- How the idea of a 28th regime was reinvented and why it should be finalised quickly
Earlier attempts to create simplified European company forms, notably the Societas Privata Europaea (SPE) and the Societas Unius Personae (SUP), encountered difficulties concerning governance, employee participation, creditor protection and the interaction with national law and failed in the end. The idea of a “28th regime” was revived in recent years by the Letta and Draghi Reports as a response to the fragmentation of company law across the EU and to the difficulties faced by start-ups and scale-ups when expanding cross-border. The concept was subsequently included in the Commission’s Political Guidelines for 2024–2029 and in the European Council Conclusions of March 2025.
On 18 March 2026, the European Commission presented the package on the “28th regime”, including the Communication Towards a 28th regime for EU companies, the proposal for a Regulation establishing the EU Inc. corporate legal framework, and a Recommendation on innovative enterprises, start-ups and rapidly growing scale-ups.
The proposed Regulation creates a new optional European legal form for limited liability companies, available alongside national company forms. EU Inc. companies could be incorporated from scratch or created through conversions, mergers or divisions, including cross-border operations, and would be registered in the Member State chosen by the founders.
The “One Europe, One Market” Joint Roadmap, signed on 24 April 2026, includes EU Inc. under the pillar dedicated to a more integrated Single Market, with a target for adoption by the end of 2026.
The main objective is to create an optional European company form with simpler and predominantly digital procedures, facilitating the establishment, financing, expansion and, where necessary, exit of companies from the market.
- The foundations of the new legal regime
The Commission’s impact assessment identifies fragmentation of company law, complex and insufficiently digitalised procedures, incomplete application of the “once-only” principle, differences concerning minimum capital and difficulties in attracting investment and talent as key obstacles to companies expanding across the EU.
At the same time, the EU already has a substantial legal framework in this area. Directive (EU) 2019/1151 introduced, among other things, online incorporation of companies and online registration of branches, while Directive (EU) 2019/2121 harmonised certain procedures concerning cross-border conversions, mergers and divisions.
Directive (EU) 2025/25 further develops the digitalisation of company law, including through wider use of digital tools, the “once-only” principle, the EU Company Certificate and the Digital EU Power of Attorney.
EU Inc. therefore builds on an already substantial acquis, but seeks to bring many of these elements together in a single framework specifically designed for companies operating across the Single Market.
- What is the EU Inc. Regulation proposing
The Regulation establishes a harmonised legal framework for EU Inc. companies, creating a new limited liability company form available in all Member States. EU Inc. companies would be governed by the Regulation, their articles of association and, for matters not covered by the Regulation, the applicable national law.
Digital incorporation
The Commission proposes a central EU interface, linked to the Business Registers Interconnection System (BRIS), through which founders could complete the incorporation process using harmonised templates and submit the relevant information to the competent national business register.
Where the standardised model is used, incorporation should be possible within 48 hours and at a maximum cost of EUR 100, including applicable preventive administrative, judicial or notarial checks. The system would also facilitate the establishment of subsidiaries and the exchange of information with the relevant authorities.
The “once-only” principle
Information submitted to the business register would be transmitted to the relevant tax, social security and beneficial ownership authorities, without requiring the company to submit the same information separately to each authority.
Capital and financing
The proposal provides for a minimum capital of EUR 0 or EUR 1, depending on the option chosen, and removes the requirement to have capital paid in at incorporation, while introducing mechanisms for creditor protection.
The proposal also facilitates modern financing instruments, including SAFE-type instruments, and allows different classes of shares and different voting rights. EU Inc. companies could access public capital markets, subject to the relevant EU and national rules.
Governance
The Regulation seeks to provide a flexible governance framework, including the possibility of holding shareholders’ meetings and certain management meetings online and adopting decisions electronically.
General meetings may also be held in hybrid or fully online format, facilitating participation by investors based in other Member States or in third countries.
Transfer of shares and employee incentives
The proposal facilitates the digital transfer of shares and provides for an EU-level framework for employee stock ownership through the EU-ESO scheme. The scheme is intended to help EU Inc. companies attract and retain talent by allowing employees and certain members of the company’s governing bodies to participate in the company’s growth.
Exit and insolvency
The proposal includes a simplified fast-track liquidation procedure for solvent companies that have no assets, debts or pending litigation. It also introduces simplified rules relating to insolvency, although this part of the proposal has generated strong reservations among Member States.
- Current state of negotiations
Examination of the proposal started during the Cypriot Presidency of the Council and is continuing under the Irish Presidency.
The file was discussed in COREPER in March, May, June, July and September 2026. Ministers held a policy debate at the Competitiveness Council on 28 May 2026 and were informed about the state of play at the Competitiveness Council meeting of 24 September 2026.
