Do Tien Thinh
Director, Business Registration Support Center,
Agency for Business Registration
In recent years, two Nordic countries, Norway and Sweden consistently enjoy high rankings in the “Doing Business” Report of the World Bank. Numerous lessons obtained from the achievements of these two countries, particularly in the field of business registration, can be applied to the business registration reform in Vietnam.
I. Organization of business registration agency and business registration in Norway
1. Organization
1.1 Bronnoysund Register Centre
Norwegian Registration Authority was established in 1978 and began to implement the registration of business in 1981 with 14 persons and the authority was put under the court system.
In 1986, the Norwegian Registration Authority was transferred to Bronnoysund Town and later in 1988, the Bronnoysund Register Center (BRC) was established. The BRC is an administrative agency responsible for the control and registration of business entities and other registration activities on a national scale. The primary goal of the agency is to improve general conditions to ensure financial safety and operational efficiency of enterprises in particular and the public in general.
The BRC currently employs nearly 500 staff with the head office covering an area of 11,000 m2 in Bronnoysund Town.
The agency is organized into the following units:
- The Central Coordinating Register for Legal Entities
- The Register of Business Enterprises
- The European Business Register
- The Eco-Management and Audit Scheme (EMAS)
- The Register of Company Accounts
- The Register of the Reporting Obligations of Enterprises
- The Register of Mortgaged Moveable Property
- The Register of Bankruptcies
- The Register of Marriage Settlements
- The Register of Private Debt Amnesty
- The National Fee Collection Office
- The Norwegian Register of Hunters
- The Department of Distribution
- Other units: the Department of Planning and Development, the Department of Administrative Affairs, the IT Department, the Department for Altinn and Seres.
The agency is responsible for operating national public registers in the fields managed by various minitries and branches.
The BRC is led by a Director General appointed by the King of Norway. The Director General is also a registration official and acts as a judge in legal proceedings. The Director General may delegate his authority related to business registration to officials of the Registers.
2. Business registration
2.1 Business enterprises required to register
According to the Business Enterprise Registration Act of Norway, the following business enterprises must be registered:
- Limited (Liability) Company
- Public Limited Company
- Other companies operating a business enterprise
- Foundations undertaking business activities
- Organizations and other associations undertaking business activities or with the purpose of undertaking business activities
- Sole proprietorships (private companies/companies with one member) trading goods or employing more than 5 employees in full-time posts
- Public corporation
- Inter-municipal companies
- Municipal and county administration enterprises
- Regional health authorities and health enterprises established in accordance with the Norwegian Health Authorities and Health Trusts Act
- Business enterprises which are required to register in accordance with special legislation
- Foreign business enterprises operating a business in the country or on the Norwegian continental shelf
In summary, all objects operating business in the country must be registered with the Registers.
2.2 The information to be registered
The information to be registered with the Registers varies depending on the type of enterprise. However, in general, enterprises must register the following information:
- Type of business
- Company's charter
- Date of establishment
- Head office address
- Objective of the business enterprise
- The business enterprise’s capital and its repayment capacity
- Members of the business enterprise, their committed capital and capital repayment capacity of each member
- Members of the Management Board
- Director General (Managing Director)
- Legal representative
2.3 Business registration at a number of Registers under the Bronnoysund Register Center
a. The Register of Business Enterprises
The Register of Business Enterprises is the national registration authority under the Bronnoysund Register Center.
Before 1988, the business registration authority operated under the court system, therefore the business registration work was conducted in local courts. At that time, it took about 9 months to register for a business enterprise. Enterprise information was not constantly updated, besides, an effective mechanism for ensuring enterprise’s governance and compliance is missing, therefore a number of “inactive” enterprises which already registered with competent authorities, meaning that numerous registered enterprises were not doing business.
On 1st January 1988, the Register of Business Enterprises was established on the basis of the Business Enterprise Registration Act issued on 21 June 1985 .
The Register of Business Enterprises is responsible for the registration of all Norwegian enterprises and foreign business enterprises in Norway. The register shall ensure legal protection of business names, the legal status of the business enterprises and provide a financial overview of a business enterprise. It is also an important resource of information for anyone in need of accurate information about the participants in Norwegian business and industry. The Register of Business Enterprises performs the functions of approximately 100 former local trade registers.
