CONFERENCE SPEECHES

Listed below are speeches that were made at the conference. If you wish to view a copy of any of these please click on the relevant speech.

Developments in European Law

Caroline Webb, European Commission

Introduction

This morning I am going to talk about EU company law harmonisation, and explain what is happening at the moment and what is likely to happen in the future in this area. At this stage I should also say that the views that I express today are not the formal views of the Commission.

Iíd like to begin by pointing out that there has been remarkable progress in the past in company law harmonisation. We have

• The 1^st Directive containing the disclosure requirements which are imposed on companies;

 

• the 2^nd Directive on the formation of public limited liability companies;

 

• the 3^rd Directive on mergers of public limited liability companies;

 

• the 6^th Directive on divisions of public limited liability companies,

 

• the 11^th Directive on disclosure requirements in relation to branches of companies in other Member States, and finally

 

• the 12^th Directive on single member private limited liability companies.

 

But the whole process slowed down after the 12^th Directive. There are a number of reasons for this: the issue of worker participation has blocked a number of initiatives; and it also took some time to reach political agreement on the Take-over Bids Directive.

But more recently, there has been reawakened interest in European Company Law, partly due to the European Court of Justice judgement in the Centros case last year. Which I think lead to the realisation that there is a need for further company law harmonisation.

Iíd like to touch on 5 subject areas: The Slim Initiative, Take-over bids directive, the European Company Statute and the proposals for the 10^th and 14^th Directives. In talking about each project, I will try to highlight the aspects which are of relevance to companies registries.

The Slim Initiative

The SLIM project (Simpler Legislation for the Internal Market) is based on an initiative of the Commission taken in May 1996, aimed at analysing the fields in which the legislation relating to the internal market can be simplified. Several previous stages of the project, scrutinised insurance regulations, social security, diplomas, ornamental plants and others.

The Fourth phase, endorsed by the Amsterdam Council of June 1997 extended the ambit to company law. A Slim Working party on Company Law, set up by the Commission, met 3 times last year. It was composed of Member state officials, company law practitioners and academics. Their mission was to examine ways of simplifying the 1^st and 2^nd Company Law Directives.

This morning Iíd like to concentrate on the 1^st Company Law Directive which, of course, contains the disclosure requirements imposed on companies. Iíll go through the Slim Groupís proposals and then explain what the Commission response has been. I know that Thierry Stoll mentioned this subject at last yearís conference; and that he went through the Slim proposals in some detail. So Iíll not repeat what he said, but I will give a general overview of the proposals just to refresh your memory and for the benefit of those of you who didnít attend last year.

The 1^st Company law Directive, which was adopted in 1968 requires compulsory disclosure of essential information by limited liability companies. As you will all be familiar, such information is to be kept at a registry, disclosed in the national gazette and made available on request. The information which must be provided by companies includes: the articles of association, the identity of persons authorised to bind the company, details of the share capital, annual accounts etc. Within their particular scope, all subsequent Company Law Directives also refer to this system of disclosure.

The Directive hasnít been touched since it was adopted in 1968, so it is obviously in need of a revamp.

The Proposals

The Slim Working Party presented 4 proposals for simplification of the 1^st Directive:

(1) The team concluded that the new information technologies currently available should be used in order to modernise and simplify the registration and disclosure rules which have been in operation since 1968. With that in mind, the team recommended that current procedures in Articles 2 to 6 of the Directive be replaced by a system based on electronic registration of company documents, leading in turn to better access to and dissemination of this information.

(2) The second proposal concerns the use of languages in the filing and dissemination of company information. It was proposed that, even where there is no foreign establishment of a company, certain rules should apply. Firstly, that documents should be filed and disseminated in one or more languages according to the rules in the companyís home-state. But also that companies should be allowed to voluntarily file documents in other EU languages.

(3) The third proposal really concerns the 11^th Company law Directive, as it suggests changes to the disclosure requirements imposed on branches by this Directive. The Slim team felt that, in practice, the 11^th Directive has led to a situation where a company, who wants to set up a branch in another MS, has to face rather substantial burdens when filing information in the registry of the MS, where the branch is to be established. For example, the length of the procedures, the difficulty in providing authenticated documents and the general expense involved.

The Slim team felt that disclosure requirements relating to branches could be simplified if a so-called "home-state" principle was introduced. Which basically means that, in the case of cross-border establishments within the EU, no additional filing requirements should exist in the host state. (ie, the state where the branch is established). Instead, all the necessary company information should be translated into the language of the host state and be filed in the registry of the companyís home state and therefore be retrievable from the electronic database in that home-state registry. And the host state authorities should not be able to impose additional disclosure requirements.

(4) Finally, the fourth proposal deals with powers of representation. National rules on this issue differ from state to state, and for this reason the Slim Group suggested that the 1^st Directive ought to require that representatives of a company with general powers be disclosed in the register. Thereby providing a clearer picture of the powers affecting a company.

The Follow-up to SLIM

With the Slim Group having fulfilled its role, the ball was then in the court of the Commission to act on the proposals. We felt that the first step should be to obtain the views of the Member States, in order to gauge how much support there was for moving in this direction. The proposals were therefore discussed at a 2 day meeting at the beginning of October last year and at a one day meeting at the beginning of June this year.

At these meetings it was clear that there was general support for the first proposal. Indeed, as you will be aware, in many Member States electronic filing does to some extent already take place , for example in relation to the filing of annual accounts. Also, many national registries automatically convert information from paper, to computerised form in order to store the data. However, Member States were not keen on the idea of making electronic disclosure mandatory. At least not until the distant future. They preferred the idea of a dual system allowing both electronic and paper filing.

One of the most useful developments from the discussion was that there was agreement on dividing the filing and disclosure process into 3 stages and to deal with each stage separately. Firstly, the actual filing of information by companies; secondly, the process of registering the information in the registry; and finally, access to the information by the public.

It was felt that the first stage should have a longer transitional period applied to it, before a system of electronic filing would have to be established in all Member States. Whereas the other 2 stages could become completely computerised within a shorter period of time. Much of the discussion centred around how long transitional periods should be and also whether there should be exemptions for small companies. But, the problem with giving exemptions to small companies is that you run the risk of making the system more complicated. We will have to give the issue of SMEís some thought. It may be that a longer transitional period would be more appropriate.

As regards the conversion of paper filings into electronic form; it was felt that the cost of conversion should be borne by the state. And it was acknowledged that to have an accurate and full electronic picture of any given company, certain past filings would also have to be converted. Old annual reports, or out-of date information, may not be relevant, but other information may be. Member States were reluctant to accept an obligation to convert all past filings, and suggested instead that it should be left to Member States to decide how much to convert.

We also discussed the role of the National Gazette, and whether it would continue to be necessary. While some MSís did question its usefulness, none were willing to remove the provision from the Directive and instead suggested that it should no longer be an obligation; but rather leave it to Member States to decide whether or not to require publication in the national gazette.

Member States also embraced the use of languages proposal. But felt that filing in another EU language should be in addition to, and not instead of filing in the home-state language. It was also felt that only the original language version should have legal value. And that companies themselves should be responsible for ensuring that the translation is certified.

As regards the proposal to amend the requirements imposed on branches by the 11^th Directive. It was recognised that, in principle, it may help to reduce the duplicate disclosure that often takes place. But it was felt that this proposal could only be put into operation after a Europe-wide electronic company information system has been established. Disclosure requirements for branches can only be reduced if a person in the branch state is able to get easy access to the information on the company held in the registry of the companyís home state. (give example) So the best approach may be to introduce an electronic filing system and open up language issues in line with the 1^st and 2^nd proposals and see how that works, before changing the 11^th Directive.

Finally, the 4^th proposal on powers of representation received only lukewarm support. Some MSís agreed that it may be a useful amendment; but the majority felt that the issue of powers of representation doesnít really cause a problem, and that it should be left to national laws to deal with the issue.

We intend to carry the project forward by presenting a draft proposal for amending the 1^st Directive next year. We will concentrate on the first two Slim proposals, for which there was most support. We would aim to computerise the whole filing and disclosure process within a reasonable timeframe. Although obviously there will be further debate over how long any transitional period should be, to enable registries and companies to embrace the new technology, if they havenít done so already.

The Commission views these amendments to the 1^st Company Law Directive as practical and logical. Computer technology is now widely used, and we should not delay any longer in harnessing it, to help make company information available Europe-wide.

