(1)

The United Nations Convention of 10 December 1982 on the Law of the Sea, to which the Union is a contracting party, provides for conservation obligations, including the maintaining or restoring of populations of harvested species at levels which can produce the maximum sustainable yield (MSY).

(2)

At the United Nations Summit on Sustainable Development held in New York in 2015, the Union and its Member States committed themselves, by 2020, to effectively regulate harvesting, to end overfishing, illegal, unreported and unregulated fishing and destructive fishing practices and to implement science-based management plans, in order to restore fish stocks in the shortest time feasible, at least to levels that can produce MSY as determined by their biological characteristics.

(3)

The Malta MedFish4Ever Ministerial Declaration of 30 March 2017 (3) lays down a new framework for fisheries governance in the Mediterranean Sea and provides a work programme with five concrete actions for the next 10 years. One of the commitments made is to establish multiannual plans.

(4)

Regulation (EU) No 1380/2013 of the European Parliament and of the Council (4) establishes the rules of the common fisheries policy (CFP) in line with the international obligations of the Union. The CFP is to contribute to the protection of the marine environment, to the sustainable management of all commercially exploited species and, in particular, to the achievement of good environmental status by 2020.

(5)

The objectives of the CFP are, amongst others, to ensure that fishing and aquaculture activities are environmentally, socially and economically sustainable in the long term, to apply the precautionary approach to fisheries management, and to implement the ecosystem-based approach to fisheries management. The CFP also contributes to a fair standard of living for the fisheries sector, including the small-scale, artisanal or coastal fisheries sector. The achievement of those objectives also contributes to the availability of food supplies and provides employment benefits.

(6)

In order to achieve the objectives of the CFP, a number of conservation measures such as multiannual plans, technical measures and the setting and allocation of maximum allowable fishing effort, should be adopted.

(7)

Pursuant to Articles 9 and 10 of Regulation (EU) No 1380/2013, multiannual plans are to be based on scientific, technical and economic advice. In accordance with those provisions, the multiannual plan established by this Regulation (‘the plan’) should contain objectives, quantifiable targets with clear timeframes, conservation reference points, safeguards and technical measures designed to avoid and reduce unwanted catches.

(8)

‘Best available scientific advice’ should be understood to refer to publicly available scientific advice that is supported by the most up-to-date scientific data and methods and that has either been issued or reviewed by an independent scientific body that is recognised at Union or international level.

(9)

The Commission should obtain the best available scientific advice for the stocks within the scope of the plan. In order to do so, it should consult in particular the Scientific, Technical and Economic Committee for Fisheries (‘STECF’). The Commission should, in particular, obtain publicly available scientific advice, including advice on mixed fisheries, which takes into account the plan and indicates ranges of FMSY and conservation reference points (BPA and BLIM).

(10)

Council Regulation (EC) No 1967/2006 (5) establishes a management framework for the sustainable exploitation of fishery resources in the Mediterranean Sea and requires the adoption of management plans for fisheries using trawl nets, boat seines, shore seines, surrounding nets and dredges in the territorial waters of the Member States.

(11)

France, Italy and Spain have adopted management plans under Regulation (EC) No 1967/2006. However, there is a lack of consistency between those plans and they do not take account of all the gear exploiting demersal stocks and the straddling distribution of certain stocks and fishing fleets. Besides, those plans have proven ineffective in meeting the objectives of the CFP. Member States and stakeholders have expressed support for the development and implementation of a multi-annual plan at Union level for the stocks concerned.

(12)

STECF has shown that exploitation of many demersal stocks in the western Mediterranean Sea exceeds by far the levels required to achieve MSY.

(13)

It is therefore appropriate to establish a multiannual plan for the conservation and sustainable exploitation of demersal stocks in the western Mediterranean Sea.

(14)

The plan should take account of the mixed nature of the fisheries and the dynamics between the stocks driving them, i.e. hake (Merluccius merluccius), red mullet (Mullus barbatus), deep-water rose shrimp (Parapenaeus longirostris), Norway lobster (Nephrops norvegicus), blue and red shrimp (Aristeus antennatus) and giant red shrimp (Aristaeomorpha foliacea). It should also take account of by-catch species caught in demersal fisheries and demersal stocks for which sufficient data are not available. It should apply to the demersal fisheries (in particular, trawl nets, bottom-set nets, traps and longlines) carried out in Union waters or by Union fishing vessels outside the Union waters of the western Mediterranean Sea.

(15)

Where mortality caused by recreational fishing has a significant impact on the stocks concerned, the Council should be able to set non-discriminatory limits for recreational fishermen. The Council should refer to transparent and objective criteria when setting such limits. Where appropriate, Member States should take necessary and proportionate measures for the monitoring and collection of data for the reliable estimation of actual recreational catch levels. Furthermore, it should be possible to adopt technical conservation measures in respect of recreational fisheries.

(16)

The geographical scope of the plan should be based on the geographical distribution of stocks indicated in the best available scientific advice. Future changes to the geographical distribution of stocks as set out in the plan may be needed due to improved scientific information. Therefore, the Commission should be empowered to adopt delegated acts adjusting the geographical distribution of stocks set out in the plan if scientific advice shows a change in the geographical distribution of the relevant stocks.

(17)

The objective of the plan should be to contribute to the achievement of the objectives of the CFP and, in particular, to reaching and maintaining MSY for the target stocks, to implementing the landing obligation for demersal stocks and pelagic by-catches caught in demersal fisheries subject to minimum conservation reference size, and to promoting a fair standard of living for those who depend on fishing activities, bearing in mind coastal fisheries and socioeconomic aspects. The plan should also implement the ecosystem-based approach to fisheries management in order to minimise negative impacts of fishing activities on the marine ecosystem. It should be coherent with Union environmental legislation, in particular the objective of achieving good environmental status by 2020, in accordance with Directive 2008/56/EC of the European Parliament and of the Council (6), and the objectives of Directive 2009/147/EC of the European Parliament and of the Council (7) and Council Directive 92/43/EEC (8).

(18)

It is appropriate to establish the target fishing mortality (F) that corresponds to the objective of reaching and maintaining MSY as ranges of values which are consistent with achieving MSY (FMSY). Those ranges, based on best available scientific advice, are necessary to provide the flexibility to take account of developments in scientific advice, to contribute to the implementation of the landing obligation and to take into account mixed fisheries. Based on the plan, those ranges are derived to deliver no more than a 5 % reduction in the long-term yield compared to MSY. In addition, the upper limit of the range of FMSY is capped, so that the probability of the stock falling below the biomass limit reference point (BLIM) is no more than 5 %.

(19)

For the purpose of fixing maximum allowable fishing effort, there should be ranges of FMSY for ‘normal use’ and, subject to the good status of the stocks concerned, the possibility to set maximum allowable fishing effort above those ranges of FMSY for the most vulnerable stock if, on the basis of scientific advice, it is necessary for the achievement of the objectives of this Regulation in mixed fisheries, to avoid harm to a stock caused by intra- or inter-species stock dynamics, or to limit the year-on-year variations in maximum allowable fishing effort. A target fishing mortality in line with those ranges of FMSY should be achieved on a progressive, incremental basis by 2020 where possible, and by 1 January 2025 at the latest.

(20)

For stocks for which targets relating to MSY are available, and for the purpose of the application of safeguards, it is necessary to establish conservation reference points, expressed as precautionary reference points (BPA) and limit reference points (BLIM).

(21)

Appropriate safeguards should be provided for in order to ensure that the targets are met and to trigger, where needed, remedial measures, inter alia, where stocks fall below the conservation reference points. Remedial measures should include emergency measures in accordance with Articles 12 and 13 of Regulation (EU) No 1380/2013, maximum allowable fishing effort and other specific conservation measures.

(22)

In order to ensure transparent access to fisheries and the achievement of target fishing mortalities, a Union fishing effort regime should be adopted for trawls which are the main gear used to exploit demersal stocks in the western Mediterranean Sea. To that end, it is appropriate to determine fishing effort groups in order for the Council to establish maximum allowable fishing effort, expressed as numbers of fishing days, on an annual basis. Where necessary, the fishing effort regime should incorporate other fishing gear.

(23)

Given the worrying situation of many demersal stocks in the western Mediterranean Sea, and in order to reduce the current high levels of fishing mortality, the fishing effort regime should entail a significant reduction of fishing effort in the first five years of implementation of the plan.

(24)

Member States should take specific measures to ensure that the fishing effort regime is effective and workable, by including a method for allocating fishing effort quotas in accordance with Article 17 of Regulation (EU) No 1380/2013, by producing a list of vessels, by issuing fishing authorisations and by recording and transmitting relevant fishing effort data.

(25)

In order to contribute to the effective achievement of the objectives of the plan, and in accordance with the principles of good governance laid down in Article 3 of Regulation (EU) No 1380/2013, Member States should be allowed to promote participative management systems at local level.

(26)

In order to protect nursery areas and sensitive habitats, and safeguard small-scale fisheries, the coastal zone should be regularly reserved for more selective fisheries. Therefore, the plan should establish a closure for trawls operating within six nautical miles from the coast except in areas deeper than the 100 m isobath during three months each year. It should be possible for other closure areas to be established, where this can ensure at least a 20 % reduction of catches of juvenile hake.

(27)

Further conservation measures should be taken as regards demersal stocks. In particular, on the basis of scientific advice, it is appropriate to establish additional closures in areas with high aggregations of spawning individuals, in order to protect a severely harmed adult stage of hake.

(28)

The precautionary approach should apply to by-catch stocks and to demersal stocks for which sufficient data are not available. Specific conservation measures should be adopted in accordance with Article 18 of Regulation (EU) No 1380/2013 where scientific advice shows that remedial measures are needed.

(29)

The plan should provide for additional technical conservation measures to be adopted by means of delegated acts. That is necessary to achieve the objectives of the plan, in particular as regards conserving demersal stocks and improving selectivity.

(30)

In order to comply with the landing obligation established by Article 15(1) of Regulation (EU) No 1380/2013, the plan should provide for additional management measures to be further specified in accordance with Article 18 of Regulation (EU) No 1380/2013.

(31)

In order to adapt the plan in a timely manner to technical and scientific progress, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission in respect of supplementing this Regulation with remedial and technical conservation measures, implementing the landing obligation and amending certain elements of the plan. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making (9). In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States' experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.

(32)

The deadline for submitting joint recommendations from Member States having a direct management interest should be established, as required by Regulation (EU) No 1380/2013.

(33)

In order to evaluate progress towards MSY, the plan should allow regular scientific monitoring of the stocks concerned and, where possible, of by-catch stocks.

(34)

In accordance with Article 10(3) of Regulation (EU) No 1380/2013, the Commission should periodically assess the adequacy and effectiveness of this Regulation. That assessment should follow and be based on periodic evaluation of the plan, on the basis of scientific advice by STECF, by 17 July 2024 and every three years thereafter. That period would allow for the full implementation of the landing obligation and for regionalised measures to be adopted and implemented and to have an impact on the stocks and fisheries.

(35)

In order to provide legal certainty, it is appropriate to clarify that temporary cessation measures that have been adopted in order to attain the objectives of the plan can be deemed eligible for support under Regulation (EU) No 508/2014 of the European Parliament and of the Council (10).

(36)

In order to achieve a balance between the fishing capacity of the fleet and the available maximum allowable fishing effort, support from the European Maritime and Fisheries Fund for the permanent cessation of fishing activities should be available in the imbalanced fleet segments covered by this Regulation. Regulation (EU) No 508/2014 should therefore be amended accordingly.

(37)

The likely economic and social impact of the plan was duly assessed before it was drafted, in accordance with Article 9(4) of Regulation (EU) No 1380/2013.

(38)

Taking into account that the maximum allowable fishing effort is set for each calendar year, the provisions on the fishing effort regime should apply from 1 January 2020. Taking into account environmental, social and economic sustainability, the provisions on the ranges of FMSY and on safeguards for stocks below BPA should apply from 1 January 2025,

(1)

The objective of this Directive is to contribute to the proper functioning of the internal market and remove obstacles to the exercise of fundamental freedoms, such as the free movement of capital and freedom of establishment, which result from differences between national laws and procedures concerning preventive restructuring, insolvency, discharge of debt, and disqualifications. Without affecting workers' fundamental rights and freedoms, this Directive aims to remove such obstacles by ensuring that: viable enterprises and entrepreneurs that are in financial difficulties have access to effective national preventive restructuring frameworks which enable them to continue operating; honest insolvent or over-indebted entrepreneurs can benefit from a full discharge of debt after a reasonable period of time, thereby allowing them a second chance; and that the effectiveness of procedures concerning restructuring, insolvency and discharge of debt is improved, in particular with a view to shortening their length.

(2)

Restructuring should enable debtors in financial difficulties to continue business, in whole or in part, by changing the composition, conditions or structure of their assets and their liabilities or any other part of their capital structure — including by sales of assets or parts of the business or, where so provided under national law, the business as a whole — as well as by carrying out operational changes. Unless otherwise specifically provided for by national law, operational changes, such as the termination or amendment of contracts or the sale or other disposal of assets, should comply with the general requirements that are provided for under national law for such measures, in particular civil law and labour law rules. Any debt-to-equity swaps should also comply with safeguards provided for by national law. Preventive restructuring frameworks should, above all, enable debtors to restructure effectively at an early stage and to avoid insolvency, thus limiting the unnecessary liquidation of viable enterprises. Those frameworks should help to prevent job losses and the loss of know-how and skills, and maximise the total value to creditors — in comparison to what they would receive in the event of the liquidation of the enterprise's assets or in the event of the next-best-alternative scenario in the absence of a plan — as well as to owners and the economy as a whole.

(3)

Preventive restructuring frameworks should also prevent the build-up of non-performing loans. The availability of effective preventive restructuring frameworks would ensure that action is taken before enterprises default on their loans, thereby helping to reduce the risk of loans becoming non-performing in cyclical downturns and mitigating the adverse impact on the financial sector. A significant percentage of businesses and jobs could be saved if preventive frameworks existed in all the Member States in which businesses' places of establishment, assets or creditors are situated. In restructuring frameworks the rights of all parties involved, including workers, should be protected in a balanced manner. At the same time, non-viable businesses with no prospect of survival should be liquidated as quickly as possible. Where a debtor in financial difficulties is not economically viable or cannot be readily restored to economic viability, restructuring efforts could result in the acceleration and accumulation of losses to the detriment of creditors, workers and other stakeholders, as well as the economy as a whole.

