member and up to a
three member private limited liability company are included in the Act
"Gesetz zur Modernisierung des GmbH Rechts" on the following website:
Musterprotokoll für die Gründung einer Einpersonengesellschaft, and
Musterprotokoll für die Gründung einer Mehrpersonengesellschaft,
http://www.bmj.de/SharedDocs/Downloads/DE/pdfs/Gesetz_zur_Modernisierung_des_GmbH_Rechts.pdf?__blob=publicationFile.
[93] C. Teichmann, Modernizing the GmbH: Germany’s Move in Regulatory
Competition, 7 European Company Law 2010, p. 22.
[94] See Annex. This calculation already includes the reforms that will
enter into force in 2014 in CZ, HU and DK.
[95] For calculations see Annex – the simple average is currently €2197.
[96] M. Bech, C. Mayer, H. F. Wagner, Where do firms incorporate ?
Deregulation and the cost of entry, 14 Journal of Corporate Finance (2008),
p.255
[97]
Braun et al, Does Charter Competition Foster Entrepreneurship? A Difference-in-Difference Approach to European Company Law Reforms, JCMS 2013 Volume 51 Number 3, p. 401.
[98] Ibidem, p. 413. Also the recent figures from Germany are
particularly telling. Within 5 years of existence of the UG company form with a
€1 minimum capital requirement (from 1.11.2008-1.1.2013), the number of
incorporations rose from 0 to 78,680. See U. Kornblum,
Bundesweite Rechtstatsachen zum Unternehmens- und Gesellschaftsrecht (Stand
1.1.2012), GmbHR 2012, p.720.
[99] http://startupmanifesto.eu/.
[100] See calculations in the Annex.
[101] See Table 1.2
[102] See Table 1.1
[103] See Table 1.1
[104] Ibidem
[105] See Table 1.1
[106] See Table 1.2
[107] See Table 1.2
[108] See Table 1.1
[109] See Table 1.1  The calculation considers MS that do not have € 1
minimum capital requirement as having those having the requirement of above  €
1 not matter whether such a requirement is not only provided for certain groups
of founders (such as natural persons).
[110] See Table 1.1
[111] Ibidem
[112] See the calculations which accompanied the reform of Austrian
company law http://www.justiz.gv.at/web2013/file/2c9484853d643b33013d92140125696b.de.0/erl.pdf
[113] The data from other countries varies. The reforms of company law in
Hungary resulted in an increase of 85% of daily incorporations. Average daily
incorporations increased by 26% one year after the reform of company law in
Germany and in France which reduced minimum capital from thousands of euros to
1. See Braun et al, Does Charter Competition Foster Entrepreneurship? A
Difference-in-Difference Approach to European Company Law Reforms, JCMS
2013 Volume 51 Number 3, p. 408.
[114] See Table 1.2 (this is a simple EU average of minimum capital
requirement in those countries that have the requirement of above € 1; currency
changes can alter the figure). 
[115] Ibidem