What changed

A. whereas enterprises, specifically small and medium enterprises (SMEs), start-ups and scale-ups, across the Union face widely varying rules from one Member State to another; whereas this regulatory diversity and the costs of navigating unfamiliar environments hinder the pan-European financing of companies;

B. whereas a unified European system could be achieved not only by means of a stand-alone legal act of the Union but also by introducing a set of rules which operate alongside the national legal system existing in each Member State;

A. whereas enterprises, specifically small and medium enterprises (SMEs), start-ups and scale-ups, across the Union face regulatory frameworks which vary significantly from one Member State to another; whereas that regulatory diversity and the associated costs of navigating unfamiliar environments hinder the pan-European financing and scaling of companies;

C. whereas many start-ups and scale-ups in the Union are developing breakthrough technologies; whereas those enterprises are often acquired by foreign enterprises before they mature; whereas such acquisitions are often below the Union’s merger control thresholds;

B. whereas the Commission, in its communication entitled ‘The EU Startup and Scaleup Strategy’, has highlighted that fragmentation and lower growth perspectives push innovative companies to seek financing outside Europe;

D. whereas innovative companies need access to venture capital, pan-European mobility, scalability, high-skilled workers, protection against ‘killer acquisitions’ and long-term investments;

C. whereas the global business environment increasingly demands agility, digitalisation and access to diverse markets and talent pools, something many Union companies currently struggle to achieve due to regulatory complexity and inconsistent frameworks;

D. whereas the Union, cautious to ensure that it is possible for companies to compete on equal terms, is to work, as provided for in Article 3(3) of the Treaty on European Union (TEU), for the sustainable development of Europe based on balanced economic growth and price stability, a highly competitive social market economy, aiming at full employment and social progress, and a high level of protection and improvement of the quality of the environment;

E. whereas a unified European corporate law system could be achieved more efficiently not only by means of a stand-alone legal act of the Union but also by introducing a set of rules which operate alongside the national legal system existing in each Member State, without those rules creating additional administrative or financial burdens or other types of obstacles to the development of businesses, especially SMEs;

F. whereas the Union has already adopted legal frameworks for a European Public Limited-Liability company, a European Cooperative Society and a European Economic Interest Grouping; whereas those corporate forms are, however, not suitable for enabling start-ups and scale-ups to operate more efficiently in the internal market;

G. whereas facilitating easier access to capital and talent through a simplified and uniform legal framework will enhance the ability of SMEs, start-ups and scale-ups to compete globally, attract investment and contribute to job creation and social cohesion within the Union;

H. whereas it is necessary to ensure clarity and legal certainty for European and foreign investors by enabling them to invest cross-border while using harmonised rules;

I. whereas SMEs, start-ups and scale-ups need enhanced access to different forms of capital, cross-border mobility, scalability, highly skilled workers, scientific and research output, including data, public procurement, protection against ‘killer acquisitions’ and long-term investment strategies to thrive within the internal market;

J. whereas SMEs, start-ups and scale-ups, many of which are social enterprises and companies founded by young or first-time entrepreneurs, play a key role in driving innovation, creating social cohesion and contributing to sustainable economic growth, yet often face greater challenges in accessing finance, networks and specialised support; whereas cooperation with universities, research institutes and technology transfer offices can accelerate the lab-to-market process, facilitate access to expertise and infrastructure, and boost the commercialisation of research results;

K. whereas many start-ups and scale-ups in the Union are developing breakthrough technologies; whereas such start-ups and scale-ups are often acquired by foreign enterprises before they mature; whereas such acquisitions are often below the Union’s merger control thresholds;

L. whereas SMEs, which are central to the competitiveness of the Union, particularly family-owned businesses, face succession challenges; whereas employee financial participation models can foster economic perspectives for SMEs, start-ups and scale-ups, incentivise talent and address the succession gap where family succession is not viable and, thus, support long-term stability and growth;

M. whereas enhancing legal certainty and predictability for companies operating across Member States is essential to strengthening the Union’s position as a leading location for entrepreneurship, innovation and sustainable business development;

1. Welcomes the Commission’s commitment to submit a legislative proposal on a 28th regime for innovative companies (the ‘28th regime’), which should consist of a legislativelegal proposalregime for a directive with Articles 50 and 114(1) of the Treaty on the Functioning of the European Union (TFEU) as the legal bases;companies;

2. Is firmly opposed to using Article 352(1) TFEU as a legal basis because that would delay the adoption of the legislative proposal due to the requirement for unanimity; is critical about the use of enhanced cooperation as referred to in Article 20 of the Treaty on European Union and Article 329 TFEU or intergovernmental agreements for the purpose of establishing the 28th regime;