(4)

There are differences between Member States as regards the range of the procedures available to debtors in financial difficulties in order to restructure their business. Some Member States have a limited range of procedures that allow the restructuring of businesses only at a relatively late stage, in the context of insolvency procedures. In other Member States, restructuring is possible at an earlier stage but the procedures available are not as effective as they could be, or they are very formal, in particular because they limit the use of out-of-court arrangements. Preventive solutions are a growing trend in insolvency law. The trend favours approaches that, unlike the traditional approach of liquidating a business in financial difficulties, have the aim of restoring it to a healthy state or, at least, saving those of its units which are still economically viable. That approach, among other benefits to the economy, often helps to maintain jobs or reduce job losses. Moreover, the degree of involvement of judicial or administrative authorities, or the persons appointed by them, varies from no involvement or minimal involvement in some Member States to full involvement in others. Similarly, national rules giving entrepreneurs a second chance, in particular by granting them discharge from the debts they have incurred in the course of their business, vary between Member States in respect of the length of the discharge period and the conditions for granting such a discharge.

(5)

In many Member States, it takes more than three years for entrepreneurs who are insolvent but honest to be discharged from their debts and make a fresh start. Inefficient discharge of debt and disqualification frameworks result in entrepreneurs having to relocate to other jurisdictions in order to benefit from a fresh start in a reasonable period of time, at considerable additional cost to both their creditors and the entrepreneurs themselves. Long disqualification orders, which often accompany a procedure leading to discharge of debt, create obstacles to the freedom to take up and pursue a self-employed, entrepreneurial activity.

(6)

The excessive length of procedures concerning restructuring, insolvency and discharge of debt in several Member States is an important factor triggering low recovery rates and deterring investors from carrying out business in jurisdictions where procedures risk taking too long and being unduly costly.

(7)

Differences between Member States in relation to procedures concerning restructuring, insolvency and discharge of debt translate into additional costs for investors when assessing the risk of debtors getting into financial difficulties in one or more Member States, or of investing in viable businesses in financial difficulties, as well as additional costs of restructuring enterprises that have establishments, creditors or assets in other Member States. This is most notably the case with restructuring international groups of companies. Investors mention uncertainty about insolvency rules or the risk of lengthy or complex insolvency procedures in another Member State as being one of the main reasons for not investing or not entering into a business relationship with a counterpart outside the Member State where they are based. That uncertainty acts as a disincentive which obstructs the freedom of establishment of undertakings and the promotion of entrepreneurship and harms the proper functioning of the internal market. Micro, small and medium-sized enterprises (‘SMEs’) in particular do not, for the most part, have the resources needed to assess risks related to cross-border activities.

(8)

The differences among Member States in procedures concerning restructuring, insolvency and discharge of debt lead to uneven conditions for access to credit and to uneven recovery rates in the Member States. A higher degree of harmonisation in the field of restructuring, insolvency, discharge of debt and disqualifications is thus indispensable for a well-functioning internal market in general and for a working Capital Markets Union in particular, as well as for the resilience of European economies, including for the preservation and creation of jobs.

(9)

The additional cost of risk-assessment and of cross-border enforcement of claims for creditors of over-indebted entrepreneurs who relocate to another Member State in order to obtain a discharge of debt in a much shorter period of time should also be reduced. The additional costs for entrepreneurs stemming from the need to relocate to another Member State in order to benefit from a discharge of debt should also be reduced. Furthermore, the obstacles stemming from long disqualification orders linked to an entrepreneur's insolvency or over-indebtedness inhibit entrepreneurship.

(10)

Any restructuring operation, in particular one of major size which generates a significant impact, should be based on a dialogue with the stakeholders. That dialogue should cover the choice of the measures envisaged in relation to the objectives of the restructuring operation, as well as alternative options, and there should be appropriate involvement of employees' representatives as provided for in Union and national law.

(11)

The obstacles to the exercise of fundamental freedoms are not limited to purely cross-border situations. An increasingly interconnected internal market, in which goods, services, capital and workers circulate freely, and which has an ever-stronger digital dimension, means that very few enterprises are purely national if all relevant elements are considered, such as their client base, supply chain, scope of activities, investor and capital base. Even purely national insolvencies can have an impact on the functioning of the internal market through the so-called domino effect of insolvencies, whereby a debtor's insolvency may trigger further insolvencies in the supply chain.

(12)

Regulation (EU) 2015/848 of the European Parliament and of the Council (4) deals with issues of jurisdiction, recognition and enforcement, applicable law and cooperation in cross-border insolvency proceedings as well as with the interconnection of insolvency registers. Its scope covers preventive procedures which promote the rescue of economically viable debtors as well as discharge procedures for entrepreneurs and other natural persons. However, that Regulation does not tackle the disparities between national laws regulating those procedures. Furthermore, an instrument limited only to cross-border insolvencies would not remove all obstacles to free movement, nor would it be feasible for investors to determine in advance the cross-border or domestic nature of the potential financial difficulties of the debtor in the future. There is therefore a need to go beyond matters of judicial cooperation and to establish substantive minimum standards for preventive restructuring procedures as well as for procedures leading to a discharge of debt for entrepreneurs.

(13)

This Directive should be without prejudice to the scope of Regulation (EU) 2015/848. It aims to be fully compatible with, and complementary to, that Regulation, by requiring Member States to put in place preventive restructuring procedures which comply with certain minimum principles of effectiveness. It does not change the approach taken in that Regulation of allowing Member States to maintain or introduce procedures which do not fulfil the condition of publicity for notification under Annex A to that Regulation. Although this Directive does not require that procedures within its scope fulfil all the conditions for notification under that Annex, it aims to facilitate the cross-border recognition of those procedures and the recognition and enforceability of judgments.

(14)

The advantage of the application of Regulation (EU) 2015/848 is that it provides for safeguards against abusive relocation of the debtor's centre of main interests during cross-border insolvency proceedings. Certain restrictions should also apply to procedures not covered by that Regulation.

(15)

It is necessary to lower the costs of restructuring for both debtors and creditors. Therefore, the differences between Member States which hamper the early restructuring of viable debtors in financial difficulties and the possibility of a discharge of debt for honest entrepreneurs should be reduced. Reducing such differences should bring greater transparency, legal certainty and predictability across the Union. It should maximise the returns to all types of creditors and investors and encourage cross-border investment. Greater coherence of restructuring and insolvency procedures should also facilitate the restructuring of groups of companies irrespective of where the members of the group are located in the Union.

(16)

Removing the barriers to effective preventive restructuring of viable debtors in financial difficulties contributes to minimising job losses and losses of value for creditors in the supply chain, preserves know-how and skills and hence benefits the wider economy. Facilitating a discharge of debt for entrepreneurs would help to avoid their exclusion from the labour market and enable them to restart entrepreneurial activities, drawing lessons from past experience. Moreover, reducing the length of restructuring procedures would result in higher recovery rates for creditors as the passing of time would normally only result in a further loss of value of the debtor or the debtor's business. Finally, efficient preventive restructuring, insolvency and discharge procedures would enable a better assessment of the risks involved in lending and borrowing decisions and facilitate the adjustment for insolvent or over-indebted debtors, minimising the economic and social costs involved in their deleveraging process. This Directive should allow Member States flexibility to apply common principles while respecting national legal systems. Member States should be able to maintain or introduce in their national legal systems preventive restructuring frameworks other than those provided for by this Directive.

(17)

Enterprises, and in particular SMEs, which represent 99 % of all businesses in the Union, should benefit from a more coherent approach at Union level. SMEs are more likely to be liquidated than restructured, since they have to bear costs that are disproportionately higher than those faced by larger enterprises. SMEs, especially when facing financial difficulties, often do not have the necessary resources to cope with high restructuring costs and to take advantage of the more efficient restructuring procedures available only in some Member States. In order to help such debtors restructure at low cost, comprehensive check-lists for restructuring plans, adapted to the needs and specificities of SMEs, should be developed at national level and made available online. In addition, early warning tools should be put in place to warn debtors of the urgent need to act, taking into account the limited resources of SMEs for hiring experts.

(18)

When defining SMEs, Member States could give due consideration to Directive 2013/34/EU of the European Parliament and of the Council (5) or the Commission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises (6).

(19)

It is appropriate to exclude from the scope of this Directive debtors which are insurance and re-insurance undertakings as defined in points (1) and (4) of Article 13 of Directive 2009/138/EC of the European Parliament and of the Council (7), credit institutions as defined in point (1) of Article 4(1) of Regulation (EU) No 575/2013 of the European Parliament and of the Council (8), investment firms and collective investment undertakings as defined in points (2) and (7) of Article 4(1) of Regulation (EU) No 575/2013, central counterparties as defined in point (1) of Article 2 of Regulation (EU) No 648/2012 of the European Parliament and of the Council (9), central securities depositories as defined in point (1) of Article 2(1) of Regulation (EU) No 909/2014 of the European Parliament and of the Council (10) and other financial institutions and entities listed in the first subparagraph of Article 1(1) of Directive 2014/59/EU of the European Parliament and of the Council (11). Such debtors are subject to special arrangements and the national supervisory and resolution authorities have wide-ranging powers of intervention in relation to them. Member States should be able to exclude other financial entities providing financial services which are subject to comparable arrangements and powers of intervention.

(20)

For similar considerations, it is also appropriate to exclude from the scope of this Directive public bodies under national law. Member States should also be able to limit the access to preventive restructuring frameworks to legal persons, since the financial difficulties of entrepreneurs may be efficiently addressed not only by means of preventive restructuring procedures but also by means of procedures which lead to a discharge of debt or by means of informal restructurings based on contractual agreements. Member States with different legal systems, where the same type of entity has a different legal status in those legal systems, should be able to apply one uniform regime to such entities. A preventive restructuring framework laid down pursuant to this Directive should not affect claims and entitlements against a debtor that arise from occupational pension systems if those claims and entitlements accrued during a period prior to the restructuring.

(21)

Consumer over-indebtedness is a matter of great economic and social concern and is closely related to the reduction of debt overhang. Furthermore, it is often not possible to draw a clear distinction between the debts incurred by entrepreneurs in the course of their trade, business, craft or profession and those incurred outside those activities. Entrepreneurs would not effectively benefit from a second chance if they had to go through separate procedures, with different access conditions and discharge periods, to discharge their business debts and other debts incurred outside their business. For those reasons, although this Directive does not include binding rules on consumer over-indebtedness, it would be advisable for Member States to apply also to consumers, at the earliest opportunity, the provisions of this Directive concerning discharge of debt.

(22)

The earlier a debtor can detect its financial difficulties and can take appropriate action, the higher the probability of avoiding an impending insolvency or, in the case of a business the viability of which is permanently impaired, the more orderly and efficient the liquidation process would be. Clear, up-to-date, concise and user-friendly information on the available preventive restructuring procedures as well as one or more early warning tools should therefore be put in place to incentivise debtors that start to experience financial difficulties to take early action. Early warning tools which take the form of alert mechanisms that indicate when the debtor has not made certain types of payments could be triggered by, for example, non-payment of taxes or social security contributions. Such tools could be developed either by Member States or by private entities, provided that the objective is met. Member States should make information about early warning tools available online, for example on a dedicated website or webpage. Member States should be able to adapt the early warning tools depending on the size of the enterprise and to lay down specific provisions on early warning tools for large-sized enterprises and groups that take into account their peculiarities. This Directive should not impose any liability on Member States for potential damage incurred through restructuring procedures which are triggered by such early warning tools.

(23)

In an effort to increase the support of employees and their representatives, Member States should ensure that employees' representatives are given access to relevant and up-to-date information regarding the availability of early warning tools and it should also be possible for them to provide support to employees' representatives in assessing the economic situation of the debtor.

(24)

A restructuring framework should be available to debtors, including legal entities and, where so provided under national law, natural persons and groups of companies, to enable them to address their financial difficulties at an early stage, when it appears likely that their insolvency can be prevented and the viability of the business can be ensured. A restructuring framework should be available before a debtor becomes insolvent under national law, namely before the debtor fulfils the conditions under national law for entering collective insolvency proceedings, which normally entail a total divestment of the debtor and the appointment of a liquidator. In order to avoid restructuring frameworks being misused, the financial difficulties of the debtor should indicate a likelihood of insolvency and the restructuring plan should be capable of preventing the insolvency of the debtor and ensuring the viability of the business.

(25)

Member States should be able to determine whether claims that fall due or that come into existence after an application to open a preventive restructuring procedure has been submitted or after the procedure has been opened are included in the preventive restructuring measures or the stay of individual enforcement actions. Member States should be able to decide whether the stay of individual enforcement actions has an effect on the interest due on claims.

(26)

Member States should be able to introduce a viability test as a condition for access to the preventive restructuring procedure provided for by this Directive. Such a test should be carried out without detriment to the debtor's assets, which could take the form of, among other things, the granting of an interim stay or the carrying out without undue delay of the test. However, the absence of detriment should not prevent Member States from requiring debtors to prove their viability at their own cost.

(27)

The fact that Member States can limit access to a restructuring framework with regard to debtors that have been sentenced for serious breaches of accounting or book-keeping obligations should not prevent Member States from also limiting the access of debtors to preventive restructuring frameworks where their books and records are incomplete or deficient to a degree that makes it impossible to ascertain the business and financial situation of the debtors.

(28)

Member States should be able to extend the scope of preventive restructuring frameworks provided for by this Directive to situations in which debtors face non-financial difficulties, provided that such difficulties give rise to a real and serious threat to a debtor's actual or future ability to pay its debts as they fall due. The time frame relevant for the determination of such threat may extend to a period of several months, or even longer, in order to account for cases in which the debtor is faced with non-financial difficulties threatening the status of its business as a going concern and, in the medium term, its liquidity. This may be the case, for example, where the debtor has lost a contract which is of key importance to it.

