Procedural information

2026/0074(COD) – Proposal for a regulation of the European Parliament and of the Council on the 28th regime corporate legal framework – 'EU Inc.' – COM(2026)0321, 18 March 2026.

Issue

In his 2024 report on the future of the single market, commissioned by the European Council, Enrico Letta emphasised the need for a specific and unique corporate legal framework. The author claims a European code of business law would be a transformative step that would 'directly address and overcome the current patchwork of national regulations, acting as a key tool to unlock the full potential of free movement within the EU'. Furthermore, it would be a 'real game-changer', particularly for small and medium-sized enterprises (SMEs). The Draghi report on EU competitiveness, commissioned by the European Commission, added that the absence of an effective EU single market acts as a drag on the EU's competitiveness and hinders firms' growth. The two reports thus emphasise the significant economic impact of non-tariff barriers,¹ which prevent the optimal expansion and financing of competitive companies, especially highly innovative ones. In fact, the International Monetary Fund (IMF) recently estimated the average intra-EU trade costs to be around 44 % for goods (excluding agriculture) and 110 % for services.²

The 28th regime is one of the Commission's priorities for improving the EU's competitiveness. The competitiveness compass of January 2025 builds on the Draghi report and the three key challenges it identified, namely closing the innovation gap, decarbonising the economy and reducing dependencies. In the compass, the 28th regime initiative is primarily aimed at boosting innovation. The Commission took up the proposal as part of its action to foster the single market, as reiterated in its work programme for 2026 ('we will ... set up the 28th regime for all companies operating across the Single Market'). The proposal, announced for the first quarter of 2026, focuses on innovative companies.

The European Commission made a proposal for a regulation on the 28th regime corporate legal framework – EU Inc.³ – on 18 March 2026,⁴ which establishes a new business form.

Main points of the proposal

The legal basis of the proposal is Article 114 of the Treaty on the Functioning of the EU (TFEU), which empowers the EU to legislate for the 'approximation of laws' with the aim of establishing or ensuring the functioning of the internal market (TFEU Article 26). The Commission's explanatory memorandum argues that the proposal would approximate in 'several regards national laws governing the activities of EU businesses throughout their life cycle' and 'aims at improving the functioning of the internal market by creating an efficient corporate legal framework for companies and investors'.

The framework would cover most aspects of businesses' life cycles, from establishment to conclusion. The name of the legal form is 'EU Inc.' and the EU Inc. company should be registered as a limited liability company in a Member State and have a legal personality (pursuant to the legal form in that Member State).

An EU Inc. company may be a newly created company or an existing company 'converting' to EU Inc. (Article 3). The EU Inc. is governed by this regulation and by the law of the Member State for matters not covered by the regulation (Article 4). EU Incs are thus not restricted to innovative companies, nor limited in terms of size or public listing.

The proposal would facilitate registration for all companies via 'fast-track formation through the EU central interface' (Article 16). The company must be set up fully online⁵  with the business register interface system ('BRIS'), a system of interconnected registers operating at EU level.⁶ The proposal provides for a central digital register (Article 34) to be developed by the Commission (subject to an implementing act adopted 18 months after application of the regulation).

The proposal's Chapter V details EU Incs' organisational requirements and governance. The provisions set out directors' duties (Article 44) and conflicts of interest (Article 45). These give the company the freedom to decide on various aspects of its governance, such as voting right distribution among shareholders (Article 55 and 57) – although majority rule is the default – and shares can be freely transferred (Article 58).

Chapter VII regulates financing rules. There would be no minimum capital requirement (Article 62), and the issuance of 'convertible instruments, warrants or other instruments entitling to new shares' would be allowed (Article 67). The distribution of dividends would be conditional on the balance sheet and solvency test⁷ without further details given on the assessment procedure. The assessment would be certified by the board of directors (signed by all directors) as compliant with the tests (Article 72).

The proposal would set up a fully digital procedure for terminating EU Inc. companies' activities. The framework makes a distinction between 'solvent' (for all companies) and 'insolvent' companies (for innovative start-ups only; see Box 1). A major innovation is the fully online procedure. Information about the dissolution of solvent companies would be transmitted entirely online (Article 80(1)), as well as filing with the business register (Article 82(1)). Moreover, the procedure would benefit from 'fast-track liquidation' (Article 83 and 84), whereby creditors would have 30 days to oppose liquidation (Article 85). The resolution would govern the insolvency proceedings for winding up⁸ 'innovative start-ups' (Chapter X), but not other types of companies.

An EU Inc. company that qualifies as an 'innovative start-up' could request simplified winding-up proceedings if it is insolvent. Insolvency would be defined as 'generally unable to pay debts as they mature', and such inability criteria would be determined by each Member State (Article 89).⁹ The request to initiate simplified winding-up proceedings could be submitted by the innovative start-up or any of its creditors using a standard form designed by a delegated act (Article 92). The Member State's court or competent authority would decide on the request to open insolvency proceedings (Article 93), which would be carried out by an insolvency practitioner (unless the debtor or a creditor requests otherwise).