2. Stresses that a 28th regime must be ambitious in substance and in form; underlines that the rules concerning the 28th regime must be the same throughout the entire Union and that Member States should not be allowed to maintain or introduce, in their national law, provisions which diverge from those laid down in the legal act on the 28th regime; considers the use of a regulation as the most appropriate measure to introduce a 28th regime; acknowledges that a maximum harmonisation directive could serve the same objective; is opposed to using Article 352(1) of the Treaty on the Functioning of the European Union (TFEU) as a legal basis because it requires unanimity in the Council, which could significantly delay the adoption of the legal act on the 28th regime and jeopardise the ambition and coherence of the corporate form adopted under the 28th regime; insists on the use of a legal basis that will make it possible to adopt the legal act on the 28th regime in the Council by qualified majority; considers, therefore, that the 28th regime might have to consist of a package of separate legislative proposals; acknowledges that the appropriate legal basis for corporate law matters is Article 50 and 114(1) TFEU; is of the opinion that a directive on the 28th regime needs to be a maximum harmonisation directive in order to achieve the objectives of the 28th regime;

3. Acknowledges the fact that Articles 50 and 114(1) TFEU require harmonisation measures in company law that necessitate implementation in the national law of Member States; considers that maximum harmonisation is to be preferred in this case in order to ensure uniform rules in all Member States;

3. Is critical of the use of enhanced cooperation as referred to in Article 20 TEU and Article 329 TFEU for the purpose of establishing the 28th regime; underlines that such an approach risks fragmenting the internal market, contrary to the Union’s integration process;

4. Considers the 28th regime as a step towards further deepening the internal market and greater European integration;

4. Acknowledges the fact that harmonisation measures in company law, based on Articles 50 and 114(1) TFEU necessitate implementation in the national law of Member States; considers that a maximum harmonisation directive containing a clearly defined set of core matters, without prejudice to labour and social law, is necessary in this case in order to ensure that there are uniform rules in all Member States, without creating additional administrative or financial barriers for businesses;

5. Considers that the need for uniformity, efficiency, coherence and legal certainty, called for by economic operators, such as globally innovative SMEs, start-ups and scale-ups, and investors in the sector, makes it necessary to adopt a maximum harmonisation directive;

6. Calls on the Commission to assess the benefits of a coherent framework, including on taxation issues, with added value for start-ups and scale-ups, as part of the 28th regime package in order to attract international investments and support innovation and growth in the Union; stresses that the Commission should facilitate coordination and encourage best practices to reduce barriers that hinder cross-border operations, investment and the attraction of talent;

7. Considers that the 28th regime is a strategic step towards further deepening the internal market, thereby advancing European integration and competitive strength;

7.10. Is mindful of the risk that a 28th regime could enable the circumvention of mandatory domestic protections for weakerworkers, their representatives and trade unions, and other vulnerable parties; underlines that the 28th regime must notunder no circumstances become a vehicle to undermineundermine, reduce, weaken or circumvent existing levels of protection;protection at Union or national level; insists that effective safeguards be set out by way of substantive rules which have a high level of protection and by way of conflict-of-law rules which ensure the application of mandatory domestic rules;

The 28th regime for innovative companies

11. Considers the establishment of a 28th regime fundamental for innovation, competitiveness and growth and believes that the proposal, along with the related regulatory and executive measures, should be adopted and implemented as quickly as possible;

The 28th regime legal framework

9.13. Proposes naming the corporate form covered by the 28th regime the ‘European‘Societas Start-UpEuropaea andUnificata’ Scale-Up’(S.EU company- (ESSU);Unified callsEuropean forCompany), thewhich abbreviationentails ‘ESSU’adding tothe beabbreviation added‘S.EU’ to existing national corporate form abbreviations;

10.14. Underlines that the 28th regime’ is without prejudice to Union and national law in the area of individuallabour and collectivesocial labourlaw, lawincluding rules on employee participation as defined in Article 2, point (k), of Directive 2001/86/EC and rules on collective agreements applicable in the place of employment; stresses that S.EUs must be subject to the same Union and national rules on employeeinsolvency codetermination;and must not derogate from any rules granting workers preferential protection in insolvency proceedings;

11.15. Highlights the need tofor simplifysimple and digital company formation and registration; calls for procedural complexity to be reduced and for the registration procedure for creating an ESSUS.EU to be completed digitally within 48 hours;hours, while ensuring legal certainty; calls for the possibilitycompulsory tointegration submitof digital tools for submitting company documents and disclosing information online throughout the lifecycle of the corporate formS.EU and for the full implementation of the ‘once only’ principle for the registration and administration of an ESSU;S.EU; considerscalls thatfor the possibility of allowing digital procedures, such as digital meetings for general assemblies and board meetings, should be possible;meetings;

12. Calls for the creation of a uniform Union-level digital company register to serve as a direct entry point for registering ESSUs, complementing and extending the existing Business Register Interconnection System (BRIS);

16. Stresses that the creation of the S.EU should be fully integrated with the initiative to develop a European business wallet, which could also streamline and simplify digital identification and authentication as well as the management of essential company documents, thereby ensuring smooth digital interactions for S.EUs across Member States and facilitating cross-border operations; calls, in addition, for the full implementation and assessment of existing Union law regarding the use of digital tools in company law, in particular Directives (EU) 2017/1132 and 2009/102/CE, as well as for further digitalisation and automation of reports to authorities, which should be a core priority in the work on regulatory simplification in the Union;