(29)

To promote efficiency and reduce delays and costs, national preventive restructuring frameworks should include flexible procedures. Where this Directive is implemented by means of more than one procedure within a restructuring framework, the debtor should have access to all rights and safeguards provided for by this Directive with the aim of achieving an effective restructuring. Except in the event of mandatory involvement of judicial or administrative authorities as provided for under this Directive, Member States should be able to limit the involvement of such authorities to situations in which it is necessary and proportionate, while taking into consideration, among other things, the aim of safeguarding the rights and interests of debtors and of affected parties, as well as the aim of reducing delays and the cost of the procedures. Where creditors or employees' representatives are allowed to initiate a restructuring procedure under national law and where the debtor is an SME, Member States should require the agreement of the debtor as a precondition for the initiation of the procedure, and should also be able to extend that requirement to debtors which are large enterprises.

(30)

To avoid unnecessary costs, to reflect the early nature of preventive restructuring and to encourage debtors to apply for preventive restructuring at an early stage of their financial difficulties, they should, in principle, be left in control of their assets and the day-to-day operation of their business. The appointment of a practitioner in the field of restructuring, to supervise the activity of a debtor or to partially take over control of a debtor's daily operations, should not be mandatory in every case, but made on a case-by-case basis depending on the circumstances of the case or on the debtor's specific needs. Nevertheless, Member States should be able to determine that the appointment of a practitioner in the field of restructuring is always necessary in certain circumstances, such as where: the debtor benefits from a general stay of individual enforcement actions; the restructuring plan needs to be confirmed by means of a cross-class cram-down; the restructuring plan includes measures affecting the rights of workers; or the debtor or its management have acted in a criminal, fraudulent, or detrimental manner in business relations.

(31)

For the purpose of assisting the parties with negotiating and drafting a restructuring plan, Member States should provide for the mandatory appointment of a practitioner in the field of restructuring where: a judicial or administrative authority grants the debtor a general stay of individual enforcement actions, provided that in such case a practitioner is needed to safeguard the interests of the parties; the restructuring plan needs to be confirmed by a judicial or administrative authority by means of a cross-class cram-down; it was requested by the debtor; or it is requested by a majority of creditors provided that the creditors cover the costs and fees of the practitioner.

(32)

A debtor should be able to benefit from a temporary stay of individual enforcement actions, whether granted by a judicial or administrative authority or by operation of law, with the aim of supporting the negotiations on a restructuring plan, in order to be able to continue operating or at least to preserve the value of its estate during the negotiations. Where so provided by national law, it should also be possible for the stay to apply for the benefit of third-party security providers, including guarantors and collateral givers. However, Member States should be able to provide that judicial or administrative authorities can refuse to grant a stay of individual enforcement actions where such a stay is not necessary or where it would not fulfil the objective of supporting the negotiations. Grounds for refusal might include a lack of support by the required majorities of creditors or, where so provided under national law, the debtor's actual inability to pay debts as they fall due.

(33)

In order to facilitate and accelerate the course of proceedings, Member States should be able to establish, on a rebuttable basis, presumptions for the presence of grounds for refusal of the stay, where, for example, the debtor shows conduct that is typical of a debtor that is unable to pay debts as they fall due — such as a substantial default vis-à-vis workers or tax or social security agencies — or where a financial crime has been committed by the debtor or the current management of an enterprise which gives reason to believe that a majority of creditors would not support the start of the negotiations.

(34)

A stay of individual enforcement actions could be general, in that it affects all creditors, or it could apply only to some individual creditors or categories of creditors. Member States should be able to exclude certain claims or categories of claims from the scope of the stay, in well-defined circumstances, such as claims which are secured by assets the removal of which would not jeopardise the restructuring of the business or claims of creditors in respect of which a stay would cause unfair prejudice, such as by way of an uncompensated loss or depreciation of collateral.

(35)

In order to provide for a fair balance between the rights of the debtor and those of creditors, a stay of individual enforcement actions should apply for a maximum period of up to four months. Complex restructurings may, however, require more time. Member States should be able to provide that, in such cases, extensions of the initial period of the stay can be granted by the judicial or administrative authority. Where a judicial or administrative authority does not take a decision on the extension of a stay before it lapses, the stay should cease to have effect upon expiry of the stay period. In the interest of legal certainty, the total period of the stay should be limited to 12 months. Member States should be able to provide for an indefinite stay where the debtor becomes insolvent under national law. Member States should be able to decide whether a short interim stay pending a judicial or administrative authority's decision on access to the preventive restructuring framework is subject to the time limits under this Directive.

(36)

To ensure that creditors do not suffer unnecessary detriment, Member States should provide that judicial or administrative authorities can lift a stay of individual enforcement actions if it no longer fulfils the objective of supporting negotiations, for example if it becomes apparent that the required majority of creditors does not support the continuation of the negotiations. The stay should also be lifted if creditors are unfairly prejudiced by it, where Member States provide for such a possibility. Member States should be allowed to limit the possibility to lift the stay to situations where creditors have not had the opportunity to be heard before it came into force or before it was extended. Member States should also be allowed to provide for a minimum period during which the stay cannot be lifted. In establishing whether there is unfair prejudice to creditors, judicial or administrative authorities should be able to take into account whether the stay would preserve the overall value of the estate, and whether the debtor acts in bad faith or with the intention of causing prejudice or generally acts against the legitimate expectations of the general body of creditors.

(37)

This Directive does not cover provisions on compensation or guarantees for creditors of which the collateral is likely to decrease in value during the stay. A single creditor or a class of creditors would be unfairly prejudiced by the stay if, for example, their claims would be made substantially worse-off as a result of the stay than if the stay did not apply, or if the creditor is put more at a disadvantage than other creditors in a similar position. Member States should be able to provide that, whenever unfair prejudice is established in respect of one or more creditors or one or more classes of creditors, the stay can be lifted in respect of those creditors or classes of creditors or in respect of all creditors. Member States should be able to decide who is entitled to request the lifting of the stay.

(38)

A stay of individual enforcement actions should also result in the suspension of a debtor's obligation to file for, or the opening at a creditor's request of, an insolvency procedure which could end in liquidation of the debtor. Such insolvency procedures should, in addition to those limited by law to having as the only possible outcome the liquidation of the debtor, also include procedures that could lead to a restructuring of the debtor. The suspension of the opening of an insolvency procedure at the request of creditors should apply not only where Member States provide for a general stay of individual enforcement actions covering all creditors, but also where Member States provide for the option of a stay of individual enforcement actions covering only a limited number of creditors. Nevertheless, Member States should be able to provide that insolvency proceedings can be opened at the request of public authorities which are not acting in a creditor capacity, but in the general interest, such as a public prosecutor.

(39)

This Directive should not prevent debtors from paying, in the ordinary course of business, claims of unaffected creditors, and claims of affected creditors that arise during the stay of individual enforcement actions. To ensure that creditors with claims that came into existence before the opening of a restructuring procedure or a stay of individual enforcement actions do not put pressure on the debtor to pay those claims, which otherwise would be reduced through the implementation of the restructuring plan, Member States should be able to provide for the suspension of the obligation on the debtor with respect to payment of those claims.

(40)

When a debtor enters an insolvency procedure, some suppliers can have contractual rights, provided for in so-called ipso facto clauses, entitling them to terminate the supply contract solely on account of the insolvency, even if the debtor has duly met its obligations. Ipso facto clauses could also be triggered when a debtor applies for preventive restructuring measures. Where such clauses are invoked when the debtor is merely negotiating a restructuring plan or requesting a stay of individual enforcement actions or invoked in connection with any event connected with the stay, early termination can have a negative impact on the debtor's business and the successful rescue of the business. Therefore, in such cases, it is necessary to provide that creditors are not allowed to invoke ipso facto clauses which make reference to negotiations on a restructuring plan or a stay or any similar event connected to the stay.

(41)

Early termination can endanger the ability of a business to continue operating during restructuring negotiations, especially when contracts for essential supplies such as gas, electricity, water, telecommunication and card payment services are concerned. Member States should provide that creditors to which a stay of individual enforcement actions applies, and whose claims came into existence prior to the stay and have not been paid by a debtor, are not allowed to withhold performance of, terminate, accelerate or, in any other way, modify essential executory contracts during the stay period, provided that the debtor complies with its obligations under such contracts which fall due during the stay. Executory contracts are, for example, lease and licence agreements, long-term supply contracts and franchise agreements.

(42)

This Directive lays down minimum standards for the content of a restructuring plan. However, Member States should be able to require additional explanations in the restructuring plan, concerning for example the criteria according to which creditors have been grouped, which may be relevant in cases where a debt is only partially secured. Member States should not be obliged to require an expert opinion regarding the value of assets which need to be indicated in the plan.

(43)

Creditors affected by a restructuring plan, including workers, and, where allowed under national law, equity-holders, should have a right to vote on the adoption of a restructuring plan. Member States should be able to provide for limited exceptions to this rule. Parties unaffected by the restructuring plan should have no voting rights in relation to the plan, nor should their support be required for the approval of any plan. The concept of ‘affected parties’ should only include workers in their capacity as creditors. Therefore, if Member States decide to exempt the claims of workers from the preventive restructuring framework, workers should not be considered as affected parties. The vote on the adoption of a restructuring plan could take the form of a formal voting process or of a consultation and agreement with the required majority of affected parties. However, where the vote takes the form of an agreement with the requisite majority, affected parties which were not involved in the agreement could nevertheless be offered the opportunity to join the restructuring plan.

(44)

To ensure that rights which are substantially similar are treated equitably and that restructuring plans can be adopted without unfairly prejudicing the rights of affected parties, affected parties should be treated in separate classes which correspond to the class formation criteria under national law. ‘Class formation’ means the grouping of affected parties for the purposes of adopting a plan in such a way as to reflect their rights and the seniority of their claims and interests. As a minimum, secured and unsecured creditors should always be treated in separate classes. Member States should, however, be able to require that more than two classes of creditors are formed, including different classes of unsecured or secured creditors and classes of creditors with subordinated claims. Member States should also be able to treat types of creditors that lack a sufficient commonality of interest, such as tax or social security authorities, in separate classes. It should be possible for Member States to provide that secured claims can be divided into secured and unsecured parts based on collateral valuation. It should also be possible for Member States to lay down specific rules supporting class formation where non-diversified or otherwise especially vulnerable creditors, such as workers or small suppliers, would benefit from such class formation.

(45)

Member States should be able to provide that debtors that are SMEs, can, on account of their relatively simple capital structure, be exempted from the obligation to treat affected parties in separate classes. In cases where SMEs have opted to create only one voting class and that class votes against the plan, it should be possible for debtors to submit another plan, in line with the general principles of this Directive.

(46)

Member States should in any case ensure that adequate treatment is given in their national law to matters of particular importance for class formation purposes, such as claims from connected parties, and that their national law contains rules that deal with contingent claims and contested claims. Member States should be allowed to regulate how contested claims are to be handled for the purposes of allocating voting rights. The judicial or administrative authority should examine class formation, including the selection of creditors affected by the plan, when a restructuring plan is submitted for confirmation. However, Member States should be able to provide that such authority can also examine class formation at an earlier stage should the proposer of the plan seek validation or guidance in advance.

(47)

Requisite majorities should be established by national law to ensure that a minority of affected parties in each class cannot obstruct the adoption of a restructuring plan which does not unfairly reduce their rights and interests. Without a majority rule binding dissenting secured creditors, early restructuring would not be possible in many cases, for example where a financial restructuring is needed but the business is otherwise viable. To ensure that parties have a say on the adoption of restructuring plans proportionate to the stakes they have in the business, the required majority should be based on the amount of the creditors' claims or equity holders' interests in any given class. Member States should, in addition, be able to require a majority in the number of affected parties in each class. Member States should be able to lay down rules in relation to affected parties with a right to vote which do not exercise that right in a correct manner or are not represented, such as rules allowing those affected parties to be taken into account for a participation threshold or for the calculation of a majority. Member States should also be able to provide for a participation threshold for the vote.

(48)

Confirmation of a restructuring plan by a judicial or administrative authority is necessary to ensure that the reduction of the rights of creditors or interests of equity holders is proportionate to the benefits of the restructuring and that they have access to an effective remedy. Confirmation is particularly necessary where: there are dissenting affected parties; the restructuring plan contains provisions on new financing; or the plan involves a loss of more than 25 % of the work force. Member States should, however, be able to provide that confirmation by a judicial or administrative authority is necessary also in other cases. A confirmation of a plan which involves the loss of more than 25 % of the work force should only be necessary where national law allows preventive restructuring frameworks to provide for measures that have a direct effect on employment contracts.

(49)

Member States should ensure that a judicial or administrative authority is able to reject a plan where it has been established that it reduces the rights of dissenting creditors or equity holders either to a level below what they could reasonably expect to receive in the event of the liquidation of the debtor's business, whether by piecemeal liquidation or by a sale as a going concern, depending on the particular circumstances of each debtor, or to a level below what they could reasonably expect in the event of the next-best-alternative scenario where the restructuring plan is not confirmed. However, where the plan is confirmed through a cross-class cram-down, reference should be made to the protection mechanism used in such scenario. Where Member States opt to carry out a valuation of the debtor as a going concern, the going-concern value should take into account the debtor's business in the longer term, as opposed to the liquidation value. The going-concern value is, as a rule, higher than the liquidation value because it is based on the assumption that the business continues its activity with the minimum of disruption, has the confidence of financial creditors, shareholders and clients, continues to generate revenues, and limits the impact on workers.

(50)

While compliance with the best-interests-of-creditors test should be examined by a judicial or administrative authority only if the restructuring plan is challenged on that ground in order to avoid a valuation being made in every case, Member States should be able to provide that other conditions for confirmation can be examined ex officio. Member States should be able to add other conditions which need to be complied with in order to confirm a restructuring plan, such as whether equity holders are adequately protected. Judicial or administrative authorities should be able to refuse to confirm restructuring plans which have no reasonable prospect of preventing the insolvency of the debtor or ensuring the viability of the business. However, Member States should not be required to ensure that such assessment is made ex officio.