The legal basis of the proposal is Article 114 TFEU. Following discussions on the legal basis and on the simplified insolvency regime, two other issues have increasingly emerged as particularly sensitive: employee participation and EU-ESO.
In the European Parliament, the Committee on Legal Affairs (JURI) appointed René Repasi (S&D, DE) as rapporteur. The JURI Committee is expected to vote on its amendments and negotiating mandate in mid-October, with the mandate expected to be put to a vote during the second October plenary session.
- What do we need to know about EU-ESO?
EU-ESO is the optional European employee stock ownership scheme proposed for EU Inc. companies. The scheme would allow EU Inc. companies to establish employee participation plans and issue warrants to eligible employees and members of the company’s governing bodies, including certain employees and board members of subsidiaries.
The key feature is the timing of taxation. Income linked to the warrants would not be taxed at grant, vesting or exercise. Taxation would take place when the shares obtained through the exercise of the warrants are sold. This is intended to avoid a situation in which an employee incurs a tax liability before having realised any cash from the investment.
The proposal does not harmonise tax rates or generally determine the tax treatment of the income. Member States remain responsible for determining the applicable tax treatment and rates under their national systems. The proposal instead harmonises the timing of taxation and certain elements concerning the calculation of the taxable income within the EU-ESO framework, with a view to avoiding double taxation and cross-border inconsistencies.
This distinction is particularly relevant to the discussion on the legal basis. Some Member States have questioned whether provisions affecting taxation can be adopted under Article 114 TFEU, given that Articles 113 and 115 TFEU provide specific legal bases for EU action in the field of taxation and, in relevant cases, require unanimity in the Council.
The EU-ESO scheme was strongly supported by the start-up and scale-up community and was highlighted in the Commission’s impact assessment as a potentially important instrument for attracting and retaining talent.
At the Competitiveness Council on 24 September, Executive Vice-President of the European Commission, Stéphane Séjourné also stressed the importance of the provision and argued for maintaining it in the Regulation. The scheme was also mentioned by Commissioner McGrath during the JHA Council (1-2 October 2026) as one of the core elements of the proposed Regulation.
- What is the problem as regards employee participation?
Employee participation in the sense of co-determination is distinct from EU-ESO. EU-ESO concerns the economic participation of employees through shares or warrants, whereas employee participation concerns representation of employees in company decision-making bodies.
There are concerns that the EU Inc. structure could potentially be used to circumvent certain national employee participation rules. This is also likely to be an important issue for the European Parliament.
At the same time, imposing one Member State’s employee participation rules on companies established in another Member State, or substantially restricting the freedom of establishment in order to achieve this, would raise significant legal and political difficulties.
The Commission’s proposal therefore largely relies on the existing EU framework.
An EU Inc. established ex nihilo, or created through a national conversion, merger or division, is subject to the employee participation rules applicable in the Member State where it has its registered office.
Where an EU Inc. is created through a cross-border conversion, merger or division under Chapters I, II and IV of Directive (EU) 2017/1132, the applicable employee participation rules are determined in accordance with the relevant provisions of that Directive, including Articles 86l, 133 and 160l.
The practical issue arises particularly where an EU Inc. established in Member State 1 operates through a branch or subsidiary in Member State 2, where employee participation rules apply. The interaction between the EU Inc. framework, the freedom of establishment and the national rules on employee participation could therefore become a difficult point in the negotiations.
The European Parliament is also expected to scrutinise this issue closely.
- What would be meaningful for companies?
For companies, the practical value of EU Inc. will largely depend on whether the new framework actually delivers a simpler and more predictable experience across the Single Market.
A clear, predictable and fully digital incorporation procedure is one of the most tangible advantages of the proposal. The possibility of using a single EU interface, standardised documentation, a 48-hour incorporation procedure and a EUR 100 cost ceiling could significantly reduce entry barriers.
The “once-only” principle is equally important: companies should not have to repeatedly provide the same information to different national authorities.
Another potentially significant advantage is the standardisation of procedures throughout the company’s life cycle, including amendments to the articles of association, capital increases, issuing and transferring shares, digital governance and exit from the market.
The standardisation of preventive checks is also relevant. These checks should not result in requirements exceeding those already applicable to companies established under existing EU and national legislation.
Ultimately, the value of EU Inc. will depend on whether it succeeds in reducing fragmentation without creating another layer of legal complexity.
EU Inc. should therefore be viewed not simply as a new company form, but as an instrument intended to make it easier for a company to operate across the Single Market – from incorporation and financing to expansion and, where necessary, exit.
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