Virginijus
Bitė, Professor of Regulation on the Regulation Faculty of Mykolas Romeris College
Ivan
Romashchenko, Senior Researcher of the Authorized Know-how Centre on the Regulation
Faculty of Mykolas Romeris College
Picture credit score: Elian, by way of Wikimedia Commons
For
a few years, paper was the primary format for the registration of firms. The Digitalisation Directive,
adopted in 2019, obliged European Union (EU) Member States to supply founders
with the choice to kind personal firms digitally. Though for Lithuania,
the place on-line formation of authorized entities had already existed even earlier than 2019
and these regulatory developments didn’t result in radical change, they however
pressured the nationwide legislator to introduce the required amendments. The
adopted amendments largely took impact on 1 July 2022. Amongst others, the
amendments present for the popularity of identification instruments, which implies
that digital signatures issued in different EU Member States must be
recognised. As well as, the State Enterprise Centre of Registers of the
Republic of Lithuania has taken steps to vary the registration portal’s
interface, to have a information in English and to simplify the method of registration
by permitting foreigners to go with out opening financial institution accounts in Lithuania as a
prerequisite to incorporation.
In
our analysis we geared toward finding out the provisions
of the Digitalisation Directive and the outcomes of its implementation in
Lithuania to counsel potential enhancements within the on-line registration of
firms. We’ve carried out a comparative research of each EU jurisdictions (Estonia,
Latvia, Lithuania, and Poland) and one non-EU jurisdiction (Ukraine). In
addition, a survey was carried out amongst representatives of enormous,
middle-sized, and small legislation companies in Lithuania. Moreover, an interview was held
with a consultant of the State Enterprise Centre of Registers relating to the
implementation of the Digitalisation Directive, their expertise in registering
firms on-line and future work views. Respective authorities in different
jurisdictions, together with the Centre of Registers and Info Methods of the
Republic of Estonia, the Register of Enterprises of the Republic of Latvia, and
the Ministry of Justice of the Republic of Poland, had been additionally approached for
statistical details about on-line registration of restricted legal responsibility firms.
One
of the important thing provisions of the Digitalisation Directive, the duty to make sure
on-line formation of personal firms, was fulfilled in Lithuania in 2009–2010.
To match, on-line formation of firms in Estonia has been out there since
2007, in Latvia since 2010, and in Poland since 2012. In Ukraine the
risk to create restricted legal responsibility firms on-line was formally
introduced in 2019. The statistical data has proven the rise of
firms being established on-line in all of the studied jurisdictions.
As
a prerequisite for on-line formation of personal firms within the jurisdictions
in focus the template of the articles of affiliation was accredited. Estonia,
Latvia, and Lithuania use a reasonably customary template which doesn’t permit many alternative
choices of regulation. In the meantime, in Poland and in Ukraine, templates are designed
in a means that the founders might select amongst numerous choices. On the one hand,
having non-obligatory clauses within the mannequin articles of affiliation gives extra
flexibility to founders—they might select the clause which inserts their wants. On
the opposite hand, if the founders need extra refined articles of affiliation,
they will go to a notary. It might be argued that in a scenario with many choices
of default provisions founders could be pressured to rent legal professionals to advise them
how one possibility differs from the opposite and which is healthier to decide on, entailing
extra authorized bills. The incorporation course of dangers changing into much more pricey
if, as an alternative of default provisions with many choices, the mannequin articles of
affiliation include empty fields that the founders must fill out.
Based mostly on the above, introducing extra default provisions for a template of a
restricted legal responsibility firm just isn’t a perfect answer becoming all and must be
studied extra.
One other
essential side we outlined is how the founding paperwork are to be signed and
how simply on-line registration of firms could be out there to foreigners. In
common, out of these nations, Estonia has the longest historical past of utility
of on-line registration of firms (since 2007). This jurisdiction has for
a while clearly given a approach to kind firms on-line to foreigners residing
within the EU. In different studied EU jurisdictions, certified digital signatures
from overseas suppliers have progressively been recognised. In Poland, there may be additionally
yet one more approach to signal the founding paperwork: by means of the creation of an ePUAP
trusted profile, however this covers solely individuals having a PESEL quantity. Subsequently,
certified digital signatures are the primary identification instrument to kind
firms on-line.
In
Lithuania a number of respondents opined in favour of broader utilization of e-signatures
throughout on-line formation of firms, specifically the introduction of e-banking. There
are some arguments to assist mentioned assertion. Financial institution purchasers who’ve e-banking
are at all times recognized and at all times bear a safety test with the verification
of identification paperwork. For this reason there are grounds to recognise
digital banking as one of many identification instruments for the aim of
firm formation. Latvian and Ukrainian expertise of utilizing Financial institution ID as an
identification instrument proves that this instrument is user-friendly and
handy.
Regardless of
a significantly excessive degree of implementation of the Digitalisation Directive in Lithuania,
there are nonetheless points in on-line formation of firms in Lithuania which had been
reported by respondents. A number of the outlined points have already been tackled
or must be resolved by the implementation of the Digitalisation Directive,
specifically the popularity of identification means issued in different EU Member States
to empower foreigners and the publishing of constituent paperwork in a language
broadly understood by most cross-border customers. On the identical time, some steps
urged by respondents exceed the necessities of the Digitalisation Directive.
These are each technical and authorized measures. As for purely technical points,
many respondents pointed on the apparently extreme have to have a number of paperwork
signed with e-signatures as an alternative of signing one single file. The popularity of
e-banking as an identification instrument and extra flexibility within the signing of a
template of a constituent doc for a restricted legal responsibility firm would make
on-line formation of firms extra accessible to a broader vary of individuals.
These options primarily transcend the impact of the Digitalisation
Directive however are aimed on the enchancment of the present regulation of
firm formation.
For
extra data see: Bitė, V., Romashchenko, I. On-line Formation of Firms
in Lithuania in a Comparative Context: Implementation of the Digitalisation
Directive and Past. Eur Bus Org Regulation Rev (2023).
https://doi.org/10.1007/s40804-023-00282-6.
