Revolution at the National Court Register
Less paperwork and faster registration of the company as of December
Legal alert (9/2014)
A new law changing the Act on the National Court Register and certain other acts will enter into force on 1 December 2014. Business will be launched faster: changes should shorten the waiting time for the start of business from 25 to 7 days.
A new law changing the Act on the National Court Register and certain other acts will enter into force on 1 December 2014. As a result, an entrepreneur who wishes to register a new company at the National Court Register will be able to make it much faster, with just one form, and during the registration will not be obliged to present the authorities with a series of additional documents and information.
Registration of the company: failure of one-stop registration service
The idea behind the one-stop service was to speed up the registration process. Now, a customer who wishes to register a company (or make changes at the National Court Register) presents the registry court with relevant court forms as well as forms and documents required by the tax office, statistical office or the Social Insurance Institution. Once the court registers a company, it sends other forms and documents to proper offices, which assign a tax identification number, statistical number and register a payer at the Social Insurance Institution.
Anyone who had anything to do with the one-stop service knows that in reality it is not perfect and often makes the registration procedure even longer. If an applicant forgets to attach a form required by a certain office, the registry court will demand that the entire application be corrected. This, combined with snail mail, delay the actual registration of a company at the National Court Register, not to mention getting the tax identification or statistical numbers.
A new face of one-stop service
In the new one-stop service a customer will only present the National Court Register with a relevant form and necessary documents (e.g. articles of association or specimen signatures of the company’s authorities). Based on the information included in the form and attached documents, the court will perform the registration. The company will be automatically assigned tax identification and statistical numbers and the Social Insurance Institution will be sent an electronic notification of a new payer. This will be possible thanks to full integration of the Court's IT system with similar systems in use at the other institutions, in particular with the Central Register of Entities in the National Records of Taxpayers. The systems will send information automatically. This way the information which will be filed at the court with an application for an entry in the National Court Register will also reach other relevant registers. The customer will receive the court's decision about an entry into the National Court Register and a certificate with tax identification and statistical numbers.
It will no longer be necessary to provide the tax office with documents such as articles of association or a document confirming the company’s title to the premises with the company’s seat. If necessary, the tax office will be able to view an electronic form of the articles of association at the Central Information Retrieval Office at the National Court Register.
The changes will also apply to limited liability companies incorporated via Internet (the so-called “S24” companies), which at present may not use the one-stop service and have to lodge any additional applications at relevant institutions after registration at the National Court Register.
Other details after the registration of the company
The information filed at the National Court Register will be the basic information about the company. A company will still need to give the information which is now required by institutions to assign tax identification and statistical numbers or register a payer at the Social Insurance Institution (such as bank account numbers, information about a special status of companies, expected number of employees or contact details), but it will be able to do it after incorporation — within 21 days of the registration at the National Court Register. The information will be given in one form, which the company will file at a competent tax office. The information will go to the National Records of Taxpayers which will automatically transfer it to the IT systems at the Social Insurance Institution and Central Statistical Office.
If any details of the company change after registration at the National Court Register, the entry into the National Court Register and — if necessary — information sent to other institutions will have to be updated. For example, if the articles of association, the company's seat or authorities change, a suitable form will have to be filed with the National Court Register and the information included in the form will be automatically sent to relevant institutions. If the changed details are not included in the entry into the National Court Register, e.g. a bank account number, a suitable form will have to be filed with the tax office. Information about the change will also be automatically sent to the IT systems at the Social Insurance Institution and Central Statistical Office.
As part of the above legislation, limited liability and public companies will be relieved of the onerous obligation — resulting from the Code of Commercial Companies — to present a competent tax office with a copy of the company's articles of association or by-laws any time the documents have changed.
Currently, at registration most of new companies enter a large number of codes describing their economic activity. The legislators called it into question as very often it is difficult to figure out what the company really does. Starting from December at registration companies will be allowed to give the maximum of ten codes and indicate one code which will best describe the company's core business. This will not mean that the company will have to limit its business to that covered by ten codes — it will also be able to operate based on any number of other codes indicated in the articles of association.
Entities which are already entered in the National Court Register will have to provide information about the predominant type of business with the first application for a change of details in the National Court Register, however, not later than within 5 years.
Business will be launched faster
The new regulations will enter into force on 1 December 2014 and will apply not only to all types of companies entered in the National Court Register, but also to other entities registrable at the National Court Register, such as associations and foundations. The reasons to the bill state that the changes should shorten the waiting time for the start of business from 25 to 7 days. The forecasts in the reasons to the bill predict that if the economic activity starts 18 days earlier, companies will sooner generate revenue which will also translate into e.g. higher wages for employees.
The changes should make things easier not only for entrepreneurs, but also for court and office clerks. Therefore we may really expect the performance of registry courts and institutions to improve which should speed up the processing of applications.