The Take-over Bids Directive

Turning now to the Take-over Bids Directive. The Council adopted a common position on the Directive on the 19^th June this year; and the Directive has now been passed to the European Parliament as part of the co-decision procedure.

[Member States had actually reached a political agreement on the text on 21 June 1999, but were prevented from adopting a common position at that stage, by a reservation raised by Spain concerning the implementation of the Directive in Gibraltar. The problem was solved on 19^th April this year, by a bilateral agreement between Spain and the UK on Gibraltar, which provides for the creation of a so-called ëpost-boxí in the UK, through which Gibraltarís competent authorities (ie those with the responsibility to implement and administer a particular law or activity) will channel their communications with the authorities of other Member States. ]

So what does the Directive actually provide for ?

The text creates a framework with certain common principles and obligations which Member States will have to implement in the context of national structures.

The Directive has two main aims:

• Firstly, to harmonise national rules on take-over bids, particularly regarding the transparency of the procedure, [in order to facilitate restructuring through out Europe]; and

 

• Secondly, to provide, through out the Union, equivalent protection for minority shareholders where there is a change of control of their company.

 

The main principles contained in the Directive are as follows:

1. Protection of Minority Shareholders

The proposed Directive is designed to ensure an adequate level of protection [for minority shareholders] across the Union where there is a change of company control. It seemed that the best way to achieve this, is to offer them the opportunity to sell their securities at an equitable price. The mechanism chosen for this is a mandatory bid addressed to all shareholders and for all their holdings at an equitable price. (Currently, several MSís do not require a full bid if control is transferred.)

[This raises the issue of alternative compensation. A compromise has been found that protects shareholders in the target company without making large take-overs more difficult, by ensuring that when the compensation offered by the bidder does not consist of liquid securities, alternative compensation has to include some cash as an alternative.]

(a) Supervision

An important element of the Directive is the obligation on Member States to appoint one or more supervisory authorities. These bodies have wide powers of investigation and decision. In the case of cross-border take-overs, the Directive establishes which supervisory authority is competent and which country's law is applicable to a particular bid. In general, the laws of the target company's Member State pertain, but the Directive also establishes a legal framework for cases where a target company is not listed in the company's state of origin

1. Protection of shareholdersí interests ñ Neutrality Principle

As well as the obligation to inform shareholders and employees, the board of the target company is obliged to act neutrally. During the period of acceptance of the bid, they must not take any action, (other than seeking alternative bids), which may cause the bid to fail, without first getting the prior approval of a general meeting of shareholders. This will ensure that the future of the target company is decided by its shareholders.

1. Transparency

Finally, transparency, which is the means of ensuring that all parties with an interest in the bid are treated equally. The Directive lays down obligations regarding information and publication of bids. The obligations are binding on both the target company and the bidder. Member States must ensure that bids are made public without delay and that the supervisory authority is informed of the bid. As soon as the bid is public, the board of the target company must inform its employees, either through their representatives or directly. In addition, an offer document containing the information necessary to enable shareholders in the target company to reach a properly informed decision on the bid must be made public.

It is of course not yet certain whether the Directive will progress through its second reading at the European Parliament unscathed. Early indication suggest that there may be problems. If the Parliament decides to make further proposals to amend the Directive, then we may have to enter into the conciliation procedure to resolve the issue.

The European Company Statute

I would like also to mention the European Company Statute. It is a project that seems to have been around for years and has reached almost mythical status. Before explaining what stage it is at, Iíll just mention, briefly what the European Company Statute actually is, and why it has taken so long to reach political agreement on it.

There are 2 elements to the ECS project:

1. A proposal for a Regulation on the Statute for a European Company.(SE)

 

1. A proposal for a Directive complementing the Statute, dealing with the involvement of employees in the European Company.

 

The proposed Regulation

The proposed Regulation aims to introduce a further option for enterprises in Europe ñ a European Company with its own legislative framework. Initially when it was proposed, the idea was to create a new and detailed regulatory system at the European level; a kind of supra-national European law; However, this was seen to be too ambitious. The current formulation of the Regulation provides that an SE would be governed by the Regulation and the article of association of the SE where authorised by the Regulation. In the case of matters not regulated by the Regulation, the national laws of the MS in which the SE is registered would apply.

So what does the proposed Regulation cover ?

The main elements dealt with by the Regulation are, amongst others, the formation, share capital, registration, management structure and general meeting of the SE.

The Statute provides four ways of forming a SE: merger, formation of a holding company, formation of a joint subsidiary, or conversion of a public limited company previously formed under national law. Formation by merger is available only to public limited companies from different Member States.. Formation of a holding company is available to public and private limited companies who have their registered offices in different Member States, or who have subsidiaries or branches in Member States other than that of their registered office. Formation of a joint subsidiary is available under the same circumstances to any legal entities governed by public or private law.

The minimum capital requirement is 120,000 EURO.

The Regulation also provides that the management structure must be either a 2 tier system consisting of a supervisory board, which in turn selects a management board; or a single tier system consisting of an administrative board appointed by the general meeting.

On the registration requirements: The Regulation refers back to methods of disclosure and publication set out in the 1^st Company Law Directive. The registered office must be the place where the European Company has its central administration; that is to say, the true centre of operations and it must be registered in the register designated by the law of that state. In addition, the registration and liquidation of an SE must also be disclosed for information purposes in the Official Journal of the Community.

The European Company would also be permitted to transfer its registered and head office to another Member State, while retaining its legal personality. ie without winding itself up.

Finally, the Regulation also states that an SE may not be registered unless an agreement or arrangements for employee involvement is in place as provided for by the proposed Directive on the ECS and employee involvement. And this is where the problem liesÖ..

The proposed Directive

The proposed Directive dealing with the thorny issue of worker participation really represents the stumbling block for the ECS. Political agreement has been reached on the Regulation, however, no such agreement has been forthcoming in relation to the Directive.

The Directive contains provisions for the setting up of a "negotiating body" to negotiate arrangements for the involvement of employees in the SE. If no agreement can be found, then standard rules will apply. The Directive requires Members States to lay down these "standard rules on employee involvement" which must satisfy the provisions of the annex (of the Directive). [Hence, the rules of the Member State where the SE has its registered office will apply in such cases of non-agreement.]

The current status of the ECS is essentially one of deadlock. Negotiations are still ongoing to see whether Spain, the last remaining country opposed to the Directive, is prepared to join the other Member States in supporting it. However, this has been the status quo for the last year and there is still no sign of movement on the part of the Spanish, who fear that the Directive will open the floodgates on worker participation and bring about unwelcome implications for their national system which does not currently allow for the concept of worker participation.

The Directive has been put on the agenda of the Social Affairs Council in the middle of October; so it is really a question of "watch this space".

10^th and 14^th Directives

What I have just said about the ECS leads me conveniently on to mention the proposal for a 10^th Directive on cross-border mergers of public limited companies and the prospective proposal for a 14^th Directive on the transfer of the corporate seat. The logjam on worker participation in the ECS project also helps to explain the lack of movement on these possible directives .

10^th Directive

Turning first of all to the proposal for a 10^th Company Law Directive on cross-border mergers of public limited companies. The objective of this Directive is, of course, to harmonise the laws on cross-border mergers, thereby removing the legal obstacles to such mergers.

Although all mergers, both national and cross-border, involve the same steps, such as the drawing up of joint draft terms of merger, the approval of the merger by appropriate organs of each of the companies and the drawing up of a experts report for each company etc: The special aspect of the cross-border merger is that the merging companies are governed by the laws of different Member States.

Therefore, although many of the preparatory acts and disclosure obligations are carried out individually by each of the companies involved, and so the law of the relevant Member States can apply: it is nevertheless necessary to synchronise certain steps in the procedure and this is what the Directive aims to do.

Also, certain rules need to be harmonised to a greater degree than for national mergers. This is achieved by setting out uniform provisions in the text of the Directive, or by designating the applicable law. Harmonisation is particularly necessary in the case of

• the contents of the draft terms of merger

• the protection of creditors of merging companies

• the date on which the merger takes effect

• the causes of nullity of mergers.

As regards the disclosure provisions, the proposal refers to the requirements set out in the 3^rd Directive on national mergers. Namely that the draft terms of merger must be published in accordance with Article 3 of the 1^st Directive for each of the merging companies, at least one month before the date fixed for the general meeting. However, it also states that when the draft terms are disclosed in the national gazette for each of the merging companies, then certain information must be specified; including, the register where the file on the company is kept, and the number of the entry in the register, the conditions which determine the date on which the merger takes effect and, for the acquired company, the details of the exercise of the rights of the creditors of that company.