(51)

Notification to all affected parties should be one of the conditions for confirmation of a restructuring plan. Member States should be able to define the form of the notification, to identify the time when it is to be made, as well as to lay down provisions for the treatment of unknown claims as regards notification. They should also be able to provide that non-affected parties have to be informed about the restructuring plan.

(52)

Satisfying the ‘best-interest-of-creditors’ test should be considered to mean that no dissenting creditor is worse off under a restructuring plan than it would be either in the case of liquidation, whether piecemeal liquidation or sale of the business as a going concern, or in the event of the next-best-alternative scenario if the restructuring plan were not to be confirmed. Member States should be able to choose one of those thresholds when implementing the best-interest-of-creditors test in national law. That test should be applied in any case where a plan needs to be confirmed in order to be binding for dissenting creditors or, as the case may be, dissenting classes of creditors. As a consequence of the best-interest-of-creditors test, where public institutional creditors have a privileged status under national law, Member States could provide that the plan cannot impose a full or partial cancellation of the claims of those creditors.

(53)

While a restructuring plan should always be adopted if the required majority in each affected class supports the plan, it should still be possible for a restructuring plan which is not supported by the required majority in each affected class to be confirmed by a judicial or administrative authority, upon the proposal of a debtor or with the debtor's agreement. In the case of a legal person, Member States should be able to decide if, for the purpose of adopting or confirming a restructuring plan, the debtor is to be understood as the legal person's management board or a certain majority of shareholders or equity holders. For the plan to be confirmed in the case of a cross-class cram-down, it should be supported by a majority of voting classes of affected parties. At least one of those classes should be a secured creditor class or senior to the ordinary unsecured creditors class.

(54)

It should be possible that, where a majority of voting classes does not support the restructuring plan, the plan can nevertheless be confirmed if it is supported by at least one affected or impaired class of creditors which, upon a valuation of the debtor as a going concern, receive payment or keep any interest, or, where so provided under national law, can reasonably be presumed to receive payment or keep any interest, if the normal ranking of liquidation priorities is applied under national law. In such a case, Member States should be able to increase the number of classes which are required to approve the plan, without necessarily requiring that all those classes should, upon a valuation of the debtor as a going concern, receive payment or keep any interest under national law. However, Member States should not require the consent of all classes. Accordingly, where there are only two classes of creditors, the consent of at least one class should be deemed to be sufficient, if the other conditions for the application of a cross-class cram-down are met. The impairment of creditors should be understood to mean that there is a reduction in the value of their claims.

(55)

In the case of a cross-class cram-down, Member States should ensure that dissenting classes of affected creditors are not unfairly prejudiced under the proposed plan and Member States should provide sufficient protection for such dissenting classes. Member States should be able to protect a dissenting class of affected creditors by ensuring that it is treated at least as favourably as any other class of the same rank and more favourably than any more junior class. Alternatively, Member States could protect a dissenting class of affected creditors by ensuring that such dissenting class is paid in full if a more junior class receives any distribution or keeps any interest under the restructuring plan (the ‘absolute priority rule’). Member States should have discretion in implementing the concept of ‘payment in full’, including in relation to the timing of the payment, as long as the principal of the claim and, in the case of secured creditors, the value of the collateral are protected. Member States should also be able to decide on the choice of the equivalent means by which the original claim could be satisfied in full.

(56)

Member States should be able to derogate from the absolute priority rule, for example where it is considered fair that equity holders keep certain interests under the plan despite a more senior class being obliged to accept a reduction of its claims, or that essential suppliers covered by the provision on the stay of individual enforcement actions are paid before more senior classes of creditors. Member States should be able to choose which of the above-mentioned protection mechanisms they put in place.

(57)

While shareholders' or other equity holders' legitimate interests should be protected, Member States should ensure that they cannot unreasonably prevent the adoption of restructuring plans that would bring the debtor back to viability. Member States should be able to use different means to achieve that goal, for example by not giving equity holders the right to vote on a restructuring plan and by not making the adoption of a restructuring plan conditional on the agreement of equity holders that, upon a valuation of the enterprise, would not receive any payment or other consideration if the normal ranking of liquidation priorities were applied. However, where equity holders have the right to vote on a restructuring plan, a judicial or administrative authority should be able to confirm the plan by applying the rules on cross-class cram down notwithstanding the dissent of one or more classes of equity holders. Member States that exclude equity holders from voting should not be required to apply the absolute priority rule in the relationship between creditors and equity holders. Another possible means of ensuring that equity holders do not unreasonably prevent the adoption of restructuring plans would be to ensure that restructuring measures that directly affect equity holders' rights, and that need to be approved by a general meeting of shareholders under company law, are not subject to unreasonably high majority requirements and that equity holders have no competence in terms of restructuring measures that do not directly affect their rights.

(58)

Several classes of equity holders can be needed where different classes of shareholdings with different rights exist. Equity holders of SMEs that are not mere investors, but are the owners of the enterprise and contribute to the enterprise in other ways, such as managerial expertise, might not have an incentive to restructure under such conditions. For this reason, the cross-class cram-down should remain optional for debtors that are SMEs.

(59)

The restructuring plan should, for the purposes of its implementation, make it possible for equity holders of SMEs to provide non-monetary restructuring assistance by drawing on, for example, their experience, reputation or business contacts.

(60)

Throughout the preventive restructuring procedures, workers should enjoy full labour law protection. In particular, this Directive should be without prejudice to workers' rights guaranteed by Council Directives 98/59/EC (12) and 2001/23/EC (13), and Directives 2002/14/EC (14), 2008/94/EC (15) and 2009/38/EC (16) of the European Parliament and of the Council. The obligations concerning information and consultation of employees under national law transposing those Directives remain fully intact. This includes obligations to inform and consult employees' representatives on the decision to have recourse to a preventive restructuring framework in accordance with Directive 2002/14/EC.

(61)

Employees and their representatives should be provided with information regarding the proposed restructuring plan in so far as provided for in Union law, in order to allow them to undertake an in-depth assessment of the various scenarios. Furthermore, employees and their representatives should be involved to the extent necessary to fulfil the consultation requirements laid down in Union law. Given the need to ensure an appropriate level of protection of workers, Member States should be required to exempt workers' outstanding claims from any stay of individual enforcement actions, irrespective of the question of whether those claims arise before or after the stay is granted. A stay of enforcement of workers' outstanding claims should be allowed only for the amounts and for the period for which the payment of such claims is effectively guaranteed at a similar level by other means under national law. Where national law provides for limitations on the liability of guarantee institutions, either in terms of the length of the guarantee or the amount paid to workers, workers should be able to enforce any shortfall in their claims against the employer even during the stay period. Alternatively, Member States should be able to exclude workers' claims from the scope of the preventive restructuring frameworks and provide for their protection under national law.

(62)

Where a restructuring plan entails the transfer of a part of an undertaking or business, workers' rights arising from a contract of employment or from an employment relationship, in particular the right to wages, should be safeguarded in accordance with Articles 3 and 4 of Directive 2001/23/EC, without prejudice to the specific rules applying in the event of insolvency proceedings under Article 5 of that Directive and in particular the possibilities provided for in Article 5(2) of that Directive. This Directive should be without prejudice to the rights to information and consultation, which are guaranteed by Directive 2002/14/EC, including on decisions likely to lead to substantial changes in work organisation or in contractual relations with a view to reaching an agreement on such decisions. Furthermore, under this Directive, workers whose claims are affected by a restructuring plan should have the right to vote on the plan. For the purposes of voting on the restructuring plan, Member States should be able to decide to place workers in a class separate from other classes of creditors.

(63)

Judicial or administrative authorities should only decide on the valuation of a business — either in liquidation or in the next-best-alternative scenario, if the restructuring plan was not confirmed — if a dissenting affected party challenges the restructuring plan. This should not prevent Member States from carrying out valuations in another context under national law. However, it should be possible that such a decision also consists of an approval of a valuation by an expert or of a valuation submitted by the debtor or another party at an earlier stage of the process. Where the decision to carry out a valuation is taken, Member States should be able to provide for special rules, separate from general civil procedural law, for a valuation in restructuring cases, with a view to ensuring that it is carried out in an expedited manner. Nothing in this Directive should affect the rules on burden of proof under national law in the case of a valuation.

(64)

The binding effects of a restructuring plan should be limited to the affected parties that were involved in the adoption of the plan. Member States should be able to determine what it means for a creditor to be involved, including in the case of unknown creditors or creditors of future claims. For example, Member States should be able to decide how to deal with creditors that have been notified correctly but that did not participate in the procedures.

(65)

Interested affected parties should be able to appeal a decision on the confirmation of a restructuring plan issued by an administrative authority. Member States should also be able to introduce the option of appealing a decision on the confirmation of a restructuring plan issued by a judicial authority. However, in order to ensure the effectiveness of the plan, to reduce uncertainty and to avoid unjustifiable delays, appeals should, as a rule, not have suspensive effects and therefore not preclude the implementation of a restructuring plan. Member States should be able to determine and limit the grounds for appeal. Where the decision on the confirmation of the plan is appealed, Member States should be able to allow the judicial authority to issue a preliminary or summary decision that protects the execution and implementation of the plan against the consequences of the pending appeal being upheld. Where an appeal is upheld, judicial or administrative authorities should be able to consider, as an alternative to setting aside the plan, an amendment of the plan, where Member States provide for such a possibility, as well as a confirmation of the plan without amendments. It should be possible for any amendments to the plan to be proposed or voted on by the parties, on their own initiative or at the request of the judicial authority. Member States could also provide for compensation for monetary losses for the party whose appeal was upheld. National law should be able to deal with a potential new stay or extension of the stay in event of the judicial authority deciding that the appeal has suspensive effect.

(66)

The success of a restructuring plan often depends on whether financial assistance is extended to the debtor to support, firstly, the operation of the business during restructuring negotiations and, secondly, the implementation of the restructuring plan after its confirmation. Financial assistance should be understood in a broad sense, including the provision of money or third-party guarantees and the supply of stock, inventory, raw materials and utilities, for example through granting the debtor a longer repayment period. Interim financing and new financing should therefore be exempt from avoidance actions which seek to declare such financing void, voidable or unenforceable as an act detrimental to the general body of creditors in the context of subsequent insolvency procedures.

(67)

National insolvency laws providing for avoidance actions of interim and new financing or providing that new lenders may incur civil, administrative or criminal sanctions for extending credit to debtors in financial difficulties could jeopardise the availability of financing necessary for the successful negotiation and implementation of a restructuring plan. This Directive should be without prejudice to other grounds for declaring new or interim financing void, voidable or unenforceable, or for triggering civil, criminal or administrative liability for providers of such financing, as laid down in national law. Such other grounds could include, among other things, fraud, bad faith, a certain type of relationship between the parties which could be associated with a conflict of interest, such as in the case of transactions between related parties or between shareholders and the company, and transactions where a party received value or collateral without being entitled to it at the time of the transaction or in the manner performed.

(68)

When interim financing is extended, the parties do not know whether the restructuring plan will be eventually confirmed or not. Therefore, Member States should not be required to limit the protection of interim finance to cases where the plan is adopted by creditors or confirmed by a judicial or administrative authority. To avoid potential abuses, only financing that is reasonably and immediately necessary for the continued operation or survival of the debtor's business or the preservation or enhancement of the value of that business pending the confirmation of that plan should be protected. Furthermore, this Directive should not prevent Member States from introducing an ex ante control mechanism for interim financing. Member States should be able to limit the protection for new financing to cases where the plan is confirmed by a judicial or administrative authority and for interim financing to cases where it is subject to ex ante control. An ex ante control mechanism for interim financing or other transactions could be exercised by a practitioner in the field of restructuring, by a creditor's committee or by a judicial or administrative authority. Protection from avoidance actions and protection from personal liability are minimum guarantees that should be granted to interim financing and new financing. However, encouraging new lenders to take the enhanced risk of investing in a viable debtor in financial difficulties could require further incentives such as, for example, giving such financing priority at least over unsecured claims in subsequent insolvency procedures.

(69)

In order to promote a culture that encourages early preventive restructuring, it is desirable that transactions which are reasonable and immediately necessary for the negotiation or implementation of a restructuring plan also be given protection from avoidance actions in subsequent insolvency procedures. Judicial or administrative authorities should be able, when determining the reasonableness and immediate necessity of costs and fees, for instance, to consider projections and estimates submitted to affected parties, a creditor's committee, a practitioner in the field of restructuring or the judicial or administrative authority itself. To this end, Member States should also be able to require debtors to provide and update relevant estimates. Such protection should enhance certainty in respect of transactions with businesses that are known to be in financial difficulties and remove the fear of creditors and investors that all such transactions could be declared void in the event that the restructuring fails. Member States should be able to provide for a point in time prior to the opening of a preventive restructuring procedure and to the granting of the stay of individual enforcement actions, from which fees and costs of negotiating, adopting, confirming or seeking professional advice for the restructuring plan start to benefit from protection against avoidance actions. In the case of other payments and disbursements and the protection of the payment of workers' wages, such a starting point could also be the granting of the stay or the opening of the preventive restructuring procedure.

(70)

To further promote preventive restructuring, it is important to ensure that directors are not dissuaded from exercising reasonable business judgment or taking reasonable commercial risks, particularly where to do so would improve the chances of a restructuring of potentially viable businesses. Where the company experiences financial difficulties, directors should take steps to minimise losses and to avoid insolvency, such as: seeking professional advice, including on restructuring and insolvency, for instance by making use of early warning tools where applicable; protecting the assets of the company so as to maximise value and avoid loss of key assets; considering the structure and functions of the business to examine viability and reduce expenditure; refraining from committing the company to the types of transaction that might be subject to avoidance unless there is an appropriate business justification; continuing to trade in circumstances where it is appropriate to do so in order to maximise going-concern value; holding negotiations with creditors and entering preventive restructuring procedures.

