Certain aspects of company law
Directive (EU) 2017/1132 – codification of certain aspects of company law concerning limited liability companies
In the interest of legal clarity and certainty, the directive codifies a series of previous directives on certain aspects of European company law. These directives concerned key areas of European company law, such as:
- disclosure of information on companies in the business registers;
- capital maintenance;
- divisions of companies;
- mergers within one country;
- cross-border mergers.
In these areas, in order to allow companies to exercise their freedom of establishment in the EU’s single market, the codified directives harmonised in particular the safeguards required of limited liability companies* across the EU for the protection of the interests of their shareholders and others, including third parties.
It repeals these directives and replaces them without changingtheir content.
The directive codifies and replaces the following six directives:
Directive 82/891/EEC concerning the division of public limited liability companies*;
Directive 89/666/EEC concerning disclosure requirements for branches opened in an EU country by certain types of company governed by the law of another country;
Directive 2005/56/EC on cross-border mergers of limited liability companies;
Directive 2009/101/EC on coordination of safeguards which are required by EU countries of companies within the meaning of the second paragraph of Article 48 of the Treaty on the Functioning of the European Union, with a view to making such safeguards equivalent;
Directive 2011/35/EU concerning mergers of public limited liability companies;
Directive 2012/30/EU on coordination of safeguards which are required by EU countries of companies within the meaning of the second paragraph of Article 54 of the Treaty on the Functioning of the European Union, in respect of the formation of public limited liability companies and the maintenance and alteration of their capital.
The directive lays down measures in order to have equivalent safeguards required by EU countries, for the protection of the interests of their shareholders and third parties, in respect of the following:
establishing public limited liability companies and maintaining and modifying their capital;
disclosure requirements for public and private limited liability companies in general and for branches opened in an EU country by public and private limited liability companies governed by the law of a country in the EU or by equivalent non-EU companies;
mergers of public limited liability companies within one EU country (different types of mergers, procedure and documents necessary for a merger);
mergers of limited liability companies based in different EU countries (conditions applicable, procedure and documents necessary for a cross-border merger, taking effect and consequences of a cross-border merger, etc.);
divisions of public limited liability companies within one EU country (different types of divisions, procedure and documents necessary for a division, etc.).
It has applied since 20 July 2017. Because it codifies existing legislation, there is no deadline by which EU countries have to incorporate it into national law. The time limits by which the repealed directives had to be incorporated into national law are recalled in its Annex III.
The second company law Directive coordinates national provisions in relation to the formation of public limited companies, minimum capital requirements distribution to shareholders and increases and reductions in capital. The purpose is to protect shareholders and creditors by the coordination of national provisions.
The Directive lays down minimum requirements in terms of information. The statutes or instrument of incorporation of a public limited company must contain the following information:
- Type and name of the company;
- Objects of the company;
- Amount of capital;
- Rules governing appointing members responsible for the management, administration, and supervision of the company.
Further information must be published in the statutes, instruments of incorporation or separate document including
- registered office,
- value, number, and form of subscribed shares,
- amount of subscribed capital,
- the identity of the signatories of the instrument of incorporation or the statutes.
The Directive provides rules in respect of:
- Value of the minimum capital;
- The issuing and acquisition of shares;
- Distribution of dividends;
- Financial aid accorded by companies for the acquisition of those shares;
- Increases and reductions in capital;
- Dissolution of PLC.
Single Member Companies
This twelfth company Directive provides for single-member private limited companies. A company may have a single-member by virtue of being formed as such or by becoming a single-member company. Where a company becomes a single-member company because all of its shares have come to be held the single person, that fact, together with the identity of the single-member must be entered on a register kept by the company and accessible to the public or be recorded or entered in the register within the meaning of the directive.
The single-member exercises the powers of the general meeting of the company. Decisions taken by the single-member on contracts entered between him and the company must be recorded in minutes and drawn up in writing.
Single-member companies Updated
Directive 2009/102/EC creates a legal instrument allowing the limitation of liability of the individual entrepreneur within the European Union (EU).
It establishes the rules applicable to single-member private limited companies.
It codifies and repeals Twelfth Company Law Directive 89/667/EEC.
A company may have a single member by virtue of its being formed, or by virtue of all its shares coming to be held, by a single person (single-member company).
Where a company becomes a single-member company because all its shares have come to be held by a single person, that fact, together with the identity of the single member, must either be entered in a register kept by the company and accessible to the public or be recorded in the file or entered in the central register or the register of companies.
The single member exercises the powers of a general meeting of the company. Decisions taken by the single member and contracts between that person and the company as represented by him or her must be recorded in the minutes or drawn up in writing.
Where an EU country allows single-member companies in the case of public limited companies as well, the rules in this directive apply.
Directive 2013/24/EU adapted the directive, adding Croatia to the list of countries in its Annex I following that country’s accession to EU membership.