Entrepreneurs in the EU benefit from access to the European Single Market. Yet in practice, those operating across several Member States face 27 different legal and administrative realities.
In this fragmented landscape, a striking new initiative is gaining momentum: EU-Inc, a proposal for a pan-European legal entity with one uniform structure and one regulatory framework, regardless of the Member State of incorporation.
With this envisioned “28th regime,” a growing coalition of private sector stakeholders and European policymakers hopes to reposition the EU as an attractive ecosystem for innovative startups and international investors.
And for those ready to take the next step in European integration, the EU-Inc petition is open for signatures.
OBSTACLES TO EUROPEAN COMPETITIVENESS
The Draghi Report of September 2024 confirmed what startups and investors have long experienced: the EU is losing ground as a competitive economic power. Europe struggles with an overgrowth of regulation, a fragmented market and limited access to venture capital. These issues result in substantial administrative and compliance costs, hampering business development and growth. A pan-European corporate entity – akin to a Delaware LLC – could help address these barriers.
The call for a European legal entity to facilitate cross-border business operations is not new. In 2004, the Societas Europaea (SE) was introduced as a flexible vehicle for cross-border integration. Yet, due to a lack of political consensus and ambition, the SE never became the supranational entity initially envisioned. Only a small number of SEs were ever created, largely due to complexity, high implementation costs and limited practical advantages.
The European Commission subsequently attempted to launch two more effective alternatives: the European Private Company (EPC) in 2010 and the Single-Member Company (SMC) in 2014. Both proposals ultimately suffered a political demise as Member States disagreed over key issues such as taxation, governance and employee participation.
Meanwhile, a growing consensus holds that the EU can no longer stand by while European talent and capital migrate elsewhere and countries like the US and China continue to produce one tech unicorn and hyperscaler after another.
WHAT IS EU-INC?
EU-Inc is an industry-driven proposal for a new pan-European legal entity established under and governed by a uniform 28th corporate regime, operating alongside – or rather above – the 27 national frameworks. The initiative is championed by a broad coalition of European private sector stakeholders, investors, academics and legal experts advocating for a digital, streamlined and uniform corporate environment within the EU.
To achieve this, EU-Inc would allow companies to incorporate a private, share-based limited liability company digitally, swiftly and without notarial intervention. By subjecting this legal entity to a single, uniform governance framework, EU-Inc aims to make it easier for startups to attract talent and capital from across Europe.
This bottom-up initiative has been elaborated in a detailed policy note (the EU-Inc Policy Proposal), which will ultimately be submitted to the European Commission for consideration.
INNOVATIONS FOR EUROPEAN ENTREPRENEURS
EU-Inc introduces four pillars that together aim to provide a uniform, digital and scalable corporate framework within the EU.
The first pillar establishes the legal foundation for a harmonised corporate structure with a strong digital-first approach. It proposes several innovations: a unified limited-liability corporate form (EU-Inc), a standardised governance model (Core Corporate Framework), as well as a centralised digital register (EU-REGISTRY) and management interface (EU-DASHBOARD). Early-stage funding should also become faster and more accessible through EU-FAST (Fast Advanced Subscription Template), a European counterpart to the US SAFE convertible instruments.
With EU-ESOP (Employee Share Option Plan), the second pillar aims to create a harmonised European framework for share option scheme for employees, enabling startups to attract and retain talent across borders.
Pillars three and four address taxation and employment law. Although these areas remain subject to the Member State’s legislation, EU-Inc advocates for maximum alignment and coherence to better support fluent cross-border business integration within the Single Market.
CHALLENGES AHEAD
EU-Inc responds to a critical need: the structural competitiveness problems identified in the 2024 Draghi Report.
Yet, its political feasibility remains uncertain. To be directly applicable in all Member States, the 28th regime would have to be implemented through an EU regulation – a step that entails a significant shift in the balance of powers from Member States towards Brussels. The proposal also has important implications for the current competition and economic dynamics between Member States.
While interest from businesses and investors is rising rapidly, the initiative faces the familiar legal, political and institutional challenges that characterise the EU. At the same time, the European Commission’s recent EU Startup & Scaleup Strategy creates favourable momentum for EU-Inc.
The coming years will show whether EU-Inc becomes the real next step in completing the Single Market – or whether it remains, for now, an ambitious idea that seems too good to be true.
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