COMMISSION STAFF WORKING DOCUMENT SUBSIDIARITY GRID Accompanying the document Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directives 2009/102/EC and (EU) 2017/1132 as regards further expanding and upgrading the use of digital tools and processes in company law
Date: 2023-03-29
Institutions: Directorate-General for Justice and Consumers, European Commission
Subjects: access to information, administrative cooperation, company law, cross-frontier data flow, digital transformation, digitisation, registration of a company, right of establishment, single market, small and medium-sized enterprises

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 29.3.2023  SWD(2023) 177 final  COMMISSION STAFF WORKING DOCUMENT SUBSIDIARITY GRID        Accompanying the document Proposal for a   DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL    amending Directives 2009/102/EC and (EU) 2017/1132 as regards further expanding and upgrading the use of digital tools and processes in company law         {COM(2023) 177 final} - {SEC(2023) 377 final} - {SWD(2023) 178 final} - {SWD(2023) 179 final}  
 
 
Subsidiarity Grid  

1.  Can the Union act? What is the legal basis and competence of the Unions’ intended action? 

1.1 Which article(s) of the Treaty are used to support the legislative proposal or policy initiative? 

The  proposal  is  based  on  Article  50  (1)  and  (2)  of  the  Treaty  on  the  Functioning  of  the  European 
Union (TFEU). This Article empowers  the European Parliament  and the  Council to adopt  provisions 
aiming to attain freedom of establishment and is the legal basis for the EU’s competence to act in the 
area  of  company  law.  In  particular,  Article  50(2)(b)  ensures  close  cooperation  between  the 
competent authorities in the Member States, Article 50(2)(c) provides for abolition of administrative 
procedures and practices forming an obstacle to freedom of establishment, Article 50(2) (f) provides 
for  abolition  of  restrictions  on  freedom  of  establishment,  both  as  regards  setting  up  branches  or 
subsidiaries and Article 50(2) (g) provides for coordination measures concerning the protection of the 
interests  of  companies’  members  and  other  stakeholders.  By  enhancing  co-operation  between 
Member  States’  authorities  through  the  Business  Registers  Interconnection  System  (BRIS),  by 
abolishing  administrative  barriers  to  freedom  of  establishment  including  when  setting  up  cross-
border  subsidiaries  and  branches  and  by  providing  new  harmonised  disclosure  requirements,  this 
proposal will contribute to attaining the freedom of establishment as enshrined in Article 50 TFEU.  

Article 50 TFEU is combined with Article 114(1) TFEU, which empowers the European Parliament and 
the Council to adopt measures for the approximation of the provisions which have as their object the 
establishment  and  functioning  of  the  internal market.  Administrative  obstacles  to  the  cross-border 
use  and  acceptance  of  company  information  in  business  registers  as  well  as  of  notarial  or 
administrative acts in the context of procedures under this  Codified Company Law Directive have a 
direct impact on the full enjoyment of the internal market freedoms of EU businesses as described in 
Article 26(2) TFEU and referred to in Article 114(1) TFEU. It is therefore the suitable complementary 
legal  basis  to  cover  the  regulation  of  company  documents  used  by  EU  businesses  in  cross-border 
scenarios within the internal market. 

1.2 Is the Union competence represented by this Treaty article exclusive, shared or supporting in 
nature? 

As regards the  regulation of  the  internal market, including  ensuring  the freedom of establishment, 
the Union’s competence is shared. 

Subsidiarity does not apply for policy areas where the Union has exclusive competence as defined in 
Article 3 TFEU1. It is the specific legal basis which determines whether the proposal falls under the 
subsidiarity control mechanism. Article 4 TFEU2 sets out the areas where competence is shared 
between the Union and the Member States. Article 6 TFEU3 sets out the areas for which the Unions 
has competence only to support the actions of the Member States. 

2.  Subsidiarity Principle: Why should the EU act? 

2.1 Does the proposal fulfil the procedural requirements of Protocol No. 24: 

-  Has there been a wide consultation before proposing the act? 