Parliament's prior position

Parliament contributed to the policy debate by adopting a resolution in January 2026 on the 28th regime.¹² The committee responsible was the Committee on Legal Affairs (JURI) with rapporteur René Repasi (S&D, Germany). The resolution recommends that the 28th regime business code be adopted by means of a 'maximum harmonisation directive' ensuring the alignment of national rules across all Member States (based on Articles 50 and 114 TFEU). The statute could be named 'Societas Europaea Unificata' (S.EU) and should not be limited to 'innovative companies'. However, only unlisted¹³ limited liability companies (with a minimum capital value of €1) can opt in to the S.EU statute. The establishment of companies should be guaranteed within 48 hours, automatically recognised in all Member States and entirely processed through a common digital entry point, which would also ensure transparency and portability of, for example, certifications and credentials. A harmonised 'equity-like debt' instrument – i.e. equity with profit rights but limited voting rights – will need to be introduced by all Member States.

Parliament also requires safeguards to national laws, in particular to ensure that individual countries' regimes do not undermine labour and social laws, including those governing employees' participation regimes and representatives. S.EU companies should be treated in the same way as other limited liability companies. Individual employment contracts would continue to be subject to Article 8 of Regulation (EC) 593/2008 on the law applicable to contractual obligations. The jurisdiction over individual employment contracts is regulated by Section 5 of Chapter II of Regulation (EC) 1215/2012. In terms of employees, the rules in force concerning employee participation in the Member State of the registered office will apply. Finally, a comprehensive legal framework that incorporates alternative mechanisms, such as solvency tests, is needed.

Prior positions of other EU institutions

Preparation of the proposal

In its impact assessment,¹⁴ the Commission identified 'fragmentation of business rules' as the main problem facing companies, particularly start-ups and scale-ups. This problem is exacerbated by 'burdensome, complex and often non-digital corporate rules and procedures'. This environment presents obstacles to the creation, operation and closure of businesses, and hampers the capacity of start-up and growth phases to attract investors and talent. The Commission's impact assessment therefore argues that the legislator should establish a 'common corporate legal framework' with 'simple and effective' rules and procedures throughout the company's life cycle. The framework should contain provisions that take into account the particular features of start-ups and high-growth companies. This would pave the way for action at EU level through the creation of a harmonised company form and an 'EU brand'.

The impact assessment analyses the policy options in terms of seven main issues relevant for the planned initiative, i.e.:

The impact assessment argues that these problems are driven by legal aspects and therefore require a legislative response. The preferred option consists of a package of measures under each of the main issues, which include:

Points of view

A study published in October 2025 by Ecorys and the Centre for European Policy Study (CEPS), commissioned by the EESC, provides a comprehensive analysis of the concept, rationale, historical development and prospects of the 28th regime in EU law. It puts forward a 'roadmap for an optional 28th regime', including 14 recommendations to guide the design and implementation of a 28th regime. It invites the Commission and co‑legislators to ensure its existence as a complementary option in all Member State jurisdictions and guarantee sound definitions and an incremental approach to extend its scope based on evidence.

In an article published on 22 March 2026, Financial Times commentator Martin Sandbu argues that EU Inc. could achieve two goals: businesses could be set up (and shut down) quickly and easily across the whole EU, and investors would benefit from legal certainty and consistent treatment of new ventures, regardless of which EU country they expand into. The initiative creates a certain degree of harmonisation and facilitates business creation, especially with the digital-only approach. However, the author regrets that the initiative falls short on the first point, as it relies on Member States rather than a separate jurisdiction, and national (dedicated) courts would be in charge of interpreting the regulation.

The European Centre for International Political Economy (ECIPE) think-tank believes that the proposal is a positive move towards a unified business code that simplifies cross-border company formation, financing and employee stock ownership. However, it would have benefited from the inclusion of taxation or labour laws in its scope. In a note of December 2025, the Jacques Delors Centre in Berlin argues that a single business code is needed for the single market, which remains a key unexploited driver of EU competitiveness. The authors argue that the new framework should be accessible to all companies, focus on corporate law in the first instance, be pragmatic regarding the legal instrument of the proposal and incorporate new features that attract innovative companies, like a single online incorporation portal.

With regard to industry representatives, the 28th regime initiative is widely welcomed as a way to simplify rules for firms, with some reservations, mostly in relation to large companies. Other organisations, especially worker representatives, are concerned about the potential for 'forum shopping' that the new regime may create, which could affect domestic laws on labour and taxation.

In a note of 19 March 2026, Allied For Startups (AFS) acknowledges that the proposal introduces several significant improvements for EU start-ups and scale-ups, and the regulation represents a powerful legislative instrument for harmonisation. Relevant components include default digital processing, flexibility in company structure and ownership, and simplified procedures related to share purchase options. However, AFS regrets that key elements of the regime have been deferred to later measures or broader developments, thus maintaining uncertainty. In particular, the new regime relies on the interconnection of national legal and administrative systems, with a European interface serving as a common entry point. The project lacks predictability and simplicity regarding the application of the rules, as registration procedures may continue to vary depending on the Member State of registration. BRIS relies on the existing infrastructure, but national registers continue to operate according to different procedures and requirements. The Commission's development of a future central register lacks a clear timetable and implementation details. In addition, national courts will be responsible for handling disputes, which could lead to differing outcomes and impede harmonisation efforts, particularly with regard to consistent interpretation of the provisions. A specialised chamber attached to the Court of Justice of the European Union would have been preferable in this regard. Simplifying insolvency procedures is a step in the right direction, but should also apply to innovative high-growth companies and not just start-ups.

