Business Removing

22 DOING BUSINESS IN 2005
Witness the work of the Centro de Formalidades de
Empresa in Portugal. Ten such centers have opened in
Portugal since 1998, at the initiative of the Portuguese
Entrepreneurs’ Association. All company registration procedures
are performed here in only 3 visits—previously
it took 11. Thirty-seven other countries have single access
points, including Algeria, Austria, Estonia, Finland,
Israel, Jamaica, Morocco, Romania, Thailand and the
United Kingdom. These countries take less than half the
time of those without single access points.
Get out of the courts
A second group of reformers, including Bosnia and
Herzegovina and Romania, eliminated the need for mandatory
use of both notaries and judges. Romania made
optional the use of notaries in business registration.
Bosnia and Herzegovina is in the midst of implementing
reform that will make registration an administrative
process, without resorting to the courts. There remain 16
countries—mostly transition countries—where the use
of notaries is still mandatory even though the registration
process involves judges. Slovakia reformed last year
to give incorporation cases to court clerks, not judges.
Notaries perform a simple verification service—
such as certifying that minimum capital has been deposited
in the Republic of Congo or verifying the
founder’s signatures in Hungary—which could easily be
handled by the municipal official or court clerk already
involved in registration. And they typically cost a lot. No
wonder that survey respondents in Albania, Bosnia and
Herzegovina, Bulgaria, Croatia, Estonia, Hungary, Latvia
and Macedonia say that notaries add no value to the incorporation
process.
The countries that have most improved the ease of
business start-up have done so by eliminating the need
for judges. Company registration is an administrative
process. Judges can be freed to focus on commercial disputes.
A recent example is Italy, which until 1998 had the
most cumbersome regulation of any European economy,
with the process taking 4 months. Registration was taken
out of the courts, saving 3 months. Further reforms last
year reduced the time to only 13 days. Several Latin
American countries, including Chile, Honduras and
Nicaragua, have taken registration out of the hands of
judges as well. 10 Serbia and Montenegro adopted legislation
to do so in May 2004. The benefits are large: entrepreneurs
in countries where registration is a judicial
process spend 14 more days to start a business.
Make registration electronic
In public administration, technology can create a unified
database of business information for sharing across municipal
offices and government agencies. And the Internet
can provide information to would-be entrepreneurs,
such as details on procedures, fee schedules and the
working hours of the relevant agencies.
With some simple legislation to allow electronic signatures,
the Internet can also be used to file business registrations,
as in Australia, Belgium, Canada, Singapore and
the United States—but also Moldova and Vietnam. Almost
half the sample countries have such laws, and a dozen others
have draft laws in parliament. Doing so cuts time—by
more than 50% on average (figure 3.5). Paper registration
remains available for those without Internet access.
FIGURE 3.5
Electronic registration and silent consent can shorten start-up time
Average change in time for business start-up
Source: Doing Business database.
Time without electronic registration
With online
services
–21 days
With electronic
database
–23 days
With electronic
database and
online services
–30 days
Time without limit
or silent consent
A “Silence is Consent” rule
imposes a deadline after which
a business is automatically
considered registered.
+19 days
With time limit
but no silent consent
Time limits alone are
associated with increased
registration time.
With time
limit and
silent consent
–28 days