1 https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:12008E003&from=EN  
2 https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:12008E004&from=EN  
3 https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:12008E006:EN:HTML  
4 https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:12016E/PRO/02&from=EN  

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- 

Is there a detailed statement with qualitative and, where possible, quantitative indicators 
allowing an appraisal of whether the action can best be achieved at Union level? 

Before putting forward this proposal, the Commission consulted widely. Those consultation activities 
included, in line with the Commission’s Better Regulation rules:  

 The inception impact assessment (roadmap), with feedback from 8 stakeholders;  
  The open  public  consultation  (OPC),  which  received  83  responses  from  business  associations,  EU 
citizens, public authorities, companies and other respondents, including legal professionals.  
 The targeted consultation of SMEs (“SME panel”), which received 158 replies, mainly from SMEs in 
the form of limited liability companies; 
  Targeted  interviews  with  key  stakeholders,  interviews  with  legal  professionals  specialised  in 
company  law,  as well  as  discussions with  company  law  experts  from  Member State  Ministries  and 
business registers in the Company Law Expert Group (CLEG), and with company law academics and 
practitioners in the Informal Expert Group on Company law and Corporate Governance (ICLEG). The 
ICLEG also drew up two reports on issues relevant for this initiative5.  
  The  Commission  also  contracted  an  external  consultant  (Milieu  Consulting)  to  carry  out  a  study, 
including specific tasks such as desk research and literature review, analysis, legal mapping, targeted 
e-surveys  and  interviews  with  key  stakeholders  to  assist  the  Commission  in  collecting  evidence, 
providing  analysis,  and  cost  estimates  for  the  initiative.  The  targeted  e-surveys  were  addressed  to 
business  registers,  public  authorities,  legal  practitioners  and  companies.  In  addition,  two  virtual 
workshops (with business registers and companies) were organised in the context of the study6. 

Detailed information on the consultation strategy and the outcome of the stakeholder consultations 
can be found in Chapter 3 of the Explanatory Memorandum to the proposal and in Annex 2 of the 
Impact Assessment.  

The Explanatory Memorandum (Chapter 2) and the Impact Assessment (Chapter 3) contain a section 
on the principle of subsidiarity (see question 2.2. below). 

2.2 Does the explanatory memorandum (and any impact assessment) accompanying the 

Commission’s proposal contain an adequate justification regarding the conformity with the 
principle of subsidiarity? 

The overall objective of this legislative proposal is to ensure the smooth functioning of the EU single 
market  by  facilitating  the  cross-border  access  to  and  use  of  company  information  in  cross-border 
situations.  There  is  a  strong  value  added  of  action  at  EU  level  because  the  problems  that  this 
proposal  tackles  are  not  limited  to  the  territory  of  one  Member  State  but  are  of  a  cross-border 
nature,  in particular due to  discrepancies  in national legislations,  and Member States on their own 
could not bring about sufficient improvement to those problems.  

To  increase  the  scope  of  available  company  data  at  EU  level  through  BRIS,  a  coordinated  action  is 
required to ensure that all Member States have the data in their business registers and that the data 
is  accessible  in  comparable  and  multilingual  format  centrally  at  EU  level  through  BRIS,  which  is 
existing  and operational  at  EU  level.  Similarly,  co-ordinated  action  is  required  to  ensure  that  there 
are common checks of company data before it is entered into national business registers to improve 
its reliability and facilitate its use in cross-border situations. Finally, enabling the cross-border use of 

5Register of Commission expert groups and other similar entities (europa.eu) 
6Company law and corporate governance (europa.eu) 

2 

 
 
 
 
 
 
                                                           
company  data,  including  the  application  of  the  once-only  principle,  requires  the  elimination  of 
barriers  in  cross-border  situations.  Similarly,  the  value  added  from  linking  the  EU  level  systems  of 
interconnection of registers can also be only achieved by an EU action.  

