As part of its strategy to foster competitiveness and innovation across the European Union, the European Commission has launched a public consultation on the creation of a “28th Regime”, being a single, harmonised set of company law rules that innovative businesses could choose to apply throughout the EU. The project, currently in its preparatory phase, seeks to overcome legal fragmentation by offering start-ups and scale-ups an optional EU-wide framework, operating in parallel to the 27 existing national systems.
Background to the initiative
The idea of a “28th Regime” is not entirely new, as it draws on earlier discussions around optional European frameworks, such as the European Company (société européenne) and the Societas Unius Personae (SUP) proposals but extends the concept much further. The initiative emerged in the broader political context of the Letta Report (2024) on the future of the Single Market and the Draghi Report on European competitiveness (2024), both highlighting the structural weaknesses of the EU’s internal market for innovative firms.
As evidenced in such reports, the lack of convergence in areas such as company formation, digital registration, taxation and insolvency procedures continues to impede the creation of a genuinely integrated business environment. Against this backdrop, the Commission’s initiative is intended to support high-growth, innovation-driven companies facing disproportionate regulatory and administrative burdens when scaling across borders.
The issues at stake
At its core, the proposal seeks to answer whether innovation-intensive companies could grow better under one coherent legal regime across the Union, without abandoning their national identity. Therefore, the initiative explores whether a uniform EU framework could replace the patchwork of national rules that currently apply to start-ups and scale-ups operating in multiple Member States. As in other areas driven by harmonisation and approximation of national legislations, the main legal question concerns whether such a framework should take the form of an entirely new EU corporate form (a “European Innovative Company”) or remain an optional layer of harmonised rules applicable to existing national companies that voluntarily opt in (following the model of the European Company).
Among the key areas under consideration are, for instance:
- simplifying and further digitalising company formation and governance, ensuring the cross-border recognition of company status;
- enhancing access to finance, through harmonising equity and convertible-debt structures, and investor protection, in order to attract EU-wide investment;
- improving labour and insolvency frameworks by facilitating mobility and a predictable treatment in case of restructuring; and
- establishing common principles for tax treatment of reinvested profits or innovation-related expenditure, and administrative compliance.
While at this stage the contours of the proposal remain open, as mentioned above, early discussions suggest that the “28th Regime” would be optional and complementary rather than mandatory, thereby allowing companies to choose between national company law and the new harmonised framework. On this, business associations seem to call for simplicity and flexibility, rather than creating a new system potentially adding, rather than removing, regulatory layers, while industry and digital-finance stakeholders emphasise the need for digital incorporation.
The way forward
If successfully designed, the “28th Regime” could represent the most ambitious development in European company law since the adoption of Council Regulation (EC) No 2157/2001 of 8 October 2001 on the Statute for a European company, as it would offer a transnational framework to reduce fragmentation and boost the global competitiveness of European firms. For lawyers and corporate practitioners, it would open a new field of advisory work, bridging corporate, tax, labour and insolvency disciplines under a single European umbrella.
However, as the initiative remains at an early stage, many constitutional and practical questions persist, including doubts as to interactions with national company registers and supervisory authorities; the interplay with Directive (EU) 2019/1151 of the European Parliament and of the Council of 20 June 2019 amending Directive (EU) 2017/1132 as regards the use of digital tools and processes in company law (the Digitalisation Directive); and the risk of (and remedies for) forum shopping incentives. The Commission is expected to consolidate feedback from the public consultation by early 2026, with a legislative proposal potentially to follow later that year, addressing all such issues.
As such, the “28th Regime” signals the EU’s renewed ambition to build a genuine single market for innovative enterprises. If implemented effectively, it could provide a long-awaited solution to the structural fragmentation that has long hampered the growth of Europe’s start-ups and scale-ups. With respect to this, the challenge will be to ensure that this new layer of EU law simplifies rather than complicates the business landscape and regulatory burdens, making the single market not only a market composed of 27 distinct sets of rules, but truly a unified market offering multiple alternative choices.
Share on
