Corporate digitalization in the European context: going one step further

on the principles governing corporate digitalization, take the analysis one step further, indicating where this issue should go in the future. Although technology helps corporations, its indiscriminate use in the corporate sphere could lead us to a European model of capital company that bears no resemblance to the one we have now. It is a process in which more advanced technology should be introduced progressively, in order to discover gradually how appropriate or not its adaptation is. This opens up a huge potential for modernizing corporate law that we should take advantage of – with caution and security – but to the fullest. Palabras clave: Digitalization, blockchain, voting agreements, corporate law.


I. CORPORATE DIGITALIZATION IN THE EUROPEAN SPHERE
The European Commission has long been aware of the importance of creating a unified and modern corporate law that is adapted to the digital world. 1  However, it was Directive (EU) 2017/1132, of the European Parliament and of the Council, relating to certain aspects of company law (OJEU L169), that established the need for Member States to make information available online regarding limited liability companies registered in central, commercial and companies' registers. It also shone the light on the absence of national laws and the disparate situation in different Member States. All of this led to another Directive -Directive (EU) 2019/1151 (OJEU L186), amending the foregoing one.
Globalization and digitalization are the two main phenomena that have pushed the European institutions to become aware of the importance of having a framework for legal certainty suitable to the challenge being faced and which enables and promotes economic growth in all the Member States. However, it is an enormously complex challenge, since the national legislations of the Member States differ, as does the status of their technological development.
Directive 2019/1151 -the "Digitalization Directive" -, which we are analyzing here, starts off from the importance of digitalization as re-gards the cost and time involved in setting up a company or opening a branch in another Member State. It also refers to the importance of providing comprehensive and accessible information for the correct functioning of companies and of the market.
Cost, time and accessible information appear as the core pillars for achieving the modernization of companies in general, and their digitalization in particular. 4 In order to achieve all of the foregoing, the Member States have been asked to permit electronic identification by authenticated means 5 , in accordance with Regulation (EU) No 910/2014 of the European Parliament and of the Council, on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93/EC. 6 It also highlights the importance of the single digital gateway 7 and the European e-Justice Portal. 8 The Digitalization Directive is designed as a minimum directive, as it allows Member States to confine this online formation procedure to certain types of capital companies. 9 The Directive also makes reference to the need for online 4 The speed sought through digital progress is counteracted by the control systems 11 that must necessarily regulate all these processes involving digital tools. 12 For example, the need to verify the identity and legal capacity of the persons wishing to set up a company, register a branch or file certain documents or information. In this regard, the Member States can establish a national control system that includes other requirements, if justified for reasons of public interest, to prevent the inappropriate use or alteration of identity, or to ensure compliance with the laws on legal capacity and on the power of representation of the company. Such requirements could make it necessary, according to national law, for the applicant or any other authority or authorized person to perform certain formalities in person. Nonetheless, that is an exceptional circumstance where there are justified reasons in order to prevent the falsification of identity or the breach of the provisions on legal capacity or the power of representation, but the Member States must ensure that the rest of phases of the online formation process can continue to be carried out online.
Also worth noting is that the Directive establishes a very important delimitation: it does not provide for mixed procedures, that is, procedures carried out partially in person and partially online; rather, if a citizen chooses to use the online procedure, the process must be completed entirely online, although this does not prevent the involvement of notaries and/or lawyers throughout the digital process. 13 Herein lies the complexity of the Digitalization Directive: the substantive and procedural requirements of each legal system must continue to be met while enabling companies to choose the online formation, filing of documents regarding their lifecycle and opening of branches in any other Member State.
A key principle of this Directive is included in the form of a mandate: Member States must ensure that the entire online formation process is fast and, where that is not possible, that the applicant is informed of any delays.
Regarding the company formation process, the Directive says that Member States can refuse the appointment of any person as a director of a company not only on the basis of the person's previous conduct in their own territory but also, where so provided under national law, based on information provided by other Member States. We already see an effect of this provision on companies under the system of intercon-10. Here, again, the European lawmaker alludes to the applicants' freedom of choice, as they can elect to use the templates or a traditional instrument of constitution, always from the perspective of flexibility that should govern the entire process, including the function of the notaries and lawyers involved in any phase of those online procedures.
11. The national control system, which can be altered where justified by reasons of public interest, to prevent the inappropriate use or manipulation of the identity, or to ensure compliance with the laws on legal capacity and on the power of representation of the company; this alteration can require, according to national law, the physical presence of the applicant or any other authority or person authorized to handle any aspect of the matter.

