I. Introduction: context and objective of the EU Inc. proposal
Against the backdrop of increasing geopolitical tensions, slowing productivity growth and fierce global competition, the European Union is under growing pressure to strengthen its economic competitiveness and close the innovation gap with other major economies. In this context, startups and scaleups are increasingly recognised as key drivers of innovation, investment and job creation across the single market.
Yet despite the existence of a common internal market, companies operating cross-border within the EU continue to face significant legal fragmentation. Diverging national corporate law regimes, administrative burdens and inconsistent procedures create friction for businesses seeking to scale across member states. This is particularly problematic for startups and high-growth companies, which require predictable, flexible and digital-friendly legal frameworks in order to attract investment and expand efficiently.
On 18 March 2026, the European Commission published its proposal for a harmonised European corporate legal form: the “EU Inc.”. The proposal aims to reduce regulatory fragmentation and remove barriers to cross-border business operations by introducing a uniform corporate law framework applicable throughout the EU.
The proposal takes the form of a regulation, which the Commission considered the most appropriate legal instrument to ensure a high degree of harmonisation, resulting in direct applicability across member states.
This article examines the key features of the proposed EU Inc. framework, as well as some of the challenges.
II. Key features of the EU Inc. proposal
A. A common corporate legal framework
The EU Inc. would constitute a new legal form within the legal order of each member state. It aims to establish a harmonised set of corporate rules governing the full lifecycle of a company, from incorporation to liquidation.
EU Inc. companies are limited liability companies that can be formed by one or more natural or legal persons. It may be incorporated ex nihilo or created through domestic or cross-border conversions, mergers or divisions.
The EU Inc. is governed by the Regulation, by its articles of association and for other matters, by national law in which the EU Inc. has its registered office.
EU Inc. companies, like any other company, are subject to the fundamental freedoms including the case law of the Court of Justice of the European Union. Therefore, an EU Inc. may be incorporated in any member state and have its registered office there, irrespective of where it carries out its main economic activities. An EU Inc. cannot be required to maintain its central administration or principal place of business in the same member state as its registered office. All member states should recognise the legal capacity of an EU Inc. company lawfully incorporated in another member state.
B. Simple and efficient corporate rules and procedures throughout the company lifecycle
A main objective of the Regulation is to ensure that corporate procedures throughout the lifecycle of an EU Inc. are simple, efficient and fully adapted to a digital economy.
To that end, the Regulation is based on two core principles: the “digital-only” principle and the “once-only” principle.
Under the digital-only principle, EU Inc. companies are entitled to complete all procedures falling within the scope of the Regulation entirely online. In parallel, the once-only principle aims to reduce the administrative burden by preventing the repeated submission of information that is already available to competent authorities via the Business Registers Interconnection System (BRIS) or national business registers.
Several provisions of the Regulation implement these principles.
1. Formation of an EU Inc. company or subsidiary
An EU Inc. may be formed either via an EU central interface based on BRIS, allowing for a “fast-track” procedure within 48 hours and subject to a maximum fee of EUR 100, or through a fully online procedure with the relevant national business register. In both cases, an application form must be submitted.
Standardised articles of association are required for the fast-track procedure, whereas either standardised or tailor-made articles of association may be used in other cases. The identification of the incorporators, as well as their signatures, must comply with the eIDAS Regulation, ensuring a fully digital process.
Relevant information on the EU Inc., including the European Unique Identifier (EUID) and data required for the issuance of a tax identification number (TIN), a VAT identification number, and for the beneficial ownership register, shall be digitally exchanged between the business register and the competent authorities. As a result, EU Inc. companies obtain their TIN and VAT identification numbers through this electronic exchange without the need to submit separate applications or provide additional information, unless it cannot be retrieved elsewhere and is strictly necessary for the purposes of issuing the VAT identification number.
The formation of an EU Inc. subsidiary in another member state may also be carried out via the EU central interface or fully online through a national business register. In such cases, the registering business register may not request documents or information that are already available in BRIS. Instead, it must automatically retrieve the relevant data concerning the parent company from BRIS using the EUID.
2. Meetings and corporate decision-making
Shareholders’ meetings, meetings of the board of directors, and voting procedures may be organised and conducted fully or partly online.
Decisions may also be taken by written resolution, which may be adopted by electronic means, thereby supporting efficient corporate decision-making.
3. Shares and share transfers
Each EU Inc. shall, upon registration, establish and maintain a digital register of shares. The digital register of shares shall contain all relevant information regarding the company’s shares, as well as any changes in the ownership.
On the basis of this register, the company may issue a digital certificate to each shareholder. Registration of shares has constitutive effect and enables shareholders to exercise their rights.
Share transfers may be carried out fully online, through electronically signed agreements, electronic notification to the company, and the subsequent registration of the change of ownership in the digital register of shares.
4. Dissolution, liquidation and simplified winding-up procedures
The Regulation provides for the possibility of filing for the dissolution of a solvent EU Inc. company fully online with the business register. The business register is required to update the company’s status instantly.