Member States acting individually would continue to apply their own rules in this respect with little 
prospect  that  such  rules  would  address  the  cross-border  situations  in  a  compatible  manner. 
Therefore, without any action at EU level, different measures taken at national level would be likely 
to result in divergent national solutions and SMEs would continue to face barriers making effective 
exercise  of  the  freedom  of  establishment  more  difficult  and  the  resulting  costs  would  negatively 
affect  companies.  Consequently,  the  targeted  EU  intervention  through  this  proposal  complies  with 
the principle of subsidiarity. 

2.3 Based on the answers to the questions below, can the objectives of the proposed action be 

achieved sufficiently by the Member States acting alone (necessity for EU action)? 

(a)  Are there significant/appreciable transnational/cross-border aspects to the problems being 

tackled? Have these been quantified? 

This initiative focuses on cross-border issues: on access to, availability and reliability of company data 
on a cross-border basis and on its cross-border use.  

(b)  Would national action or the absence of the EU level action conflict with core objectives of 

the Treaty7 or significantly damage the interests of other Member States? 

Without  EU  level  action,  different  national  initiatives  to  address  the  increasing  demand  for  cross-
border company data and the need to facilitate its use cross-border would likely result in divergent 
national rules and potentially overlapping requirements, leading to legal uncertainty and increasing 
administrative burden for companies to operate cross-border, therefore conflicting with the Treaty 
objective of establishing the internal market.  

(c)  To what extent do Member States have the ability or possibility to enact appropriate 

measures? 

Member  State  measures  on  their  own  could  not  bring  about  sufficient  improvement  in  the  areas 
tackled by this initiative, given their cross-border nature. Co-ordinated action is required to achieve 
the objectives of this initiative. For instance, it is necessary to ensure that all Member States have the 
data in their business registers and that the data is accessible in comparable and multilingual format 
centrally at EU level to increase the scope of available company data in national registers and at EU 
level through BRIS. Reliability of company data will only be improved if all Member States carry out 
common checks of company data before it is entered into national business registers. Furthermore, 
some measures can only be achieved by EU action, e.g. introducing a common company extract or 
applying  the  once-only  principle  to  facilitate  the  use  of  company  information  in  cross-border 
situations.  Linking  the  EU  level  systems  of  interconnection  of  registers  can  also  only  be  achieved 
through  EU  level  measures.  EU  action  is  also  needed  because  this  initiative  aims  to  build  on  BRIS, 
which is an already operational EU level system of interconnection and provides for multilingual and 
comparative company information cross-border.   

7 https://europa.eu/european-union/about-eu/eu-in-brief_en  

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(d)  How does the problem and its causes (e.g. negative externalities, spill-over effects) vary 

across the national, regional and local levels of the EU? 

Overall,  the  problems  tackled  by  this  initiative  –  i.e.  insufficient  availability  of  reliable  company 
information cross-border and difficulties to directly use company data when setting up cross-border 
branches  or  subsidiaries  and  in  cross-border  activities  and  situations  (including  administrative  and 
court procedures) –  are  cross-border  and therefore, are present across national, regional and local 
levels throughout the EU.  

(e)  Is the problem widespread across the EU or limited to a few Member States? 

The problems generally arise in cross-border situations and are thus spread across the Single Market.  

(f)  Are Member States overstretched in achieving the objectives of the planned measure? 

The planned measures build on what exists at national and EU level today. In particular, the planned 
measure builds on the BRIS, which is an already operational EU level system of interconnection and 
provides  for  multilingual  and  comparative  company  information  cross-border.  Member  State 
measures  on  their  own  could  not  bring  about  sufficient  improvement  in  the  areas  tackled  by  this 
initiative given their cross-border nature, in particular they would not suffice to create legal certainty 
and reduce administrative burden on companies in the Single Market.  

