EU Inc.: A European Company Form for Startups and Scaleups?

The discussion around the ‘EU Inc.’ corporate legal framework is increasingly moving to the centre of the European legal and policy debate. 

At its core, the current proposal raises an important question: whether Europe is moving towards a genuinely single European company form, or simply a harmonised label depending heavily on national legal systems. 

The use of a Regulation under Article 114 TFEU (Treaty on the Functioning of the European Union) signals the ambition to go further than traditional EU company law coordination. The proposal reflects a broader recognition that Europe does not necessarily have a startup problem, but a scaleup one. Fragmentation in company law, administrative, financing, and operational rules continues to create costs and complexity for founders and investors operating across the Union.

The proposal creates a distinct company form at national level recognised across the EU, but it should probably be understood as a minimum viable product rather than a fully autonomous “28th regime.” It is a functional first step toward reducing fragmentation, not yet a fully integrated European company system.

It is important to underline that the proposal is not a “silver bullet”. However, even with its limitations, it still introduces a number of relevant improvements. A “digital-by-default” approach seeks to enable incorporation, shareholder and board meetings, share transfers, and even closure procedures online. Combined with the “only-once principle” and standardised templates and fast-track incorporation, it could significantly reduce bureaucracy, legal complexity, and costs for founders.

Additionally, the framework attempts to bring European company law closer to startup and VC realities. Flexible capital structures, multiple share classes, dematerialised shares, online transfers, and employee stock options move the proposal closer to the practical needs of high-growth companies. 

Arguably, the introduction of an EU employee stock option framework is the proposal’s most significant innovation. For startups competing internationally for talent, stock options are often one of the few ways to attract and retain highly skilled workers. Today, fragmented tax systems and legal uncertainty make these schemes difficult to implement across borders. A more coherent framework could therefore become an important competitiveness tool for Europe.

These features matter because the success of ‘EU Inc.’ will depend less on political ambition and more on whether founders and investors perceive it as genuinely simpler, faster, and more predictable than existing alternatives.

The chosen legal architecture is influenced by both what it leaves to national law and what it harmonises. Article 4 establishes a hierarchy in which the Regulation applies first, followed by the company’s articles of association and, only afterwards, national law for areas not covered. Giving greater importance to articles of association is positive because it creates more space for standardisation through EU-level templates and contractual flexibility. However, to ensure greater consistency across the Single Market, reducing excessive reliance on national legislation will be also necessary.

The fallback to national law remains substantial. Taxation, labour law, insolvency, dispute resolution, governance, and several administrative procedures continue to depend on domestic systems. ‘EU Inc.’ thus does not eliminate fragmentation. In many ways, it reconfigures it.

This is of great significance because founders and investors will continue comparing jurisdictions. Even if incorporation becomes more harmonised, decisions on where to register may still depend on the broader business environment. If reliance on national law remains too extensive, ‘EU Inc.’ risks becoming an additional European label layered on top of 27 different practical experiences.

A similar concern exists regarding digital infrastructure. The proposal creates a central interface for incorporation on top of interconnected national registers. Diverging administrative practices, documentation requests, or implementation timelines may lead to inconsistent user experiences across Member States and should be avoided. Also, the decision process to approve a new ‘EU Inc.’ should be similar across the Union.

The question is not simply whether companies can incorporate faster, but whether startups and scaleups can operate, hire, raise capital, transfer shares, and scale across borders with a genuinely European experience.

This helps explain the debate around forum shopping. Critics fear companies may incorporate in more business-friendly jurisdictions while operating elsewhere. Yet, forum shopping already exists today. Founders and investors routinely compare jurisdictions, and many European companies rely on foreign structures precisely because fragmentation remains high.

In that sense, excessive fragmentation may reinforce these dynamics rather than prevent them. The more uneven the practical experience across Member States becomes, the greater the incentive for companies to cluster in a small number of jurisdictions or look outside Europe altogether.

At the same time, ‘EU Inc.’ should not become politically overloaded. Questions surrounding worker participation, governance traditions, and national corporate models deserve serious discussion, but turning ‘EU Inc.’ into a broader renegotiation of national systems risks undermining the proposal itself. The challenge is to keep the necessary protections in place while ensuring workable rules for fast-growth companies.

Ultimately, the success of ‘EU Inc.’ will very much depend on its practical uptake: whether founders choose it, investors trust it, and companies can genuinely scale across the Single Market with fewer barriers than they face today. Europe may not need a perfect company law framework from day one, but it does need a credible and competitive European alternative capable of helping innovative businesses build, grow, and compete from Europe.

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Vasco Pereira da Silva is the Head of Policy at Allied For Startups.

This blog is based on a discussion held at the 7th LawFin Workshop The 28th Regime: An Effective Legal Architecture for Innovation in Europe?. Visit the event page to explore more conference-related blogs.

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