13. Calls for the further development and adaptation of a Union company identifier to streamline registration, boost transparency and trust, facilitate company identity verification, and combat fraud and tax evasion;

17. Calls for the creation or integration into existing structures of a uniform Union-level digital portal to serve as a direct entry point for S.EUs, complementing and extending the existing Business Register Interconnection System (BRIS) by providing a harmonised, single-access interface for cross-border use, without creating a new separate or parallel register; stresses that the digital portal should not replace the existing national incorporation rules but, rather, serve as a common portal on which all information necessary for investors would be aggregated; stresses that the digital portal must be easily accessible, allowing for seamless access to national business registries, and should build on or, where appropriate, revamp the existing e-Justice portal; calls for the digital portal to serve as a platform that facilitates secure digital processes, capable of storing documents as well as national certifications, which could later be recognised in all Member States in order to enable the portability of certifications, supporting the ‘prove-it-once’ principle; stresses that the digital portal should enable verifiable credentials, the e-signature of documents, the sale and allocation of shares, the creation and adoption of board resolutions and the provision of e-invoicing services; underlines that the digital portal must be multilingual and support cross-border operability; highlights that such digital tools will enhance legal certainty, reduce administrative burdens and promote the seamless operation of companies within the internal market;

14. Considers that the possibility to register as an ESSU should not be limited to a new category of ‘innovative companies’ or to other limiting factors; warns that creating such a new category would add unnecessary red tape; clarifies that it should only be possible for natural or legal persons that are resident or established in the Union to establish an ESSU;

18. Calls for the further development and adaptation of a single Union company identifier to streamline registration, boost transparency and trust, facilitate company identity verification, and combat fraud, money laundering and tax evasion; stresses that that would enable companies to securely store and share verifiable credentials with authorities across the Union; encourages the Commission to work on interoperability with global initiatives for company identifiers;

15. Considers that it should be possible for an ESSU to operate as an autonomous single company or as a subsidiary company of an ESSU parent company;

19. Considers that the possibility to register as an S.EU should take into account the diversity of business models and not be limited to a new category of ‘innovative companies’ or to other limiting factors; warns that creating such a new category would add unnecessary red tape; clarifies that it should only be possible for natural or legal persons who are resident or established in the Union to establish an S.EU;

16.20. StressesConsiders that the registeredS.EU seatshould ofserve as a companycorporate mustform befor insingle oneentities ofand thefor 27uniform Membergroup Statesmanagement inand orderconsiders tothat qualifyit forshould registrationbe aspossible for an ESSU;S.EU underlinesto thatoperate theas seata andparent registeredcompany officeor mayas bea insubsidiary differentcompany Memberof States;an S.EU parent company;

17.21. UnderlinesStresses that productivitythe growth,registered innovationseat andof sociala inclusioncompany must gobe hand-in-hand;in isone of the view that27 considerationMember shouldStates bein givenorder to the creation ofqualify employeefor stockregistration ownershipas plansan forS.EU employees; ofunderlines anthat ESSUthe soregistered thatseat theyand canthe gainregistered anoffice ownershipmay interestbe in thedifferent company;Member States;

18.22. UnderlinesCalls thefor needincluding tooptional protectforms Europeanof innovativesteward companiesownership, fromasset ‘killerlocks acquisitions’and different classes of shares, especially loyalty shares and todual-class preventshares, theincluding relocationveto shares, as part of innovation,the oftenlegislative supportedproposal; byunderlines that European publicinnovative researchcompanies, funds,in toparticular outsideSMEs, start-ups and scale-ups, are in need of alternative paths for access to capital; stresses the Union;need considersfor mergeralternative regulationfinancing asmodels insufficientin tothe addressearly stages of the issuelifecycle of ‘killeran acquisitions’;S.EU; callsconsiders forthat includingentrepreneurs optionalmight formswant ofto stewardprotect ownership,themselves assetfrom locks‘killer andacquisitions’ differentto classesprevent the relocation of shares,innovation, especiallyoften dual-classsupported shares,by includingEuropean vetopublic shares,research asfunds, partoutside of the legislativeUnion; proposal;considers merger regulation as insufficient to address that issue;

19. Is concerned about the risk of undermining the existing standards for the protection of the weaker party in the national legal orders of the Member States;

23. Stresses the need not to undermine existing standards at Union or national level, thereby fostering legal certainty and protecting public interests, such as the prevention of money laundering, the respect for Union sanction regimes, and the protection of workers, their representatives and trade unions, and other vulnerable parties in the national legal orders of the Member States; reiterates that any S.EU must comply with the requirements set by Union and national labour law;

20. Considers the use of conflict-of-law rules as a more appropriate way of addressing the protection of the weaker party than substantive rules in the new legislative proposal; calls for matters relating to employee codetermination to be determined by the law of the real seat of the company, which is the place of the company’s central management;