All enterprises operating business activities (including both limited and unlimited liability enterprise) are obliged to register at the Register of Business Enterprises. This provision applies to sole proprietorships trading goods or which employ 5 or more staff in primary positions. Other sole proprietorships may register on a voluntary basis.
Registration at the Registry of Business Enterprises provides a business enterprise with:
• The right to operate a business enterprise
• Legal protection of the business names
• A certificate of business registration as an “identificaiton card” when working with creditors, competent state agencies and tax authorities.
• A business enterprise organization number (business registration code) as an important identification to authorities and can be used for collaboration among public administrative bodies.
• Identification of the leaders of a business enterprise
One of the most important objectives of the Register of Business Enterprises is to clarify who is responsible for what in a business enterprise. The members of the board of directors, the general manager and the auditor must sign to prove that they have assumed their responsibilities in the business enterprise. Any change in the assignment of duties in a business enterprise must be promptly reported to the Register of Business Enterprises for registration. If the business enterprise neglects this duty, it will be ordered to adjust. Thus, the Register of Business Enterprises can always provide updated information on who holds the various positions in a business enterprise, changes in capital contribution, and information about whether a business enterprise has been taken to court for enforced dissolution or is undergoing bankruptcy proceedings.
Most information in the Register of Business Enterprises is available to the general public, so this is an important source of information for those who require reliable data and information on the legal status of a business enterprise.
b. The Central Coordinating Register for Legal Entities
The main task of the Central Coordinating Register for Legal Entities í to coordinate the information on business and industry in various public registers and provide information for questionnaires upon requested by state agencies. Instead of having each agency send its own separate questionnaire to an enterprise, the Central Coordinating Register for Legal Entities ensures that all information is collected through one focal point. The establishment of this agency in 1995 was applauded as one of the most important measures to improve the efficiency of public administration in recent years.
The Central Coordinating Register for Legal Entities manages the database of legal entities which are obliged to report to the Register of Employers, the Value Added Tax Register, the Register of Business Enterprises, the Statistics Norway's Register of Companies and Business Enterprises, the Corporate Taxation Data Register or the Foundation Register. Others may register voluntarily with the Central Coordinating Register for Legal Entities.
The 9 digit number identifies a legal entity, supporting authorities in collaborating on information exchange. Pursuant to the Act related to the Central Coordinating Register for Legal Entities, other state registers are obliged to cooperate with the Central Coordinating Register for Legal Entities and keep the agency updated on their registered information. The replacement of registration forms of various competent agencies with a unified form ensures that necessary information is provided to the authorities requiring registration and notifications of changes.
As all competent authorities share a common register for exchanging information among themselves, it will become easier for business managers and others parties engaged in financial activities to comply with requirements of registration form. Many organizations and those who are not obliged to register find it useful to register voluntarily at the Central Coordinating Register of Legal Entities. The registration is completely free of charge.
The Central Coordinating Register for Legal Entities only contains information as stipulated by law and everyone has access to open registration information, such as name and address, business objective, industry, branch and representative. Key information can be obtained free of charge via the Internet and over the phone. When paying fee, people will be provided with printouts from the register with the same information.
c. Department of Distribution
The Bronnoysund Register Center does not only receive registration information but also serves as an important source of business information. Anyone in need of information can contact the registers via phone, fax or the Internet. The Department of Distribution was established in 1992 with the objective of providing all information registered in the Bronnoysund Register Center to the public in an efficient and friendly manner. Since the establishment, the Department has undergone times of restructuring and the latest was in 2010. The number of staff increased from 20 in 1992 up to 117 in 2011. The public can access registered information through various channels and in recent years, the Internet is one of the most common channel with 73.9 million requests, while only 489 thousand requests were made over the phone in 2010 .
Through the Department of Distribution, individuals, businesses, government agencies and other organizations can access a variety of information products and services, including business registration certificates from the Register of Business Enterprises, annual financial statements from the Register of Company Accounts, certificates of guaranteed rights from the Register of Mortgaged Moveable Property, documents attached with the business registration application in electronic form, information on the position of a person in an organization ... Information products are sent in electronic form via e-mail and in paper form by post mail to customers. Apart from standard products, the Department also offers other products depending on the specific needs of customers.