But having given you the good news that the Commission has taken action proposing harmonisation in this area of company law, there is, of course, the bad news. The proposal was presented in 1985. However, it has not yet reached the Council for discussion. It has been stranded in the 1^st Reading in the European Parliament. They have not yet delivered their opinion on the proposal. Once again the main stumbling block centres around the problem of what to do about the issue of worker participation. The fear was expressed (particularly from German trade unions) that companies might want to merge away from Germany because of the strong worker participation rules that exist there.

The current Commission policy as set out in the Financial Services Action Plan is to wait for political agreement on the ECS and then apply its solution on worker participation to the draft 10^th Directive.

14^th Directive

The Commission has also prepared a draft proposal for a 14^th Company law Directive, governing the transfer of the registered office of a company from one Member State to another. The draft aims to enable a company with share capital formed in one Member State to transfer its registered office to another Member State while retaining its legal personality (ie without being wound up, as is necessary at the moment). Clearly this proposal would represent an important step forward in facilitating the free movement of companies within the single market. However, this draft has not yet been officially proposed by the Commission, as it is also affected by the issue of worker participation; and given the problems encountered by the 10^th Directive it was deemed more sensible to wait for an agreement on worker participation before launching another official legislative procedure which may also not progress past the first Parliamentary reading.

Despite its lack of official status Iíll mention briefly what the draft attempts to do. But I will start first of all with what the proposed legislation does not do: It does not try to reconcile the "real seat" and "registered office" theories which exist in different Member States. Those Member States that adhere to the registered office theory, such as the UK and Ireland may continue to do so. While others may continue to advocate the "real seat theory". [Registered office theory = the laws of the state where the company was registered are the applicable laws. Real seat theory = the laws in the state where the company has its real central administration and management are the applicable laws.]

The proposed text provides for a specific procedure which ensures the transparency of transfers and provides guarantees to members and creditors. The management of the company would be required to draw up a report, explaining the legal and economic aspects of the transfer and indicating the implications of the transfer for members and employees. The proposal for transfer would also have to be lodged in the companies registry and published in accordance with Articles 2 and 3 of the 1^st Directive. The decision to transfer must be approved by a majority of the general meeting. Then the company must register in the host country and only after this, may it delete its entry in the register of the home country. The new registration and deletion of the old registration would then be publicised in each of the Member States in the usual manner. The company therefore transfers its registered office while retaining its legal personality.

After the transfer, the company will be subject to the legal provisions of the host country in the same way as other companies registered in that country. Therefore, it will have to adapt its statutes to the new legislation and, in countries applying the "real seat theory", transfer its central administration before being able to register.

We do view this draft proposal as being important and recognise that it is eagerly awaited by industry and we intend to move forward with it at the first opportunity. However, as I mentioned earlier, the official Commission position is to wait for an agreement on worker participation in the ECS.

If this agreement is not forthcoming; then other alternatives for the 10^th and 14^th Directives may have to be considered. Such as, amending the texts to limit the scope of the Directives so that they donít apply to companies with worker participation Their scope could then be expanded when an agreement is found on worker participation which can be used across the board. At the moment, this is only an idea and doesnít represent official Commission policy. Until the Commission takes the political decision to move forward with the 10^th and 14^th proposals possibly by amending the texts, we must wait patiently for the European Social Affairs Council to crack the nut of worker participation.

Conclusion

There is a real need to continue with company law harmonisation:

• There are certain projects which we need to complete: Slim; the European Company Statute; and the Take-over Bids Directive.

• We need to look at the mobility of companies in the internal market. They should have free movement under the Treaty provisions, but legislative barriers prevent this. So we are coming under pressure to push forward with the 10^th and 14^th Directives.

• Finally, with the growing importance of capital markets in Europe, the lack of harmonisation in certain areas linked to capital market rules and regulations has become apparent. This is particularly the case for the whole area of shareholder rights, but also for the questions relating to the functioning of companies (corporate governance).There are a number of impediments which make it difficult for shareholders to exercise their voting rights cross-border; and there is no level playing field in the area of minority protection. So, it is likely that in the future, we will see further harmonisation taking place in the area of capital markets.

 

So the message is, keep watching, because the next few years should be very interesting.

Co-operation on law enforcement

Per Nordström, Chief Legal Adviser, PRV Sweden

Introduction

I am fairly sure that even before I start, some of you in this room are wondering if this is really a matter for registration authorities.

And, certainly, itís a fair question ñ and to some degree a sensitive subject.

But, on the other hand, we were never meant to register fictitious businesses or disqualified persons. Nor do we want, without batting an eyelid, to register companies or legal representatives, where we suspect criminal practice which will result in fraud against the state or private individuals.

Serious businessmen have the right to demand that the registration authority makes sure that businesses stick to the rules within the legal area we cover, that is company law, etc. But the serious businessman and society in general also have the right to demand that the registration authority helps to detect crime and also make it more difficult to commit crime. Our registration must not become an easily accessible tool for getting round relevant laws. We must make a contribution to the conditions necessary for healthy competition and fair play.

Latvia and Sweden have co-operated in a work group under the heading "Co-operation on law enforcement" and we are now going to illustrate a few of the matters we discussed, but also raise new questions for your consideration.

More active co-operation between authorities

Which authorities?

With which authorities should we co-operate in these questions? Of course, with the tax authorities and with the police. Thatís what first comes to mind. But the information and the knowledge to be found within the registration authorities is also important to other bodies - the Customs, the Motor Vehicle Register, the Register of Shipping, the Property Register, the Financial Supervisory Authority, the law courts. Also agencies within the European Union which grant various types of subsidies and EU institutions which work in the fight against fraud.

National co-operation

On a national level, we consider regular meetings among the authorities to be important. The registration authorityís staff can teach the staff of other authorities to make efficient use of the information in the registers. We can put forward suggestions on how to co-operate on the processing of different types of register information, thus enabling another authority to carry on efficient examinations of the register.

On the other hand, regular meetings with the police, the tax authorities, etc. can contribute to the registration authorityís understanding of how certain criminal procedures are planned and carried out. The registration authority can then react, and quickly pass on important information to the police, etc.

Even if this type of co-operation can be regarded as sensitive, it is important if the police are to be able to act when a crime is committed, or preferably before it is committed. It is not reasonable for us to abstain from passing on the information in our possession. As I said previously, we must not allow our register to be a platform for doubtful business operations.

Black list

Another idea that we have discussed in the work group is that each registration authority should draw up a so-called black list ñ a computerised register in which we compile information on

• fictitious business enterprises
• fictitious persons
• false addresses
• real persons who, against their will, have been falsely reported for registration as board members, etc.

Without a black list of this kind, it is difficult for the registration authority to avoid registering fictitious persons or false addresses in several companies. Many examiners process many cases every day and we would risk making the same mistake again and again.

Different types of warning can also be built into our computer systems, giving our staff an indication that they should do an extra check before registration. The warnings can be related to companies that have not filed their annual reports, companies without a registered auditor, companies that are in the process of being dissolved, etc.

Of course, we are aware that the black list system must be used with care and will certainly require support from legislation. But we must be prepared to test new and more effective methods in order to cut down financial crime or other conduct that does not abide by the law.

Police at the registration office

An alternative to the concept where the registration authorityís staff are to be more active is that personnel from the police and tax authorities should be present at the registration office. Their work would consist of checking documents filed for registration. Doubtful conduct and criminal methods would then more often be detected at an early stage.

The business enterprises

In addition to giving service to the police, tax authorities, etc. we have an even more important task of co-operating with the individual business enterprises. We need to direct more attention towards them. We should see the entrepreneur as our customer!

From the aspect regarding the fight against criminal conduct, this means that we must show the business enterprises how to become even more efficient when carrying out business checks, by making use of our registers and our knowledge. We can teach them how to interpret our register information to detect signs of unreliable actors on the business scene. The registration authorities should thus arrange seminars ñ why not in co-operation with other authorities? ñ where businessmen, trade organisations, credit agencies and the general public are invited to attend.

International co-operation

The importance of international co-operation between registration authorities increases with the growth of internationalisation in the world of trade and industry. We would like to raise a few questions here.

Should we not more often check the information in our foreign colleaguesí registers, before we register foreign companies or persons as owners or company officers in our national business enterprises?