(71)

Where the debtor is close to insolvency, it is also important to protect the legitimate interests of creditors from management decisions that may have an impact on the constitution of the debtor's estate, in particular where those decisions could have the effect of further diminishing the value of the estate available for restructuring efforts or for distribution to creditors. It is therefore necessary to ensure that, in such circumstances, directors avoid any deliberate or grossly negligent actions that result in personal gain at the expense of stakeholders, and avoid agreeing to transactions at below market value, or taking actions leading to unfair preference being given to one or more stakeholders. Member States should be able to implement the corresponding provisions of this Directive by ensuring that judicial or administrative authorities, when assessing whether a director is to be held liable for breaches of duty of care, take the rules on duties of directors laid down in this Directive into account. This Directive is not intended to establish any hierarchy among the different parties whose interests need to be given due regard. However, Member States should be able to decide on establishing such a hierarchy. This Directive should be without prejudice to Member States' national rules on the decision-making processes in a company.

(72)

Entrepreneurs exercising a trade, business, craft or independent, self-employed profession can run the risk of becoming insolvent. The differences between the Member States in terms of opportunities for a fresh start could incentivise over-indebted or insolvent entrepreneurs to relocate to a Member State other than the Member State where they are established, in order to benefit from shorter discharge periods or more attractive conditions for discharge, leading to additional legal uncertainty and costs for the creditors when recovering their claims. Furthermore, the effects of insolvency, in particular the social stigma, the legal consequences, such as disqualifying entrepreneurs from taking up and pursuing entrepreneurial activity, and the continual inability to pay off debts, constitute important disincentives for entrepreneurs seeking to set up a business or have a second chance, even if evidence shows that entrepreneurs who have become insolvent have more chances of being successful the next time.

(73)

Steps should therefore be taken to reduce the negative effects of over-indebtedness or insolvency on entrepreneurs, in particular by allowing for a full discharge of debt after a certain period of time and by limiting the length of disqualification orders issued in connection with a debtor's over-indebtedness or insolvency. The concept of ‘insolvency’ should be defined by national law and it could take the form of over-indebtedness. The concept of ‘entrepreneur’ within the meaning of this Directive should have no bearing on the position of managers or directors of a company, which should be treated in accordance with national law. Member States should be able to decide how to obtain access to discharge, including the possibility of requiring the debtor to request discharge.

(74)

Member States should be able to provide for the possibility to adjust the repayment obligations of insolvent entrepreneurs when there is a significant change in their financial situation, regardless of whether it improves or deteriorates. This Directive should not require that a repayment plan be supported by a majority of creditors. Member States should be able to provide that entrepreneurs are not prevented from starting a new activity in the same or different field during the implementation of the repayment plan.

(75)

A discharge of debt should be available in procedures that include a repayment plan, a realisation of assets, or a combination of both. In implementing those rules, Member States should be able to choose freely among those options. If more than one procedure leading to discharge of debt is available under national law, Member States should ensure that at least one of those procedures gives insolvent entrepreneurs the opportunity of having a full discharge of debt within a period that does not exceed three years. In the case of procedures which combine a realisation of assets and a repayment plan, the discharge period should start, at the latest, from the date the repayment plan is confirmed by a court or starts being implemented, for example from the first instalment under the plan, but it could also start earlier, such as when a decision to open the procedure is taken.

(76)

In procedures that do not include a repayment plan, the discharge period should start, at the latest, from the date when a decision to open the procedure is taken by a judicial or administrative authority, or the date of the establishment of the insolvency estate. For the purposes of calculating the duration of the discharge period under this Directive, Member States should be able to provide that the concept of ‘opening of procedure’ does not include preliminary measures, such as preservation measures or the appointment of a preliminary insolvency practitioner, unless such measures allow for the realisation of assets, including the disposal and the distribution of assets to creditors. The establishment of the insolvency estate should not necessarily entail a formal decision or confirmation by a judicial or administrative authority, where such decision is not required under national law, and could consist in the submission of the inventory of assets and liabilities.

(77)

Where the procedural path leading to a discharge of debt entails the realisation of an entrepreneur's assets, Member States should not be prevented from providing that the request for discharge is treated separately from the realisation of assets, provided that such request constitutes an integral part of the procedural path leading to the discharge under this Directive. Member States should be able to decide on the rules on the burden of proof in order for the discharge to operate, which means that it should be possible for entrepreneurs to be required by law to prove compliance with their obligations.

(78)

A full discharge of debt or the ending of disqualifications after a period no longer than three years is not appropriate in all circumstances, therefore derogations from this rule which are duly justified by reasons laid down in national law might need to be introduced. For instance, such derogations should be introduced in cases where the debtor is dishonest or has acted in bad faith. Where entrepreneurs do not benefit from a presumption of honesty and good faith under national law, the burden of proof concerning their honesty and good faith should not make it unnecessarily difficult or onerous for them to enter the procedure.

(79)

In establishing whether an entrepreneur was dishonest, judicial or administrative authorities might take into account circumstances such as: the nature and extent of the debt; the time when the debt was incurred; the efforts of the entrepreneur to pay the debt and comply with legal obligations, including public licensing requirements and the need for proper bookkeeping; actions on the entrepreneur's part to frustrate recourse by creditors; the fulfilment of duties in the likelihood of insolvency, which are incumbent on entrepreneurs who are directors of a company; and compliance with Union and national competition and labour law. It should also be possible to introduce derogations where the entrepreneur has not complied with certain legal obligations, including obligations to maximise returns to creditors, which could take the form of a general obligation to generate income or assets. It should furthermore be possible to introduce specific derogations where it is necessary to guarantee the balance between the rights of the debtor and the rights of one or more creditors, such as where the creditor is a natural person who needs more protection than the debtor.

(80)

A derogation could also be justified where the costs of the procedure leading to a discharge of debt, including the fees of judicial and administrative authorities and of practitioners, are not covered. Member States should be able to provide that the benefits of that discharge can be revoked where, for example, the financial situation of the debtor improves significantly due to unexpected circumstances, such as winning a lottery, or coming in the possession of an inheritance or a donation. Member States should not be prevented from providing additional derogations in well-defined circumstances and when duly justified.

(81)

Where there is a duly justified reason under national law, it could be appropriate to limit the possibility of discharge for certain categories of debt. It should be possible for Member States to exclude secured debts from eligibility for discharge only up to the value of the collateral as determined by national law, while the rest of the debt should be treated as unsecured debt. Member States should be able to exclude further categories of debt when duly justified.

(82)

Member States should be able to provide that judicial or administrative authorities can verify, either ex officio or at the request of a person with a legitimate interest, whether entrepreneurs have fulfilled the conditions for obtaining a full discharge of debt.

(83)

If an entrepreneur's permit or licence to carry on a certain craft, business, trade or profession has been denied or revoked as a result of a disqualification order, this Directive should not prevent Member States from requiring the entrepreneur to submit an application for a new permit or licence after the disqualification has expired. Where a Member State authority adopts a decision concerning a specifically supervised activity, it should be possible to also take into account, even after the expiry of the disqualification period, the fact that the insolvent entrepreneur has obtained a discharge of debt in accordance with this Directive.

(84)

Personal and professional debts that cannot be reasonably separated, for example where an asset is used in the course of the professional activity of the entrepreneur as well as outside that activity, should be treated in a single procedure. Where Member States provide that such debts are subject to different insolvency procedures, coordination of those procedures is needed. This Directive should be without prejudice to Member States being able to choose to treat all the debts of an entrepreneur in a single procedure. Member States in which entrepreneurs are allowed to continue their business on their own account during insolvency proceedings should not be prevented from providing that such entrepreneurs can be made subject to new insolvency proceedings, where such continued business becomes insolvent.

(85)

It is necessary to maintain and enhance the transparency and predictability of the procedures in delivering outcomes that are favourable to the preservation of businesses and to allowing entrepreneurs to have a second chance or that permit the efficient liquidation of non-viable enterprises. It is also necessary to reduce the excessive length of insolvency procedures in many Member States, which results in legal uncertainty for creditors and investors and low recovery rates. Finally, given the enhanced cooperation mechanisms between courts and practitioners in cross-border cases, set up under Regulation (EU) 2015/848, the professionalism of all actors involved needs to be brought to comparable high levels across the Union. To achieve those objectives, Member States should ensure that members of the judicial and administrative authorities dealing with procedures concerning preventive restructuring, insolvency and discharge of debt are suitably trained and have the necessary expertise for their responsibilities. Such training and expertise could be acquired also during the exercise of the duties as a member of a judicial or administrative authority or, prior to appointment to such duties, during the exercise of other relevant duties.

(86)

Such training and expertise should enable decisions with a potentially significant economic and social impact to be taken in an efficient manner, and should not be understood to mean that members of a judicial authority have to deal exclusively with matters concerning restructuring, insolvency and discharge of debt. Member States should ensure that procedures concerning restructuring, insolvency and discharge of debt can be carried out in an efficient and expeditious manner. The creation of specialised courts or chambers, or the appointment of specialised judges in accordance with national law, as well as concentrating jurisdiction in a limited number of judicial or administrative authorities would be efficient ways of achieving the objectives of legal certainty and effectiveness of procedures. Member States should not be obliged to require that procedures concerning restructuring, insolvency and discharge of debt be prioritised over other procedures.

(87)

Member States should also ensure that practitioners in the field of restructuring, insolvency, and discharge of debt that are appointed by judicial or administrative authorities (‘practitioners’) are: suitably trained; appointed in a transparent manner with due regard to the need to ensure efficient procedures; supervised when carrying out their tasks; and perform their tasks with integrity. It is important that practitioners adhere to standards for such tasks, such as obtaining insurance for professional liability. Suitable training, qualifications and expertise for practitioners could also be acquired while practising their profession. Member States should not be obliged to provide the necessary training themselves, but this could be provided by, for example, professional associations or other bodies. Insolvency practitioners as defined in Regulation (EU) 2015/848 should be included in the scope of this Directive.

(88)

This Directive should not prevent Member States from providing that practitioners are chosen by a debtor, by creditors or by a creditors' committee from a list or a pool that is pre-approved by a judicial or administrative authority. In choosing a practitioner, the debtor, the creditors or the creditors' committee could be granted a margin of appreciation as to the practitioner's expertise and experience in general and the demands of the particular case. Debtors who are natural persons could be exempted from such a duty altogether. In cases with cross-border elements, the appointment of the practitioner should take into account, among other things, the practitioner's ability to comply with the obligations, under Regulation (EU) 2015/848, to communicate and cooperate with insolvency practitioners and judicial and administrative authorities from other Member States, as well as their human and administrative resources to deal with potentially complex cases. Member States should not be prevented from providing for a practitioner to be selected by other methods, such as random selection by a software programme, provided that it is ensured that in using those methods due consideration is given to the practitioner's experience and expertise. Member States should be able to decide on the means for objecting to the selection or appointment of a practitioner or for requesting the replacement of the practitioner, for example through a creditors' committee.

(89)

Practitioners should be subject to oversight and regulatory mechanisms which should include effective measures regarding the accountability of practitioners who have failed in their duties, such as: a reduction in a practitioner's fee; the exclusion from the list or pool of practitioners who can be appointed in insolvency cases; and, where appropriate, disciplinary, administrative or criminal sanctions. Such oversight and regulatory mechanisms should be without prejudice to provisions under national law on civil liability for damages for breach of contractual or non-contractual obligations. Member States should not be required to set up specific authorities or bodies. Member States should ensure that information about the authorities or bodies exercising oversight over practitioners is publicly available. For instance, a mere reference to the judicial or administrative authority should be sufficient as information. It should be possible, in principle, to attain such standards without the need to create new professions or qualifications under national law. Member States should be able to extend the provisions on the training and supervision of practitioners to other practitioners not covered by this Directive. Member States should not be obliged to provide that disputes over remuneration of practitioners are to be prioritised over other procedures.

(90)

To further reduce the length of procedures, to facilitate better participation of creditors in procedures concerning restructuring, insolvency and discharge of debt and to ensure similar conditions among creditors irrespective of where they are located in the Union, Member States should put in place provisions enabling debtors, creditors, practitioners and judicial and administrative authorities to use electronic means of communication. Therefore, it should be possible that procedural steps such as the filing of claims by creditors, the notification of creditors, or the lodging of challenges and appeals, can be carried out by electronic means of communication. Member States should be able to provide that notifications of a creditor can only be performed electronically if the creditor concerned has previously consented to electronic communication.

(91)

Parties to procedures concerning restructuring, insolvency and discharge of debt should not be obliged to use electronic means of communication if such use is not mandatory under national law, without prejudice to Member States being able to establish a mandatory system of electronic filing and service of documents in procedures concerning restructuring, insolvency and discharge of debt. Member States should be able to choose the means of electronic communications. Examples of such means could include a purpose-built system for the electronic transmission of such documents or the use of email, without preventing Member States from being able to put in place features to ensure the security of electronic transmissions, such as electronic signature, or trust services, such as electronic registered delivery services, in accordance with Regulation (EU) No 910/2014 of the European Parliament and of the Council (17).

(92)

It is important to gather reliable and comparable data on the performance of procedures concerning restructuring, insolvency and discharge of debt in order to monitor the implementation and application of this Directive. Therefore, Member States should collect and aggregate data that are sufficiently granular to enable an accurate assessment of how the Directive is working in practice and should communicate those data to the Commission. The communication form for the transmission of such data to the Commission should be established by the Commission assisted by a Committee within the meaning of Regulation (EU) No 182/2011 of the European Parliament and of the Council (18). The form should provide a shortlist of the main outcomes of procedures that are common to all Member States. For example, in the case of a restructuring procedure, those main outcomes could be the following: the plan being confirmed by a court; the plan not being confirmed by a court; the restructuring procedures being converted to liquidation procedures or closed because of the opening of liquidation procedures before the plan was confirmed by a court. Member States should not be required to provide a break-down by types of outcome in respect of the procedures which end before any relevant measures are taken, but could instead provide a common number for all procedures which are declared inadmissible, rejected or withdrawn before being opened.