24. Considers it necessary to include safeguards for the participation of employees, employees' representatives, or both, in the affairs of a company; understands participation as it is defined in Article 2, point (k), of Directive 2001/86/EC; reiterates that the S.EU should be treated in the same manner as comparable domestic companies by its home Member State and as comparable Union foreign law companies by any host Member State whilst ensuring that the artificial use of the S.EU with a view to circumventing current levels of employee participation protection in the law of the Member States is effectively prevented; underlines that the S.EU should be subject to the rules in force concerning employee participation, if any, in the Member State of employment; stresses that, accordingly, the S.EU must introduce, in accordance with the applicable national law of the place of employment, board-level employee representation rights once the number of employees of the company exceeds any threshold, as laid down in the national law of the place of employment, for triggering board-level employee representation rights in that Member State; considers the reference to the negotiation procedure as laid down in Articles 3 to 7 of Directive 2001/86/EC as a fallback option, provided that employee participation rights which have already been established are not circumvented;

25. Stresses that the 28th regime should not lead to the creation of shelf- S.EUs or an increase of letterbox companies, as such practices undermine regulatory integrity, distort fair competition and erode genuine economic activity within the Union; underlines that the 28th regime should be without prejudice to the rights of trade unions and employers’ organisations to negotiate collective agreements;

26. Considers that a company for which infringement of binding rules regarding fraud, tax, social security evasion or employee participation have been officially established, should not be allowed to opt in to the 28th regime;

Attracting and supporting talent

27. Stresses that the S.EU framework should foster partnerships with universities, research institutes and technology transfer offices to accelerate the transition from lab to market, to ensure access to research infrastructure and expertise, and to support the commercialisation of research results, thereby strengthening innovation-driven ecosystems;

28. Highlights that the S.EU framework should facilitate free movement within the Union, without the need for intermediaries in administrative processes, while respecting applicable Union and national rules on labour and social law;

29. Stresses that attracting top talent is essential for growth and innovation in the Union and that SMEs, start-ups and scale-ups often face difficulties in offering the right competitive financial incentives across the single market, such as equity or profit-sharing, to attract and retain skilled professionals; underlines that productivity growth, innovation and social inclusion must go hand in hand; is of the view that consideration should be given to harmonising rules for employee financial participation, in particular through the creation of employee stock ownership plans (‘ESOPs’) and employee stock options (‘ESOs’);

30. Underlines that harmonised rules for employee financial participation are among the key demands of entrepreneurs that face difficulties in providing equal benefits to their employees across the internal market; highlights that the harmonised rules should be without prejudice to fiscal policy, but, rather, should allow for employees to have progressive stock options; considers that having such harmonised rules would enable employees to gain an ownership interest and directly benefit from their company’s success, fostering long-term loyalty, innovation and a fairer distribution of growth; emphasises that it is important for the Commission to establish guidelines on the valuation of equity and on vesting periods; notes in that context that taxation-related issues, that is making employee financial participation fiscally attractive, are both sensitive and critical to the success of attracting top talent, and therefore calls on the Commission to address such issues as part of the 28th regime package to ensure legal coherence and cross-border applicability;

31. Insists that the harmonised rules for employee financial participation schemes should be designed in such a way as to feed into a more favourable work environment and should be non-discriminatory; stresses that such schemes should not replace or diminish remuneration and must have a low threshold for employees to access them;

21. Calls for the elaboration of model documents to be used within the entire Union for shareholder agreements and articles of association;

32. Highlights that proposal on the 28th regime establishing an S.EU should in general bring clarity to European and foreign investors by enabling them to invest cross-border using harmonised rules;

22. Considers that the new legislative proposal should contain harmonised rules on equity-like debt instruments, enabling investors to invest in a company without acquiring rights of control over that company;

33. Calls for the elaboration of standardised multilingual model documents to be used by S.EUs within the entire Union for shareholder agreements and articles of association and calls for the use of and compliance with those model documents and other foundational and operational templates specifically tailored for S.EUs to be monitored by the digital portal referred to in point 17 in order to ensure legal clarity, ease of cross-border use and investor familiarity; recommends that those model documents serve as optional default templates within the S.EU registration process; recommends that it should be possible to depart from the model documents to take into account specific business requirements;

34. Considers that the legislative proposal should contain harmonised rules on equity-like debt instruments, including insolvency rules linked to those instruments, enabling investors to invest in a company without acquiring rights of control over that company;

35. Reiterates that access to finance should not be limited to venture capital but should also cover other types of investments, including equity and social impact investments, pension schemes and public investment funds, in order to ensure the necessary access to capital;

36. Considers that provision should be made to facilitate the cooperation of SMEs, start-ups and scale-upswith research institutions to support spin-offs and knowledge transfer; underlines that, to that end, the creation of the S.EU should be fully integrated with Union initiatives to facilitate improved access to data in the context of research;