For example, suppose a Swedish trading partnership applies to register a British business enterprise as a partner. A check with Companies House would tell us that the British business does exist, that they have not changed their business name, that the persons representing the business are competent to do so, that the business enterprise has not recently been dissolved through bankruptcy, etc. Remember, it can be dangerous to rely entirely on a copy of the foreign authorityís certificate of registration.

The quality of the information in our registers would improve at once, if a simple check of this kind were to be carried out.

Of course, this check can be done with the help of EBR (the European Business Register), if possible. It is important for the registration authorities to have easy access to one anotherís registers. Future development in the area of information technology must take into account that there will be an ever-increasing use of register information across national borders.

Perhaps we could even have access to one anotherís black lists.

In our daily work, we see more and more that business enterprises, owners and their legal representatives are located ñ or at least are said to be located ñ in offshore countries and tax havens. Our work group is of the opinion that it is essential for the information from the commercial registers in these places to be easily accessible, complete and reliable. Perhaps we can exert some influence within the framework of international co-operation in different areas and thus achieve certain improvements.

How far-reaching is our legislation?

The majority of countries have regulations regarding trade bans and personal bankruptcy. Persons who are the subject of a trade ban or who are undischarged bankrupts are not allowed to be officers in a business enterprise and can thus not carry on business.

However, the effect of a trade ban is usually only national. A person who is the subject of a trade ban in Norway can start a business in Sweden.

When EUís insolvency directive comes into force, it will make it possible for a bankruptcy in a certain country also to take into account property in another EU country.

Perhaps the time has come for the EU to consider the question of whether trade bans and adjudicated bankruptcies for private persons should also have effect in other EU countries.

Electronic filing

The electronic world is already here. Does it bring new opportunities or new threats as regards crime, etc.?

To start with, I think that electronic filing will mean that the legal regulations for the registration of enterprises will be simplified and become more similar internationally. Any country which does not keep up with electronic development will run the risk of businesses choosing to register in another country, where the electronic method is in use and where the registration process is quick and relatively simple.

Of course, this can mean that it will be easier for criminals ñ with little effort ñ to register many companies in many countries in the electronic world. There is that risk.

But at the same time, there are increased opportunities for control. The registration authorities can easily check company files ñ both current and historic information. This gives a more secure basis for decisions on registration. In addition to this, we can gain access to the registration files in other countries in order to compare information.

A system with electronic signatures can also make it easy for an investigating authority to ascertain from which computer the information has been sent. This improves the conditions for the investigation.

The electronic world is here. Itís up to us to make the most of its opportunities.

Questionnaire

We would like to take the opportunity of asking you a few questions with regard to what I have been talking about.

I would therefore like to distribute a questionnaire when I have finished speaking.

Agencies

Finally, we carried out a survey in Sweden of four company formation agencies. These establish and register companies which are sold directly to new businessmen. Two of the agencies are considered by us to be serious. Two of them, less so. Our survey covered 120 companies registered at the beginning of 1998.

What did we find?

Of 60 limited companies registered by the serious agencies, only 2 failed to file their annual reports with the registration authority at the correct time. Of 60 companies from the less serious side, the figure was 36 companies which failed to file their annual reports at the correct time.

Of 60 companies from the serious agencies, 2 had been declared bankrupt. Of 60 companies from the less reliable agencies, 28 had been declared bankrupt or entered into liquidation and 5 were in danger of liquidation.

The conclusion of the Swedish survey is that unreliable agencies provide unreliable businessmen with companies which are used for criminal practice.

This puts agencies in focus. What can be done to obtain better control over the situation?

In this connection, I think the next speaker has some interesting information.

The Romanian Commerce Register - a portal for e-commerce

Dr. Cornelia Rotaru, General Director, National Trade Registry Office

Chamber of Commerce & Industry of Romania

Introduction

The paper presents how the Commerce Register is used in emerging economies like Romania as a portal for e-commerce. The ways and modalities for accomplishing this purpose are based both on the Internet facilities and on the position of the Romanian Commerce Register as main source of business information.

Market globalisation has brought about tremendous changes in all fields of activity, having serious effects on business, information, environment.

The future will belong to virtual companies and to the smart organizational structures using modern IT and communication to access markets worldwide.

1. Impact of the Information Society on the further evolution of the commerce register

The world economy is moving from an industrial society to a new set of rules - the Information Society.

Enterprises in all sectors are starting to transform their business into e-business - requiring restructuring of the entire company.

Public administration must serve the citizen and more and more they talk about e-administration.

Accessing and using the Internet, whether via a computer a mobile phone, or a TV set-top box, seems become commonplace.

Driven by the Internet revolution, e-commerce is dramatically expanding and undergoing radical changes.

Information Society means a new way of thinking, working, doing business, living, based on tremendous evolution of IT & C.

The impact of the Information Society on the further evolution of the commerce register will cover all the field of this institution activity : organization framework, legislation, methods and working procedures, personnel, relationships with the clients, services provided, access to the data etc.

The changes will be based on the high level of integration in the commerce register of the information technology. The Internet will become the main chanel of communication between Commerce Register and customers.

The evolution of the commerce register should be in the directions of becoming more virtual than the real one.

2. Brief presentation of the Romanian Commerce Register

History

First law for companies registration in Romania was enforced in 1884. In 1950 the commercial register was liquidated as being an institution incompatible with socialist economy.

In November 1990 the Law no. 26 regarding Commerce Register came into force. This Law was amended in January 1998.

2.1. Organization framework

Host structure of the Commerce Register is Chamber of Commerce and Industry, autonomous, non-governmental and self-financing organisation.

The Commerce Register Office is an entity without legal personality organised on two levels:

• local level, represented by 42 territorial commerce register offices within each local chamber of commerce and industry;
• national level represented by National Trade Registry Office, organized by the Chamber of Commerce and Industry of Romania.

2.2. The control of legality of registration operations is accomplished by county court's judge delegated to Commerce Register Office.

2.3. Mission

Aim of the Commerce Register Office is to keep the legal register of the traders both at the local and the national level, for assuring the full transparency of companies in the condition of the free movement of persons, capital, goods and services.

The register is consisting of:

2.4. Main features

The Commerce Register has the following main characteristics:

• it is legal register of the traders;
• it is available for the public;
• the company's registration is compulsory;
• it is operating on territorial area;
• it is a form of guarantee, providing protection for economic dealings.

2.5. Information system within National Trade Registry Office.

There are operational four main databases:

2.6. The place of the Commerce Register on the information market

In Romania Commerce Register became the main source of information on companies providing information services both of the certain companies and with a strategic role in supporting the evaluation, planning and implementation of social, fiscal, industrial, export and regional development policies.

It is an instrument of market's transparency, offering particulary to SMEs an easy access to information needed to carry out their daily activities (marketing, identification of potential partners, clients and subcontractors, statistics, distribution of competitors etc.).

3. ROLEG - Commerce Register on Internet as an environment for e-commerce

ROLEG is the registered trade mark of services provided by Chamber of Commerce and Industry of Romania on the companies using Internet facilities.

ROLEG is abbreviation for Romanian Legal Register. It has been developed as a project of e-commerce. Initiated in 1998 this project was awarded with "Eurochambers President's Award - 1998.

The overall objectives are:

- to contribute to the development of a global electronic environment for the open and non-discriminatory exchange of information;

- to contribute to the involvement of SMEs in the global e-commerce.

3.1. The approach

The traditional models of company information used in market economy have been developed on the base of some common principles:

• the existence of company legal information provided generally, by the body in charge to keep Commerce Registers in each country;
• the setting-up the commercial database including company profile, offers and demands. The information is mainly got using questionnaires, filled in by the company itself;
• the printing of directories on paper and in the last years on CD-ROM and Internet like Yellow Pages, Gold Pages, Compass, Euro Pages, etc.;
• the processing of the company annual balance sheets together with information collected by questionnaire, providing financial reports or credit reports. In this respect well known providers are Dun & Bradstreet, Creditreform, O.R.Télématique, etc.

ROLEG approach was based on the new model and conception of business information integrating in one system the legal information.

ROLEG was designed as a portal for e-commerce, having as main goals:

• to become a tool for market mediation;
• to create a virtual trading marketplace;
• to be a new concept of networking information in the digital economy.

In fact ROLEG offers an extension from legal information to the economic one, creating around commerce register an environment for electronic commerce.

For achieving its goals ROLEG exploited all the facilities offered by Internet.

As, it is known, Internet has three main functions:

- communication	- fulfilled by e-mail and FTP procedure;
- information	- assured by the information content of sites and data bases;
- advertising	- accomplished by selling to the companies spaces in most visited location.

