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The 28th regime
The 28th Regime: A new legal framework for innovative companies
Issam Hallak, Members' Research Service
Summary
In May 2025, the Commission announced its intention to develop the 28th regime initiative for innovative companies as part of its startup and scaleup strategy. In January 2026, Parliament is set to vote on a legislative-initiative report with recommendations to the Commission on the design of the 28th regime.
Background
Enrico Letta's 2024 report stated that the 28th regime – an EU-level legal framework companies can opt into – would be a 'transformative step' towards completing the single market. It would allow companies to operate across the EU under a single set of rules; resolve the 'patchwork of national regulations'; and 'unlock the full potential of free movement within the EU'. In its 2025 communication on a startup and scaleup strategy, the Commission announced the initiative for the establishment of a 28th regime applicable to innovative companies. The initiative would be based on 'digital-by-default solutions' enabling establishment within 48 hours, and address legal aspects such as insolvency, labour and taxation. The public consultation closed in September 2025, and the legislative proposal is to be published by the end of March 2026.
European Parliament own-initiative legislative report
Parliament decided to contribute to the policy debate by drafting a legislative-initiative report on the 28th regime. On 11 December 2025, the Committee on Legal Affairs (JURI) adopted the report based on Rule 47 of Parliament's Rules of Procedure, with 18 votes in favour, 4 against and one abstention. The report recommends that national limited liability companies that would like to benefit from the 28th regime could register as 'Societas Europaea Unificata' (S.EU); as such, they would be automatically recognised in all Member States. The EU legal framework for corporate law matters should be adopted by means of a 'maximum harmonisation directive' ensuring alignment of national rules across all Member States, based on Articles 50 and 114 TFEU. However, safeguards to national laws are recommended, in particular to ensure that the regime does not undermine labour and social laws, including those governing employee participation regimes. Establishment of companies within 48 hours should be guaranteed through a common digital direct entry point, which would also ensure transparency and portability of certifications and credentials, among others. The S.EU should provide for optional harmonised rules across the EU on employee financial participation schemes. To attract capital, Member States should introduce a harmonised 'equity-like debt' instrument, i.e. equity with profit rights but limited voting rights. Finally, the report calls for the creation of an alternative specialised dispute resolution mechanism in Member States to address business-to-business disputes.
Box 1
Legislative-initiative report: 2025/2079(INL); Committee responsible: JURI; Rapporteur: René Repasi (S&D, Germany). For further information see our briefing 'The 28th regime'.
Classification
Policy areas: Economics and Monetary Issues | Financial and Banking Issues | Industry | Research Policy | Contract Law, Commercial Law and Company Law
Regions: European Union
Committees: Economic and Monetary Affairs (ECON), Legal Affairs (JURI), Industry, Research and Energy (ITRE)
Disclaimer
This document is prepared for, and addressed to, the Members and staff of the European Parliament as background material to assist them in their parliamentary work. The content of the document is the sole responsibility of its author(s) and any opinions expressed herein should not be taken to represent an official position of the Parliament.
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