B. Features of simplified and other

B. Features of simplified and other business incorporation regimes
and their impact on MSMEs
19. The Working Group was also reminded of the main issues raised in document
A/CN.9/WG.I/WP.82 in its consideration of features of simplified and other business
incorporation regimes and how those features could be relevant to support MSMEs.
It was noted that simplified corporate forms were a relatively new type of regime
aimed at providing a more flexible and accessible business form for MSMEs, which
could also be advantageous for enterprises of a larger size. It was observed that
many different types of enterprises could benefit in several ways from the creation
of simplified corporate forms, including smaller closely-held companies, family
firms, joint ventures and professional service firms.
20. The comparison of different simplified corporate forms contained in document
A/CN.9/WG.I/WP.82 was highlighted, noting that the different regimes were
examined in respect of three main areas. First, issues of limited liability and other
aspects of formation were considered, including legal personality, issues relating to
disclosure of financial statements, formation requirements, and the number of
founders required pursuant to each legal regime examined. The second main area of
comparison focused on internal governance established in each of the legislative
schemes, in particular on internal governance itself, on financial rights among
owners, on the existence of freedom of contract in establishing the internal
governance and on the transferability of the ownership interest. Finally, each
separate regime was also examined with a view to the fiduciary duties they required
in order to protect the enterprise from abusive or excessively negligent behaviour on
the part of managers.
21. Other aspects of document A/CN.9/WG.I/WP.82 were highlighted, such as the
suggestion that concerns about the potential of simplified business forms for their
abuse in pursuit of criminal activities could be addressed through disclosure of
beneficial ownership and sharing of information domestically and internationally. In
addition, possible methods of conflict resolution for participants in simplified
business forms were noted, including through derivative actions or the existence of
exit rules for enterprise owners to withdraw or be expelled from the business.
Another approach considered for conflict resolution was the creation of specialized
business courts and procedures focused on providing faster, more flexible and
expert dispute resolution for participants in simplified corporate forms. Finally, the
attention of the Working Group was drawn to various available statistics indicating
the success of such simplified business forms in a number of different States.
General comments on the direction the work could take
22. Several general observations were made in respect of issues that could be
considered by the Working Group in addressing its mandate. The view was
expressed that the work, once completed, should include a list of best practices
drawn from country experience in this area. In addition, it was observed that SMEs
and larger enterprises were more likely to require consideration of international
issues than micro-sized enterprises, which were more likely to operate in a more
limited scope and thus be subject to the specific context of individual States. Other
views were expressed that, although ambitious, the Working Group should consider
the possible internationalization of small and micro-sized businesses, particularly in
the modern electronic business era, and in respect of craftsmen and others who may
add value in the production chain. The Working Group also noted that its work
should be undertaken with a view to enhancing the creditworthiness of MSMEs.
Finally, two intergovernmental organizations advised the Working Group of their
strong interest in, and support of, the work being undertaken.