A step towards a harmonised European corporate law framework with EU Inc.

On 18 March 2026 the European Commission published its proposal for a regulation on the 28th regime corporate legal framework, ‘EU Inc.’  The proposal would introduce a 28th regime: a supranational corporate law framework that would be directly applicable by regulation and exist alongside the 27 national legal systems of the EU Member States. Rather than replacing national legal forms, it offers a new alternative of a single legal form that can be used across all 27 Member States.

This alert reflects the proposal as at 4 November 2026. The text is currently under negotiation in the European Parliament and the Council, both of which have already proposed substantial amendments. Accordingly, the features described below reflect the Commission’s original proposal and remain subject to change.

Why this matters

Companies operating across borders within the EU currently face different national company law regimes and administrative requirements, creating legal uncertainty and additional costs for founders, companies and investors. The Commission’s proposal seeks to address these challenges and follows the recommendations of the 2024 Draghi report on EU competitiveness. The report identified differences in laws and regulations across Member States as an obstacle to companies operating seamlessly within the single market and called for the introduction of a new EU-wide legal statute for innovative start-ups.

These differences are not limited to substantive company law but also affect incorporation and other corporate procedures. Depending on the Member State, companies may be required to appear in person, engage intermediaries or legal counsel, or submit the same information repeatedly to different authorities. As a result, establishing and operating a business across the EU can be time-consuming, complex and costly. The proposed 28th regime and EU Inc. seek to overcome these obstacles by introducing a single corporate legal framework that companies can use throughout the EU.

What EU Inc. would mean in practice differs by type of business

Start-ups and scale-ups. The main advantage would be the ability to incorporate quickly and at low cost, without a paid-up minimum share capital requirement (see below). In addition, EU Inc. would provide an EU-wide employee stock option plan, potentially reducing the need for founders to establish separate arrangements in each Member State.

Private equity. The proposal would facilitate shares carrying multiple voting rights and fully digital share transfers without notarial involvement. It would also allow companies to issue redeemable shares, which can be redeemed at the option of the company, the shareholder or both, depending on the terms agreed upon when the shares are issued. Upon redemption, the shares would be cancelled and the shareholder would become entitled to receive the redemption price. This could offer investors a predetermined way to exit their investment, although any payment would remain subject to balance sheet and solvency tests.

Fully digital transfers also raise questions about transaction certainty and the allocation of risk. Without mandatory notarial involvement, parties would no longer necessarily benefit from an independent notary’s checks on the transferor’s identity, title and authority to transfer. The proposal instead requires the EU Inc. itself to verify the transferor’s title and compliance with its articles of association. In our view, this could shift some costs from preventive checks before completion to resolving title defects or disputes afterwards. An effective framework for addressing those issues would therefore be important, and transaction practice may develop additional contractual protections or insurance covering title risks.

A separate consideration for private equity investors is the court-ordered withdrawal right for shareholders where the company’s affairs are conducted in a manner oppressive to them. This should be considered when drafting shareholder agreements, including drag-along and squeeze-out provisions.

Corporates and multinationals. The main benefit would be consolidation rather than incorporation. Instead of using different national legal forms for subsidiaries in each Member State, with separate local counsel and filing requirements, groups could operate through a single legal form across the EU. This would benefit both existing and newly established groups, as an EU Inc. could also be formed through a cross-border merger, division or conversion.

However, the degree of standardisation would remain relatively limited, as matters such as employment law, taxation, social security and co-determination would continue to be governed by national law. EU template articles of association would help promote consistency, although more complex situations will still require tailored provisions and legal advice. Another example of the limits of harmonisation concerns other corporate bodies, such as a supervisory board. While the proposal allows an EU Inc. to establish a supervisory board, it does not specify the responsibilities and liabilities of supervisory directors. Where these matters are not regulated in the articles of association, the applicable national law would continue to apply.

A closer look

EU Inc. would be a private limited liability company available in all EU Member States. Founders would be free to choose the Member State in which to incorporate the company. Both natural and legal persons could establish an EU Inc., either by incorporating a new company or through a domestic or cross-border merger, division or conversion.

The European Commission proposes to introduce the 28th regime through a regulation based on Article 114 TFEU, which provides for the harmonisation of laws within the internal market and requires only a qualified majority in the Council. However, the choice of this legal basis has been questioned by legal commentators and several Member States in the Council. They have referred to the Court of Justice’s ruling in Case C-436/03 concerning the European Cooperative Society (SCE). In that case, the Court held that a comparable supranational legal form could not be established on the basis of the predecessor to Article 114 TFEU, but instead required Article 352 TFEU, which requires unanimity in the Council. This distinction has practical legal consequences, as the use of an incorrect legal basis could lead to the regulation being annulled by the Court of Justice. It therefore remains an important issue to follow as the legislative process continues.