ANÁLISIS ECONÓMICO DEL DERECHO
nection of registers, which is the ultimate aim of this provision.
Although the Directive seems to focus solely on the three aspects mentioned -online formation of companies, online registration of branches and the exchange of certain information -it actually goes one step further, establishing that throughout a company's lifecycle, it should be allowed to file certain documents and information with the national registries entirely online. This last point can be linked to the corporate information disclosure systems whereby Member States are given the option to publish all or some corporate information in a national journal, while ensuring that the registrar provides the information to that national journal electronically. 14 In this connection, the Directive follows the "once only" principle 15 , which prevents companies from having to submit certain information more than once. 16 This, along with the possibility attributed to the Commission of establishing additional access points 17 to the system of interconnection of registers (for which the Member States can already establish certain optional access points) 18 , is the basis for enhancing the legal certainty that must govern all company digitalization systems.
In this regard, in order to achieve the desired transparency and increase trust between companies and the authorities, it is particularly important to facilitate access to corporate information and specifically to information on the status of a company and any branches it may have in other Member States. For that purpose, the Commission must be able to establish additional access points to the system of interconnection of registers, to which the Member States can already establish certain optional access points.
Lastly, Directive (EU) 2019/1151 reiterates that nothing established in it implies that the Member States cannot exercise their powers in case of fraud, abuse, etc. in relation to the formation of companies, the opening of branches and whatever else is regulated in it. Also, the Directive does not affect other obligations under national law in relation to personal data protection and anti-money laundering.
Due to the complexity involved in achieving all of the foregoing, the Member States were given the option of requesting an extension of the deadline for transposing and implementing this Directive 19 , and it is in that extension period where some Member States are at present, as we shall see. 20

II. ONLINE FORMATION OF A COMPANY: THE CHALLENGE OF DIGITALIZING ITS LI-FECYCLE
Focusing specifically on the online formation of a company, the Digitalization Directive establishes that Member States must ensure some minimum requirements through their national laws 21 ; it also states that they can establish requirements for the legality of the instrument of constitution. 22 In this regard, Member States must also allow the online contribution of share capital, in the same online procedure, by means of the payment into a bank account operating in the Union. 23 Therefore, companies whose shareholders subscribe the share capital through contributions in kind are excluded from this procedure.
With respect to the speed which the Directive attempts to infuse in the online procedure 24 , it establishes that the process should be completed within five business days when the templates are used and the company is being formed by individuals, or ten business days in other cases. 25 It also emphasizes the idea that there should be templates for the online formation of companies on bespoke websites that can be accessed through the single gateway mentioned abo-22. As regards the templates to be used, the consequences of the disqualification of a director by the competent authority in any Member State; the role of a notary or any other person or body mandated under national law to deal with any aspect of the online formation of a company; and, very importantly, the exclusion of online formation in cases where the share capital of the company is paid by way of contributions in kind.
23. Article 13e of the Digitalization Directive establishes the obligation for Member States to make online payment services available which permit cross-border payments, and which permit identifying the person who made the payment, and which are provided by a financial institution or payment service provider established in a Member State.
25. If these deadlines cannot be met, the applicant must be notified of the reasons for the delay.

