EU Inc. – A Potential Turning Point for European Startups and Growth Companies

When Ursula von der Leyen mentioned the concept of a new European company form called “EU Inc.” during her address at this year’s World Economic Forum (WEF) in Davos, many in the audience probably heard about it for the first time. 

Yet the underlying idea – i.e., creating a legal form of a private company that operates under the same set of rules across all Member States of the European Union (EU) – is not new.

While respective initiatives have failed in the past due to lack of political support, there is reason to hope that things will turn out differently this time.

This briefing provides an overview of the current initiative regarding a so-called 28th Regime for European Companies and outlines where the legislative process currently stands and what the new legal framework could look like. 

1. Status Quo and Past Initiatives 

The EU may constitute the world’s largest single market, but in Europe scaling a company’s business still means navigating legal fragmentation. Each time a border is crossed, companies face a new set of rules. This drives up compliance costs and restricts access to capital as investors must familiarize themselves with different governance and regulatory frameworks. For startups, this situation is particularly challenging because they rely on (fast) access to equity financing.   

The only existing European legal form relevant for VC-/PE-backed companies, the Societas Europaea (SE), introduced in 2001, is not designed to overcome these problems. Its hybrid legal structure leaves key governance topics to national law, resulting in different frameworks across Member States.

Aware of the problem, the European Commission repeatedly launched initiatives to introduce a genuinely European private company form for SMEs and startups. The Societas Privata Europaea (SPE), proposed in 2008, failed due to fears of regulatory forum-shopping and disagreements on employee co-determination. Its successor initiative, the Societas Unius Personae (SUP), proposed in 2014, faced the same concerns and was eventually abandoned in 2018.

2. New Momentum

After years of little political attention, the idea of a genuinely European legal form for companies has now gained momentum again. Publications such as the Letta Report have contributed to this shift, calling for a new legal framework for European companies, a so‑called 28th Regime. Also, the industry‑led initiative “EU Inc.”, supported by leading European tech companies, investors, and startup associations, has played a major role in putting this topic back on the agenda.

3. Legislative Process (Current State of Play) 

Building on this momentum, EU institutions have once again begun to translate the ideas regarding a 28th Regime into concrete legislative steps. A respective legislative proposal from the Commission is expected by the end of March 2026. 

Meanwhile, the European Parliament, which has no formal right of initiative in the EU legislative process, has articulated its own vision of a 28th Regime. In December 2025, its Legal Affairs Committee adopted an “initiative report” that has been endorsed in plenary on 20 January 2026 (the "Report"). The Report contains several (non-binding) recommendations to the Commission regarding a legislative proposal for the 28th Regime.

4. What the Commission’s Proposal Could Look Like 

To date, the Commission has provided little insight into the substance of its legislative proposal.

In her speech in Davos, Ursula von der Leyen stated that the 28th Regime will create “a single and simple set of rules that will apply seamlessly all over our Union” and that entrepreneurs “will be able to register a company in any Member State within 48 hours – fully online”. Commissioner for Justice Michael McGrath offered a bit more detail during a European Parliament debate in January 2026, noting that the 28th Regime will have a focus on corporate law but also include “targeted elements” in ancillary fields such as tax and insolvency law and potentially be structured in a “modular and progressive way”.

In the absence of more detailed communications from the Commission, the European Parliament’s Report arguably provides the best indication of what the 28th Regime could look like at this stage. Although not binding, it reflects the political expectations the Commission’s proposal will have to navigate. Against this backdrop, the main recommendations contained in the Report are presented in summary form below.

a) General Principles, Modularity and Progressive Implementation 

While the Report proposes the name “Societas Europaea Unificata” (S.EU), the new legal form will presumably be called “EU Inc.” as indicated by Ursula von der Leyen in her speech at the 2026 WEF.

The Report recommends introducing the 28th Regime through a so called maximum harmonization directive rather than a regulation, as a regulation would require unanimous approval by the Council. Unlike regulations, directives do not constitute directly applicable EU law but require national implementation measures. This often results in differences in how rules are applied across Member States. “Maximum harmonization directives” aim to limit such divergences by obliging Member States to fully align their national laws with the directive’s provisions.

