EU Inc. Explained: Why Europe’s Startup Leaders Fear a Weakened 28th Regime

EU Inc. is the European Commission’s proposed “28th regime”: an optional, harmonised corporate-law framework that would sit alongside national company forms. Its purpose is to give entrepreneurs one company vehicle that can be formed and used across the EU, instead of requiring them to navigate a patchwork of national rules as they hire, raise capital and expand. 1718

That ambition has made the proposal a major test of Europe’s startup policy. In September, 50 European CEOs and investors urged lawmakers not to dilute it during negotiations, arguing that a weak final law would simply add another company form on top of 27 national systems. 3

What EU Inc. would change

The Commission’s proposal is built around a digital-first company form intended to reduce the cost and administrative burden of operating across the single market. Its headline features include:

• Fully digital incorporation within 48 hours, using an EU-level interface, at a maximum cost of €100 when the harmonised process and templates are used. 1720
• No minimum share-capital requirement. 1721
• Multiple share classes and rules intended to support modern financing instruments, alongside easier digital share transfers and capital operations. 1821
• A harmonised EU employee stock-option scheme, with taxation deferred until disposal of the shares under the proposal described by Parliament. 21
• Digital procedures through the company lifecycle, including insolvency processes and once-only submission of company information. 1821

In practical terms, the proposal is trying to make a European startup easier to set up, finance and operate without repeatedly rebuilding its legal structure as it enters new member states.

Why 50 founders and investors are pushing back

The signatories—including representatives associated with major European venture firms such as Index Ventures, Accel, Balderton, Atomico and EQT—are not opposing EU Inc. They are warning that its value depends on preserving the elements that make it workable for venture-backed businesses. 34

Their concern is straightforward: if the final regulation leaves too much to national processes, restricts flexible share structures or makes the fast digital route impractical for companies with real financing needs, founders could still face the same fragmentation the reform is meant to fix. 36

The provisions they want protected

The startup community’s central asks are to retain:

1. A central EU digital incorporation route. A company should be able to form once through a common interface and have that status work across the Union, rather than face a new administrative maze in each country. 1719
2. The 48-hour, €100 fast track. Those targets are a meaningful signal only if the route is broadly usable in practice. 2023
3. No minimum capital and flexible financing tools. Multiple share classes, digital share operations and support for modern financing structures matter because venture-backed companies commonly need to allocate different economic and voting rights to founders, employees and investors. 1821
4. A usable employee-equity framework. Stock options are central to startup hiring, especially where young companies cannot compete with established employers on cash compensation. Parliament’s summary of the proposal includes deferred taxation upon disposal for the EU employee stock-option scheme. 21
5. Digital processes beyond incorporation. A fast launch is less valuable if later corporate actions, filings or insolvency procedures revert to fragmented and paper-heavy national systems. 18

The link to startup relocation and Europe’s scale-up problem

EU Inc. addresses a corporate-law problem: whether a founder can build a company for a European market without legal complexity becoming a reason to choose another jurisdiction or structure.

That matters alongside Europe’s broader scale-up challenge. The Commission describes the Scaleup Europe Fund as a way to help high-potential European companies access the growth financing needed to become global leaders, rather than seeking it elsewhere. 1

A single company form cannot create more growth capital. But growth capital alone cannot remove the friction around incorporation, equity, governance and cross-border administration. The two initiatives therefore target different bottlenecks:

Initiative	Main problem addressed
EU Inc.	Corporate-law and operational fragmentation across the EU
Scaleup Europe Fund	Availability of late-stage capital for strategic European technology companies

Where the €5 billion Scaleup Europe Fund fits

The Scaleup Europe Fund is a roughly €5 billion public-private investment vehicle for European scale-ups in strategic technologies. The European Innovation Council says EQT and the EIC Fund are finalising the fund’s foundational legal agreements, including its governance and investment framework. 1

Reporting on the fund has described its intended focus as areas including AI, quantum technology, biotechnology and clean technology, with investment decisions to be made independently and on market terms. 7

Its reported participation in Mistral AI’s €3 billion Series D illustrates the policy logic: pair European growth capital with companies considered strategically important to Europe’s technology base. That reported investment should not be confused with a solution to EU Inc.’s legal issues, however. A fund can finance a scale-up; it cannot by itself harmonise how that company incorporates, grants options or conducts cross-border corporate actions. 918

Why academics say the proposal may still fall short

Legal scholars have welcomed several features of the proposal—digital incorporation, reduced reliance on notarisation, flexible capital tools and employee-equity provisions—but have also raised concerns about how much legal uniformity it truly delivers. 2329

The key criticisms are:

• The fast track may be narrower than the headline suggests. The 48-hour and €100 route depends on use of harmonised forms and standard articles of association. If a venture-backed company needs terms not accommodated by those templates, it may lose the simple route. 2023
• National law may still fill important gaps. One academic assessment argues that extensive references to national law and broad member-state discretion could reduce cross-border certainty. 29
• Member-state discretion could undermine harmonisation. The same concern applies if national implementation, tax treatment or administrative controls make an ostensibly EU-wide company form operate differently in practice. 2329
• Worker-protection concerns are part of the debate. Unions and some lawmakers have warned that a special company rulebook must not weaken labour protections; these concerns help explain why the legislative balance is politically sensitive. 24

These criticisms do not mean EU Inc. lacks value. They identify the standard by which it should be judged: whether a founder can actually use it for a real, financed, cross-border company—not simply whether a new legal label exists.

What happens next

The Commission presented the EU Inc. proposal on 18 March 2026. 27 It must still be agreed by the European Parliament and the Council, and reporting in September said lawmakers were negotiating a final text with approval expected by year-end. 35

No precise final Parliament vote date is established in the available evidence. But the coming parliamentary and Council decisions will determine whether EU Inc. keeps its central digital interface, cost-capped incorporation, flexible capital architecture and employee-equity provisions.

For European founders, the outcome is consequential. A robust EU Inc. could become a common operating layer for startups that want to grow across the single market. A watered-down version could leave Europe with a new company form that is technically pan-European but too constrained or fragmented to displace the national-law workarounds it was meant to solve. 32329