EU Inc. and the 28th Regime: A Second Attempt at a European Company

Twenty-two years after the European Company (Societas Europaea, or SE) became available, the European Union is trying again. On 18 March 2026, the European Commission published its proposal for a Regulation on the "28th regime corporate legal framework", which would introduce a new, optional corporate form called the EU Inc. ^[1][2]. Following its publication, EU leaders called for rapid progress on competitiveness initiatives, with the Council of the EU and the European Parliament tasked with advancing negotiations.

It is not simply a cheaper SE: it rests on a different legal basis, targets different businesses and reflects a different view of what has held European companies back. As the proposal remains under negotiation, what follows describes what the regime is intended to achieve, not rules that apply today.

What is the 28th regime?

The "28th regime" is intended to be an EU-level set of rules, sitting alongside the 27 national legal systems, which businesses could choose instead of the rules of any single Member State. Announced in the Commission's Political Guidelines for 2024–2029 and the January 2025 Competitiveness Compass, its stated long-term aim is to allow innovative companies to operate under one harmonised body of rules, eventually covering relevant aspects of corporate, insolvency, labour and, to an extent, tax law ^[3] (the "28th Regime").

The EU Inc. is intended as the first building block of the 28th Regime: its corporate law pillar. An accompanying Communication sets out the further initiatives needed to complete it, including a "European Business Wallet" and specialised courts or chambers for EU Inc. disputes, and a Recommendation defines innovative start-ups and scale-ups ^[4][5].

As proposed, the regime would be:

•         Optional: The EU Inc. would not replace any national company form. A company incorporated under Malta's Companies Act (Cap. 386) would remain unaffected.

•     A Regulation: Once adopted, it would apply directly in every Member State without national transposition. The proposed legal basis is Article 114 TFEU (the internal market), which permits adoption by qualified majority.

•         Open to all: Although designed for innovative companies, it would be available to any founder.

Why is the EU contemplating it?

The short answer is competitiveness. In 2024 the Letta report called for a "Simplified European Company" and the Draghi report for an "Innovative European Company"^[6]. Both identified a growing innovation gap, compounded by barriers to operating across borders within the Union.

Company law fragmentation is one such barrier, the single market contains 27 legal systems and more than 60 company legal forms. Expanding across borders means local advice, notarised documents in local languages, differing investor documentation, incompatible share option frameworks and distinct insolvency regimes. An International Monetary Fund estimate cited in the legislative debate equates intra-EU barriers in services to a 110% tariff^[7].

A quarter to almost a third of European unicorns have moved their headquarters or holding company to the United States^[8], often because investors prefer a familiar vehicle. The Commission's stated aim is to make it easier to start and grow in the EU, and to encourage those who left to return^[9].

The Commission's proposal in outline

Under the proposal, an EU Inc. would be incorporated in a Member State, either from scratch or by converting an existing company, and governed first by the Regulation and its own articles of association. Where the Regulation is silent, the law of the Member State of incorporation would apply as if the EU Inc. were the designated ‘relevant national legal form’^[10]. The Commission's text envisages:

•         Incorporation within 48 hours, for no more than EUR 100, when using a harmonised form and EU model articles.

•         No minimum share capital, with shares permitted without nominal value.

•         Fully digital procedures throughout the company's life, including share transfers and capital operations, without mandatory intermediaries for share transfers.

•      A "once-only" principle: information would be filed once through an EU central interface built on the Business Registers Interconnection System (BRIS) and shared with other authorities, including for tax and VAT registration.

•         A preventive legality check at incorporation, administrative, judicial or notarial at each Member State's choice.

•     Governance by one or more directors who must be natural persons, at least one resident in the EU, appointed and removed by the general meeting, which could give them binding instructions.

•         Creditor and minority safeguards, including a dual distribution test, directors' liability and dispute resolution, and the ability to form EU Inc. subsidiaries.

•         An EU employee stock option scheme (EU-ESO) with harmonised deferred taxation, the only point at which the proposal touches tax.

•         Simplified, digital winding-up and insolvency procedures, with specific rules for insolvent innovative start-ups, without altering the jurisdiction rules of the Insolvency Regulation (EU) 2015/848.

Equally important, the proposal would not harmonise corporate tax rates or bases, and national employment and social security law would continue to apply in full. An EU Inc. would be subject to the employee participation rules of the Member State of its registered office.

How does the EU Inc. differ from the Societas Europaea?

The SE Statute (Council Regulation (EC) No 2157/2001) and its companion Directive 2001/86/EC on employee involvement became applicable in October 2004. Adopted under the flexibility clause of former Article 308 EC, the Regulation required unanimity in Council and its compromises show. The SE requires subscribed capital of at least EUR 120,000. It has served groups such as BASF, Puma and Zalando, but its complexity has largely confined it to large corporations.