(93)

The communication form should provide a list of options which could be taken into account by the Member States when determining the size of a debtor, by reference to one or more of the elements of the definition of SMEs and large enterprises common to all Member States. The list should include the option of determining the size of a debtor based on the number of workers only. The form should: define the elements of average cost and average recovery rates for which Member States should be able to collect data voluntarily; provide guidance on elements which could be taken into account when Member States make use of a sampling technique, for example on sample sizes to ensure representativeness in terms of geographical distribution, size of debtors and industry; and include the opportunity for Member States to provide any additional information available, for example on the total amount of assets and liabilities of debtors.

(94)

The stability of financial markets relies heavily on financial collateral arrangements, in particular, when collateral security is provided in connection with the participation in designated systems or in central bank operations and when margins are provided to central counterparties. As the value of financial instruments given as collateral security may be very volatile, it is crucial to realise their value quickly before it goes down. Therefore, the provisions of Directives 98/26/EC (19) and 2002/47/EC (20) of the European Parliament and of the Council and Regulation (EU) No 648/2012 should apply notwithstanding the provisions of this Directive. Member States should be allowed to exempt netting arrangements, including close-out netting, from the effects of the stay of individual enforcement actions even in circumstances where they are not covered by Directives 98/26/EC, 2002/47/EC and Regulation (EU) No 648/2012, if such arrangements are enforceable under the laws of the relevant Member State even if insolvency proceedings are opened.

This could be the case for a significant number of master agreements widely used in the financial, energy and commodity markets, both by non-financial and financial counterparties. Such arrangements reduce systemic risks especially in derivatives markets. Such arrangements might therefore be exempt from restrictions that insolvency laws impose on executory contracts. Accordingly, Member States should also be allowed to exempt from the effects of the stay of individual enforcement actions statutory netting arrangements, including close-out netting arrangements, which operate upon the opening of insolvency procedures. The amount resulting from the operation of netting arrangements, including close-out netting arrangements should, however, be subject to the stay of individual enforcement actions.

(95)

Member States that are parties to the Convention on international interests in mobile equipment, signed at Cape Town on 16 November 2001, and its Protocols should be able to continue to comply with their existing international obligations. The provisions of this Directive regarding preventive restructuring frameworks should apply with the derogations necessary to ensure an application of those provisions without prejudice to the application of that Convention and its Protocols.

(96)

The effectiveness of the process of adoption and implementation of the restructuring plan should not be jeopardised by company law. Therefore, Member States should be able to derogate from the requirements laid down in Directive (EU) 2017/1132 of the European Parliament and of the Council (21) concerning the obligations to convene a general meeting and to offer on a pre-emptive basis shares to existing shareholders, to the extent and for the period necessary to ensure that shareholders do not frustrate restructuring efforts by abusing their rights under that Directive. For example, Member States might need to derogate from the obligation to convene a general meeting of shareholders or from the normal time periods, for cases where urgent action is to be taken by the management to safeguard the assets of the company, for instance through requesting a stay of individual enforcement actions and when there is a serious and sudden loss of subscribed capital and a likelihood of insolvency. Derogations from company law might also be required when the restructuring plan provides for the emission of new shares which could be offered with priority to creditors as debt-to-equity swaps, or for the reduction of the amount of subscribed capital in the event of a transfer of parts of the undertaking. Such derogations should be limited in time to the extent that Member States consider such derogations necessary for the establishment of a preventive restructuring framework. Member States should not be obliged to derogate from company law, wholly or partially, for an indefinite or for a limited period of time, if they ensure that their company law requirements do not jeopardise the effectiveness of the restructuring process or if Member States have other, equally effective tools in place to ensure that shareholders do not unreasonably prevent the adoption or implementation of a restructuring plan which would restore the viability of the business. In this context, Member States should attach particular importance to the effectiveness of provisions relating to a stay of individual enforcement actions and confirmation of the restructuring plan which should not be unduly impaired by calls for, or the results of, general meetings of shareholders. Directive (EU) 2017/1132 should therefore be amended accordingly. Member States should enjoy a margin of appreciation in assessing which derogations are needed in the context of national company law in order to effectively implement this Directive, and should also be able to provide for similar exemptions from Directive (EU) 2017/1132 in the case of insolvency proceedings not covered by this Directive but which allow for restructuring measures to be taken.

(97)

In respect of the establishment of, and subsequent changes to, the data communication form, implementing powers should be conferred on the Commission. Those powers should be exercised in accordance with Regulation (EU) No 182/2011.

(98)

A study should be carried out by the Commission in order to evaluate the necessity of submitting legislative proposals to deal with the insolvency of persons not exercising a trade, business, craft or profession, who, as consumers, in good faith, are temporarily or permanently unable to pay debts as they fall due. Such study should investigate whether access to basic goods and services needs to be safeguarded for those persons to ensure that they benefit from decent living conditions.

(99)

In accordance with the Joint Political Declaration of 28 September 2011 of Member States and the Commission on explanatory documents (22), Member States have undertaken to accompany, in justified cases, the notification of their transposition measures with one or more documents explaining the relationship between the components of a directive and the corresponding parts of national transposition instruments. With regard to this Directive, the legislator considers the transmission of such documents to be justified.

(100)

Since the objectives of this Directive cannot be sufficiently achieved by the Member States because differences between national restructuring and insolvency frameworks would continue to raise obstacles to the free movement of capital and the freedom of establishment, but can rather be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve those objectives.

(101)

On 7 June 2017, the European Central Bank delivered an opinion (23),

(1)

Directive 2003/98/EC of the European Parliament and of the Council (3) has been substantially amended. Since further amendments are to be made, that Directive should be recast in the interests of clarity.

(2)

Pursuant to Article 13 of Directive 2003/98/EC and five years after the adoption of Directive 2013/37/EU of the European Parliament and of the Council (4), which amended Directive 2003/98/EC, the Commission, after consulting the relevant stakeholders, evaluated and reviewed the functioning of Directive 2003/98/EC in the framework of a regulatory fitness and performance programme.

(3)

Following the stakeholder consultation and in the light of the result of the impact assessment, the Commission considered that action at Union level was necessary in order to address the remaining and emerging barriers to a wide re-use of public sector and publicly funded information across the Union, in order to bring the legislative framework up to date with the advances in digital technologies and to further stimulate digital innovation, especially with regard to artificial intelligence.

(4)

The substantive changes introduced to the legal text so as to fully exploit the potential of public sector information for the European economy and society should focus on the following areas: the provision of real-time access to dynamic data via adequate technical means, the increase of the supply of valuable public data for re-use, including from public undertakings, research performing organisations and research funding organisations, the tackling of the emergence of new forms of exclusive arrangements, the use of exceptions to the principle of charging the marginal cost and the relationship between this Directive and certain related legal instruments, including Regulation (EU) 2016/679 of the European Parliament and of the Council (5) and Directives 96/9/EC (6), 2003/4/EC (7) and 2007/2/EC (8) of the European Parliament and of the Council.

(5)

Access to information is a fundamental right. The Charter of Fundamental Rights of the European Union (Charter) provides that everyone has the right to freedom of expression, including the freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers.

(6)

Article 8 of the Charter guarantees the right to the protection of personal data and provides that such data must be processed fairly for specified purposes and on the basis of the consent of the person concerned or some other legitimate basis laid down by law, and subject to control by an independent authority.

(7)

The Treaty on the Functioning of the European Union (TFEU) provides for the establishment of an internal market and of a system ensuring that competition in the internal market is not distorted. Harmonisation of the rules and practices in the Member States relating to the exploitation of public sector information contributes to the achievement of those objectives.

(8)

The public sector in Member States collects, produces, reproduces and disseminates a wide range of information in many areas of activity, such as social, political, economic, legal, geographical, environmental, meteorological, seismic, touristic, business, patent-related and educational areas. Documents produced by public sector bodies of the executive, legislature or judiciary constitute a vast, diverse and valuable pool of resources that can benefit society. Providing that information, which includes dynamic data, in a commonly used electronic format allows citizens and legal entities to find new ways to use them and create new, innovative products and services. Member States and public sector bodies may be able to benefit from and receive adequate financial support from relevant Union funds and programmes, ensuring a wide use of digital technologies or the digital transformation of public administrations and public services, in their efforts to make data easily available for re-use.

(9)

Public sector information represents an extraordinary source of data that can contribute to improving the internal market and to the development of new applications for consumers and legal entities. Intelligent data usage, including their processing through artificial intelligence applications, can have a transformative effect on all sectors of the economy.

(10)

Directive 2003/98/EC established a set of minimum rules governing the re-use and the practical arrangements for facilitating re-use of existing documents held by public sector bodies of the Member States, including executive, legislative and judicial bodies. Since the adoption of the first set of rules on re-use of public sector information, the amount of data in the world, including public data, has increased exponentially and new types of data are being generated and collected. In parallel, there is a continuous evolution in technologies for analysis, exploitation and processing of data, such as machine learning, artificial intelligence and the internet of things. That rapid technological evolution makes it possible to create new services and new applications, which are built upon the use, aggregation or combination of data. The rules originally adopted in 2003, and amended in 2013, no longer keep pace with those rapid changes, and as a result, the economic and social opportunities offered by the re-use of public data risk being missed.

(11)

The evolution towards a data-based society, where data from different domains and activities are used, influences the life of every citizen in the Union, inter alia, by enabling them to gain new ways of accessing and acquiring knowledge.

(12)

Digital content plays an important role in that evolution. Content production has given rise to rapid job creation in recent years and continues to do so. Most of those jobs are created by innovative start-ups and small and medium-sized enterprises (SMEs).

(13)

One of the principal aims of the establishment of an internal market is the creation of conditions conducive to the development of services and products Union-wide and within Member States. Public sector information or information collected, produced, reproduced, and disseminated within the exercise of a public task or a service of general interest, is an important primary material for digital content products and services and will become an even more important content resource with the development of advanced digital technologies, such as artificial intelligence, distributed ledger technologies and the internet of things. Broad, cross-border geographical coverage will also be essential in that context. Increased possibilities of re-using such information is expected, inter alia, to allow all Union businesses, including microenterprises and SMEs, as well as civil society, to exploit its potential and contribute to economic development and high-quality job creation and protection, especially for the benefit of local communities, and to important societal goals such as accountability and transparency.

(14)

Allowing the re-use of documents held by a public sector body adds value for the benefit of re-users, end users and society in general and in many cases for the benefit of the public sector body itself, by promoting transparency and accountability and by providing feedback from re-users and end users, which allows the public sector body concerned to improve the quality of the information collected and the performance of its tasks.

(15)

There are considerable differences in the rules and practices in the Member States relating to the exploitation of public sector information resources, which constitute barriers to bringing out the full economic potential of that key document resource. The fact that practice in public sector bodies in exploiting public sector information continues to vary among Member States should be taken into account. Minimum harmonisation of national rules and practices on the re-use of public sector documents should therefore be pursued where the differences in national regulations and practices or the absence of clarity hinder the smooth functioning of the internal market and the proper development of the information society in the Union.

(16)

Open data as a concept is generally understood to denote data in an open format that can be freely used, re-used and shared by anyone for any purpose. Open data policies which encourage the wide availability and re-use of public sector information for private or commercial purposes, with minimal or no legal, technical or financial constraints, and which promote the circulation of information not only for economic operators but primarily for the public, can play an important role in promoting social engagement, and kick-start and promote the development of new services based on novel ways to combine and make use of such information. Member States are therefore encouraged to promote the creation of data based on the principle of ‘open by design and by default’, with regard to all documents falling within the scope of this Directive. In doing so they should ensure a consistent level of protection of public interest objectives, such as public security, including where sensitive critical infrastructure protection related information are concerned. They should also ensure the protection of personal data, including where information in an individual data set does not present a risk of identifying or singling out a natural person, but when that information is combined with other available information, it could entail such a risk.

(17)

Moreover, without minimum harmonisation at Union level, legislative activity at national level, which has already been initiated in a number of Member States in order to respond to the technological challenges, might result in even more significant divergence. The impact of such legislative divergence and uncertainties will become more significant with the further development of the information society, which has already greatly increased cross-border exploitation of information.

(18)

Member States have established re-use policies under Directive 2003/98/EC and some of them have been adopting ambitious open data approaches to make the re-use of accessible public data easier for citizens and legal entities beyond the minimum level set by that Directive. There is a risk that diverging rules across Member States act as a barrier to the cross-border offer of products and services and prevent comparable public data sets from being re-usable for pan-Union applications based on them. Therefore, minimum harmonisation is required to determine what public data are available for re-use in the internal information market, consistent with and not affecting the relevant access regimes, both general and sectoral, such as that defined in Directive 2003/4/EC. The provisions of Union and national law that go beyond those minimum requirements, in particular in cases of sectoral law, should continue to apply. Examples of provisions that exceed the minimum harmonisation level of this Directive include lower thresholds for permissible charges for re-use than the thresholds provided for in this Directive or less restrictive licensing terms than those referred to in this Directive. In particular, this Directive is without prejudice to provisions that exceed the minimum harmonisation level of this Directive as laid down in Commission delegated regulations adopted under Directive 2010/40/EU of the European Parliament and of the Council (9).

(19)

Moreover, Member States are encouraged to go beyond the minimum requirements set out in this Directive by applying its requirements to documents held by public undertakings, which are related to activities that have been found, pursuant to Article 34 of Directive 2014/25/EU of the European Parliament and of the Council (10), to be directly exposed to competition. Member States may also decide to apply the requirements of this Directive to private undertakings, in particular those that provide services of general interest.

(20)

A general framework for the conditions governing re-use of public sector documents is needed in order to ensure fair, proportionate and non-discriminatory conditions for the re-use of such information. Public sector bodies collect, produce, reproduce and disseminate documents to fulfil their public tasks. Public undertakings collect, produce, reproduce and disseminate documents to provide services in the general interest. Use of such documents for other reasons constitutes re-use. Member States' policies can go beyond the minimum standards established in this Directive, thus allowing for more extensive re-use. When transposing this Directive, Member States can use terms other than ‘document’, provided that they retain the full scope of the definition of ‘document’ set out in this Directive.

(21)

This Directive should apply to documents the supply of which forms part of the public tasks of the public sector bodies concerned, as defined by law or by other binding rules in the Member States. In the absence of such rules the public tasks should be defined in accordance with common administrative practice in the Member States, provided that the scope of the public tasks is transparent and subject to review. The public tasks could be defined generally or on a case-by-case basis for individual public sector bodies.