Both the Report and the Commissions statements so far suggest that the 28th Regime may be introduced in a modular and progressive way (i.e., while the initial legislative act may focus primarily on corporate law, further elements covering areas such as insolvency or taxation could be added at a later stage).

b) Eligibility

The Report rejects the idea that only certain “innovative” companies should qualify for the 28th Regime and calls for a (symbolic) minimum capital requirement of EUR 1. However, it also introduces one notable limitation: only natural or legal persons who are resident or established in the EU should be able to establish the new legal form.

c) Simplified (Digital) Administration 

The notion of fully digital 48 hour incorporation, highlighted by Ursula von der Leyen in her speech at the 2026 WEF, is also advocated for in the Report.

With respect to the administration of the EU Inc., the Report calls for enabling companies to submit all relevant documents online throughout their lifecycle. It further advocates for applying the “once‑only principle”, meaning that information submitted in one Member State should not have to be resubmitted in another. 

The above shall be made possible by an EU‑level business portal built on the existing Business Registers Interconnection System (BRIS). Currently, BRIS only provides cross‑border access to company information but does not function as an entry point. The new business portal shall serve as a one-stop shop and a common platform on which all relevant information necessary for investors would be aggregated. Furthermore, it shall enable the execution of corporate actions such as the sale and allocation of shares and the creation and adoption of board resolutions.

d) Standardized Model Documents

The Report also calls for the creation of standardized multilingual model documents for the EU Inc. (e.g., shareholders’ agreements and articles of association) that can be used across the EU and recommends that those documents shall serve as “optional default templates” in the registration process. Furthermore, it recommends harmonizing rules on “equity like” investment instruments as well as employee incentive programs which could potentially create space for standardized convertible instruments and employee stock option plans. With respect to employee participation programs, the Report also highlights that tax‑related issues are critical for making employee participation attractive and must therefore be addressed as part of the 28th Regime.

e) Dispute Resolution

To accelerate dispute resolution proceedings concerning the new legal form, the Report advocates for the introduction of an alternative specialized dispute resolution mechanism (with the participation in such mechanism being voluntary). Furthermore, it is stated in the Report, that Member States should consider introducing a special panel within their national courts dedicated to resolving disputes relating to the new corporate form.

f) Limits with Respect to Labor Law

Echoing the difficulties that contributed to the failure of previous initiatives, the Report stresses that existing national and EU rules on individual and collective labor law should remain unaffected by the 28th Regime.

5. Assessment and Outlook

The initiative to create a 28th Regime for European Companies is clearly to be welcomed as it offers a real chance to improve scaling conditions across the Union. The hope, therefore, is that this new attempt will succeed and not (once again) be abandoned due to political resistance from Member States.

As for the substance of the forthcoming legislative proposal, some issues will require particular attention:

• Using a directive instead of a regulation would leave room for national divergence and the Commission should therefore assess whether the project can be pursued in the form of a regulation (potentially also without the need for a unanimous decision in the Council). Irrespective of whether the 28th Regime will be implemented by way of a (full-harmonization) directive or a regulation, it will – in any case – have to go beyond the scope of the SE-Regulation if the EU Inc. shall be a truly European legal form.

• The EU Inc.’s success and its practical impact will very much depend on how far national formalities and procedures such as notarization requirements for incorporations and share transfers in Germany will apply to it. The more such national requirements will persist, the less the intended harmonization and simplification will be achieved. 

• The residency requirement set out in the Report would prevent businesses from outside the EU from establishing an EU-Inc. In order for the EU Inc. to be a suitable legal form for VC-backed companies, the residency requirement should be minimal and (if imposed at all) confined to the company’s incorporation, without preventing non-EU persons from acquiring or subscribing for shares in an EU Inc.

• A uniform legal framework applying to employee participation programs would significantly increase the attractiveness of the EU Inc. Therefore, it is to be welcomed that the Report calls on the Commission to address taxation-related issues, which make employee financial participation fiscally attractive to ensure legal coherence and cross-border applicability. However, without at least some alignment also in terms of labor law, standardized model documents for employee participation programs will be difficult to achieve.

• Finally, if national employee co-determination rules will apply to the EU Inc., such rules will significantly impact the corporate governance of a co-determined EU Inc. The divergences resulting therefrom would be detrimental to the stated objective of creating a genuinely European corporate form with uniform governance structures across all Member States.