Not a New Idea: EU Inc.

Since 2009, there has been discussion about creating a European corporation for small and medium-sized enterprises. After several regulatory proposals failed, the debate—sparked primarily by Mario Draghi’s report on the future of European competitiveness—gained momentum again in 2024 within the framework of a so-called “28th regime.”

The starting point is the recognition that the fragmentation of the European single market unnecessarily complicates the cross-border formation, conversion, and management of companies, and that high-growth companies, in particular, prefer to establish and scale their operations abroad.

Key Elements of the European Parliament’s Own-Initiative Report

In 2025, the European Parliament’s Committee on Legal Affairs published an own-initiative report aimed at creating a new European corporate legal form, particularly for innovative companies, startups, and scale-ups. Among other things, the proposal calls for rapid digital incorporation, model documents, flexible financing options, the possibility of employee share ownership, and provisions for employee participation.

Key elements of the European Commission’s proposal

In March 2026, the European Commission set out the details of its plan to create an “EU Inc.” in a proposed regulation. The new legal form is designed as an optional, EU-wide harmonized limited liability company. It is intended to allow for fully digital incorporation, utilizing the European Business Register Interconnection System (BRIS) and a central interface, and to enable the company to be established within 48 hours at a cost of no more than 100 euros using standard articles of association. The proposal also provides for flexible financing instruments, such as different classes of shares, no-par-value shares, convertible instruments, and an EU employee stock option plan. At the same time, references to national law remain in many areas; in specific cases, the proposal also addresses issues related to tax, insolvency, and labor law.

BDI’s Position

The BDI views both the own-initiative report and the Commission’s proposal positively in principle, as a 28th regime can strengthen the European single market, facilitate start-ups, and retain high-growth companies in Europe. The BDI particularly welcomes digital company formation, the ability to use EU Inc. as a building block for corporate groups, the interlinking of registers via BRIS, and flexible financing options. The BDI places particular emphasis on ensuring that the new legal form is open to all interested companies and is not limited to startups or “innovative companies,” especially since this would raise difficult questions of demarcation. The BDI is particularly critical of references to national law that could create new fragmentation, as well as the potential overburdening of the proposal with elements of tax and insolvency law. In addition, questions remain regarding the group interests of subsidiaries as well as the approaches to asset commitment and employee co-determination contained in the European Parliament’s own-initiative report.

The key to the success of EU Inc. lies in its simple, legally certain, and low-bureaucracy design.

Outlook

The Commission’s proposal on EU Inc. is currently being discussed in the relevant committees of the European Parliament. A vote in the European Parliament’s Committee on Legal Affairs is scheduled for September 2026. The plenary vote on EU Inc. in the European Parliament is set to take place in December 2026.

At a meeting of the EU Competitiveness Council in late May 2026, the ministers welcomed the proposal to establish EU Inc. and stated their intention to conclude deliberations on it by the end of 2026.

In the further legislative process, debates are likely to focus primarily on politically sensitive issues such as employee participation, the relationship between EU regulations and national law, questions of creditor protection and safeguards to prevent fraud, tax evasion, and money laundering, as well as provisions under tax and insolvency law. From the BDI’s perspective, the success of the 28th regime hinges crucially on whether EU Inc. is designed as an attractive and reliable legal form across the Union, without creating new bureaucratic burdens or perpetuating the existing fragmentation of the legal framework.

For the BDI, the priority now is to support the initiative to create an “EU Inc.” and to utilize it as a new, important building block for the European single market. “EU Inc.” represents an opportunity to enable dynamic growth for companies in the EU and to make Europe more attractive again as a business location in the face of global competition.