The European Commission (the Commission) has announced a consultation on single-member limited liability companies, in order to assess the need for legislative action governing this type of company across the EU.

The aim of the consultation is to get more in-depth information on whether the harmonisation of national laws on single-member limited liability companies would provide companies, and in particular SMEs, with simple and harmonised rules across the EU which could reduce the administrative burden and costs they face. Comments are sought on the possible scope of such an initiative, its content and details of any barriers that currently exist for companies that want to use the potential offered by the Internal Market.

The Commission says that the responses will be taken into account in assessing the need for and impact of a possible new instrument.

Background

Various European law instruments governing single-member limited liability companies were codified by the 12th Company Law Directive (Directive 2009/102/EC on single-member private limited liability companies) to provide limited harmonisation of national laws. However, the Directive did not address issues such as registration requirements, creditors' protection, transfer of seat, minimum capital requirements and dissolution, and these issues are provided for at national level. The Commission explains that the costs and risks associated with having to deal with several different national legal systems appear to prevent companies from expanding their activities abroad. In addition, the Commission says lack of trust in foreign corporate legal forms may make the participation of SMEs in the Internal Market more difficult. The Commission believes that existing measures facilitating the mobility of companies such as the Cross-border Mergers Directive and SE Regulation, as well as the case-law of the Court of Justice, do not address all SMEs' needs.

The consultation runs until 15 September 2013.