23.37. Considers that an alternative dispute resolution mechanism should be established for disputes relating to ESSUsS.EU s to ensure fast and specialised dispute resolution; further believes that Member States should consider introducing a special panel within their national courts dedicated to disputes between companies relating to ESSUsS.EU s and that it should be possible for such special panels to conduct the dispute resolution in English;

Impact assessment, review and evaluation

38. Urges the Commission to conduct and publish a comprehensive and transparent impact assessment of any new legislative proposal related to the 28th regime, focusing on the impact of harmonisation measures for companies and on social, fiscal and legal consequences, as well as on the risk of weakening national protection standards;

39. Calls on the Commission to ensure a comprehensive review and, where necessary, revision of the 28th regime at regular intervals, including an assessment of its adoption rates among companies, particularly SMEs, start-ups, and scale-ups, its alignment with evolving business and societal needs, its overall fitness for purpose and its effect on the Union’s competitiveness; calls on the Commission to evaluate and report to the European Parliament, the Council and the European Economic and Social Committee on the potential effect of the new legislative act on the development and economic growth of SMEs; considers that the review cycle should occur every 4 years to ensure adaptability to new challenges;

41. Considers that the financial implications of the requested proposal should be covered by robust budgetary allocations;

Parliament proposes to call the corporate form covered by the 28th regime the ‘European Start-Up and Scale-Up’ company (ESSU). The ESSU should not be an autonomous pan-European corporate form, but a national corporate form in all Member States that must consist of certain elements that are harmonised by Union law. The abbreviation ESSU should be added to existing national corporate form abbreviations.

Parliament proposes to call the corporate form covered by the 28th regime ‘Societas Europaea Unificata’ (S.EU) (Unified European Company). The rules for the S.EU must be the same in all Member States, and, in order to overcome fragmentation of the internal market, the Member States may not maintain or introduce, in their national law, any provisions diverging from those rules. To ensure a robust, ambitious and comprehensive regulatory framework, Parliament insists on adopting the S.EU with a legal basis that provides for the ordinary legislative procedure with a qualified majority in the Council. Parliament therefore opposes the use of Article 352(1) TFEU as a legal basis. Parliament is critical of the use of enhanced cooperation since a 28th regime would then only be applicable in a subset of Member States, which, instead of overcoming fragmentation of the internal market, would further fragment it and which would undermine the attractiveness of S.EUs, which would not, in such a case, be recognised within the entire Union. The 28th regime establishing the S.EU might have to be adopted by means of several legal acts, rather than by a single comprehensive legal instrument. In that case, each separate legislative proposal should provide the same safeguards when it comes to the protection of public interests such as labour law and worker and trade union rights. The corporate law elements of the regime will need to be adopted under Articles 50 and 114(1) TFEU, which are the only legal bases available for legal acts in the area of corporate law that provide for the ordinary legislative procedure with qualified majority voting in the Council; Article 50 TFEU, however, only allow for the adoption of directives. Against that background the S.EU would not be an autonomous corporate form, but a national corporate form in all Member States that must consist of a set of essential elements that are harmonised by Union law, in order to avoid gold plating and divergent national S.EUs which would go against the objective of the 28th regime. The abbreviation S.EU should be added to existing national corporate form abbreviations.

The law applicable to the creation of an ESSUS.EU should be the law of the Member State in which the company in question is incorporated.registered. By way of derogation from that principle and for the purpose of protecting predefined public interests, it should be possible to determine the applicable law by means of an overriding connecting factor rather than the place of incorporation.

The legal bases for the ESSU should be Articles 50 and 114(1) TFEU. In order to achieve legal certainty as to the constitutive elements of the ESSU,S.EU, the directive adopted under Articles 50 and 114(1) TFEU must be a maximum harmonisation directive.

Parliament is mindful of the risk that an automatically recognised ESSUS.EU could lead to athe circumvention of mandatory domestic rules that protect weakerworkers, parties.their representatives and trade unions, and other vulnerable parties as well as other public interests.. The ESSUS.EU corporate rules should therefore be without prejudice to Union and national law in the area of individual and collective labour law, including rules on employee codeterminationparticipation rules,in the affairs of the company, and should contain safeguards that effectively prevent the abusive use of the ESSU.S.EU.

If national company law provides for a minimum paid-in capital for the establishment of a company eligible to register as an ESSU, the immediately paid-in capital must, for the purpose of the registration of that company, be set at EUR 1 and the company should be obliged to allocate at least 25 % of its annual profits to a legal reserve until that reserve, together with the any initially paid-in capital, reaches the minimum capital required under the national law in question.

– it must be entitled to transfer its registered seat to another Member State without requiring dissolution or re-incorporation, in accordance with harmonised procedures ensuring continuity of legal personality;

In the interest of simplification, the possibility to register as an ESSU should not be limited to a new category of ‘innovative companies’ or to other limiting factors as that would create additional red tape and an unnecessary bureaucratic burden.

To establish a company eligible to register as an S.EU, the immediately paid-in minimum capital requirement must, for the purpose of the registration of that company, be set at EUR 1, regardless of the minimum capital otherwise required under the national law in question.