Concerning the last function of Internet it is necessarily to point out the mechanism used and the rules of advertising in cyberspace.

Parallely with the real world the virtual world is developing. The last one works with almost the same concepts as in the real economy. It is known that in the traditional advertising they prefer to place an advertise in a central and crowded street or in a newspaper well known and printed in many copies. In the same way it is happening on Internet. The most visited sites are those belonging to the public bodies or to the transnational companies. Within one web sites the home page is the place firstly accessed when they click on a certain web site addresses.

The principle of advertising on Internet is to sell pieces of the home pages to the companies for introducing their banner linked to their own Web sites.

3.2. The main functions of ROLEG

ROLEG fulfills five main functions:

a) Providing of legal information on companies

ROLEG offers global access to all the traders registered with the central commerce register in two ways:

- free of charge delivering: - company name;

- incorporation member;

- city and county of location;

- statue of company (in dissolution, liquidation,

in bankruptcy, operational etc.).

- on subscription base providing complete report on the company.

The information is available in Romanian and in English language

The procedure for obtaining information consists of:

Depending on the searching criterion used it is possible to get a list of many companies. In this case it has to click on the looking for company or on each listed company.

The subscriber has the possibility to use a range of searching criteria for getting needed information:

If the criterion of searching was selected the data required on the screen are entered.

The next screen contains the list of the delivered information. The subscriber has to mark the needed information.

Going on, the cost of the required information detailed on each item appears on the screen. The user can decide to accept the delivery of information or to come back for decreasing the number of information items.

At the end of the working session the value of the subscriber's account is displayed.

b) Companies advertising is a service offered by the chamber of commerce based on the position and the role of this organisation in the business community as the most prestigious and old brand name.

They use two modalities of doing advertising:

• by selling spaces for inserting company's banner on ROLEG home page;
• by filling in the commerce register the company's web site address with automatic link to the site itself.

c) The ROLEG function for setting up an e-commerce environment was developed for offering:

• communication between companies using Internet e-mail facilities;
• information on company profile, products and services provided by it;
• connection to virtual shops or mall;
• development of direct marketing.

One compulsory information entered in the Commercial Register is the registered office of the trader including data of location. This item was extended by adding two new fields: e-mail address and web site address. The mentioned data have been included also in the registration form.

Clicking on e-mail address of one accessed company the screen specific for sending e-mail messages appears and becomes operational giving to the user the possibility to contact immediately the respective company.

Clicking on site address the visitor can navigate the company's Web page. In fact, it means to know about the commercial offer of one company. In this way the visitor can enter into the first steps of e-commerce namely by:

• getting the company's commercial offer;
• sending the order or a letter of intention.

The connection to a virtual shop or mall can be achieved in two ways :

• to click on the icon of the virtual shop put on home page of ROLEG for doing the automatic linkage to the shop;
• to click on the site address included in the registration office of the company, if the respective address is the address of the virtual shop or mall.

d) The ROLEG function as a gate-way to the domestic public bodies is achieved by including a dedicated chapter in the home page or in the structure of ROLEG.

It means to include the site addresses of the public institutions involved in the company's registrations and further activities like: public notary, fiscal bodies, liquidators, stock-exchange, commodities stock exchange, State Property Fund, National Bank ministries and governmental agencies etc. The first link is done with National Trade Registry Office.

e) The same way, ROLEG could become the gate-way to the commercial registers in any country, including a list of their site addresses with the automatic linkage to them.

Combining legal and commercial information due to Internet facilities an interested person accessing the ROLEG is informed both on legal existence of one company and at the same time can navigate in business virtual space.

The Central Commercial Register brings together all types of participants in the e-commerce: manufactures, wholesalers, retails, bankers, services providers. Around the companies' legal information is developing a virtual business world which offers the advantages of quick information, communication and business relationships development.

In the annex 1 the conceptual model for e-commerce transaction using ROLEG is presented.

4. New value added services developed by trade register office in the e-commerce field

The ROLEG concept allowed to the Chambers of Commerce and Industry to define and launch on the market new value added services, in line with e-commerce. The brief list of them includes:

• selling of digital certificates, Romanian Chamber of Commerce and Industry being appointed as National Registration Authority of Public Infrastructure Key within Trade Information Network of developing countries;
• providing counseling services specially to SMEs on the advantages of using Internet and e-commerce tools for modern development of the business and for becoming the actors in the Global markets;
• fulfilling the linkage between legal information on one company and its Web page;
• hosting the Web pages in the Chamber virtual shop or on Internet site;
• designing at the request the Web pages for companies;
• offering to the companies e-mail addresses on the Chamber site and faxing the e-mail message to the company;
• registering the company's web page linked to ROLEG on search engines;
• installing the account for numbering the accesses at Web page;
• providing statistical reports on accesses to the company Web page;
• organisation of direct marketing actions on behalf of the small companies.

5. The ROLEG approach as an information shop

Business information is a non-tangible commodity with a strategic role in the life of one enterprise. Information has value because for its collecting, processing and delivery the important resources are spent.

The information contained by ROLEG is sold on the subscription base.

The subscriber has to pay:

- a connection fee of 16^th dollars once;

- a deposit of minimum 100 US dollars.

The evidence of value of the delivered data is kept automatically and the subscriber receives an extract with all the transactions.

The system also displays the amount remained in account after each information delivery.

The payment system has to be improved in the future by including new methods based on secure, electronic tools.

Recently it was allowed the payment by cards.

6. The strategy on short term for the ROLEG

In the new Europe and in the new world economy the role of the Commerce Register will be different of the existing now.

How should Commerce Register respond to the globalization challenges?

How should Commerce Register face to the trade liberalization?

How should Commerce Register respond to the faster and faster development of e-commerce, e-business, e-mobile, as result of tremendous IT & Communication changes?

What should the place of National Commerce Registers be in a Global economy?

These questions should concern the responsible in charge with the Commerce Register in each country.

Taking into consideration the role of ROLEG as portal of virtual market mediation the strategy for further development is based on the defining and implementation on the new services capable to:

- guarantee the trust in supplied information;

- set up a new chain of values and sell the trust by using Trust Info System.

It is clear for us that the challenge of Globalization will change structurally the Commerce Register too, sooner or later depending on the strategy adopted by each country.

We have to look at the Information Society and Globalization as an opportunity, not a threat.

Electronic Filing

Developments in Sweden

Roland Höglund, Swedish Patent- and Registration Office, Companies Department ("PRV")

There are many ongoing projects in Sweden in the field of e-Government. Most of them of course are developments in internet applications in different agencies which enable citizens to get more and more information from different registers in the national and local administrations. As an example, most of the agencies have their most frequent forms available on the Internet, just to print out or to fill in and print out. This is of course a good step ahead in the process of making the administration closer to the citizens and in a wider perspective also an important tool in the democratic process.

It is also ñ if you look upon it more formally ñ the two first steps, of totally four, that the Swedish Government wants the agencies to take in order to become what in Sweden is called a "24x7 Agency". That means that it should be possible in one way or the other, to get in touch with the agency around the clock. As I understand that is also the idea in many other countries in Europe

Step 1: The agencies shall have a website providing "packaged" information about the agency and its services.

Step 2: The website shall provide "interactive" information about the agency and its services.

Step 3: A website and communication functions allowing the visitor to hand in and retrieve personal information, for example applications to register a new company.

Step 4: Website and network functions for proactive and joined-up services involving more than one agency and institution.

One thing is for sure: lots of work is going on in the Swedish administration to take steps on this "ladder".

I will now give you a brief summary of three projects in Sweden which all are "pieces" that belong to this "jig-saw-puzzle" which is called e-Government, and which our office and myself are involved.

It is of course steps on the ladder towards "the 24x7 Agency", and it is about e-filing - todayís topic.

The three projects are:

• Kontakt-N
• Government E-Link

• SAMSET

First of all: Kontakt-N

The Website shown on the slide here is unfortunately for all non-Swedish speaking persons of less value, but I show it anyway.

The name of the project: "Kontakt-N" is a Swedish pun using the Swedish word "kontakt" - "contact" in English - combined with the letter "N", when pronounced in Swedish would refer to the word "one" in English. Thus the acronym tells you that there is just "One Contact" to be established in order to communicate with two agencies, in this case to start a company. The agencies involved here are PRV and the Swedish National Tax Board, the latter also with is regional offices. But, the technical solution behind this system allows you to incorporate any number of agencies in Kontakt-N, if you find it appropriate.