ANÁLISIS ECONÓMICO DEL DERECHO
ve. 26 Measures shall be established to ensure control online or digitally. 27 For the purposes of this work, what is most important is that the Digitalization Directive seeks the digitalization of any act of the company's lifecycle, i.e., the amendment of bylaws, the appointment and removal of directors, etc. 28 , establishing that national laws must ensure that such documents can be filed online without the necessity for an applicant to appear in person before any authority or person or body mandated under national law. However, this does not prevent continuing to use any other forms of filing, such as by electronic or paper means.
Also, the Directive requires Member States to have rules on the disqualification of directors that take into account any disqualification that is in force in another Member State. Regarding the rules that each national law should have, the Directive establishes that information on disqualifications in the different Member States should be available free of charge and in an official language of the Union that is broadly understood by the largest possible number of users, and it should be accessible by any citizen by means of the Single Digital Gateway. What is most important in this respect is that Member States may refuse the appointment of a person as a director of a company where that person is currently disqualified from acting as a director in another Member State.
Again, both legal certainty and speed are the drivers of the desired corporate digitalization, the key being the exchange of information between Member States, with the evident risks which that entails. 29 In our opinion, the fact that Community legislation has highlighted this issue as a priority in the area of digitalization makes sense. Moreover, we conclude from the Directive that, although Member States can obtain information from each other, they are not obliged to do so, nor are they obliged to recognize disqualifications of directors in force in other Member States, despite having that information at their disposal. 30 However, what is guaranteed by national laws is that if information is requested regarding the disqualification of directors, it can be obtained quickly through the exchange of information system. All the foregoing, while complying with national legislation for the prevention of fraud and abuse and safeguarding the protection of the personal data of the people involved.
If the exchange of information is the key to achieving corporate digitalization, it is logical that the coordination between the different national registries, the interconnection system 31 , the single 26. See supra note 7.
27. This is established in the Spanish case, as seen in the transposition of the Digitalization Directive, which has given rise to the digital gateway, and the disclosure of corporate acts, are essential elements. In this context, the first step is the assignment of a European unique identifier ("EUID") 32 , which identifies companies in the system of interconnection of registers and facilitates access to information relating to corporate acts. This system ensures that all documents are accessible in the register of each Member State, although it is left up to the States to require that such information be published in their national journals and to ensure that discrepancies between the two resources are prevented.
Inherent in the registry system is the access to information published by any interested party. For that purpose, Member States must ensure that copies can be obtained of all or any part of the documents and information. 33 Those copies, whether by paper or electronic means, shall always be certified, unless the interested party dispenses with the certification. 34 What we see is that, in matters of digitalization, the aim is not only to obtain digital support of data but also for there to be global and immediate access to such information. Due to that, the purpose of the system of interconnection

ANÁLISIS ECONÓMICO DEL DERECHO
However, here we must distinguish between two types of legal systems. 38 One type is the kind found in Spain, Germany, Italy, Belgium, etc., where a company formation requires the physical presence of certain individuals such as a notary public 39 , and where the appointment of the managing body, the amendment of bylaws, etc. must be formalized in a public deed. In such legal systems, in order to attain legal certainty, the process must be carried out in the presence of a notary. 40 The other type of legal system is one where that requirement does not apply. The challenge faced by countries with the first type of legal system is how to reconcile the legal certainty provided by the notary's intervention, with the competitiveness sought through the reduction of the cost and time attained through online procedures. The Directive integrates this, but we shall see to what extent the Member States that require a notary's intervention can achieve that competitiveness in cost and time. We will now look at the cases of Germany, Italy, and Spain, as examples of countries that are in the group where digitalization may be more complex.
Germany is one of the first Member States to have taken steps to carry out the transposition. 41 Video conferencing is established as the means to ensure the involvement of a notary, and this can only be done through the Federal Chamber of Notaries, thus ensuring legal certainty. This legal certainty is enhanced by the process of identification of the parties involved 42 : by electronic means and by the notary's verification of all persons in appearance with a photograph by means of which the passport or identity card chip can be read. The result will not be a traditional public deed, but rather a public deed signed telematically with the electronic certificate of the Federal Chamber of Notaries. The companies that can be formed online in Germany are limited liability companies -GmbHG. 43 Regarding means of identification, Germany accepts the following: the German national identity card, the German electronic residency permit, the new electronic identity card for EU and EEA nationals with the online identification function activated and personal PIN integrated, or any other means of electronic identification that meets the requirements of high-level security, according to the European Electronic Iden-38. For a comparative study of the adaptation of the Digitalization Directive, see Álvarez Royo-Villanova, S., note 14.
39. The Directive even speaks of the notary's presence in the online formation of companies in national systems that envisage that possibility, and also in other corporate acts in a company's lifecycle.
40. The notary's involvement is necessary to certify the identity of the appearing parties, their capacity and the giving of free and informed consent. In contrast to these countries, there are others where the absence of a notary is balanced out by careful research into the company, its shareholders, etc., for any corporate act formalized subsequently. 43. In Germany, following the provisions of the Digitalization Directive, this procedure may not be used by companies created with contributions in kind. The procedure can also be used for other corporate acts and for the exchange of information on disqualified directors. The traditional procedure (i.e., not online) is still in force and may be used at the election of the interested parties.

For an analysis of digitalization in
tification Regulation. 44 The German legislation also establishes the maximum periods for the online formation of companies specified by the Directive, which are five days if the founders are natural persons using model documents, or no longer than ten days if they are legal entities or do not use the model documents. As we can see, Germany has implemented a system which has barely amended its national law, and which refers to the provisions regulating notaries and the Companies Register in order to comply with the Digitalization Directive. 45 Italy's transposition of the Digitalization Directive has been similar to Germany's. 46 Italy only allows the online formation for limited liability companies and those formed through cash contributions. It also provides the possibility of opening branches in other Member States through online procedures, and permits access to certain information and, in general, adopts the minimum requirements established in the Directive.
The novelty in the Italian case derives from the notaries' attempt 47 to have the online proce-dure include other typical corporate acts, such as the holding of Shareholders' Meetings. Although it is only a recommendation by the notaries' council, it shows an increased awareness of the need to achieve total digitalization of corporate law.
As we shall see below 48 , the Shareholders' Meeting is the key to promoting the digitalization of the lifecycle of capital companies.

