“EU-Inc” is a proposed form of pan-European private company. The proposal represents the most recent iteration of the EU’s commitment to the single market and its commitment to establish a harmonised European company. However, EU-Inc has attracted debate about its legal and practical feasibility.
Objectives of the Regime
As part of the EU’s ongoing simplification efforts to increase its global competitiveness, reinforce the single market and free movement across the EU, the 28th regime stands as a significant and ambitious proposal to create a more harmonised and streamlined option for businesses.
At the recent annual meeting of the World Economic Forum in Davos, European Commission President Ursula von der Leyen reaffirmed her endorsement of “EU-Inc” and the proposed “28th regime” initiative. The “28th regime” represents the 28th virtual state. In her address, President von der Leyen contended that the initiative would enable entrepreneurs and innovative companies to register a “Societas Europaea Unificata” (S.EU) in any Member State “within 48 hours and fully online”.
Recent policy analysis, including the Enrico Letta report, describes the regime as a “transformative step” which aims to directly address the current “patchwork of national regulations”. However, it should be noted that EU-Inc would sit alongside the existing national corporate vehicle options in each EU Member State and would not replace them.
How would EU-Inc Work?
In summary, the 28th regime is designed to achieve the following key outcomes in terms of a new corporate vehicle:
- Companies registered as an S.EU would automatically be recognised in all Member States.
- Proposed establishment of S.EU companies within 48 hours would be guaranteed through a common digital direct entry point, guided by the once-only principle (i.e. information submitted to one EU authority should not be re-submitted to another).
- Proposed standardisation of incorporation and management processes for S.EU companies.
The clear objective is to introduce a ‘single set of rules’ for the formation and operation of EU-Inc companies. It has been suggested that this could include simplification of certain areas of law, including insolvency, labour and tax law; however the scope of the proposed changes is still unclear.
Ensuring Legal Certainty?
SMEs and start-up businesses, in particular, face practical challenges when trying to establish in multiple EU Member States and navigate local regimes. While the 28th regime aims to simplify the establishment process across the EU, it remains to be seen how the regime will operate in practical terms and how it will interact with local laws.
In order for the new regime to be effective, it will be important that the implementing legislation clarifies how the functional mechanics of the 28th regime will operate in practice, including how Member States will facilitate cross-border information sharing. In addition, there is some ambiguity surrounding the eligibility criteria and the possible conversion / re-incorporation of existing entities (if permitted); there are also questions around the applicable governing law and adjudication of jurisdictional disputes which will need to be addressed.
Current Status
Over the past year, the EU Commission has signalled strong support for EU-Inc, with a view that a more simplified European corporate framework would enable SMEs and startups to scale and grow within the single market. The EU Commissioner for Democracy, Justice, the Rule of Law and Consumer Protection, Michael McGrath has also voiced his support for the proposal. The EU Commission is expected to publish its legislative proposals by the end of March 2026. We will keep you updated on EU-Inc as it progresses.
For further advice and guidance, please contact Emma Doherty, Pat English, or any member of the International Business Group or your usual Matheson contact.