Since this project and its background was presented of a colleague of mine at the last years conference in Sundsvall, I will not go into any details today, but inform you of the current status of the project.

Of course the ultimate goal of the project is that all correspondence, contacts or exchange of data with a person setting up a company and the registration office as well as the appropriate tax office, should be handled through electronically means.

However, we have chosen to launch the project in two steps, due to a couple of reasons or obstacles if you prefer. I will come back to them later.

The first step of the project Kontakt-N will make it possible for a person with a Web browser and an Internet connection to do a lot of things:

• Get information about the different types of companies or associations and how to register them, which is information from PRV.
• Get information about VAT and other tax-related issues, information which is supplied by the Nation Tax Board
• Get information, through Internet links, from other agencies where in some cases permissions are necessary to start a company.
• Calculate economic figures useful for you as a businessman and owner of a company-to-be
• Fill in data necessary to register the company and VAT
• Save all your data to the next time you visit the website, protected of course with a password created by yourself

And if you are ready for it:

• Print out the data in appropriate forms which are automatically generated for you to sign and to send to PRV and the Local Tax Office.

It is of course very easy to understand that if this is step one, step two will make it possible for you to send all the data to the agencies involved, electronically instead via this print-out system.

We have set out the first of November as the rolling-out-date for this application in step one.

As an important piece in the Kontakt-N project towards step two, we also participate in a project concerning the methods and standards for sending and receiving data from and to different agencies in the Swedish administration.

The result of this is something called Government eLink, which is a Swedish national set of generic services for exchange, dissemination and collection of data. The owner is the Swedish public agencies and it is administered, developed and maintained by a co-operation project, the Government eLink-project. The project is co-ordinated by the Swedish Agency for Administrative Development, SAAD.

The Government eLink have been developed together by the SAAD, the Swedish National Tax Board and the Swedish National Insurance Board. The concept and standards are currently implemented, after a public procurement in form of services by two vendors, Frontec AB and Hewlett-Packard AB.

Even if the mainstreams of data will be between agencies, it is also applicable on the exchange of data between agencies and the citizens as shown on the slide.

SAAD will also make a proposal to make the Govermnet eLink useful within the European Community and the following slides give you an idea about that.

The third project I would like to mention in called SAMSET. The word is a Swedish acronym, and a translation in English as close as possible would be "Electronic Services in the Society".

The project is dealing with the delicate matter of defining a common policy for electronic certificates to be used by the Swedish agencies in their electronic contacts with the citizens. The project is commissioned by the Government to four agencies:

• The Swedish National Tax Board,
• The Swedish National Insurance Board,
• PRV

• Swedish Agency for Administrative Development,

with the National Tax Board holding the chair.

The framework for this project is of course the European Union Directive for electronic signatures from last year and a corresponding Swedish law which will be in force January 1^st , next year.

However, neither the Directive nor the Law will solve all the problems connected with this issue. The Swedish agencies must therefore agree upon levels of security in their electronic services and how the certificates shall be produced and distributed, if the certificates should be stored in smart cards or in software solutions, who should carry the costs and so on. This of course is what the SAMSET project has been thinking of since the beginning of this year. However, Friday last week we delivered our proposal to the Government.

We propose that the national administration can use certificates that are of a lower security level than described in the Directive (and the Swedish Law), and that the agencies normally should be satisfied with certificates stored in software solutions. We also suggest that the National Tax Board will act as a Government Certificate Authority. Furthermore we suggest that the Swedish banks and other similar organisations to be invited to play a important role in the system as providers of the certificates and other services such as revocation services.

As you may well understand the result of the SAMSET project is very important for us in the Kontakt-N project.

But, as I said earlier there are other obstacles on our road towards the second and last step of the Kontakt-N project, allowing us to offer our citizens, that are on their way setting up a company, the possibility to do so on the Internet.

The toughest problem is that The Swedish Company Laws and adjacent legislation so far do not allow the use of electronic signatures when applying for registration.

This will probably be the main reason why we and other agencies in the same situation will not be able in the near future to offer "Step 4-solutions" (remember the ladder leading towards the "7x24 Agency"). There may be technical and other problems, but we can cope with them. The legal matters are something else.

However we will not give up our work in affecting our colleagues in the Government. It is necessary to adjust the law to todayís demands if you really mean something with the word e-Government.

The electronic legal document and the French Commercial Court Registrars, public and ministerial officials

Pascal Beder

Greffier associé du tribunal de commerce de Paris/Associate Registrar of the Commercial Court of Paris, President of ASG, Association Syndicale de Greffiers de Commerce de France

with the participation of Jean Marc Bahans, Doctor of Law, Greffier associé du tribunal de commerce de Bordeaux/Associate Registrar of the Commercial Court of Bordeaux

Outline

I. The public official and the security of electronic documents in

France

The public official, legal instrument for the security of electronic documents: the electronic authentic document

The public official, an implicit model for the certification of private documents

1.Third party certification, a reduced version of the public official

The public official, third party certification

II. The electronic document and the renewal of the traditional activities of the Registrars of the Commercial Court, public and ministerial officials

1. Electronic legal notices

2. The e-procedure

III. The implementation of the Internet site of the Registrars of the commercial Court of Paris and the granting of the electronic signature keys European Trade Register Congress

Cardiff, 5 October 2000

The electronic legal document and the French Commercial Court Registrars - public and ministerial officials

I would like to address the question of the electronic document from the point of view of the Commercial Court Registrar's profession - which, in France, is responsible for the local trade registers. Acting in both a public and ministerial capacity, French Commercial Court Registrars give the legal, reliable and valid character to the business information they receive, validate and distribute.

First, a precision is necessary: The French public and ministerial official directs an office which gives its holder a body of powers and obligations. These officials have the right to exercise their functions as independent professionals, following their official nomination. The office of the Registrar of the Commercial Court is ministerial, as the Ministry of Justice has delegated to it a part of public authority - that of validating the authenticity of documents within its area of competence.

Therefore, acting in both a public and ministerial capacity, French Commercial Court Registrars embody the third party responsible for the security of both legal and juridical documents. Now, security is at the heart of the question of electronic documents.

If security is at the heart of the question, the public official is directly concerned.

Why? In two ways:

• First, because French Law permits the drawing-up of electronic original documents and, under French Law, original documents are the most perfect example of authenticity.
• Then, indirectly, because the function of the Registrar - an independent person authorized by the State to carryout the verification of original documents - is taken as a model for the acceptance of electronic private documents in the same manner as documents drawn-up on paper.

It is interesting to note that the legal texts present the certifying official's responsibility as one of validation and conservation of documents - and of confidentiality. We note that the validation of electronic signatures is not identified with the authenticity of the document. We also note that the electronic document - the validity of which is presumed - is a document verified by the intervention of a third party and, given the strictness of that verification, is therefore almost more valid than in its paper form. The methodology of the public official therefore influences the criteria used to render secure the electronic document.

The electronic document in itself justifies anew the traditional activities of the public official.

The public official and the electronic document therefore have a mutual base of interest. Examining the influence of the Registrar on the security of the electronic document must come before analysing the renewal of the traditional activities of public officials via the electronic document.

1. The public official and the security of electronic documents: the electronic original document

As noted, security is at the heart of the question of electronic documents.

Without legal security no commerce is possible - e.commerce is no exception to that rule.

In my opinion, the public official plays a double role:

… it is he who validates the most authentic document - now possible electronically

… it is he who influences the model for securing electronic private documents, which, unlike such documents on paper, may be rated as to their level of credibility.

In the second case, the official may compete with other certification service providers.

A. The public official, the legal instrument for securing electronic documents: the electronic original document

The original document is at the top of the security pyramid for legal documents and its effects are not the same as those of a private document. The original document is therefore both a writ of execution and a deed deemed authentic unless proved to be a forgery.

The French Law of 13 March 2000 approved the electronic document and the possibility of concluding original deeds electronically. It also stated that the signature is necessary to complete a legal document - both to identify the author and to show his consent to the terms of the deed.

The same law adds that the signature "When it is signed by a public official, confirms the authenticity of the document". It is therefore clearly the public official's signature which validates the authenticity of the deed.

The public official's signature authenticates a legal document, whether it be electronic or hand written.

The public official is therefore at the heart of the question of securing electronic documents.

The Law of 13 March 2000, having approved the electronic original deed, then rates the security level of legal documents - particularly electronic deeds.