(g)  How do the views/preferred courses of action of national, regional and local authorities 

differ across the EU? 

from  Ministries  responsible 

In general, Member States expressed support for the measures planned under this proposal, during 
the  discussions  in  the  Commission  Company  Law  Expert  Group  (CLEG8,  bringing  together  Member 
in  replies  by 
State  representatives 
authorities/business registers to the public consultation and contractor surveys in the context of this 
initiative.  In  general,  they  considered  enhancing  transparency  of  company  data  important  and 
supported  the  extension  of  company  data  available  in  BRIS,  and  acknowledged  the  importance  of 
reliable company data. There was also support from many Member States for measures to facilitate 
the cross-border use of company information. At the same time, Member States expressed different 
views on how  the  proposed  provisions  should look  like given  already existing  national approaches, 
raised questions about the potential impact on national business registers and saw some challenges 
in this context. 

for  company 

law)  and 

2.4 Based on the answer to the questions below, can the objectives of the proposed action be 

better achieved at Union level by reason of scale or effects of that action (EU added value)? 

(a)  Are there clear benefits from EU level action?  

There is a strong value added of action at EU level in the context of this initiative because it focuses 
on  cross-border  issues.  Improving  the  availability  and  reliability  of  comparable  and  multilingual 
company data at EU level and cross-border is an objective that needs to be achieved at EU level. In 
addition,  EU  action  is  needed  because  this  initiative  aims  to  build  on  BRIS,  which  is  an  already 
operational  EU  level  system  of  interconnection  and  provides  for  multilingual  and  comparative 
company information cross-border. Similarly, the value added from connecting the EU level systems 

8Register of Commission expert groups and other similar entities (europa.eu) 

4 

 
 
 
                                                           
of  interconnection  of  registers  can  also  only  be  achieved  by  EU  action.  Common  rules  are  also 
required  to  ensure  that  similar  checks  of  company  data  are  carried  out  before  it  enters  business 
registers and only those can result in increased  legal certainty about company data for companies, 
authorities  and  other  stakeholders  in  the  Single  Market.  The  objective  of  enabling  direct  use  of 
company data from business registers in cross-border situations equally requires action at EU level to 
introduce  the  once-only  principle  and  provide  for  a  common  company  extract  that  would  be 
recognisable in all Member States.  

(b)  Are there economies of scale? Can the objectives be met more efficiently at EU level (larger 

benefits per unit cost)? Will the functioning of the internal market be improved? 

The  planned measures  are  expected to  be  highly  beneficial  for  companies,  in particular  SMEs,  and 
society in general, including consumers, due to its expected strong positive impact on ease of doing 
business and access to EU markets, and for providing more trust and transparency of company data 
across  the  EU.  Increasing  the  availability,  accessibility  and  reliability  of  cross-border  company  data 
will also facilitate the fight against abuse and fraud and this initiative will thus contribute to creating 
a fairer Single Market.  

(c)  What are the benefits in replacing different national policies and rules with a more 

homogenous policy approach? 

The  free  movement  of  goods,  services  and  capital  will  be  facilitated  as  businesses  will  be  able  to 
extend their operations cross-border with less administrative burden. Making it easier for companies 
to be set up and carry out activities cross-border can also lead to more employment. Downstream, 
consumers  will  have  better  access  to  company  information  and  thus  will  be  in  a  position  to  make 
more  informed  decisions  when  buying  from  or  entering  contracts  with  companies  from  other 
Member States. The value of basic company data alone is estimated to be approximately £800 (950 
euros) per direct user per year in a purely national setting9. It can be reasonably assumed that the 
value of reliable information in the cross border context of the EU BRIS would be significantly higher.  

(d)  Do the benefits of EU-level action outweigh the loss of competence of the Member States 
and the local and regional authorities (beyond the costs and benefits of acting at national, 
regional and local levels)? 

While  competence  is  shared  between  the  EU  and  the  Member  States  in  the  area  of  the  internal 
market,  including  freedom  of  establishment,  EU-wide  measures  are  necessary  to  increase  the 
amount  and reliability of company data available in business  registers and/or  through  BRIS, and to 
enable its direct use in cross-border situations, while avoiding fragmentation of the internal market. 
As the proposal will take the form of a directive, Member States will be able – by transposing the EU 
rules  into  their  national  laws  –  to  take  account  of  the  need  for  consistency  and  coherence  within 
their national/regional legal systems. 