If an ESSU intends to list itself on the stock market, it should be required to convert into a public limited company under national or Union law in accordance with national and Union conversion rules.

In order to ensure the protection of creditors, the Commission should put forward a comprehensive legal framework which incorporates alternative mechanisms such as solvency tests. Such alternative mechanisms should be proportionate and transparent, with clear criteria for assessing the financial health of companies and mitigating risks to creditors.

In the interests of simplification, the possibility to register as an S.EU should not be limited to a new category of ‘innovative companies’ or to other limiting factors as that would create additional red tape and an unnecessary bureaucratic burden.

If an S.EU intends to list itself on the stock market, it should be required to convert into a public limited company under Union or national law in accordance with Union and national conversion rules.

The creation and registration of an ESSUS.EU should be fully digital and comply with the ‘once only’ principle.principle whereby companies submitting a document in one Member State should not have to submit it again in another Member State. The setting up of an ESSUS.EU must be finalised within 48 hours.

Upon creation, an ESSUS.EU should receive a unified digital identity and company identifier to streamline registration, boost transparency and trust, facilitate company identity verification, and combat fraudfraud, money laundering and tax evasion.evasion, while ensuring legal certainty.

To facilitate the achievement of those objectives, a uniform Union-level digital companyportal registerthat serves as a direct entry point for ESSUsS.EUs should be created or integrated into existing structures and operated by the Commission. Such aThat registerportal wouldshould complement and extend the existing Business Register Interconnection System (BRIS).(BRIS) Theby uniformproviding Union-levela digitalharmonised, companysingle-access registerinterface for cross-border use, without creating a new separate or parallel register. The digital portal should not replace the existing national incorporation rules but, rather, serve as a common portal.platform Whenon registeringwhich onall relevant information necessary for investors would be aggregated. Member States should therefore automatically transmit documents to the Union-levelportal, ensuring recognition and seamless access for stakeholders. The platform should also provide information about national procedures and resources and give access to investor model documents for S.EUs, enable the verification of credentials, the e-signature of documents, the sale and allocation of shares, the creation and adoption of board resolutions and the provision of e-invoicing services. When using the digital companyportal register,to register an S.EU, a company must choose a Member State as the place of incorporation and, in so doing, the national law applicable to the incorporation.

The uniform Union-level digital companyportal for companies should make it possible to register wouldas establishan aS.EU directand entryto pointsearch for companiesa tocompany registerregistered as an ESSU.S.EU. Incorporation,Registration, fillings and updates should be administered byvia thatthe registerdigital portal only once and should be accessible across Member States on the basis of a multilingual interface and harmonised identification standards under the eIDAS Regulation. The registerdigital portal could make use of a permissioned distributed ledger (DLT) network that records key corporate events, such as registrations or share transfers, with immutable timestamps.

It should be possible for any cash contributions for the setting up of the company to be made to a public trust agency for the period before the opening of a bank account is finalised. After the opening of the bank account, the trust agency should transfer the cash contributions to that bank account.

The rules on ESSUs should be without prejudice to individual and collective labour law and to rules on employee codetermination.

The rules on S.EUs should be without prejudice to Union and national labour law including rules on the participation of employees, the employees’ representatives, or both, in the affairs of a company as defined in Article 2, point (k), of Directive 2001/86/EC. As a matter of principle, the S.EU should be treated by its home Member State in the same manner as the domestic limited liability company form that on which it is built and by any host Member State in the same manner as comparable Union foreign law companies, whilst ensuring that the artificial use of the S.EU with a view to circumvent current levels of employee participation protection in the law of the Member States is effectively prevented.

The law applicable to individual employment contracts shouldcontinues beto exclusivelybe determined byexclusively under Article 8 of Regulation (EC) No 593/2008.593/2008 and the jurisdiction over individual employment contracts continues to be determined under Section 5 of Chapter II of Regulation (EC) No 1215/2012, including the relevant case law of the Court of Justice of the European Union. Accordingly, the choice of the parties may not deprive employees of the protection afforded to them by mandatory provisions that cannot be derogated from by agreement.

For matters relating to employee codetermination, the applicable law should be determined by the real seat of the company, that is the place of the company’s central management.

Regarding employee participation, the S.EU must be subject to the rules in force concerning employee participation, if any, in the Member State of the registered office. However, if an S.EU conducts an economic activity which entails employment in another Member State without setting up a branch, agency or subsidiary, the S.EU must be subject to the rules in force concerning employee participation, if any, in the Member State of the place of employment provided that the legal order of the S.EU’s registered office does not provide for at least the same level of board-level employee representation rights as required under the law of the place of employment. If necessary, the S.EU should adjust its Articles of Association accordingly.

