After a three-month fast track procedure, the European Parliament accepted a Commission proposal in July for the removal of unnecessary burdens on small businesses. The proposal is one of a package of 10 'fast track actions' presented by the Commission to cut red tape and now awaits agreement by Member States.
One of the main benefits for small businesses is that public limited liability companies will no longer have to order costly expert reports in case of mergers and divisions, unless there is a demand for such reports among shareholders. This proposal potentially applies to more than 600,000 public limited liability companies across Europe and particularly to those owned by a limited number of shareholders. The current obligation was meant to inform shareholders of the draft terms of mergers or divisions, but it is considered needless paperwork when shareholders have no interest in costly reports. This is often the case for SMEs where shareholders take an active part in the day-to-day management of the business.
It is estimated that the average cost of commissioning such an expert report amounts to roughly Euro 3,500. This is obviously not a trivial figure for SMEs that have identified the requirement as a bureaucratic burden. However, the proposal also ensures that, if shareholders still see a need for the expert report, they will continue receiving them.
This article is adapted from one originally published by Scotland Europa http://www.scotlandeuropa.com.