EU's Proposed 'EU Inc.' Legal Form Falls Short for Start-ups

The European Commission has introduced a draft regulation for 'EU Inc.,' a new independent European legal form designed to support start-ups and scale-ups across the single market. Intended as a '28th regime' alongside existing national systems, the proposal aims to enhance Europe's competitiveness by standardizing corporate structures. However, the current draft is criticized for failing to meet the expectations of founders and investors. While it introduces beneficial digitalization measures, such as digital-only founding processes and share registers, it relies heavily on national laws for critical issues like investor rights and employee participation. This dependency risks perpetuating the legal fragmentation the initiative seeks to resolve. Experts argue that the framework remains too rigid for venture capital financing and cross-border expansion, lacking the necessary speed and cost efficiency. The article highlights that without significant improvements to ensure legal certainty and uniformity, the EU Inc. may not effectively address the barriers hindering innovative growth in the European internal market.