In addition to the main task which is to provide information to the public upon request, the Department is also responsible for operating a customer support center to provide information directly over the phone, provide guidance and consultation service related to business startup and support users of both the website of the Bronnoysund Register Center and the Altinn portal.
II. Organization of business registration agency and business registration in Sweden
1. Organization
Bolagsverket (Swedish Companies Registration Office) was established in July 2004 by converting the registration department of the Swedish Patent and Registration Office into a separate public authority. Business registration started at the end of the 19th century (1897) when the Swedish Royal Patent Office (Kungliga Patentverket) started registration for limited liability companies and then the registration included other types of businesses and associations .
The Swedish Companies Registration Office is an administrative agency under the Ministry of Enterprise, Energy and Communications responsible for the control and registration of all businesses and commercial activities on a national scale.
The agency which is located in the city of Sundsvall is relatively financially independent from the government which has no influence on the administrative decisions related to business registration of the agency.
To date, the agency employs 513 staff. It processed an average of 400,000 records and 200,000 annual financial statements per year. As a self-financing agency, 75% of the its annual revenue is made up of registration fees and the remaining 25 % is coverd by information services fee.
The agency has two main functions:
First, register business enterprises and associations, receive annual financial statements of business enterprises and make decisions related to business closure. The agency also publishes the Official Swedish Gazette (Postoch Inrikes Tidningar).
Second, provide the whole community with information registered in the Swedish Companies Registration Office including records of business enteprirses such as financial statements, certificate of business registration in Swedish and English, confirmation of the position and role of a specific individual in a business enterprise. From the Portal of the Swedish Companies Registration Office, people can also request information about enterprises in other European countries via the link to the network of European Business Register (EBR) which Sweden joined as one of 26 member states.
The Swedish Companies Registration Office is organized into the following units:
- Business Registration Department
- Legal Department
- Department of System Operational Support
- Department of System Development
- Department of Communications and Public Relations
- Department of Cooperation and Electronic Services
The head of the agency is the Director General appointed by the Government.
2. Business registration
2.1 Entities required to register
According to the Swedish Companies Act 2005, the following businesses and organizations must be registered:
- Limited Liability Company
- Trading Partnership
- Limited Partnership
- Sole trader
- Branch
- Economic association
- Homeowner association
- European economic interest grouping (EEIG)
- Other non-profit business organization, association
- Agricultural association
- Foreign companies doing business in Sweden
In summary, it can be seen that all objects doing business in Sweden must be registered with the agency.
The registered enterprises in Sweden currently include: 500,000 sole traders, 400,000 limited liability companies and nearly 100,000 enterprises of various types such as partnerships, economic organizations, banking, insurance companies, foreign companies, associations of agricultural farms and associations and non-profit organizations.
2.2 Online registration
Since 1st December 2002, online registration has been enabled with electronic signatures being used in registration applications. By the end of 2011, there have been approximately 140,000 online applications directly filed by web users. The number does not include applications submitted by company formation agents. The electronic filing helps reduce the cost of business registration by 15 % compared to paper filing.
Regarding electronic signatures, most of the certification authorities are large banks as almost every person has a bank account (nearly 100 % of the population aged 18 years and older). In Sweden, 95 % of people know about electronic certification and 55 % have been granted and used electronic certification. However, since electronic certificates are provided by different authorities, users can only access one web page at one time. If they want to connect to another web page, users have to relog in since there is no mechanism for authentication cross-check among various certification authorities. To solve the problems of authentication of electronic certification, since 2010, the Swedish government has been working on regulations related to the establishment of a supervisory body for certification authorities, making policies and regulations on the electronic certification, regulations on technical standards for suppliers of certification authorities.
2.3. Business registration at Swedish Companies Registration Office
a. Business Registration Department
The Business Registration Department aims to support all customers with business registration issues, provide information to the public in an easy, fast and accurate manner.
The Department is divided into 3 groups including:
· Business start-up and amendment registration group
· Membership changes and mergers group
· Software development group responsible for programming modifications of the system in case of changes of policies or upon requested.
The process of business registration applications at the Department consists of two basic steps: Step 1: Applications are sent to the Department via email or postal mail; Step 2: Applications then go to an automatic queuing system. Afther that, applications will be manually checked by staff of the Department who will request additional information if the application is incomplete or issue a certificate if the application is valid.
b. Legal Department
- There are 20 lawyers in total who are responsible for providing legal services for customers.
