Digitizing government registries will make it easier for businesses to develop and build the tools needed to move forward with digitalization.

On 30 August 2022, the Liechtenstein government approved the consultation report on the amendment to several laws to implement an EU directive. Sounds boring? It is, but not when considering what it is all about.

The goal of the amendments is to implement an EU directive, which deals with the digitalization of commercial registers and company law. That’s super important because it lays the foundation for businesses to develop apps and tools.

But first things first, what’s being amended?

Which laws should be amended?

The amendments are for several civil and corporate laws (“Personen- und Gesellschaftsrecht”), the Notaries Act (“Notariatsgesetz”), the Legal Security Ordinance (“Rechtssicherungs-Ordnung”), and the E-Government Act (E-Government-Gesetzes”).

The key goals are to simplify companies’ formation and establishment of branches across borders throughout Europe by using digital tools and procedures. That should reduce bureaucracy and make formal procedures more cost- and time efficient.

Also, the cross-border exchange of information via the European System of Interconnected Registers is to be expanded. Thus, certain information on branches of principal establishments in another EEA member state and vice versa is to be automatically exchanged between the concerned commercial registers.

That should also benefit the harmonization of the European market by streamlining a barrier-free flow of information and strengthening the fight against abuse.

What’s that good for?

One practical implication is that in the future, it will be possible to establish companies completely online without the founders having to appear in person at an office. The same goes for the establishment of branches anywhere in the EU.

Additionally, the amendments will create the legal prerequisites to make digital entries in the commercial register by submitting supporting documents in electronic form. The Office of Justice will make sample templates available on its website.

Why the Notaries Act?

Since public certification is required to form corporations, the bill also contains provisions in the Notaries Act and the Legal Security Ordinance.

That should make it possible to create digital certifications and authentications. Notaries and the district court staff will, in the future, be able to carry out public authentications without the physical presence of the company founders.

Practical implications

Digitizing these public registers creates the legal and technological basis for businesses to build applications around them. For example, when the government has created the possibility to form businesses online, service providers can develop tools to make the process smoother.

Having digital registries also helps companies that work in the area of tokenization. It makes it easier to tokenize equity if the databases are digital, just as it would be easier to tokenize real estate assets if ownership registers were digital.

Governments should speed up the digitization of their entire databases and infrastructures so businesses can build applications. The latest amendments to critical laws are a step in the right direction.

The consultation report can be obtained from the Government Chancellery or via www.rk.llv.li. The consultation period runs until 6 December 2022.

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