Europe’s quiet champions of responsible ownership deserve better law

Some of Europe’s most successful companies – including Bosch, Inter IKEA, Novo Nordisk, Rolex and La Caixa – share a distinctive ownership model. They are controlled by enterprise foundations: non-profit entities that own and govern commercial businesses while pursuing long-term social, philanthropic or public-interest objectives. These foundations have helped anchor European champions in stable ownership, patient capital and responsible governance. Yet, despite their economic and societal importance, enterprise foundations remain poorly understood and unevenly regulated across Europe.

Most national foundation laws were designed for traditional grant-making charities, not for organisations that own and oversee complex businesses. As a result, enterprise foundations often operate in a legal grey zone, navigating rules that assume a strict separation between for-profit and non-profit activity. The consequences are legal uncertainty, fragmented governance standards and significant barriers to cross-border activity – precisely at a time when Europe is searching for ownership models that can support competitiveness, sustainability and long-term value creation.

To address this gap, the European Law Institute has developed the European Enterprise Foundations Model Law – a practical legislative toolkit for policymakers seeking to modernise their national frameworks. Rather than imposing a rigid, uniform regime, the model law is built on optionality. Legislators can adopt the framework as a whole or select individual provisions that fit their legal traditions, while still promoting responsible ownership, transparency and accountability.

At the heart of the model law is a functional definition of an enterprise foundation: a foundation that holds a controlling interest in a business. Crucially, responsible ownership of a company is recognised as a legitimate purpose in its own right. Enterprise foundations are expected not merely to preserve capital, but to act as engaged, competent owners, taking calculated risks in the long-term interests of the business and its stakeholders. This reflects what we observe in practice: foundation-owned companies often pursue longer time horizons, invest more in innovation, treat employees better and perform strongly on environmental and social dimensions.

Governance is central to the proposal. Because foundations have no shareholders, the model law places particular emphasis on board duties, independence, transparency and accountability. Foundation directors are expected to oversee not only the foundation itself but also its corporate subsidiaries. Related-party transactions must be disclosed and approved by disinterested board members. Directors who sit on company boards are to be remunerated through fixed fees rather than performance-based incentives. These rules aim to balance entrepreneurial freedom with safeguards against conflicts of interest and mission drift.

External supervision also plays an important role. The model law allows national legislators to choose whether enterprise foundations are overseen by courts, administrative authorities or a combination of both. What matters is not the institutional form, but the effectiveness and competence of supervision. Authorities should focus on legality and compliance with the foundation’s charter, not on day-to-day business decisions. Excessive regulatory intervention risks politicisation and bureaucratic delay, while too little oversight can undermine public trust.

Taxation is another sensitive area. Enterprise foundations are sometimes accused of enjoying special tax privileges, yet in practice their tax treatment is often comparable to that of family holding companies or other long-term owners. The model law therefore proposes principles of tax neutrality: enterprise foundations should neither be penalised nor favoured simply because of their ownership structure. Where tax benefits exist, they should be linked to genuine public-interest activities rather than to business ownership per se.

Why does this matter for Europe’s corporate governance agenda? Enterprise foundations represent a distinctive form of purpose-driven ownership. They offer an institutional mechanism through which companies can be anchored in long-term objectives, shielded from short-term market pressures and aligned with broader societal goals. In an era of geopolitical uncertainty, sustainability transitions and renewed concern about economic resilience, such ownership models deserve serious policy attention.

The aim is not to turn every European company into a foundation-owned enterprise. Enterprise foundations will always remain relatively rare, since they require founders to relinquish private wealth permanently. But where founders choose this path, the legal system should facilitate – not frustrate – their intentions. Clear, coherent and modern rules can help ensure that enterprise foundations contribute fully to Europe’s economic competitiveness, social cohesion and sustainable development.

The ELI Model Law provides a roadmap for achieving this. It draws on extensive comparative research across more than twenty jurisdictions and reflects both civil-law and common-law experiences. Most importantly, it offers policymakers a set of practical building blocks for strengthening one of Europe’s most distinctive – and quietly successful – forms of corporate ownership.

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Steen Thomsen is a Novo Nordisk Foundation Professor of Enterprise Foundations at CBS, and an ECGI Research Member.

Anne Sanders is the Chair of Civil Law, Corporate Law, Family Business Law and Justice Research at Bielefeld University, and is Professor II at the University of Bergen (Norway).

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