ANÁLISIS ECONÓMICO DEL DERECHO
terprises -SMEs-and microenterprises. 52 Although that outcome seems limited, the bases are set for the digitalization of all kinds of companies, without having to confine ourselves to SMEs. Likewise, although the model documents help speed up the processes, they also impose greater restrictions, for example, as regards the way of organizing the company. Also, online procedures require all Member States to have electronic resources to ensure the identity of the parties involved, the transfer and disclosure of information and, in many of the systems, the required participation of a notary to certify the entire process.

IV. INNOVATION, TRUST AND LEGAL CER-TAINTY: THE NEXT STEPS IN CORPORATE DIGITALIZATION
The question that we should ask ourselves, in light of the foregoing reflections, is whether great strides have been made in the digitalization of companies based on everything we have seen so far. The answer to that question is undoubtedly no. 53 Much more can be done, but what is important is that we are working on it. The challenge is huge, and the solutions and the regulations will take time. Nonetheless, we can point to the direction that Europe should go in with this digitization process. 54 Although in the contractual and commercial context, innovation 55 , trust and legal certainty are vital, so is speed in performing transactions and immediacy in the access to information, which permit any citizen to perform secure transactions from any location within the Union. This is the desired scenario. Reality is much less advanced, but the bases analyzed in the Digitalization Directive led us to go a step further and link the principles that have inspired the European lawmaker to the current corporate framework. For that purpose, a good approach is to consider the potential provided by blockchain technology 56 and the possibility of using the so-called "smart contracts". 57 This technology could potentially enable the digitalization of other capital enterprises, those of medium and large size.
Although they may not have been formed in an online procedure, we could still attain the digitalization of their lifecycle.
Blockchain technology is said to provide trust through a computer code; we do not wholly agree with that statement. Blockchain technology provides verification, but verification is not trust 58 , trust goes beyond that 59 and can only be provided by the legal system 60 . Our aim here is not to explain blockchain technology 61 but to try to use some of the applications or functionalities of this technology to make progress in corporate digitalization 62 ; those applications are smart contracts 63 which a priori could be used not only with respect to the company's foundation agreement 64 but also to the agreements governing many of the company's day-to-day operations. 65 Let us look at blockchain's potential use in the context of the Shareholders' Meeting where the means for adopting resolutions is by casting votes. With blockchain technology, digitalization would not be confined to the formation of limited liability companies through cash contributions, as is the case under the Digitalization Directive which, as we have seen, confines its use to SMEs and microenterprises. The aim would be to transfer that digitalization potential to other kinds of capital companies.
The Shareholders' Meeting is an area where it makes the most sense to use that technology. 66 The Digitalization Directive states that its aim is also to promote the online procedure for bylaws amendments, which are typical in the corporate lifecycle. We know that bylaws amendments generally require a prior resolution by the shareholders who attend -in person or by proxy-the Shareholders' Meeting. 67 We could consider either a more comprehensive or radical use of blockchain in the Shareholders' Meeting, or a more ancillary or residual use 68 . In the first case, we would be talking about a model that differs considerably from