• First, the original document, exclusive domain of the public official, which implies verification of the information offered as proof, as well as the physical verification of the identity of the person signing. Verification made by a legal professional - nominated and monitored by a public authority - is incontestably proof of security.
• Second, the electronic private document verified in the same manner as by a public official.
• Lastly, the unverified electronic private document, of lesser value.

To each level of security of the electronic document, a different legal power is implied :

• … First, the original authentic document. It constitutes a writ of execution when it contains an enforceable obligation.
• … Second, a certified document is assumed to equal a private document on paper.
• … Lastly, the uncertified document which does not benefit from that assumption.

The French legislator has established a scale for rating the level of security for electronic documents - thereby giving legal commerce a selection of tools to use according to the needs encountered.

When the public official authenticates a document, his function should be differentiated from that of third party verification of an electronic private document - even when one uses the term "verification" to describe part of that procedure. Third party certification borrows the characteristics of the public official's functions in a somewhat reduced form.

A public official may perform third party certification, but he is then in competition with other service providers.

B. The public official, an implicit model for the certification of electronic private documents.

Two aspects merit analysis from this point of view:

• First, the mechanics of the electronic document, the signature and third party certification.
• Then, recognising that third party certification acts almost in the same manner as a public official, comes the question of the public official's role in third party certification.

1. Third party certification: a reduced version of the public official

I would like to explore the question first from a technical point of view.

• The electronic document is computer generated in the form of electronic data. This data then circulates via a telecommunications network, usually via the web (RNS, RNIS, Internet).

This poses the following problem:

When a user sends an e.mail, the body of the message normally appears unscrambled - therefore readable by anyone able to intercept the message before it reaches its destination. The structure of the web lends itself to such interceptions as electronic data leaves a temporary copy on each server it passes during its transmission. Even uninterrupted data may be altered during transmission for technical reasons.

Therefore the security of electronic exchanges can only be assured with certainty if it is possible to:

• identify the sender
• verify that the message really comes from the sender identified
• guarantee that the message has not been changed either deliberately or by error
• preserve the confidentiality of the message.

Cryptology makes these functions possible by combining various techniques to protect information with a secret code. Information is transformed into numbers using algorithms and keys. The preferred system in France uses a combination of two keys - one public, the other private or user's code.

These keys may be created by the user from an Internet programme. Or, the user could ask a third party to furnish him with the technical means according to a secure and guaranteed procedure. Coding and decoding can only operate by using a combination of the two keys. Thus, to encode the contents of a message and render it confidential before sending it to its destination, one encodes the message with the receiver's public key - who may then in turn decode it with his personal, or private, key.

Having recalled these basic notions, let us examine the manner in which the electronic signature operates, and the role played by the third party certification process.

We know that the secure transmission of an electronic document assumes that four functions be assured: the user's identity, verification that the message really comes from that person, the guarantee that the message has not been adulterated and also that it has remained confidential.

Confidentiality, as we have seen, is assured by encoding the message with the receiver's public key. The other functions, also using codes, form the actual electronic signature. With the electronic signature, the sender identifies himself and validates that the message really comes from him.

The assurance that a message remains unadulterated can only come from the combination of the electronic signature and the technique called "hachage" - a mathematical function which transforms a text into a group of "bits" or "digest". This digest is then electronically signed with a private key. This constitutes an electronic signature.

The electronic signature therefore consists of encoding a condensed version of the message with a private key and signing it - thereby technically certifying the source and the integrity of the message.

Third party certification - called an "electronic certification service provider" by the European directive of 13 December 1999 on electronic signatures - intervenes between the sender and the receiver to guarantee the identity, the authenticity and the integrity of the message.

Without going into the details of the various services linked to the electronic signature which might be offered, one notes that the essential functions of a service provider might be accomplished by one, or several people.

The first function is that of a registration authority. The electronic certification provider registers the person who wishes to obtain a digital certificate. This registration entails verifying the identity, the qualifications and powers of an applicant by requiring official proof of identity (I.D. or copy of his registration with the Commerce and Trade Register), and filing the public key of the signature made by a secure mechanism for creating electronic signatures (double-key creation).

The second function is that of a - rightly called - certification authority, who creates the digital certificate and thereby establishes and guarantees the link between the applicant registered by an official registrar and the two asymmetrical keys to which he is entitled.

This certificate contains the essential information: the name of the person signing, ID references produced, the public key to the signature, the date of issue and of expiration of the certificate, the hachage algorithm used and the name and electronic signature of the third party certification provider.

During the exchange of e.mails, the third party's role essentially consists of attesting that a certificate has been issued to the person in question. The use of a private key by the user of a public key - the identity of which has been confirmed by a third party - thus secures the document.

The other functions of third party certification, or certification service provider, are linked to the electronic signature. This service publishes an on-line directory of the certificates issued and confirms their current validity. It could also offer proof of the date the certificate was issued, or a conservation service - the access to which would only be possible by the combined use of the electronic signatures of the sender and the receiver.

European and French texts foresee that third party certification could be the object of voluntary accreditation by a qualified private or public organisation. Either way, the certification service provider must report to the Prime Minister when documents are issued that claim to be legally valid. The service providers will also be monitored by the State.

Two ratings for electronic signatures are written into the texts:

• The signature called "advanced electronic signature" is assumed to be valid given two conditions.

The first concerns the manner in which the signature was created (key creation by an authorised programme), and the strictness of certification by the mechanism or computer programme.

The other condition concerns the use of the electronic certificate issued by a certification service provider - the certificate of which must guarantee the signature's identity and the validity of the document.

• Other electronic signatures do not benefit from that assumption of validity. The burden of proof is therefore reversed: it falls upon the person signing to prove validity and not the person contesting the signature.

Henceforth, the Law recognises that the electronic document, just like the electronic original deed, has the same power as a document written on paper under the following conditions:

• when the electronic signature is recognised as having been validated and the link between it and the document guaranteed
• when the document has been created and conserved under conditions that guarantee its integrity
• and when that recognition is based on a presumed (third party certification) or proven guarantee.

Third party certification is therefore truly a key function in the electronic signature process - it gives the electronic document the benefit of presumed legal validity, and is therefore legally recognised in the same manner as a document written on paper.

However, the function of third party certification comes from imitating the role of the public official. In fact, it acts as an independent third party, accredited by a public authority - or at least monitored by one - to attest to the identity of a digital signature and to link that signature to the electronic document to which it is affixed. It could also perform the functions of certification of the document's date and the conservation of it. It could also offer its services for the creation of the electronic signature, i.e. the creation of the key.

2. The public official, third party certification

According to the legal texts, electronic certification service providers, or third party certification, could be the object of a procedure called "voluntary accreditation", organised by member states of the European Union - accreditation coming from a decision by the public or private organisations chosen by internal state legislation in the framework of the adaptation of a directive to internal laws.

The European legislator has therefore chosen to place the activity of certification service providers on the open market. No monopoly could be conferred to one or other regulated profession. The system will thus be that of open competition between third party certification providers, who will, in France, be monitored by the Prime Minister's services, to which it must report all activity and who may also be accredited by a recognised organisation.

According to Article 3 of the European directive relating to the electronic signature, this accreditation must be based on "objective, transparent, proportional and non-discriminatory" criteria.

Member states may not affix numerous clauses concerning third party certification. They are obliged to put in place - again according to Article 3 of the directive - "an adequate system of monitoring the certification service providers established on their territory and issuing certificates to the public".

In France, monitoring is the responsibility of the Prime Minister's services, since third party certification issues certificates presented as conforming to legal norms.

Subject to these procedures of accreditation and control, the activity of third party certification will be open to all.

The electronic signature being founded on the use of Cryptology - which is not totally free for obvious reasons linked to national defence - it is necessary to say a few words about the legal system.

French Law states that the use of Cryptology must usually be authorised. However, the law establishes a completely free system for the use of Cryptology when it only concerns functions of authentication of a message and the verification of its validity.

Concerning the function of confidentiality of messages - which is what interests the national defence - a 1999 text states that the use of Cryptology is free in certain cases, such as:

• when the key used is less than, or equal to, 40 bits
• or when the key used is less than, or equal to 128 bits, on condition that the means and computer programme be used exclusively for a private purpose by an individual - or that the means have been reported by the producer, the provider or importer. Therefore, if the key used is less than, or equal to, 128 bits, the system of reporting to the Prime Minister must be applied.