Where there is athe disputeapplicable orlaw anycannot uncertaintybe asdetermined toin whichaccordance nationalwith lawthe governsprinciples mattersset relatingout toin employeethe codetermination,previous theparagraph, managementas boarda offallback anoption, ESSU,a thenegotiation representativesprocedure ofequivalent theto employeesthat orprovided tradefor unionsin thatArticles would3 haveto a7 nominationof rightDirective pursuant2001/86/EC tomust thebe nationalinitiated lawonce the applicationnumber of whichemployees isreaches in disputeat orleast uncertainone shouldMember beState ableany tothreshold requesttriggering theboard-level courtemployee orrepresentation tribunalrights ofin thethat Member State in whichwhere thean companyS.EU has its registered office to decide on thenot applicableyet law.introduced Thatemployee courtparticipation or tribunalwhere shouldreaching havethe exclusivethreshold jurisdictionimplies tochanges settleto the matter.existing employee participation.

5. Encouraging optional long-termism

If an existing national company transforms into an S.EU, Articles 86l, 133 and 160l of Directive 2017/1132 must apply mutatis mutandis provided that already established employee participation rights are not circumvented.

With a view to protecting European innovative companies from ‘killer acquisitions’ and to preventing the relocation of innovation, the creation of which is often supported by European public research funds, to outside of the Union, Member States should introduce rules that allow for companies to irrevocably opt in to additional legal protection schemes such as:

5. Encouraging long-term strategies and optional forms

 the separation of voting rights and economic rights through different classes of shares, especially dual-class shares;

With a view to stimulating European innovative companies, attracting investment and creating alternative paths for access to capital and financing models and preventing the relocation of innovation, the creation of which is often supported by European public research funds, outside of the Union, Member States should introduce rules that allow for companies to voluntarily and irrevocably opt in to additional legal protection schemes. The purpose of such additional legal protection schemes should be to help European companies that might want to protect themselves from ‘killer acquisitions’ and relocation. Those schemes can include:

 the separation of voting rights and economic rights through different classes of shares, including dual-class shares, veto shares and preferred shares;

Directive (EU) 2017/1132 should be amended as regards cross-border conversions, mergers and divisions should be amended in order to allow Member States that have chosen to introduce their own national corporate form of steward ownership to limit the cross-border conversion of such a national corporate form to corporate forms of other Member States that also provide for similar forms of steward ownership.

Attracting skilled and innovative talent is crucial for driving economic growth, fostering innovation and maintaining competitiveness in a rapidly evolving global market. Productivity growth, innovation and social inclusion must go hand-in-hand. The ESSUS.EU framework should facilitate free movement within the Union, without the need for intermediaries in administrative processes, while respecting applicable Union and national rules on labour and social law. The S.EU should provide for optional harmonised rules across the Union on employee financial participation schemes, in particular on the structuring of employee stock ownership plans (‘ESOPs’), facilitated via a separate intermediary.legal Thisentity willand notthe onlycreation of employee stock option plans (‘ESOs’). This will enable SMEs, start-ups and scale-ups not only to attract talent andtalent, incentivise long-term commitment and facilitate their operations across different national markets due to the design of existing distinct frameworks, but also ensureto promote the full and fair participation of employees in the value they help create through their labour and intellectual capital. The harmonised rules on optional ESOPs and ESOs should focus on harmonising the key corporate law elements, framework and structural features of plans for employee financial participation, without affecting fiscal rules. The following principles must be taken into account when designing harmonised rules in the framework of the ESSU:S.EU:

 as a pre-condition, suchemployee financial participation schemes should, under no circumstances, replace or diminish normal basic remuneration or any other form of contribution such as social security contributions, but should be a benefit complementary to all social and contractual rights;

 transparency and democratic governance must be a key principleprinciples throughout the design and implementation of such schemes;

 participation in such schemes must be non-discriminatorynon-discriminatory, and be open and exclusive to all employees;

 participation in such schemes must remain voluntary for employees;employees and the setting up of such schemes must remain optional for S.EUs;

The Commission, in consultation with the social partners and based on best-practise examples, should design simple,relevant elementarystakeholders and basic supportivebased modelon profit-sharingbest-practice, agreementsshould anddesign guidance for ESSUsS.EUs to ease implementation, to improve awareness about ESOPsemployee financial participation and convergeto ensure the convergence of employee financial participation schemes across Member States. The model agreements and guidance should include information about associated financial risks for employees, specify employee buy-out options and democratic governance, and consider the impact on employees with a specific view to gender equality.employees.

7. Attracting venture capital

In addition, the Commission should address, as part of the 28th regime package, issues related to the tax treatment of employee financial participation to ensure legal coherence and cross-border applicability. Until Union-wide harmonisation is achieved, Member States should be strongly encouraged to proactively adopt supporting measures for employee financial participation, aligned with the S.EU’s objectives, in order to make it attractive for both employers and employees, fostering cross-border mobility and fairness.

Member States should introduce harmonised equity-like debt instruments that allow for investors to invest in companies without acquiring rights of control over a company (such as profit participation rights, silent partnerships or profit-linked loans). Such equity-like debt instruments should:

To strengthen the innovative capacity of S.EUs and accelerate the commercialisation of research results, the legislative proposal should be accompanied by measures to promote and facilitate structured partnerships between S.EUs and universities, research institutes and technology transfer offices. The Commission should develop guidance and model cooperation agreements for such partnerships, ensuring they are simple, transparent and fair for all parties involved.