ANÁLISIS ECONÓMICO DEL DERECHO
what a Shareholders' Meeting is today. 69 Following the spirit of the Digitalization Directive and, in general, the European model of modernization of corporate law, we think that it would be best to implement these technologies little by little. 70 Therefore, we favor an ancillary or residual use that permits companies, regulators, lawmakers and the like to gradually assess the advantages and disadvantages of the technology. Focusing on this, we wonder what aspects of the functioning and use of blockchain technology could provide the greatest advantages to the Shareholders' Meeting. 71 One of the most important uses could be for giving instructions prior to the vote 72 . The aim of Directive 2017/828 on encouraging long-term shareholder engagement is, among others, to put an end to the opaqueness entailed by chains of intermediaries which make it difficult to identify the shareholder. 73 In such scenarios, which are often cross-border, this or other technology could be of great help. We can link this issue to others such as absenteeism or shareholder fatigue. Oftentimes, the shareholder's lack of trust that his voting instructions will be conveyed when there are multiple intermediaries could be reduced considerably by using blockchain.
Another use of blockchain could be for holding Shareholders' Meetings without physical attendance by the shareholders as well as in relation to matters of shareholder activism. 74 Votes could be cast using vote coins, or even through normal electronic voting systems, provided that the voting shareholder's identity is ensured. Although blockchain technology enables the possibility of holding Shareholders' Meetings without in-person attendance, that is, entirely virtually, this raises problems under national legal systems. 75 At this point, we could wonder whether the usefulness of the traditional Shareholders' Meeting as such might be coming to an end, in the sense of it becoming a body that makes decisions that have actually already been made. 76 Although we don't think that is the case, because certain decisions must be made by the Shareholders' Meeting as a sovereign body that represents the shareholders, we do question 69. Bellavitis, C., Fisch, CHR., and Momtaz, P., In any case, although the usefulness of the Shareholders' Meeting could be questioned, what is more important is that its activity results in resolutions that can be contested, and that it is an essential disclosure and control body. In view of how Shareholders' Meetings have been held in the last years, it is worth noting that in the United States, since 2017, more and more Shareholders' Meetings are being held in person. 78 The view is that virtual-only Shareholders' Meetings, where permitted by national law, entail a regression in the role of this corporate decision-making body, because they mean that the shareholders do not have a physical venue where they can go to decide on certain matters and request information from the managing body, which is not physically present at a virtual meeting. 79 In any case, we consider that one area where the technology could have the greatest potential to provide security, control, transparency, and speed is in relation to syndicated voting. 80 The fact that it foments the efficiency of these voting agreements is a huge step forward in the protection which those agreements provide to minority shareholders.
There are two main concerns in this area where blockchain technology could be advantageous: (i) whether the syndicated shareholders' instructions are actually conveyed to the voting proxy; and (ii) the efficiency of the voting system 81 as regards whether the syndicated shareholders can easily breach their agreement, and the consequences of that. Although, depending on the national law, there has been a great deal of progress made in this area, no solution is as efficient as blockchain technology. The idea would be to set up a voting syndicate as a "smart contract", that is, a contract that uses blockchain technology which, by its very nature, removes the first problem mentioned and, a priori, removes the second problem as well. If, moreover, the company in question has the capacity to cast the vote through blockchain technology, the legal certainty that is sought with this system seems to be achieved, or at least considerably improved.
The procedure could be as follows: the representative of the syndicated shareholders 82 ,

ANÁLISIS ECONÓMICO DEL DERECHO
through a voting syndicate structured through smart contracts, calls a meeting of all of the syndicated shareholders because, in turn, a Shareholders' Meeting would have been called for those shareholders to vote on a matter in which they must express an opinion that complies with the terms of the syndicate agreement.
As already stated herein 83 , blockchain technology makes perfect sense since, given that a voting syndicate is not a company 84 in itself, that meeting of syndicated shareholders can be held entirely virtually, taking advantage of all the benefits of technology without any disadvantages whatsoever. 85 The result of that meeting would be the instructions for the proxy on how to vote at the Shareholders' Meeting.
Having arrived at this point, we recommend that this Shareholders' Meeting -i.e., that of the capital company whose shareholders are bound by the voting agreement -should not be virtual only, due to the problems that could arise under the different national laws of the Member States 86 ; however, the voting system could benefit from the technology, so we advise using an online platform for the deliberations that may take place, whether in real time or remotely. We think that blockchain technology would be extremely useful for overcoming problems of efficiency of voting syndicates and thus, largely, of shareholder activism. 87

V. CONCLUSIONS
In this article, we have analyzed the status of digitalization of capital companies in Europe. Based on an in-depth analysis of the Digitalization Directive, we observe that the European lawmaker's intentions are appropriate and promising, but the progress achieved through it is minimal 88 : to enable the online formation of limited liability companies, i.e., small capital companies (small and medium-sized enterprises and microenterprises), to promote the digitalization of other corporate acts, and to allow the online opening of branches of capital companies in any Member State.
On that basis, it is necessary to face the challenge of digitalizing the rest of capital companies and of corporate acts that go beyond those of the company's instrument of constitution. To do so, we should use technology that creates an advantageous environment of innovation 89 , security 90 , transparency and speed, which is none other than blockchain. 91 Due to the blockchain's uniqueness, we support the initiatives for applying it in the context of Shareholders' Meetings and in those where voting is required. Most of the acts of a company's lifecycle must be approved by the Shareholders' Meeting. In this regard, we see how the instructions issued prior to the Shareholders'