Certain aspects of company law concerning limited liability companies

SUMMARY OF:

Directive (EU) 2017/1132 – codification of certain aspects of company law concerning limited liability companies

WHAT IS THE AIM OF THE DIRECTIVE?

Directive (EU) 2017/1132 brings together a large part of European Union (EU) company law rules in one single directive. It covers issues such as their formation, capital and disclosure requirements, and operations (such as mergers and divisions) of companies.

Originally, it codified six previous EU company law directives (Directives 82/891/EEC, 89/666/EEC, 2005/56/EC, 2009/101/EC, 2011/35/EU, 2012/30/EU) without changing their contents.

Since then, this directive has been amended by Directive 2019/1151 on the use of digital tools and processes in company law and by Directive 2019/2121 on cross-border conversions, divisions and mergers. It was also amended by Directive (EU) 2019/1023 , specifically to allow Member States to allow exceptions from certain articles of Directive (EU) 2017/1132, when this is necessary to establish preventive restructuring frameworks.

KEY POINTS

Directive (EU) 2017/1132 brings together rules on the following issues:

establishing public limited liability companies*, determining the validity of their obligations and nullity, and maintaining and modifying their capital;
the formation of companies and branches online and filing of company information with business registers fully online, i.e. without having to appear in person before the competent authorities, including safeguards (e.g. the possibility to require physical presence in exceptional cases);
disclosure requirements for public and private limited liability companies in general and for branches opened in a Member State by public and private limited liability companies governed by the law of other EU Member States or by equivalent non-EU companies;
rules on the business registers interconnection system, which interconnects national business registers and makes information about limited liability companies* available to the public through a single access point, the European e-Justice portal, and provides secure means for exchange of information between business registers (e.g. on branches, cross-border operations, disqualified directors);
mergers and divisions of public limited liability companies within one Member State (steps of the merger/division procedure and documents necessary for a merger/division, when a merger/division takes effect and its consequences, safeguards for third parties such as creditors, minority shareholders and employees);
conversions, mergers and divisions of private and public limited liability companies based in different Member States (conditions applicable, steps of the cross-border operation procedure, including mandatory anti-abuse measures to ensure that no operations are authorised if they are carried out for abusive, fraudulent or criminal purposes, documents necessary for a cross-border operation, safeguards for minority shareholders, creditors and employees when a cross-border operation takes effect and its consequences).

FROM WHEN DOES THE DIRECTIVE APPLY?

Directive (EU) 2017/1132 entered into force on 20 July 2017. Because it codifies existing legislation, no additional transposition by Member States into national law is necessary. The time limits by which the repealed directives had to be transposed into national law are set out in Annex III.
Amendments introduced by Directive (EU) 2019/1023 entered into force on 16 July 2019.
Amendments introduced by Directive (EU) 2019/1151 entered into force on 31 July 2019. Member States needed to transpose this directive by August 2021 (with a longer deadline for some specific provisions). A number of Member States took advantage of the possibility provided by the directive to extend the transposition by 1 year, i.e. by August 2022.
Amendments introduced by Directive (EU) 2019/2121 entered into force on 1 January 2020. Member States need to transpose this directive by January 2023.

BACKGROUND

Codification is the process of bringing together a legislative act – or two or more related acts – and all related amendments in a single new act without introducing any real changes. In the area of company law, where the relevant rules are spread across many different legal acts – with the first directives dating from the 1960s and 1970s, and many amendments made since – it was not easy for users to have a clear overview of EU law in this policy area. Directive (EU) 2017/1132 brings together the rules established by the repealed directives, without changing their content or adding new rules.

For further information, see:

Company law and corporate governance (European Commission).

KEY TERMS

Public limited liability company. A limited liability company that has offered shares to the general public.

Limited liability company. A company with share capital and with legal personality possessing separate assets that alone serve to cover its debts.

MAIN DOCUMENT

Directive (EU) 2017/1132 of the European Parliament and of the Council of 14 June 2017 relating to certain aspects of company law (codification) (OJ L 169, 30.6.2017, pp. 46–127).

Successive amendments to Directive (EU) 2017/1132 have been incorporated into the original text. This consolidated version is of documentary value only.