With respect to liquidation proceedings, the Regulation ensures the once-only submission of data. It further provides for digital filing with the business register and for electronic communication between creditors and the EU Inc. company or the liquidator.
Chapter X of the Regulation lays down rules on simplified winding-up proceedings, which apply exclusively to EU Inc. companies qualifying as innovative startups. Member states are required to enable the use of electronic means of communication for all exchanges between the competent authority, any insolvency practitioner, and the parties involved in the simplified winding-up procedure.
Moreover, courts may proceed with the realisation of assets through an electronic auction system, which member states must establish as part of their simplified procedures, at least for EU Inc. companies that are innovative startups.
C. An enabling framework for investment
1. Flexible financing framework
The EU Inc. proposal provides for a flexible financing framework aimed at facilitating capital structuring and funding.
In this respect, shares have no nominal value unless the articles of association provide otherwise. Accordingly, the shares do not represent a fraction of the company’s capital. The consideration for a share may be freely determined in a share issuance, and it may also be freely determined whether a contribution to capital is required.
Moreover, the Regulation does not restrict the type of consideration that can be provided for a share. This allows, inter alia, for in-kind contributions in the form of undertakings to perform work and services.
An EU Inc. company is not subject to any minimum capital requirements. At the same time, the Regulation provides the company with the possibility to increase its capital at any time. Capital reductions, however, are subject to specific safeguards. They require a balance sheet test, a solvency test, and a report by an independent expert.
With regard to governance and ownership structure, the articles of association may provide for shares with multiple voting rights or, alternatively, with no voting rights. The Regulation further allows for the issuance of convertible instruments, warrants, and redeemable shares, thereby broadening the available financing instruments.
Finally, existing shareholders benefit from default pre-emptive rights in relation to new shares issued against cash consideration and to instruments entitling to new shares.
2. EU employee stock option plans (EU-ESO)
The Regulation allows the EU Inc. company to establish an EU employee stock option plan (EU-ESO), under which it may issue warrants to eligible persons, including employees and members of the board of the EU Inc. company and its subsidiaries.
In this context, a mandatory waiting period applies before the warrants issued under the EU-ESO can be exercised. This waiting period is at least 24 months from the issuance of a warrant.
Furthermore, the taxation of any income derived from warrants under the EU-ESO is deferred until the time when the shares obtained through the exercise of the warrants are disposed of.
III. Key challenges and open questions
A. Scope of harmonisation
A first challenge concerns the scope of harmonisation achieved by the Regulation. While it introduces a harmonised set of corporate rules for EU Inc. companies, this harmonisation remains partial rather than comprehensive.
In this respect, the Regulation does not affect labour law, taxation, or other national legal frameworks. Moreover, a number of corporate law matters are expressly left outside its scope. These include, inter alia, legal personality, directors’ liability, remedies against decisions of the board or shareholders, accounting rules, etc.
B. No fully centralised EU system
A second challenge concerns the absence of a fully centralised EU system, notably with respect to registration and dispute resolution.
With regard to registration, EU Inc. companies shall be registered in the business register of the member state where they have their registered office. The Commission will only establish an EU interface linking national business registers for registration and information exchange purposes. A fully centralised EU register is, however, only envisaged at a later stage.
A similar fragmentation is observed in relation to dispute resolution. Disputes involving EU Inc. companies remain within the jurisdiction of national courts. Although the Commission encourages member states to designate specialised courts for such disputes, no EU-wide specialised judicial system is introduced.
By way of illustration, the Regulation allows a shareholder of an EU Inc. company to withdraw in certain circumstances and sets out certain scenarios which may, for example, justify such withdrawal. However, the Regulation also provides that the actual assessment of whether the company’s affairs are conducted in an oppressive manner is ultimately left to the competent national court, which must consider all relevant circumstances of the individual case. As a result, the application of the right of withdrawal may vary across member states.
C. Potential resistance to the tax aspects of the EU-ESO framework
A further challenge concerns the tax treatment embedded in the EU employee stock option (EU-ESO) framework. Since taxation remains within the competence of member states, the proposed deferral of taxation until the disposal of shares acquired through exercised warrants may give rise to discussion in the further negotiations of the Regulation.
IV. Timing and next steps
The EU Inc. proposal was published on 18 March 2026, marking the start of the EU legislative process and the opening of negotiations between the Commission, the European Parliament, and the Council. During this process, the draft Regulation will be amended as a result of the discussions.
The Commission aims to reach an agreement by the end of 2026. Once adopted, the Regulation will apply 12 months after its entry into force, which would point towards an application at the earliest by the end of 2027.
If you have any questions regarding the EU Inc., please feel free to contact the authors of this article, Tom Swinnen or Sisey Zhang.
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This newsletter does not constitute legal advice or a legal opinion. Please consult with a legal counsel of your choice before taking any action based on the information provided.