Proposal for EU Inc. meets opposition.

On 18 March, the European Commission presented its proposal for a new European company law form – the EU Inc. – and, with the so-called 28th regime, simultaneously introduced the corresponding legal framework. This new company form would exist alongside the established national legal forms.

At present, companies are confronted with 27 national legal systems and more than 60 different company forms. This complexity makes any incorporation process time-consuming. Under the 28th regime, it would become possible to establish new companies digitally, quickly and seamlessly, on the basis of a uniform set of rules.

“One Europe, one market” – by 2028?

The EU Inc. legal form is intended for companies with a digital orientation that wish, in the future, to make use of EU-provided tools for electronic identification, registration and communication. Reduced formalities are intended to limit administrative burden. Incorporation would take place fully online within 48 hours, irrespective of the Member State in which the company chooses to establish its registered office. This is expected to be possible as of 2028. Common, fast, digital and cost-efficient procedures, combined with reduced administrative requirements, are intended to stimulate private investment.

Start-ups and scale-ups as drivers of growth

An EU Inc. would be able to expand freely across EU borders and is designed in particular as an attractive option for high-growth companies. At the same time, it is intended to make the EU a more attractive location for business founders. The concept primarily targets start-ups and scale-ups, which the Commission associates with a higher risk appetite, a focus on scalability and strong innovation potential. These companies are expected to contribute significantly to EU growth and competitiveness. In principle, however, the new company form would be open to all businesses.

Complementary rules on insolvency and liquidation

The Commission’s proposal is complemented by specific provisions on insolvency and liquidation for EU Inc. entities. These include a simplified winding-up procedure for selected innovative start-ups. In straightforward cases, liquidation procedures should be concluded swiftly, allowing EU Inc. entities to be removed from the commercial register within three months. These additional rules are also intended to ensure that insolvency and liquidation procedures can be carried out digitally.

Directive versus Regulation

The proposed legal basis for the Regulation on the 28th company law regime – “EU Inc.” – is Article 114 TFEU. This is already the subject of debate. Article 114 requires the harmonisation of existing law, whereas the EU Inc. would complement national legal frameworks. Moreover, the usual legal instruments based on Article 114 are directives adopted by qualified majority or regulations, which typically require unanimity. However, the Commission has opted for a regulation to be adopted by qualified majority, which has raised concerns. In its recommendations of 19 January, the European Parliament had proposed a maximum harmonisation directive, anticipating more significant and prolonged resistance from Member States in the case of a regulation (see DSV-News 01/2026).

Further critical voices

Initial criticism has already been voiced by the S&D Group and its rapporteur on the 28th regime, René Repasi. The proposal is considered to lack robust safeguards, notably to prevent abuse in areas such as creditor protection, labour law and employee board-level participation. The Left Group has also stated that it will not stand by while workers’ rights are undermined. Criticism has likewise been expressed by European trade unions (ETUC) and the global union federation UNI Global Union. According to them, the EU Inc. constitutes a “Trojan horse”: presented as support for start-ups, it would in practice amount to a broader weakening of workers’ rights and corporate accountability. The free choice of company seat is seen as posing risks to the European social model, industrial relations and high-quality employment. A final point of note: employee participation arrangements vary significantly across EU Member States, and statutory provisions on this form of collective labour right exist in only twelve Member States.