(22)

This Directive should apply to documents that are made accessible for re-use when public sector bodies license, sell, disseminate, exchange or provide information. To avoid cross-subsidies, re-use should include further use of documents within the organisation itself for activities falling outside the scope of its public tasks. Activities falling outside the public task typically include supply of documents that are produced and charged for exclusively on a commercial basis and in competition with others in the market.

(23)

This Directive does not restrict or impair the performance of the statutory tasks of public authorities and other public sector bodies. This Directive lays down an obligation for Member States to make all existing documents re-usable unless access is restricted or excluded under national rules on access to documents or subject to the other exceptions laid down in this Directive. This Directive builds on the existing access regimes in the Member States and does not change the national rules for access to documents. It does not apply to cases in which citizens or legal entities can, under the relevant access regime, obtain a document only if they can prove a particular interest. At Union level, Article 41 on the right to good administration and Article 42 on the right of access to documents in the Charter recognise the right of any citizen of the Union and any natural or legal person residing or having its registered office in a Member State to have access to documents held by the European Parliament, the Council and the Commission. Public sector bodies should be encouraged to make available for re-use any documents held by them. Public sector bodies should promote and encourage re-use of documents, including official texts of a legislative and administrative nature in those cases where the public sector body has the right to authorise their re-use.

(24)

Member States often entrust the provision of services in the general interest with entities outside of the public sector while maintaining a high degree of control over such entities. At the same time, Directive 2003/98/EC applies only to documents held by public sector bodies, while excluding public undertakings from its scope. This leads to poor availability for re-use of documents produced in the performance of services in the general interest in a number of areas, in particular in the utility sectors. It also greatly reduces the potential for the creation of cross-border services based on documents held by public undertakings that provide services in the general interest.

(25)

Directive 2003/98/EC should therefore be amended in order to ensure that it can be applied to the re-use of existing documents produced in the performance of services in the general interest by public undertakings pursuing one of the activities referred to in Articles 8 to 14 of Directive 2014/25/EU, as well as by public undertakings acting as public service operators pursuant to Article 2 of Regulation (EC) No 1370/2007 of the European Parliament and of the Council (11), public undertakings acting as air carriers fulfilling public service obligations pursuant to Article 16 of Regulation (EC) No 1008/2008 of the European Parliament and of the Council (12), and public undertakings acting as Community shipowners fulfilling public service obligations pursuant to Article 4 of Council Regulation (EEC) No 3577/92 (13).

(26)

This Directive does not contain a general obligation to allow the re-use of documents produced by public undertakings. The decision whether or not to authorise re-use should remain with the public undertaking concerned, except where otherwise required by this Directive or by Union or national law. Only after the public undertaking has made a document available for re-use, should it observe the relevant obligations laid down in Chapters III and IV of this Directive, in particular as regards format, charging, transparency, licences, non-discrimination and prohibition of exclusive arrangements. On the other hand, public undertakings should not be required to comply with the requirements laid down in Chapter II, such as the rules applicable to processing of requests. When allowing the re-use of documents, particular attention should be given to sensitive critical infrastructure protection related information as defined in Council Directive 2008/114/EC (14) and of essential services within the meaning of Directive (EU) 2016/1148 of the European Parliament and of the Council (15).

(27)

The volume of research data generated is growing exponentially and has potential for re-use beyond the scientific community. In order to be able to address mounting societal challenges efficiently and in a holistic manner, it has become crucial and urgent to be able to access, blend and re-use data from different sources, as well as across sectors and disciplines. Research data includes statistics, results of experiments, measurements, observations resulting from fieldwork, survey results, interview recordings and images. It also includes meta-data, specifications and other digital objects. Research data is different from scientific articles reporting and commenting on findings resulting from their scientific research. For many years, the open availability and re-usability of scientific research data stemming from public funding has been subject to specific policy initiatives. Open access is understood as the practice of providing online access to research outputs free of charge for the end user and without restrictions on use and re-use beyond the possibility to require acknowledgement of authorship. Open access policies aim in particular to provide researchers and the public at large with access to research data as early as possible in the dissemination process and to facilitate its use and re-use. Open access helps enhance quality, reduce the need for unnecessary duplication of research, speed up scientific progress, combat scientific fraud, and it can overall favour economic growth and innovation. Beside open access, commendable efforts are being made to ensure that data management planning becomes a standard scientific practice and to support the dissemination of research data that are findable, accessible, interoperable and re-usable (the FAIR principle).

(28)

For the reasons explained above, it is appropriate to set an obligation on Member States to adopt open access policies with respect to publicly funded research data and ensure that such policies are implemented by all research performing organisations and research funding organisations. Research performing organisations and research funding organisations could also be organised as public sector bodies or public undertakings. This Directive applies to such hybrid organisations only in their capacity as research performing organisations and to their research data. Open access policies typically allow for a range of exceptions from making scientific research results openly available. The Commission Recommendation of 25 April 2018 on access to and preservation of scientific information describes, among other things, relevant elements of open access policies. Additionally, the conditions, under which certain research data can be re-used, should be improved. For that reason, certain obligations stemming from this Directive should be extended to research data resulting from scientific research activities subsidised by public funding or co-funded by public and private-sector entities. Under the national open access policies, publicly funded research data should be made open as the default option. However, in this context, concerns in relation to privacy, protection of personal data, confidentiality, national security, legitimate commercial interests, such as trade secrets, and to intellectual property rights of third parties should be duly taken into account, according to the principle ‘as open as possible, as closed as necessary’. Moreover, research data which are excluded from access on grounds of national security, defence or public security should not be covered by this Directive. In order to avoid any administrative burden, obligations stemming from this Directive should apply only to such research data that have already been made publicly available by researchers, research performing organisations or research funding organisations through an institutional or subject-based repository and should not impose extra costs for the retrieval of the datasets or require additional curation of data. Member States may extend the application of this Directive to research data made publicly available through other data infrastructures than repositories, through open access publications, as an attached file to an article, a data paper or a paper in a data journal. Documents other than research data should continue to be exempt from the scope of this Directive.

(29)

The definition of ‘public sector body’ is based on the definition in point (1) of Article 2(1) of Directive 2014/24/EU of the European Parliament and of the Council (16). The definition of ‘body governed by public law’ set out in that Directive and the definition of ‘public undertaking’ set out in Directive 2014/25/EU should apply to this Directive.

(30)

This Directive lays down the definition of the term ‘document’ and that definition should include any part of a document. The term ‘document’ should cover any representation of acts, facts or information — and any compilation of such acts, facts or information — whatever its medium (paper, or electronic form or as a sound, visual or audiovisual recording). The definition of ‘document’ is not intended to cover computer programmes. Member States may extend the application of this Directive to computer programmes.

(31)

Public sector bodies are increasingly making their documents available for re-use in a proactive manner, by ensuring online discoverability and actual availability of documents and associated metadata in an open format that can be machine-readable and that ensure interoperability, re-use and accessibility. Documents should also be made available for re-use following a request lodged by a re-user. In those cases, the time limit for replying to requests for re-use should be reasonable and in accordance with the equivalent time for requests to access the document under the relevant access regimes. Public undertakings, educational establishments, research performing organisations and research funding organisations should however be exempt from that requirement. Reasonable time limits throughout the Union will stimulate the creation of new aggregated information products and services at pan-Union level. This is particularly important for dynamic data (including environmental, traffic, satellite, meteorological and sensor generated data), the economic value of which depends on the immediate availability of the information and of regular updates. Dynamic data should therefore be made available immediately after collection, or in the case of a manual update immediately after the modification of the dataset, via an application programming interface (API) so as to facilitate the development of internet, mobile and cloud applications based on such data. Where this is not possible due to technical or financial constraints, public sector bodies should make the documents available in a timeframe that allows their full economic potential to be exploited. Specific measures should be taken in order to lift relevant technical and financial constraints. Should a licence be used, the timely availability of documents may be a part of the terms of the licence. Where data verification is essential in the light of justified public interest reasons, in particular for public health and safety, dynamic data should be made available immediately after verification. Such essential verification should not affect the frequency of the updates.

(32)

In order to get access to the data opened for re-use by this Directive, it would be useful to ensure access to dynamic data through well-designed APIs. An API is a set of functions, procedures, definitions and protocols for machine-to-machine communication and the seamless exchange of data. APIs should be supported by clear technical documentation that is complete and available online. Where possible, open APIs should be used. Union or internationally recognised standard protocols should be applied and international standards for datasets should be used where applicable. APIs can have different levels of complexity and can mean a simple link to a database to retrieve specific datasets, a web interface, or more complex set-ups. There is general value in re-using and sharing data via a suitable use of APIs as this will help developers and start-ups to create new services and products. It is also a crucial ingredient of creating valuable ecosystems around data assets that are often unused. The set-up and use of API needs to be based on several principles: availability, stability, maintenance over lifecycle, uniformity of use and standards, user-friendliness as well as security. For dynamic data, meaning frequently updated data, often in real time, public sector bodies and public undertakings should make this available for re-use immediately after collection by ways of suitable APIs and, where relevant, as a bulk download, save for cases where this would impose a disproportionate effort. Assessment of the proportionality of the effort should take into account the size and operating budget of the public sector body or the public undertaking in question.

(33)

The possibilities for re-use can be improved by limiting the need to digitise paper-based documents or to process digital files to make them mutually compatible. Therefore, public sector bodies should make documents available in any pre-existing format or language, through electronic means where possible and appropriate. Public sector bodies should view requests for extracts from existing documents favourably when to grant such a request would involve only a simple operation. Public sector bodies should not, however, be obliged to provide an extract from a document or to modify the format of the requested information where this involves a disproportionate effort. To facilitate re-use, public sector bodies should make their own documents available in a format which, as far as possible and appropriate, is not dependent on the use of specific software. Where possible and appropriate, public sector bodies should take into account the possibilities for the re-use of documents by and for persons with disabilities by providing the information in an accessible format in accordance with the requirements of Directive (EU) 2016/2102 of the European Parliament and of the Council (17).

(34)

To facilitate re-use, public sector bodies should, where possible and appropriate, make documents, including those published on websites, available through an open and machine-readable format and together with their metadata, at the best level of precision and granularity, in a format that ensures interoperability, for example by processing them in a way consistent with the principles governing the compatibility and usability requirements for spatial information under Directive 2007/2/EC.

(35)

A document should be considered to be in a machine-readable format if it is in a file format that is structured in such a way that software applications can easily identify, recognise and extract specific data from it. Data encoded in files that are structured in a machine-readable format should be considered to be machine-readable data. A machine-readable format can be open or proprietary. They can be formal standards or not. Documents encoded in a file format that limits automatic processing, because the data cannot, or cannot easily, be extracted from them, should not be considered to be in a machine-readable format. Member States should, where possible and appropriate, encourage the use of a Union or internationally recognised open, machine-readable format. The European interoperability framework should be taken into account, where applicable, when designing technical solutions for the re-use of documents.

(36)

Charges for the re-use of documents constitute an important market entry barrier for start-ups and SMEs. Documents should therefore be made available for re-use free of charge and, where charges are necessary, they should in principle be limited to the marginal costs. Where public sector bodies carry out a particularly extensive search for requested information or extremely costly modifications of the format of requested information, either voluntarily or as required under national law, marginal costs may cover the costs associated with such activities. In exceptional cases, the necessity of not hindering the normal running of public sector bodies that are required to generate revenue to cover a substantial part of their costs relating to the performance of their public tasks should be taken into consideration. This also applies where a public sector body has made data available as open data but is obliged to generate revenue to cover a substantial part of their costs relating to the performance of other public tasks. The role of public undertakings in a competitive economic environment should also be acknowledged. In such cases, public sector bodies and public undertakings should therefore be able to charge above marginal costs. Those charges should be set according to objective, transparent and verifiable criteria and the total income from supplying and allowing re-use of documents should not exceed the cost of collection and production, including purchasing from third parties, reproduction, maintenance, storage and dissemination, together with a reasonable return on investment. Where applicable, it should also be possible to include in the eligible cost the costs of anonymisation of personal data and costs of measures taken to protect the confidentiality of data. Member States may require public sector bodies and public undertakings to disclose those costs. The requirement to generate revenue to cover a substantial part of the public sector bodies' costs relating to the performance of their public tasks or the scope of the services of general interest entrusted with public undertakings does not have to be a legal requirement and may stem, for example, from administrative practices in Member States. Such a requirement should be regularly reviewed by the Member States.

(37)

The return on investment can be understood as a percentage, in addition to marginal costs, allowing for the recovery of the cost of capital and the inclusion of a real rate of return. As the cost of capital is closely linked to credit institutions' interest rates, which are themselves based on the fixed rate of the European Central Bank (ECB) on main refinancing operations, the reasonable return on investment should not be more than 5 % above the ECB's fixed interest rate.

(38)

Libraries, including university libraries, museums and archives should be able to charge above marginal costs in order not to hinder their normal running. In the case of such public sector bodies, the total income from supplying and allowing re-use of documents over the appropriate accounting period should not exceed the cost of collection, production, reproduction, dissemination, preservation and rights clearance, together with a reasonable return on investment. Where applicable, the costs of anonymisation of personal data or of commercially sensitive information should also be included in the eligible cost. For the purpose of libraries, including university libraries, museums and archives, and bearing in mind their particularities, the prices charged by the private sector for the re-use of identical or similar documents could be considered when calculating a reasonable return on investment.

(39)

The upper limits for charges set in this Directive are without prejudice to the right of Member States to apply lower charges or no charges at all.

(40)

Member States should lay down the criteria for charging above marginal costs. For example, they should be able to lay down such criteria in national rules or to designate an appropriate body or appropriate bodies, other than the public sector body itself, competent to lay down such criteria. That body should be organised in accordance with the constitutional and legal systems of the Member States. It could be an existing body with budgetary executive powers and under political responsibility.

