Introduction
The European Commission published its legislative proposal for the 28th regime (“EU Inc.”) on 18 March 2026, with political backing from the European Council on 19 and 20 March 2026. The proposal aims to be adopted before the end of 2026, in order to create a new EU-wide corporate legal form, simplified and designed to facilitate cross-border operations. The proposal is currently under negotiation under the ordinary legislative procedure.
What comes next
- 17, 27 April & 7 May: Working Party on Company Law sessions where substantive negotiations begin (national positions and early amendments emerge).
- European Parliament (JURI): Rapporteur assignment and first key debate shaping Parliament’s direction.
- Spring 2026: Expected draft merger guidelines published for consultation.
- End of 2026: Political target for trilogue agreement.
Context and Rationale
The European Commission proposes a new corporate legal framework, “EU Inc.” (the 28th regime), aimed at strengthening the EU’s competitiveness vis-à-vis other global economies, particularly the United States (e.g. Delaware). The initiative is inspired by the French SAS, known for its flexibility and success.
Despite the EU’s large and attractive single market, regulatory fragmentation across Member States continues to create barriers for companies. This complexity limits the ability of startups and scaleups to expand efficiently across borders and reduces the overall attractiveness of the EU as a place to incorporate and grow.
As a result, many high-growth companies choose to incorporate outside the EU, often in Delaware, or undertake redomiciliation processes to more efficient jurisdictions. This trend is particularly visible in emerging sectors such as AI, where faster market entry and access to capital are key competitive advantages.
Need for Harmonisation
Various reports and stakeholders, including the Draghi report and the European Parliament, highlight the need for a simplified and harmonised framework for innovative companies. A common EU regime could reduce legal complexity and improve scalability across Member States.
Global Competitive Pressure
The latest wave of AI-based startups is largely being developed in the United States, including by European founders. Faster go-to-market strategies and rapid capital deployment are accelerating growth, increasing the gap with Europe.
New Harmonised Legal Form
A new common corporate form—EU Inc.—is introduced, coexisting with national forms.
- It will be optional for companies and entrepreneurs (the opt-in model has been criticised but appears pragmatic at this stage.
- It is not limited to innovative companies. A conversion process governed by national law will allow existing entities (e.g. SLs or SAS) to become EU Inc.; in theory, even large companies such as Mercadona or El Corte Inglés (place here your largest domestic non public companies) may opt in.
- It will have harmonised characteristics across the EU through the Regulation and its implementing provisions.
- It will facilitate multi-jurisdictional operations (e.g. via subsidiaries).
Full Digitalisation (Digital-by-Default)
The framework promotes fully digital procedures:
- Online company registration.
- Use of European digital identity.
- Interconnection of business registers (BRIS).
- Reduction of administrative burdens.
The question is: why?
The answer lies in Article 114 TFEU, which is the legal basis chosen by the Commission for this proposal.
Article 114 is the EU’s internal market harmonisation provision. It allows the Union to approximate national laws in order to improve the functioning of the Single Market. Its key advantage is procedural: it enables qualified majority voting in the Council, meaning that no single Member State can veto the proposal. This choice is therefore primarily driven by speed and political feasibility.
However, Article 114 has clear constitutional limits. Case law of the Court of Justice of the EU confirms that it cannot be used to create entirely new autonomous EU-level bodies, such as a dedicated court system or an independent EU registration authority. By contrast, instruments like the Societas Europaea (SE) were based on Article 352 TFEU, which does allow the creation of new institutional structures, but requires unanimity among all 27 Member States.
This creates a clear trade-off:
- Article 114: faster procedure (qualified majority), but more limited scope.
- Article 352: broader institutional ambition, but requires unanimity and is therefore much harder to adopt.
The Commission has chosen Article 114, prioritising speed and the likelihood of adoption, even at the cost of a narrower institutional design (for example, no new EU court or fully autonomous registry body).
This is not a political failure or the result of lobbying pressure. It reflects a structural constraint embedded in the EU Treaties. Understanding this is important, because it defines what can realistically be changed during the legislative process — and what would instead require treaty reform.
Conclusions
- Adopts an universal scope in the EU.
- Leaves national corporate law with a prominent role, it is unclear the coordination between the Eu Inc regulations and the gap-filling national law.
- Incumbents may not be attracted to the regime because the innovations may not be designed for them.
- Delivers real innovations—zero capital, EU-ESO, non-par value shares, SAFE compatibility—.
- Is estimated to produce savings of between €328 million and €440 million over ten years for an estimated 308,000 companies—figures that, even taken at face value, amount to rounding-error territory when spread across a decade and a continent-sized competitiveness gap.
- May increase forum shopping and, if handed correctly, may be an opportunity to foster new corporate and tax regulations across Europe.
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