(e)  Will there be improved legal clarity for those having to implement the legislation? 

It is expected that EU rules lead to improved legal certainty as compared to today’s fragmented legal 
framework. 

3. Proportionality: How the EU should act 

9 “Corporate Transparency and Register Reform White Paper” from the UK Department for Business, Energy & 
Industrial Strategy. 

5 

 
 
                                                           
3.1  Does the explanatory memorandum (and any impact assessment) accompanying the 

Commission’s proposal contain an adequate justification regarding the proportionality of the 
proposal and a statement allowing appraisal of the compliance of the proposal with the 
principle of proportionality? 

The  measures  introduced  by  this  proposal  are  proportionate  to  its  objectives  of  increasing  the 
amount  and  reliability  of  company  data  available  in  business  registers  and/or  through  BRIS,  and 
enabling its direct use in cross-border situations. The proposed provisions are well targeted as they 
focus on the needs of direct users (e.g. companies, other stakeholders and public authorities) to use 
reliable  and  up-to-date  official  company  data  from  business  registers  in  the  cross-border  context 
(section 1.3 of the impact assessment). The proposal focuses on cross-border aspects and introduces 
solutions, which could not be achieved by Member States on their own. The harmonisation elements 
are  limited  to  what  is  necessary  and  proportionate  to  achieve  the  sought-for  objectives  while 
respecting  national  legal  traditions,  including  those  with  notarial  involvement  in  company  law 
procedures and, where possible, providing flexibility to Member States to achieve the requirements 
in  line  with their  national laws  and  systems.  In  addition, the  proposal  does  not  introduce  any  new 
systems, but builds on the use of existing and operational systems of interconnection of registers as 
well  as  on  the  eIDAS  Regulation10  and  the  2021  proposal  to  amend  that  Regulation  as  regards 
establishing a framework for European Digital Identity11. 

The package of preferred measures can most comprehensively address the objectives because it will 
make  most  information  available  cross-border  and  connect  BRIS  with  two  other  EU  systems  of 
interconnection  of  registers,  thus  considerably  increasing  the  transparency  about  EU  companies  in 
the single market. It will also bring  the most benefits in terms of increased legal certainty as it will 
both provide for ex-ante checks and introduce additional common procedural requirements to keep 
company information up-to-date. Finally, it will have the strongest positive impact on enabling direct 
use of company data in cross-border situations as it will not only apply the once-only principle to the 
setting  up  of  cross-border  subsidiaries  and  branches,  but  also  introduce  the  common  company 
extract and abolish formalities such as apostille (section 7.2 of the impact assessment).  

The  package  does  not  go  beyond  what  is  necessary  to  achieve  the  objectives.  The  multi-criteria 
analysis  (MCA)  carried  out  for  all  policy  options,  which  took  into  account  their  effectiveness, 
efficiency, coherence and proportionality, showed that all options had a net positive benefit and that 
the preferred measures ranked the highest in the analysis (section 6.5 of the impact assessment and 
its Annex 4 on methodology).  

In  line  with  the  principle  of  proportionality,  the  planned  initiative  will  not  go  beyond  what  is 
necessary to achieve its objectives by targeting specific cross-border issues (i.e. needs of direct users 
to  access  and  use  cross-border  official  company  data  from  business  registers)  which  could  not  be 
achieved by Member States on their own.  

3.2 Based on the answers to the questions below and information available from any impact 
assessment, the explanatory memorandum or other sources, is the proposed action an 
appropriate way to achieve the intended objectives? 

(a)  Is the initiative limited to those aspects that Member States cannot achieve satisfactorily on 

10Regulation (EU) 910/2014. 
11COM(2021) 281 final. 

6 

 
 
 
 
 
 
                                                           
their own, and where the Union can do better? 

The proposal focuses on cross-border aspects and introduces solutions which could not be achieved 
by Member States on their own, as explained above in replies to the sub-questions of question 2.3. 

