On February 1, 2023, the Business Register Act will be implemented, which will entail several important changes in the business register and registry procedures.
The biggest changes are related to deletion from the register based on failure to submit the annual report. In addition, the registrar also has additional opportunities to delete a legal person from the register. In the future, third parties will be able to see more information about the problems of the legal person and natural persons related to it in the e-Business Register.
The main changes are as follows.
- The register regulation of all private legal persons will be harmonized and consolidated in the Business Register Act.
Changes to the register procedure are largely based on current law and do not lead to fundamental changes, but have been regrouped and completely re-systematized in the new Business Register Act. This simplifies the activities of both the entrepreneur and the registrar, because uniform registration provisions, principles and organization will apply to all legal persons in the future.
- Deletion from the register of legal persons that do not fulfill reporting obligations will be made faster
Deletion from the register due to unsubmitted annual report(s) will be simplified and accelerated, so that those legal persons that have not submitted an annual report for years cannot be in the register and continue to operate. If a legal person does not submit an annual report within the deadline, the legal person may be deleted from the register if certain conditions are met (e.g. there are no pending court proceedings, enforcement proceedings, etc.).
The deletion process becomes shorter and faster. At the earliest, this can be done three months after the deadline set by the law for submitting the annual report.
If the deadline for submitting the annual report has passed, the registrar can, depending on the company, either delete it from the register or impose a fine for submitting the annual report. If the report is not submitted by the deadline, the registrar sets a deadline for submitting the report with a deletion warning. From now on, giving a deadline with a deletion warning will be done automatically through the information system. If the legal person does not submit a report within the specified term and at least three months have passed since the deadline for submitting the report, the legal person may be deleted from the register if the requirements specified in the law are met.
- The registrar's monitoring capabilities are expanded in order to ensure the reliability of business register data and the fulfillment of the reporting obligation of entrepreneurs.
The purpose of the changes is to improve the supervisory capacity of the registrar, as the problem in the current law is that the registrar is not provided with sufficient and effective opportunities for quick intervention in situations where the data of the company entered in the register do not meet the requirements or the obligations set out in the law have not been fulfilled. It is also often not possible for third parties to understand, based on the data entered in the register, whether the data entered in the register about the company are correct or whether it is a problematic legal person. In practice, it has been a problem for many years that legal persons fail to submit their annual reports on time.
Several changes are planned to solve this: adding signs of contacting difficulties, displaying information on fines for natural persons related to legal persons in the e-Business Register, imposing a fine on shareholders in case of failure to submit the annual report on time, faster deletion from the register in case of failure to submit the annual report or failure to designate a mandatory contact person.
The additional rights of the registrar make it possible to end the situation faster than before, where the data of the legal person entered in the register do not meet the requirements set forth in the law or the obligations set forth in the law have not been fulfilled. This, in turn, improves the legal process and makes the registry data more reliable.
- Provision is made for the mandatory deadline for the contact person and it is possible to automatically delete from the register those legal persons that have not fulfilled the obligation to submit a contact person.
In the future, the contact person will have a fixed-term, and the legal person is obliged to send the information of the term to the registrar. The registrar must be also notified separately about the extension of the deadline. If the extension has not been done, the contact person's data will be automatically removed from the register.
If a legal person has not designated a mandatory contact person, it is possible to delete it from the register in a simplified manner. The purpose of this option is to eliminate from civil circulation persons who cannot be contacted by the registrar and to whom it is not possible to deliver documents.
- In order to balance the faster deletion, the possibility of restoration to the register is available within three years.
Since deletion from the register is the most extreme measure against a legal person, in order to balance it, restoration to the register is allowed within three years from the deletion in order to continue operations. However, the possibility of restoration is provided only if the legal person has been deleted from the register from 1st of February 2023 either due to failure to submit an annual report or failure to designate a mandatory contact person.
- Deletion upon request
Those legal persons that have not started operations and for which the usual termination and liquidation procedure is not necessary, can be deleted from the register on the basis of an application. The prerequisite is that the legal person has not acted and this is confirmed by the board and, in the case of a limited company, all shareholders.
- The e-Business Register will contain more information about problematic legal persons
The e-Business Register contains more information about problematic persons than before. The registrar is allowed to make a note in the e-Business Register about difficulties in contacting a legal person, in order to notify the public of those legal persons that have problems in reaching them.
In addition, the e-Business Register will start highlighting information about fines imposed on natural persons related to a legal person, which should provide the user of the e-Business Register data with information about problematic legal persons and natural persons related to them.
- Changes related to the minimum share capital size and certification
From February 1, 2023, a private limited company no longer has a mandatory minimum share capital, which means that the founders are free to choose the amount of the share capital themselves, but it must be taken into account that the share capital must be paid in at the time of establishment before being entered in the business register, so it is no longer possible to establish a private company without an immediate payment.
The proof of share capital contribution also changes. From now on, the share capital contribution must be certified to the registrar only if the contribution is over 50,000 euros. In the case of a contribution of less than EUR 50,000, confirmation by the board that the contribution has been paid to the private limited company is sufficient. The rules for auditing non-monetary contributions will also change, from now on the auditor control of non-monetary contributions of a private limited company will be mandatory if the share capital of the private limited company is at least 25,000 euros or the nominal value of the part received or increased on account of the non-monetary contribution is at least 25,000 euros.
As stated earlier, the biggest changes are related to deletion from the register based on non-submission of the annual report. We would like to draw the attention to the fact that from February, important changes in this regard will apply to those persons who have not yet submitted their 2021 report. Associations with ongoing processes that allow them to be deleted will start to be deleted already in January.