7. Attracting capital

Member States should introduce a harmonised equity-like debt instrument that allows for investors to invest in companies without acquiring rights of control over a company, such as profit participation rights, silent partnerships or profit-linked loans. Such equity-like debt instruments should:

With a view to increasing legal certainty across the 27 national jurisdictions of the internal market and to reducing market entry barriers to investmentinvesting in ESSUs,S.EUs, the Commission should facilitate the development of standard multilingual model articles of association, shareholder agreements and all other relevant documents for ESSUsS.EUs and establish a platform on which those model documents and practical information are made available in all official languages of the Union. .

The Commission should appoint an expert group tasked with the elaboration of standardised high-quality model articles of association that correspond to the harmonised requirements for ESSUs.S.EUs. That expert group should include, amongst others, representatives of founders, investors and trade unions.

The Commission should appoint a further expert group tasked with the elaboration of standardised, fair and high-quality model shareholder agreements. Such model shareholder agreements should strike a balance between the interests of founders and investors. That expert group should include, amongst others, representatives of founders and venture capital investors.

The Commission should establishsupport aand Jointbuild Researchupon Centreexisting forinitiatives concerning research into and information on European and comparative business law to establish open-access and comparable information on the business regulation in the Member States in all official languages of the Union.

In order to accelerate dispute resolution concerning ESSUs,S.EUs, an alternative specialised dispute resolution mechanism should be established. Participation in that mechanism should be subject to the consent of the parties involved. Disputes relating to individual and collective labour law should be excluded from that mechanism.mechanism, Jurisdictionand jurisdiction in thosesuch cases should be determined in accordance with Articles 20 to 23 of Regulation (EU) No 1215/2012.

Member States should furthermore introduceconsider introducing a special panel within itstheir national courts – either one panel within one specific court at the national level or one panel within one specific court in each federal entity, depending on the national judicial system in question. Such panels should be dedicated to resolving civil law disputes between companies relating to the ESSUS.EU corporate form, disputes arising from or in connection with the acquisition of ESSUsS.EUs or shares in ESSUsS.EU and disputes between an ESSUS.EU and members of its management or supervisory board. Member States should ensure that proceedings before such panels can be conducted in English, provided that the parties involved consent.

9. Impact Assessment, Review and Evaluation

The effectiveness of the 28th regime in promoting innovation, enhancing competitiveness, safeguarding legal certainty and preventing regulatory circumvention of Union and national social and labour standards should be continuously monitored.

The Commission should conduct and publish a comprehensive and transparent impact assessment at the same time as any new legislative proposal related to the 28th regime, with a focus on social, fiscal and legal consequences, as well as risks of weakening Union and national protection standards. To ensure legal certainty and coherence, the Commission should also assess existing national models and best practices, such as the functionality of national corporate registries, and automated digital processes that facilitate company creation while maintaining high standards of transparency and accountability. The Commission should specifically explore ways to optimise procedures to ensure that the entire registration process, including additional verifications and compliance checks, can be completed within 48 hours, without affecting legal certainty and in accordance with procedural safeguards.

The Commission should further ensure a comprehensive review and, where necessary, a revision of the 28th Regime at regular intervals, including an assessment of its adoption rates among companies, in particular SMEs, start-ups, and scale-ups, its alignment with evolving business and societal needs, the Union’s competitiveness, social protection and employment and its overall fitness for purpose.

The Commission should evaluate and report to the European Parliament, the Council and the European Economic and Social Committee on the potential effect of the legislative act on the development and economic growth of SMEs and the compliance with and impact on Union and national labour law and worker protection standards every 4 years to ensure adaptability to new challenges. That report should, where appropriate, be accompanied by legislative proposals for revision.

Establishing the necessary safeguards to effectively prevent abusive use of a ‘28th Regime’ in particular in regardsregard to codeterminationemployee participation rules (as defined by Article 2 (k) of Directive 2001/86/EC) are of the utmost importance and a necessary pre-condition for the success and societal acceptance of this project. Repeating past mistakes and failing to establish safe solutions that do not undermine existing standards would endanger the idea from the outset.

The rapporteurLegal Affairs Committee therefore recommends, that the corporate form proposed by the Commission be named the ‘European Start-‘Societas andEuropaea Scale-Up’Unificata’ (ESSU)(S.EU) company. Instead of establishing an autonomous pan-European corporate form, through a regulation – which would necessitate Article 352(1) TFEU as a legal basis and risk repeating past mistakes – the rapporteurreport recommends being ambitious in substance rather than in form and the setting up of a national corporate form automatically recognised in all Member States. This can be implementing by upgrading existing national limited liability corporate forms or by creating new tailor-made national corporate forms. Such a way of supranationalising essential elements of an otherwise national corporate form can be achieved by means of a maximum harmonising directive on the basis of Articles 50 and 114 TFEU.

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