(b)  Is the form of Union action (choice of instrument) justified, as simple as possible, and 

coherent with the satisfactory achievement of, and ensuring compliance with the objectives 
pursued (e.g. choice between regulation, (framework) directive, recommendation, or 
alternative regulatory methods such as co-legislation, etc.)? 

The proposed instrument is a Directive, since Article 50 TFEU requires the European Parliament and 
the Council to act by means of directives. Consequently, Member States will be able – by transposing 
the  EU  rules  into  their  national  laws  –  to  take  account  of  the  need  for  consistency  and  coherence 
within their national legal systems.  

In order to supplement the provisions of the proposed Directive, implementing acts will be adopted.  

(c)  Does the Union action leave as much scope for national decision as possible while achieving 
satisfactorily the objectives set? (e.g. is it possible to limit the European action to minimum 
standards or use a less stringent policy instrument or approach?) 

The proposed provisions are limited to what is necessary and proportionate to achieve the objectives 
of the initiative while respecting national legal traditions and, where possible, providing flexibility to 
Member States to achieve the requirements in line with their national laws and systems. 

Legislative  means  are  necessary  to  provide  legally  certain  solutions  for  the  cross-border  problems 
targeted by this initiative.  

(d)  Does the initiative create financial or administrative cost for the Union, national 

governments, regional or local authorities, economic operators or citizens? Are these costs 
commensurate with the objective to be achieved? 

The package will result in one-off costs for certain companies, i.e. for those which currently do not 
file specific information to a register, estimated at around EUR 311 million. However, the expected 
recurrent  cost  savings  (administrative  burden  reduction)  for  companies  creating  new  cross-border 
subsidiaries  or  branches  and  for  all  companies  engaging  in  cross-border  business  activities  - 
estimated to amount to around EUR 437 million per year - would much outweigh the one-off costs, 
and  the  initiative  will  therefore  overall  bring  a  significant  burden  reduction  for  companies  in  the 
single market.  

Due to the need for business registers to adapt their IT systems, the package is estimated to amount 
to around EUR 5.4 million one-off costs for all business registers together, and recurrent costs e.g. to 
carry  out  ex-ante  verification  of  company  data,  estimated  at  around  EUR  4  million  per  year  for  all 
registers. However, Member States would be able to build on investments in IT already done for BRIS 
in the recent years, and adjustment costs for verification should be limited given the ex-ante checks 
already in place in many Member States. It is also likely that there will be some loss of revenue for 
registers which charge fees for company extracts for cross-border use, estimated at around EUR 7.9 
million for all registers. At the same time, the increased accessibility and reliability of company data, 
and better connections between business registers, thanks to the once-only principle and connecting 
other  EU  level  systems/registers  to  BRIS,  should  facilitate  registers’  work  due  to  easier  search  for 
company data from other Member States and reduced need to request documents from companies. 
Other authorities would also benefit from an easier access to more reliable company data directly in 
business  registers  and  BRIS.  Although  authorities  in  charge  of  issuing  apostilles  will  lose  related 

7 

 
 
 
 
revenue, estimated at 9.5 million EUR per year, abolishing of the apostille is estimated to result in an 
overall administrative  burden  reduction  given  the  current  legal  uncertainty  and  the  related  human 
resources and time needed to issue it. 

The costs are commensurate with the objectives as overall gains will much outweigh the costs and as 
the  initiative  will  also  be  highly  beneficial  for  society  in  general,  including  consumers,  by  providing 
more accessible and reliable company data across the EU, which is difficult to quantify.  

(e)  While respecting the Union law, have special circumstances applying in individual Member 

States been taken into account? 

Existing  Member  States’  laws  on  company  law  issues  relevant  for  this  initiative  were  thoroughly 
examined in the  preparation of this proposal (including through a legal mapping carried out  in the 
external contractor study).  

The  proposed  provisions  overall  aim  to  respect  national  legal  traditions,  e.g.  including  those  with 
notarial involvement in company law procedures. 

8