(41)

Ensuring that the conditions for re-use of public sector documents are clear and publicly available is a pre-condition for the development of a Union-wide information market. Therefore, all applicable conditions for the re-use of documents should be made clear to the potential re-users. Member States should encourage the creation of indices accessible on line, where appropriate, of available documents so as to promote and facilitate requests for re-use. Applicants for re-use of documents held by entities other than public undertakings, educational establishments, research performing organisations and research funding organisations should be informed of available means of redress relating to decisions or practices affecting them. This will be particularly important for start-ups and SMEs, which may not be familiar with interactions with public sector bodies from other Member States and corresponding means of redress.

(42)

The means of redress should include the possibility of review by an impartial review body. That body could be an already existing national authority, such as the national competition authority, the supervisory authority established in accordance with Regulation (EU) 2016/679, the national access to documents authority or a national judicial authority. That body should be organised in accordance with the constitutional and legal systems of Member States. Recourse to that body should not pre-empt any means of redress otherwise available to applicants for re-use. It should however be distinct from the Member State mechanism laying down the criteria for charging above marginal costs. The means of redress should include the possibility of review of negative decisions but also of decisions which, although permitting re-use, could still affect applicants on other grounds, in particular by the charging rules applied. The review process should be swift, in accordance with the needs of a rapidly changing market.

(43)

Making public all generally available documents held by the public sector — concerning not only the political process but also the legal and administrative process — is a fundamental instrument for extending the right to knowledge, which is a basic principle of democracy. That objective is applicable to institutions at every level, be it local, national or international.

(44)

The re-use of documents should not be subject to conditions. However, in some cases justified by a public interest objective, a licence may be issued imposing conditions on the re-use by the licensee dealing with issues such as liability, the protection of personal data, the proper use of documents, guaranteeing non-alteration and the acknowledgement of source. If public sector bodies license documents for re-use, the licence conditions should be objective, proportionate and non-discriminatory. Standard licences that are available online may also play an important role in this respect. Therefore Member States should provide for the availability of standard licences. Any licences for the re-use of public sector information should, in any event, place as few restrictions on re-use as possible, for example limiting restrictions to an indication of source. Open licences in the form of standardised public licences available online which allow data and content to be freely accessed, used, modified and shared by anyone for any purpose, and which rely on open data formats, should play an important role in this respect. Therefore, Member States should encourage the use of open licences that should eventually become common practice across the Union. Without prejudice to liability requirements laid down in Union or national law where a public sector body or a public undertaking makes documents available for re-use without any other conditions or restrictions, that public sector body or public undertaking may be allowed to waive all liability with regards to the documents made available for re-use.

(45)

If the competent authority decides no longer to make available certain documents for re-use, or to cease updating those documents, it should make those decisions publicly known, at the earliest opportunity, by electronic means where possible.

(46)

Conditions for re-use should be non-discriminatory for comparable categories of re-use. In that regard, the prohibition of discrimination should not, for example, prevent the exchange of information between public sector bodies free of charge for the exercise of public tasks, whilst other parties are charged for re-use of the same documents. Neither should it prevent the adoption of a differentiated charging policy for commercial and non-commercial re-use.

(47)

Member States should in particular ensure that re-use of documents of public undertakings does not lead to market distortion and that fair competition is not undermined.

(48)

Public sector bodies should comply with Union and national competition rules when establishing the principles for re-use of documents avoiding as far as possible exclusive agreements between themselves and private partners. However, in order to provide a service of general economic interest, an exclusive right to re-use specific public sector documents may sometimes be necessary. This may be the case if no commercial publisher would publish the information without such an exclusive right. In this regard, it is appropriate to take into account public service contracts that are excluded from the scope of Directive 2014/24/EU pursuant to Article 11 of that Directive and innovation partnerships as referred to in Article 31 of Directive 2014/24/EU.

(49)

There are numerous cooperation arrangements between libraries, including university libraries, museums, archives and private partners, which involve digitisation of cultural resources granting exclusive rights to private partners. Practice has shown that such public-private partnerships can facilitate worthwhile use of cultural collections and at the same time accelerate access to the cultural heritage for members of the public. It is therefore appropriate to take into account current divergences between Member States with regard to digitisation of cultural resources, by a specific set of rules pertaining to agreements on digitisation of such resources. Where an exclusive right relates to digitisation of cultural resources, a certain period of exclusivity might be necessary in order to give the private partner the possibility to recoup its investment. That period should, however, be limited to as short a time as possible in order to comply with the principle that public domain material should stay in the public domain once it is digitised. The period of an exclusive right to digitise cultural resources should in general not exceed 10 years. Any period of exclusivity longer than 10 years should be subject to review, taking into account technological, financial and administrative changes in the environment since the arrangement was entered into. In addition, any public private partnership for the digitisation of cultural resources should grant the partner cultural institution full rights with respect to the post-termination use of digitised cultural resources.

(50)

Arrangements between data holders and data re-users which do not expressly grant exclusive rights but which can reasonably be expected to restrict the availability of documents for re-use should be subject to additional public scrutiny. The essential aspects of such arrangements should therefore be published online at least two months before coming into effect, namely two months before the agreed date on which the performance of the obligations of the parties is set to begin. The publication should give interested parties an opportunity to request the re-use of the documents covered by those arrangements and prevent the risk of restricting the range of potential re-users. In any event, the essential aspects of such arrangements in their final form agreed by the parties should also be made public online without undue delay following their conclusion.

(51)

This Directive aims to minimise the risk of excessive first-mover advantage that could limit the number of potential re-users of the data. Where contractual arrangements are likely, in addition to a Member State's obligations under this Directive to grant documents, to entail a transfer of that Member State's resources within the meaning of Article 107(1) TFEU, this Directive should be without prejudice to the application of the competition and State aid rules laid down in Articles 101 to 109 TFEU. It follows from the State aid rules laid down in Articles 107, 108 and 109 TFEU that a Member State must check ex ante whether State aid may be involved in the relevant contractual arrangement and ensure that it complies with the State aid rules.

(52)

This Directive does not affect the protection of individuals with regard to the processing of personal data under Union and national law, particularly Regulation (EU) 2016/679 and Directive 2002/58/EC of the European Parliament and of the Council (18) and including any supplementing provisions of national law. This means, inter alia, that the re-use of personal data is permissible only if the principle of purpose limitation as set out in point (b) of Article 5(1) and Article 6 of Regulation (EU) 2016/679 is met. Anonymous information is information which does not relate to an identified or identifiable natural person or to personal data rendered anonymous in such a manner that the data subject is not or is no longer identifiable. Rendering information anonymous is a means of reconciling the interests in making public sector information as re-usable as possible with the obligations under data protection law, but it comes at a cost. It is appropriate to consider that cost to be one of the cost items to be considered to be part of the marginal cost of dissemination as referred to in this Directive.

(53)

When taking decisions on the scope and conditions for the re-use of public sector documents containing personal data, for example in the health sector, data protection impact assessments may have to be performed in accordance with Article 35 of Regulation (EU) 2016/679.

(54)

The intellectual property rights of third parties are not affected by this Directive. For the avoidance of doubt, the term ‘intellectual property rights’ refers to copyright and related rights only, including sui generis forms of protection. This Directive does not apply to documents covered by industrial property rights, such as patents and registered designs and trade marks. The Directive neither affects the existence or ownership of intellectual property rights of public sector bodies, nor does it limit the exercise of these rights in any way beyond the boundaries set by this Directive. The obligations imposed in accordance with this Directive should apply only insofar as they are compatible with international agreements on the protection of intellectual property rights, in particular the Berne Convention for the Protection of Literary and Artistic Works (Berne Convention), the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) and the WIPO Copyright Treaty (WCT). Public sector bodies should, however, exercise their copyright in a way that facilitates re-use.

(55)

Taking into account Union law and the international obligations of Member States and of the Union, particularly under the Berne Convention and the TRIPS Agreement, documents for which third parties hold intellectual property rights should be excluded from the scope of this Directive. If a third party was the initial owner of the intellectual property rights for a document held by libraries, including university libraries, museums and archives and the term of protection of those rights has not expired, that document should, for the purpose of this Directive, be considered to be a document for which third parties hold intellectual property rights.

(56)

This Directive should be without prejudice to the rights, including economic and moral rights, that employees of public sector bodies may enjoy under national law.

(57)

Moreover, where any document is made available for re-use, the public sector body concerned should retain the right to exploit that document.

(58)

This Directive is without prejudice to Directive 2014/24/EU.

(59)

Tools that help potential re-users to find documents available for re-use and the conditions for re-use can facilitate considerably the cross-border use of public sector documents. Member States should therefore ensure that practical arrangements are in place that help re-users in their search for documents available for re-use. Examples of such practical arrangements are assets lists, which should preferably be accessible online, of main documents (documents that are extensively re-used or that have the potential to be extensively re-used), and portal sites that are linked to decentralised assets lists. Member States should also facilitate the long-term availability for re-use of public sector information, in accordance with the applicable preservation policies.

(60)

The Commission should facilitate the cooperation among Member States and support the design, testing, implementation and deployment of interoperable electronic interfaces that enable more efficient and secure public services.

(61)

This Directive is without prejudice to Directive 2001/29/EC of the European Parliament and of the Council (19). It provides for conditions within which public sector bodies can exercise their intellectual property rights in the internal information market when allowing re-use of documents. Where public sector bodies are holders of the right provided for in Article 7(1) of Directive 96/9/EC, they should not exercise that right in order to prevent re-use or to restrict the re-use of existing documents beyond the limits provided for in this Directive.

(62)

The Commission has supported the development of an online open data maturity report with relevant performance indicators for the re-use of public sector information in all the Member States. A regular update of that report will contribute to the exchange of information between the Member States and the availability of information on policies and practices across the Union.

(63)

It is necessary to ensure that the Member States monitor the extent of the re-use of public sector information, the conditions under which it is made available, and the redress practices.

(64)

The Commission may assist the Member States in implementing this Directive in a consistent way by issuing and updating existing guidelines, particularly on recommended standard licences, datasets and charging for the re-use of documents, after consulting interested parties.

(65)

One of the principal aims of the establishment of the internal market is the creation of conditions conducive to the development of Union-wide services. Libraries, including university libraries, museums and archives hold a significant amount of valuable public sector information resources, in particular since digitisation projects have multiplied the amount of digital public domain material. Those cultural heritage collections and related metadata are a potential base for digital content products and services and have a huge potential for innovative re-use in sectors such as learning and tourism. Other types of cultural establishment, such as orchestras, operas, ballets and theatres, including the archives that are part of those establishments, should remain outside the scope of this Directive because of their specificity as performing arts and the fact that almost all of their material is subject to third-party intellectual property rights.

(66)

In order to provide for conditions supporting the re-use of documents which is associated with important socioeconomic benefits having a particular high value for the economy and society, a list of thematic categories of high-value datasets should be set out in an Annex. By way of illustration, and without prejudice to the implementing acts identifying the high-value datasets to which the specific requirements set out in this Directive should apply, taking into account the Commission guidelines on recommended standard licences, datasets and charging for the reuse of documents, the thematic categories could, inter alia, cover postcodes, national and local maps (geospatial), energy consumption and satellite images (earth observation and environment), in situ data from instruments and weather forecasts (meteorological), demographic and economic indicators (statistics), business registers and registration identifiers (companies and company ownership), road signs and inland waterways (mobility).

(67)

In order to amend the list of thematic categories of high-value datasets by adding further thematic categories, the power to adopt acts in accordance with Article 290 TFEU should be delegated to the Commission. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making (20). In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States' experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.

(68)

An Union-wide list of datasets with a particular potential to generate socioeconomic benefits together with harmonised re-use conditions constitutes an important enabler of cross-border data applications and services. In order to ensure uniform conditions for the implementation of this Directive, implementing powers should be conferred on the Commission to support the re-use of documents associated with important socioeconomic benefits by adopting a list of specific high-value datasets to which specific requirements of this Directive apply, along with the arrangements for their publication and re-use. Consequently, those specific requirements will not apply prior to the adoption by the Commission of implementing acts. The list should take into account sectoral Union legal acts that regulate the publication of datasets, such as Directives 2007/2/EC and 2010/40/EU, to ensure that datasets are made available under corresponding standards and sets of metadata. The list should be based on the thematic categories set out in this Directive. In preparing the list, the Commission should carry out appropriate consultations, including at expert level. Moreover, when deciding on the inclusion in the list of data held by public undertakings or on their free availability, the effects on competition in the relevant markets should be taken into account. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council (21).

(69)

For the purpose of ensuring their maximum impact and to facilitate re-use, the high-value datasets should be made available for re-use with minimal legal restrictions and free of charge. They should also be published via APIs. However, this does not preclude public sector bodies from charging for services that they provide in relation to the high-value datasets in their exercise of public authority, in particular certifying the authenticity or veracity of documents.

(70)

Since the objectives of this Directive, namely to facilitate the creation of Union-wide information products and services based on public sector documents, to ensure the effective cross-border use of public sector documents on the one hand by private businesses, particularly by SMEs, for added-value information products and services, and on the other hand by citizens to facilitate the free circulation of information and communication, cannot be sufficiently achieved by the Member States but can rather, by reason of the pan-Union scope of the proposed action, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality as set out in that Article, this Directive does not go beyond what is necessary in order to achieve those objectives.

(71)

This Directive respects the fundamental rights and observes the principles recognised in particular by the Charter, including the right to privacy, the protection of personal data, the right to property and the integration of persons with disabilities. Nothing in this Directive should be interpreted or implemented in a manner that is inconsistent with the Council of Europe Convention for the Protection of Human Rights and Fundamental Freedoms.

(72)

The European Data Protection Supervisor was consulted in accordance with Article 28(2) of Regulation (EC) No 45/2001 of the European Parliament and of the Council (22) and delivered an opinion on 10 July 2018 (23).

(73)

The Commission should carry out an evaluation of this Directive. Pursuant to the Interinstitutional Agreement of 13 April 2016 on Better Law-Making, that evaluation should be based on the five criteria of efficiency, effectiveness, relevance, coherence and value added and should provide the basis for impact assessments of options for further action.

(74)

This Directive should be without prejudice to the obligations of the Member States relating to the time-limit for the transposition into national law of the Directives set out in Annex II, Part B,