- Legal issues which must be consulted with the Legal Department for authorisation include:
+ Business name
+ Share increase
+ Consolidation and merger of companies
+ Court dispute
+ Dissolution
The Legal Department handles approximately 1,000 cases per year.
c. Department of Communications and Public Relations
20 staff of the Department of Communications and Public Relations undertake the tasks of communications and public relations, both internal and external through the intranet, the Internet and publications. The Department is also responsible for managing and developing an internal and public website.
d. Department of Cooperation and Electronic Services
The Department is divided into 2 groups: Cooperation Group with 4 staff and the Sales Group with 18 staff. In addition to technical duties, the Department also participates in a number of government’s projects and works as the focal point of the Swedish Companies Registration Office in collaboration with 13 other agencies and departments to simplify market entry procedures. The Department also coordinates with the Swedish Tax Agency to build Verksamt Portal providing business community with direct access to the services of business registration and tax agencies.
The Department aims to facilitate the sending of information from businesses to relevant government agencies through a single point of contact which helps minimize administrative procedures for small-scale companies.
e. Department of System Development
The Department consists of 2 groups: Project Management group and IT Development group. In addition to 87 official staff, there are 30 fixed-term contract staff. The Department is responsible for managing and maintaining 60 applications and received about 15,000 requests for technical support each year.
III . Lessons learned in business registration in Norway and Sweden
1. Absolute legalization of citizen’s rights and responsibilities related to the registration process for market entry so that company founders take charge of registered information
In Norway and Sweden, it is stipulated by law that business founders and investors take responsibilities for all registered information and registration agency actually serves as a state “secretary” to record information as prescribed by law. In case the business founder has no or insufficient information on the rules and regulations related to business in general and business registration in particular, he can contact with the judicial authority or legal consulting firms for support. The state administrative agencies are not obliged to handle public enquiries as such. Businesses are required to pay for consulting services provided by state agencies and consultation information supplied by these agencies is for reference only which does not serve as the basis for any legal decision by competent state agencies. The final legal decision must be made by judicial authorities . To facilitate this process, the state can use a number of technical assistance projects to promote the market for business development services (BDS).
2. Business registration web portal serves as an essential tool for business registration and business information services
In Norway and Sweden , the business registration web portal is now a key element for successful business registration reform. Through these portals (www.altinn.no of Norway and www.verkskam.se of Sweden), businesses and investors can easily file online business registration applications; submit reports to business registration agencies; search and purchase information about the legal status, financial statements of enterprises. The below information reflects the role and effectiveness of the two portals Altinn and Verkskam:
- Altinn: Atinn is the core of the Norwegian E-Government and serves as an important tool of communication between the government and the people as well as the business community. Most of the information that the Government needs to collect from the public through the fulfillment of reporting obligations of enterprises can now be exploited from Altinn. People can also access the information currently stored in the database of Altinn. Through Altinn, Norwegian businesses and citizens can find and use electronic forms and access other online services provided by government agencies. Therefore , about 90% of business registration applications, 74 % financial statements and 72% of tax returns, 97 % data of tax payment and tax withholding are filed online and sent to Altinn.
- Verkskam: This portal operates on the basis of close links between the 3 agencies: the Swedish Companies Registration Office, the Swedish Tax Agency and the Swedish Agency for Economic and Regional Growth. Every month, the portal gets about 100,000 page visits of people aiming to file business registration applications and access business information.
3. Penalties for violations of rules of business registration and reporting obligations must act as powerful deterrents, making great contribution to increasing the transparency of business environment
It can be noted from the experience in Norway and Sweden, that in order to make the information on legal status of enterprises accurate and updated, it is crucial to impose strict penalties for violations of rules of business registration and reporting obligations. For instance, under Swedish law, businesses must file financial statements within 7 months since the financial year-end. For a late submission of financial statement, enterprise must pay a fine of 5,000 SEK (approximately 15,500,000 VND) and 2 months later, it must pay another fine 5,000 SEK and 10,000 SEK (approximately 30.8 million VND) for the next 2 months. The fine will gradually increase until the “6- month time limit”. After the deadline, certificate of business registration of companies which do not fulfil reporting obligations will be revoked. Therefore, in Sweden, 97 % of enterprises submit complete financial statements on schedule.