The new European Company Eu Inc.
A “European Company” or “Eu Inc.” in just 48 hours, with minimal red tape and very low costs. This is the challenge set by the European Commission with the launch of Eu Inc., the new pan-European company form. The presentation of this joint project will take place on 18 March, with the proposal for a so-called “28th regime” (a corporate regime that would complement the standard legislation of the 27 Member States).
In this way, Brussels aims to accelerate its pace in the global race for innovation, boosting the Old Continent’s competitiveness and competing with Silicon Valley and China.
But what is Eu Inc.?
EU Inc. is essentially a European limited liability company (European Limited), a new supranational legal form, which complements the 27 systems already in force at the level of each EU Member State, without replacing the forms already in use in each of them. Hence the term ‘28th regime’: an alternative legal framework, with a set of uniform rules recognised equally across all EU member states, designed to simplify the launch and operation of business ventures operating beyond national borders. The idea was first presented in January at the World Economic Forum by the President of the European Commission, Ursula von der Leyen, who highlighted its merits and its ability to reduce regulatory fragmentation, thereby accelerating the growth and attractiveness of the single market.
How it will work
The draft EU implementing regulation indicates that the European Company (EU Inc.) will benefit from a simplified, rapid incorporation process (expected to take 48 hours) and a maximum incorporation cost of €100.
The EU Inc. can be incorporated online. Once the data has been entered, the relevant national authorities will be able to access it without duplication. Companies may be established from scratch or through extraordinary transactions (mergers, demergers or transformations of existing companies). The Regulation provides that many corporate procedures will be conducted online: shareholders’ meetings, official communications, and company registers. Liquidation will also follow a simplified procedure. There is also provision for incorporating a European Company without a mandatory minimum capital requirement.
Benefits and opportunities
Currently, incorporating and/or growing a start-up within the European Union with an international scope can mean navigating 27 distinct legal systems governing company formation, governance, shareholder rights, and even employee and manager incentive schemes. Regulatory fragmentation increases costs and pushes founders to choose their country of registration based on bureaucracy rather than industrial or technological needs. Eu Inc. thus aims to create a single system automatically recognised across the EU, allowing companies to open branches and operate throughout the Union without having to repeat lengthy, often cumbersome bureaucratic procedures each time.
Another important aspect concerns the possibility of reserving share ownership for employees. With EU Inc., a harmonised system for stock options will also be introduced, valid throughout the EU, designed to make companies more competitive in recruiting talented employees, developing them and retaining their loyalty. The rights must be held for at least two years before they can be sold. Taxation will remain the responsibility of individual Member States.
Outstanding issues
Despite the enthusiasm generated from the outset for the new European Company, the proposal also raises several questions. The draft EU regulation currently available contains over 100 articles but does not address certain fundamental issues, such as taxation, labour law, and the necessary coordination with complex national company law frameworks, which will remain the responsibility of individual Member States. Consequently, an EU Inc. company will still have to comply with different rules regarding taxes, social security contributions, contracts, and other matters. These are among the hottestly debated issues amongst trade associations and start-ups, who fear the lingering fragmentation that has already characterised similar EU initiatives in the past.
The timeline for implementing the new European Company
The path towards approval of the new regulatory text on the European Company has only just begun: following its initial presentation, the text will need to be negotiated between the EU Council and the European Parliament. Brussels aims to have the new framework operational from 2027. The objective is particularly ambitious: to transform the European single market into a truly integrated environment for entrepreneurship, fostering the growth of innovative businesses within a simpler, digital and competitive legal system capable of attracting and retaining start-ups, investment and talent in Europe.