Thus, the activity of third party certification being open to any legal entity conforming to the norms, public officials, professionals of law and the security of documents, may, if they so wish, assume the functions of third party certification.

This activity could be performed either by public officials themselves or in a group, given the importance of the means needed to develop a system conforming to the security norms required for these authentication activities.

The Registrars of the Commercial Court already have the legal structure allowing them to rapidly perform the various roles concerning the responsibility of third party certification: that of a certifying authorisation might be attributed to a certification technician responsible for the management of the computer system.

Thus, the public official, with his professional qualifications, will guarantee the registration procedure. During that procedure, the applicant will file his public key for the signature created by an authorised secure mechanism and prove his identity, his qualifications and his powers, which will then be listed on the electronic certificate.

II. The electronic document and the renewal of the traditional activities of the Registrars of the Commercial Court - public and ministerial officials

Two examples: electronic legal notices, which almost exist today, and the e-procedure, which does not yet exist.

1.Electronic legal notices

The activity of publishing legal notices by the Registrars of the Commercial Court is in fact almost in place today, as they are authorised to publish electronically copies of the registers of legal notices of which they have charge: the register of commerce and trade, and the different registers concerning company debts (debts to the State, the Social Security, and company, property, stock and equipment mortgages)

This new form of publication of legal notices was recognised in 1988. In 1998, the Registrars extended the principal of electronic publication of legal notices to the all the registers under their control.

All the Registrars of the Commercial Court publish the legal information contained in their registers on the local Minitel, and the Internet (Infogreffe, Greftel and Intergreffe).

We note that until now, even though copies of the Register of Commerce and Trade may be delivered by e.mail, only a signed document is accepted as authentic. Therefore, electronic delivery of legal information is still not legally accepted - the texts explain that the information is only given as a service and that the copies are not legally binding. At present, there is neither supporting value nor opposability attached to documents delivered electronically.

Thus, what we see today is quite revolutionary; for, once the legal texts have been accepted, they will allow authentic documents to be processed electronically - allowing one to electronically "sign" authentic copies of the Register of Commerce and Trade.

Clearly, it will be extremely useful to obtain, on demand, authentic copies of the Register of Commerce and Trade, or other registers held by the Registrars - electronic copies that have the same authentic value as those traditionally delivered on paper.

The electronic signature will be useful in many ways: it will make it possible to reply to the ever increasing demand for rapidity and efficiency from public services.

2. The e-procedure

The realization of the e-procedure, or on-line processing, will not be generally accepted without some difficulty, but it will nevertheless be of considerable help to the commercial process. The first indication of satisfaction expected from the commercial e-procedure is its rapidity. The second is the quality of decision-making.

The quality of decision-making will not be challenged by the electronic nature of the process in that its on-line character in no way modifies the need to write a justified decision.

A note on what will doubtless be a reality in the very near future: A reality desired by the European directive of 13 December, 1999, which, in its preamble number 19, foresees that "electronic signatures will be used in the public sector by the national and community administrations, as well as with citizens and electronic operations, for example, in the framework ( ... ) of the judicial system". That perspective fits into the framework of a recent French legal text recognising electronic authentic documents - the judgement, we may recall, being an authentic document signed by a public official, the registrar of the jurisdiction.

How could the process be organised?

• one foresees the e-procedure only being used at first for laws of minor importance, that is common law commercial procedures and not public or collective procedures
• the on-line character of the process must be accepted by the parties and the jurisdiction according to the nature of the request
• parties should have legal representation for obvious reasons of security

With the exception of these three essential rules, the on-line character of a procedure should not pose any great difficulty. Submission to the jurisdiction may be made by electronic document from a lawyer's office to the registrar of the jurisdiction, if both structures are equipped for such exchanges in a secure manner - using the functions of the electronic signature and the confidentiality offered by cryptology.

The parties may also easily exchange conclusions by e.mail. Most of the legal paperwork may be scanned and then sent electronically, followed by the actual documents sent by post.

A closure of proceedings must then be given by the judge and sent to the parties in order that the exchange of conclusions be finalised.

A mini-audience by video-conference could even be organised, even though one would not think it always necessary. The procedure could be concluded in writing -electronically, of course.

The decision will be given by the judge, assisted by the public official -the registrar - who then will send authentic copies of the decision to the lawyers. One may see that the cyber-process is possible, as long as one respects the rules inherent in litigation of this sort.

III. The implementation of the Internet site of the Registrars of the Commercial Court of Paris and the granting of electronic signature keys

Replying to the growing need for help and information from almost 2 000 people a day, the four associated registrars of the Commercial Court of Paris decided to create a workable web site - in addition to the services already offered in person, on the Minitel, by telephone and by post.

In July 2000, a web site was opened for Internet users - during the first month, the site registered 2 000 visits.

What does the site offer?

Part of the web site is open to the general public, offering general legal information, news updates, and, of course, information on the services of the Registrars of the Commercial Court.

Questions posed by e.mail are answered on-line.

Specifically geared to business - the site allows visitors to:

• complete the obligatory legal paperwork for the management of their business - on-line
• consult administrative obligations and fees
• all this in a completely secure on-line environment.

Users may:

• register their company
• change their statutes
• close their company
• submit their annual accounts
• prepare an injunction for delinquent payers
• complete business documents for administrative paperwork on-line
• receive the validated documents by return on-line
• and print them out
• they may also use their bank charge card to pay for administrative
• documents on-line.

Plus - the site offers a team of Registrars, who are legal specialists, who reply on-line to business owners in answer to their personal business questions.

The web site of the Registrars of the Commercial Court of Paris functions in two ways:

First, "secure exchanges" allow the business owner to complete administrative paperwork on-line - using a coded exchange of information -which guarantees confidentially.

Second, with an electronic signature, the sender and the Registrar benefit from a secure exchange using the digital certificate which proves the identity of the sender.

Given the absence of legal texts covering the electronic signature in France, obtaining a personal code is given only in preparation of such texts on an experimental basis.

The electronic signature will be given to any entrepreneur presenting his credentials

- he will soon be able to use the services offered by the Registrar of the Commercial Court using that electronic signature in complete security.

European Commerce Registers Forum

The proposal

Roine Amonsson, PRV Sweden

At the annual conference in Sundsvall last year, it was decided that a group of volunteers should try to come up with a proposal on how to organise, in a more formal way, the commerce registers of Europe. And that we should present this proposal at this yearís conference.

The group came to represent 7 different organisations/ countries and, besides myself, consists of:

We have had a few meetings during the year and we are now prepared to present our proposal.

A first question is perhaps ñ do we need an organisation or at least a more organised way to meet and to work together?

Yes ñ we are absolutely convinced about that.

Why ?

First of all, you have proved it yourself, by attending this conference, and most of you came also to Sundsvall last year, and some of you came also to Riga the year before. The number of organisations which attend these conferences also seems to increase every year. You have by that proved that you feel the need to meet and to learn from each other and to build closer relationships with other organisations.

But it is also proved by the work which is going on in the Commission, in the SLIM group for instance. Are the commerce registers represented there? ñ No. Even though the discussions there have a direct influence on our area of responsibility.

It is also proved by the technology development, which goes more and more in the direction of common solutions. Why invent something, which someone else has already solved?

Sector after sector show us the need of closer relationship and the need of doing things together instead of separately within each organisation. If we can accept a common frame to work within, it will help us to proceed more effectively.

Here is our proposal.

I will here also say that the group has worked together to produce the proposal and therefore, the presentation will also be done in co-operation.

I will give you a general picture and then Eric Fossum will present the statutes and the discussions behind them and finally Pat McCourt will say some words on what we think about the future.

We have, of course, the General Assembly ñ which is the same as all the members together and the body of the Forum.

We have a board, which takes the administrative responsibility. Here we believe in a responsibility which circulates among the members in a way which will be explained by Erik.

The responsibility this first year must mainly be upon the shoulders of the organisation which takes the responsibility for the next yearís conference and after that we can complete the board in the way we describe. More about that from Erik.

Then we have defined 3 areas or sections as we call them, within which we believe there is a special need for closer work together and they are:

• IT
• LAW
• GENERAL MANAGEMENT

What becomes of this, is of course a responsibility for all of us, but I think we shall look upon the first year of this organisationís life, as a year under which we find the paths which can lead to stabilisation of the Forum and its work.

But I know already now two areas where a wish has been expressed to try to do something, already from the beginning. These are the IT-section, especially electronic filing and signatures, and the section for General Management, especially a wider cross-border benchmarking project.

But that is up to you to think about.