If the regulation is adopted and withstands any legal challenge, the incorporation and registration process is intended to be fast and fully digital. A central EU interface would allow founders to incorporate an EU Inc. within 48 hours at a maximum cost of EUR 100, provided they use the harmonised application form and EU template articles of association. The company would acquire legal personality upon registration in the business register of the Member State in which it has its registered office.

The proposal also introduces a once-only principle, under which companies would only need to submit their information once. Following registration, the business register would share the relevant information with other authorities, including tax authorities, social security agencies and ultimate beneficial ownership (UBO) registers. This would reduce the administrative burden by avoiding the need to provide the same information separately to different authorities.

The proposed framework also gives founders considerable flexibility in structuring the company. No paid-up minimum share capital would be required upon incorporation. Creditor protection would be ensured through balance sheet and solvency tests. In terms of governance, an EU Inc. would need to have at least one shareholder and one director. Directors would have to be natural persons, and at least one director would have to be resident in the EU. Beyond these minimum requirements, companies could establish additional corporate bodies, such as a supervisory board, and both shareholder and board meetings could be held fully digitally or in hybrid form.

This flexibility is also reflected in the company’s share structure. EU Inc. could have different classes of shares, including shares carrying multiple voting rights. Shares could be transferred fully digitally without requiring notarial involvement and may also be traded on multilateral trading facilities (MTFs). Member States could furthermore allow EU Inc. companies to seek admission of their shares to trading on a regulated market. The framework would also allow companies to establish EU employee stock option plans (EU-ESO). Under Article 79(2) of the proposal, income from warrants granted under such plans would be taxed only when the shares acquired on exercise are disposed of, rather than on grant, vesting or exercise. The characterisation of that income and the applicable tax rates would remain matters of national law.

The simplified approach would extend to the end of the company’s lifecycle. Fast-track liquidation procedures would be available under certain conditions, while innovative start-ups meeting the relevant criteria could benefit from simplified insolvency procedures. The criteria for qualifying as an innovative start-up are set out in a separate Commission Recommendation, which sets the thresholds for innovative enterprises, start-ups and scale-ups.

The European character of EU Inc. would also be supported by mechanisms intended to facilitate its recognition across Member States. Each EU Inc. would receive an EU Company Certificate and a European Unique Identifier (EUID). These would enable public authorities and counterparties across the EU to verify company information through the Business Registers Interconnection System (BRIS), without requiring the company to submit the same documentation again.

However, this European recognition would not mean that all EU Inc. companies are subject to identical rules. Matters not regulated by the regulation or the articles of association would remain subject to the national law applicable to the designated national company form in the Member State where the EU Inc. is registered. This would include aspects of directors’ liability and insolvency to the extent that they are not covered by the regulation. As a result, an EU Inc. registered in one Member State could be subject to rules different from those applicable to an EU Inc. registered in another Member State, despite both having the same legal form. The precise division between the harmonised framework and applicable national law may still change during the legislative process.

National courts would retain jurisdiction over disputes involving EU Inc. companies. The European Commission also encourages Member States to designate specialised judicial chambers with specific expertise in the EU Inc. framework.

Key takeaways

EU Inc. is intended to make it easier to set up and run a company across the EU, but what it would change in practice differs by type of business, and important parts of the proposal are still being negotiated.

For now:

• Standardisation is partial. EU Inc. would harmonise incorporation and recognition, while matters such as employment law, taxation, social security and co-determination would remain subject to applicable national laws. As a result, the rules governing an EU Inc. could differ depending on the Member State in which it is registered.
• The legal basis is a point to watch. Whether the proposal can validly rest on Article 114 TFEU is disputed among legal commentators and Member States, which means annulment cannot be ruled out, although the outcome is far from certain at this stage. We will continue to monitor this debate.
• The proposal remains subject to change. In light of the ongoing criticism, we expect further substantial amendments. The European Parliament and the Council have already departed substantially from the Commission’s original proposal, including on points covered in this alert. Readers should therefore not rely on any of its specific features as settled law. We will continue to monitor developments. The Commission has called on the co-legislators to reach political agreement by the end of 2026, which is a target date rather than a firm deadline.