Four differences stand out in particular!

In terms of access, an SE can only be formed by existing companies with a cross-border element, through merger, a holding or joint subsidiary, or conversion. An EU Inc. could be formed by individuals in a single Member State, with no capital requirement.

When it comes to employee involvement, the SE's negotiation with a special negotiating body before registration is often its largest source of delay and cost. The EU Inc. would avoid that mechanism by deferring to the participation rules of the Member State of the registered office. This has become one of the most contested points in Parliament^[11].

As to depth of harmonization, the SE statute leaves so much to national public company law that there are in substance 27 varieties of SE. The EU Inc. aims to regulate more directly, through model articles, standard forms and digital procedures, though it too relies on national law for gaps.

Lastly, the EU Inc has scope beyond company law. The SE is purely a corporate law instrument. The EU Inc. would reach into employee stock options and insolvency, seen as central to whether start-ups can recruit talent and fail cheaply.

Expected benefits

If adopted as proposed, the EU Inc. is expected to:

1.       Lower cost and set-up time, removing the most visible entry barriers, particularly where incorporation still involves notaries and paid-up capital.

2.       Offer a recognisable vehicle for investors, reducing due diligence and countering the drift towards US holding structures.

3.       Ease cross-border operation, through the once-only principle and the BRIS interface.

4.       Help European businesses compete for talent, through a common EU-ESO scheme with harmonised deferral of the tax charge.

5.       Enable a faster fresh start, as simplified winding-up and insolvency would reduce the cost and stigma of failure.

None of this is guaranteed. Critics argue that the proposal still relies heavily on national law and retains mandatory rules that sit uneasily with venture capital contracting^[12], and doubt what a corporate form can achieve while tax, labour law and capital markets remain fragmented.

Where negotiations stand

The proposal is still being negotiated, and the final text may differ significantly from the Commission's version. Neither the European Parliament nor the Council has yet agreed its position. The Parliament's lead negotiator wants a narrower regime, limited to start-ups and closed to public listing, and a committee vote is due on 8 October 2026. The Council presidency is aiming to begin final negotiations with Parliament in November and to reach agreement by the end of the year^[13].

The main points of disagreement are whether the EU Inc. should be open to all businesses or only to start-ups, and whether it should remain a Regulation under Article 114 TFEU or become a Directive under Article 50 TFEU. A further question is which employee participation rules should apply where a company is registered in one Member State but operates mainly in another. Finally, it is debated whether the stock option tax deferral scheme will survive in its current form, as several Member States argue that any fiscal provision must be based on Article 115 TFEU (requiring unanimity) rather than Article 114 TFEU.^[14].

Why Malta is well placed for EU Inc.

The EU Inc. would allow a company to choose its Member State of registration while operating through a corporate form recognised across the single market. Malta is well placed to present itself as a jurisdiction of choice. An EU Inc. registered in Malta would remain subject to Maltese tax law and could therefore, where the applicable conditions are met, benefit from Malta’s full imputation system, shareholder refund mechanism, participation exemption and extensive network of double tax treaties^[15] . This would combine Malta’s established tax and corporate framework with a corporate identity familiar to investors, banks and counterparties across the Union.

Malta also offers practical advantages. English is an official language, and the proposal would permit articles of association in a language customary in international business ^[16], enabling founders to incorporate and operate in English. Maltese company law draws substantially on English company-law traditions, while Malta’s established corporate and financial services sector is accustomed to supporting cross-border groups. The Malta Business Bureau has accordingly encouraged Malta to market itself as a jurisdiction of registration for EU Inc. companies ^[17].

To this effect, the Malta Business Registry is actively working to ensure readiness to connect efficiently with the proposed EU central interface and to support the regime’s digital and accelerated incorporation process.

Careful structuring would nevertheless remain essential. Registration in Malta would not, by itself, determine tax residence, the existence of a permanent establishment or the location of a company’s centre of main interests where management and operations are conducted elsewhere. The final scope of the regime also remains under negotiation. Founders, scale-ups and groups considering where to establish an EU Inc. should therefore assess both the advantages of Maltese registration and the substance required for Malta to serve as a sound long-term base for operations across Europe. Our corporate and tax team would be pleased to discuss how the proposed regime may apply to your business.

Conclusion

The EU Inc. is the most ambitious attempt at a pan-European corporate form since the SE, and in several respects it is the SE's opposite. It would be open to individuals, without a capital threshold, digital by default and adoptable by qualified majority. Whether it fulfils that intention depends on the co-legislators preserving its breadth and simplicity, and on Member States building the registries and courts to make the 48-hour promise real. We will continue to follow the file closely.

This article is for general information only and does not constitute legal or tax advice.