In an early opinion on the proposal of 19 March 2026, BusinessEurope considers that the proposal is a 'positive development for competitiveness', emphasising the appropriateness of both choosing a regulation and making the business form open to all companies. It also welcomes excluding areas such as labour law. In a previous position paper of September 2025, BusinessEurope argued that the new regime should be an optional EU company law instrument, supplementing existing national frameworks without harmonising or disrupting Member States' company law or governance models. It should aim at facilitating access to Member States' markets for any natural or legal person looking to conduct or create a business. It should primarily be for start-ups, scale-ups and SMEs although remain open to all company types. It would preferably be established through a regulation or fully harmonising directive. However, the regime should exclude labour, insolvency and tax matters and allow company transfers across Member States without dissolution. Moreover, the applicable law to 28th regime companies should be determined by the place of registration.

In October 2025, Digital Europe ¹⁵  published an opinion supporting the 28th regime initiative, but states the new framework should not include eligibility criteria or capital requirements. It should ensure fully digital and fast (within 48 hours) incorporation, have standardised model documents, such as shareholder agreements, and the ownership structures and business models should remain flexible. It is also in favour of establishing a specialised court, conflict resolution mechanisms (with English-language options available) and aligned insolvency procedures.

In its position paper of 8 October 2025, the European Business and Innovation Centre Network ¹⁶ supports the establishment of the 28th regime, which 'must serve as the cornerstone' for simplification. EBN highlights the complexity and costs currently associated with incorporating and operating companies across the EU due to the fragmentation of national rules, which discourage business growth. Its key suggestions include the adoption of a regulation (i.e. not a directive) and the establishment of a digital-first life cycle that provides for incorporation, management and closure entirely online via an EU Registry, with full cross-border eID recognition. The network also calls for the introduction of 'standardised EU-wide investment and talent instruments'.

A policy brief published in September 2025 by the European Trade Union Institute (ETUI)¹⁷ suggests that the 28th regime is unnecessary and potentially harmful to labour rights. The brief is concerned that firms would be able to opt in to a framework that is less favourable to labour protection ('forum shopping'), and that the new business code would negatively impact domestic labour standards. It is also concerned about the creation of loopholes and 'letterbox' companies (similar to the European Company experience, according to the author). Finally, ETUI argues there is no need for such a framework. For this reason, the policy brief calls for precise eligibility criteria for 'innovative' firms, anti-abuse rules to prevent shell companies and robust safeguards for worker participation and collective bargaining. ETUI's position is supported by other labour representation organisations, such as UNI Europa.

Background information

The Letta report dedicates a whole section to the motivations and design of the 28th regime – 'A European code of business law for a simpler Single Market', part of the section on how to 'unleash SMEs' potential'. The business code would be a 'simplified European company' whose scope may be expanded to include the following areas: general commercial law, market law, e-commerce law, company law, securities law, enforcement law, insolvency law, banking law, financial market law, intellectual property law, employment law and tax law. Where the EU has exclusive competence, the code would replace national laws. In other areas, the code would supplement national laws with new instruments businesses can opt in to. Therefore, a European business code would provide EU firms with an additional – 28th – regime to operate across borders. The report emphasises that the 28th regime would be a major step towards a unified single market, directly addressing the 'current patchwork of national regulations'. The report cites the Uniform Commercial Code (UCC) in the United States and the Organization for the Harmonization of Business Law in Africa (OHADA) as two examples that have reaped benefits.

In the past, the EU has made several attempts to establish a statute for an EU business code. The Council regulation establishing the statute for the European Company (Societas Europaea, SE)¹⁸ entered into force in 2004. The framework is aimed at companies operating in several Member States, as it allows greater mobility and easier transfer of registered offices. An SE can be set up by merger, creation of a holding company, creation of a joint subsidiary or conversion of an existing company set up under national law. The SE must have a minimum capital of €120 000. The SE statute aims to cut administrative costs and provide a legal structure for EU cross-border activities. It differs substantially from the Commission's proposal, which primarily targets micro-enterprises and young start-ups.

Finally, the European Parliament and the Council have recently concluded negotiations on the harmonisation of aspects of insolvency law, providing for a framework for avoidance actions, tracing assets, pre-pack proceedings, directors' duties and creditors' committees. The directive will complement Directive 2019/1023 on preventive restructuring frameworks, discharge of debt and disqualifications, which provides a framework for pre- and post-insolvency proceedings.

Moreover, the European Commission has proposed a regulation to establish European business wallets, ¹⁹ which would ensure the interoperability of digital tools that securely identify, authenticate and exchange data and documents, with full legal effect across EU borders. The wallets would facilitate interactions between businesses and with governments across the EU by simplifying administrative tasks and reducing compliance costs.