Momentum builds for EU-wide company status

The European Parliament has added its backing to plans for a new EU-wide corporate legal framework designed to allow faster company creation and ease their expansion across borders. MEPs voted through their report on January 20, just as European Commission President Ursula von der Leyen was pitching the framework, known as the 28th regime, at the World Economic Forum in Davos.

“Our entrepreneurs, the innovative companies, will be able to register a company in any member state within 48 hours, fully online,” she said. “They will enjoy the same capital regime all across the EU.”

The Commission is expected to present its plans for creating the 28th regime in March. The idea is not to replace national rules, but offer an optional harmonised framework that makes it easier for companies to expand into different EU countries and attract cross-border investment. 

“We call it EU-Inc,” von der Leyen said, a direct reference to the campaign launched by start-up founders and investors that put forward specific recommendations for the pan-European legal framework.

The Parliament’s report received the backing of most political groups in the assembly, from the centre-left and greens to the conservative right, with 492 votes in favour and 144 against. “When was the last time we saw such a broad centre majority in a piece of substance?” said rapporteur René Repasi, of the Socialists and Democrats group.

According to Repasi, part of the reason for this broad support is the inclusion of safeguards for labour standards and employee participation in management decisions. 

MEPs want to make the new legal framework open to all companies, as limiting it to innovative firms would introduce unnecessary complexity. At the same time, the legislation must guard against the risk that “charlatans” could abuse it to lower social standards, he said.

During a debate in Parliament the day before the vote, justice Commissioner Michael McGrath said the Commission “share’s the Parliament’s determination to ensure that the 28th regime is not used to undermine existing rules and standards.”

MEPs also want the new framework to include a harmonised employee stock option regime, making it easier for innovative companies to attract talent. “Achieving critical mass is essential to compete with innovative US and Chinese companies,” said MEP Pascal Canfin, Renew Europe’s shadow rapporteur for the file. 

“The 28th regime will accelerate continental expansion and attract more investment,” he went on. “I am particularly pleased with the inclusion of a harmonised stock option regime, a measure I championed and a top request from Europe’s start-up ecosystem.”

MEPs further called for measures to support partnerships between companies opting for the EU-wide framework and universities, research institutes and technology transfer offices, to promote the commercialisation of research results.

Regulation vs directive

A key question is whether the policy will take the form of a regulation, which would immediately be applicable across the EU, or a directive, which would give member states two years to transpose its objectives into their national law. While the start-up community has warned that a directive would fail to address the issue of fragmentation, this is the legal form recommended by the Parliament.

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Ideally, the company form would be created by means of a regulation, Repasi said, but this would require unanimity among national governments. The last attempt at an EU-wide company status, the Societas Europaea, was adopted in 2001 after 30 years of negotiations among 15 member states.

“To have unanimity among 27, honestly, it’s not going to happen. Or it is something that looks like Frankenstein’s monster because all member states will put a little piece of their national legislation on it,” Repasi said.

Realistically, a directive, which only requires a qualified majority, is the only way to get it done quickly, he said. “If I have to compromise ambition in substance with ambition in form, I always choose ambition in substance.”

According to McGrath, the appropriate legal instrument has still to be decided. In either case, the Commission wants to achieve a common set of rules across the single market. “What we need to avoid is 27 versions of the new 28th regime,” he said.

Finally, MEPs differ from the Commission on the name, preferring the Latin Societas Europaea Unificata (S.EU) to EU-Inc. Using a term inspired by the US incorporated company status sends the wrong signal, said Repasi. “I think it undermines the success of the company form if you call it after one that doesn’t exist anywhere in the European Union.”

Franco-German cooperation

Meanwhile, a report submitted to the French and German finance ministers at their meeting on January 19 highlighted the 28th regime as one of five priorities to bridge the European innovation financing gap.

The French and German governments already pledged to work together to establish a 28th regime in their joint economic agenda, adopted in August 2025.

In the report, former German finance minister Jörg Kukies and Christian Noyer, honorary governor of the Bank of France, also recommend ambitious reforms to supplementary pension systems in Europe to channel more savings towards innovation financing.

A third recommendation is to deploy public schemes inspired by France’s Tibi initiative and Germany’s Win initiative, which mobilise private savings towards venture capital and growth funds. Similar initiatives should be replicated across the EU at national level and eventually be interconnected through a pan-European venture capital initiative, the authors say.

They also suggest launching a second phase of the European Tech Champions Initiative, the European Investment Bank Group’s fund-of-funds scheme supporting innovative scale-ups, and improving Europe’s public equity markets.