A single set of rules applicable across the EU to enable companies to thrive and expand globally is expected in the coming months, with the aim of promoting competitiveness. The corporate form of the consolidated European company will be for unlisted limited liability companies based in one of the 27 EU countries.
The registration of such a company should be fully digital and can be completed in 48 hours, requiring a minimum capital of only one euro. To promote the seamless functioning of these companies within the internal market, including digital communication with authorities and digital investor information, MEPs want a multilingual digital portal managed by the Commission and accessible by all EU member states.
With 492 votes in favour, 144 against and 28 abstentions, MEPs last week adopted a series of recommendations that are expected to feed into the Commission's proposal for a new legal framework to support businesses in the EU, which is expected in the coming months. Under this new framework, EU countries will be able to either create a new corporate form or incorporate pan-European rules into an existing framework for the establishment of legal entities. MEPs insist on a single harmonised set of rules known as the "28th regime" to ensure a level playing field for businesses across the EU.
MEPs want to facilitate the access of these companies to investments, including through alternative financing models, while ensuring voluntary protection schemes, such as the separation of voting rights and economic rights or the distribution of profits under contractual agreements of limited duration or quantity. They also propose rules to attract and retain top talent in South-East European countries, including through ownership plans or stock options for employees.
Parliament supports that integrated European companies should be able to exploit research commercially and calls for measures to ensure better cooperation between small and medium-sized enterprises, start-ups and scale-ups and research institutions in the EU. These companies should have access to a specialized and rapid dispute resolution mechanism that could work in English.
It is noted that the European Parliament's study states that the current debate around a 28th regime begins with a proposal (Letta, 2024,) to allow businesses that wish to operate under a new business law codified at European level. The aim is to enable companies, especially SMEs and innovative businesses, to operate frictionlessly in all EU Member States. The problems that the 28th regime seeks to address are not new. Tensions between harmonisation or concentration at EU level and the autonomy of Member States have persisted for decades. These tensions are not a flaw in themselves – it is common for political systems to struggle to find the right balance between centralization and decentralization. Business creation in the EU has grown steadily over the last decade, in particular in knowledge-intensive services and digital sectors. However, the activity of start-ups and the dynamism of businesses remain concentrated in a few hubs: Berlin, Paris, Stockholm and Amsterdam. While the EU has consistently created slightly more new businesses per year than the US, it has struggled to grow them into globally competitive players. The EU's share of global start-ups worth more than €1 billion has been steadily declining since the global "financial crisis", reflecting structural challenges to scaling.
