The 28th Regime: a new legal framework for innovative companies

P10_TA(2026)0002

The 28th Regime: a new legal framework for innovative companies

Committee on Legal Affairs

PE773.199

European Parliament resolution of 20 January 2026 with recommendations to the Commission on the 28th Regime: a new legal framework for innovative companies (2025/2079(INL))

– having regard to Article 225 of the Treaty on the Functioning of the European Union,

– having regard to Articles 50 and 114(1) of the Treaty on the Functioning of the European Union,

– having regard to Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I),

– having regard to Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters,

– having regard to Regulation (EU) No 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93/EC,

– having regard to Directive 2009/102/EC of the European Parliament and of the Council of 16 September 2009 in the area of company law on single-member private limited liability companies,

– having regard to Directive (EU) 2017/1132 of the European Parliament and of the Council of 14 June 2017 relating to certain aspects of company law,

– having regard to Directive (EU) 2019/2121 of the European Parliament and of the Council of 27 November 2019 amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers and divisions,

– having regard to Directive (EU) 2025/25 of the European Parliament and of the Council of 19 December 2024 amending Directives 2009/102/EC and (EU) 2017/1132 as regards further expanding and upgrading the use of digital tools and processes in company law,

– having regard to Council Directive 2001/86/EC of 8 October 2001 supplementing the Statute for a European company with regard to the involvement of employees,

– having regard to the communication from the Commission of 28 May 2025, entitled ‘The EU Startup and Scaleup Strategy’,

– having regard to Enrico Letta’s report of 17 April 2024 entitled ‘Much more than a market’,

– having regard to Mario Draghi’s report of 9 September 2024 entitled ‘The future of European competitiveness’,

– having regard to the opinion of the Committee on Legal Affairs on the proposed legal basis,

– having regard to Rules 47 and 55 of its Rules of Procedure,

– having regard to the report of the Committee on Legal Affairs (A10-0269/2025),

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;

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;

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 legislative 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;

General principles

1. Welcomes the Commission’s commitment to submit a legislative proposal on a 28th legal regime for companies;

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 legislative 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 legislative 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 legislative 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. 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. 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;

8. Reiterates that companies which voluntarily opt in to the 28th regime should be bound by its rules;

9. Emphasises that a company’s choice to opt in to the 28th regime must be automatically recognised in the national legal orders of all 27 Member States;

10. Is mindful of the risk that a 28th regime could enable the circumvention of mandatory domestic protections for workers, their representatives and trade unions, and other vulnerable parties; underlines that the 28th regime must under no circumstances become a vehicle to undermine, reduce, weaken or circumvent existing levels of 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;

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

12. Is of the opinion that the 28th regime should mainly concern company law rules and that only limited liability companies not listed on the stock market should be able to participate in it; considers that the 28th regime should be a set of rules that must be incorporated into existing or new national corporate forms;

13. Proposes naming the corporate form covered by the 28th regime ‘Societas Europaea Unificata’ (S.EU - Unified European Company), which entails adding the abbreviation ‘S.EU’ to existing national corporate form abbreviations;

14. Underlines that the 28th regime’ is without prejudice to Union and national law in the area of labour and social law, including 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 insolvency and must not derogate from any rules granting workers preferential protection in insolvency proceedings;

15. Highlights the need for simple and digital company formation and registration; calls for procedural complexity to be reduced and for the registration procedure for creating an S.EU to be completed digitally within 48 hours, while ensuring legal certainty; calls for the compulsory integration of digital tools for submitting company documents and disclosing information online throughout the lifecycle of the S.EU and for the full implementation of the ‘once only’ principle for the registration and administration of an S.EU; calls for the possibility of allowing digital procedures, such as digital meetings for general assemblies and board meetings;

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/EC, 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;

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;

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;

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;

20. Considers that the S.EU should serve as a corporate form for single entities and for uniform group management and considers that it should be possible for an S.EU to operate as a parent company or as a subsidiary company of an S.EU parent company;

21. Stresses that the registered seat of a company must be in one of the 27 Member States in order to qualify for registration as an S.EU; underlines that the registered seat and the registered office may be in different Member States;

Safeguards, including long-term strategies and optional forms

22. Calls for including optional forms of steward ownership, asset locks and different classes of shares, especially loyalty shares and dual-class shares, including veto shares, as part of the legislative proposal on the 28th regime; underlines that European innovative companies, in particular SMEs, start-ups and scale-ups, are in need of alternative paths for access to capital; stresses the need for alternative financing models in the early stages of the lifecycle of an S.EU; considers that entrepreneurs might want to protect themselves from ‘killer acquisitions’ to prevent the relocation of innovation, often supported by European public research funds, outside of the Union; considers merger regulation as insufficient to address that issue;

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;

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 S.EU 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 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, which make 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;

Access to capital

32. Highlights that the legislative 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;

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 on the 28th regime 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-ups with 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;

Dispute resolution

37. Considers that an alternative dispute resolution mechanism should be established for disputes relating to S.EUs 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 S.EUs 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;

Final provisions

40. Requests that the Commission submit, by the first quarter of 2026, on the basis of Articles 50 and 114 TFEU, a proposal for a directive following the recommendations set out in the Annex hereto;

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

42. Instructs its President to forward this resolution and the accompanying recommendations to the Commission and the Council.

ANNEX TO THE RESOLUTION: RECOMMENDATIONS AS TO THE CONTENT OF THE PROPOSAL REQUESTED

1. General principles and legal basis

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 legislative acts, rather than by a single comprehensive legislative 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 legislative 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 S.EU should build on corporate forms established under national law. The Member States should be free as to whether they choose to allow existing national corporate forms to convert into an S.EU or to create a new national corporate form. The founders or the owners of a national corporate form should be able to voluntarily opt in to the new regime, which would allow for the use of the company label ‘S.EU’.

An S.EU should be automatically recognised in the national legal orders of all the Member States as a limited liability company.

The law applicable to the creation of an S.EU should be the law of the Member State in which the company in question is 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.

In order to achieve legal certainty as to the constitutive elements of the 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 S.EU could lead to the circumvention of mandatory domestic rules that protect workers, their representatives and trade unions, and other vulnerable parties as well as other public interests. The S.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 participation in the affairs of the company, and should contain safeguards that effectively prevent the abusive use of the S.EU.

2. Scope

The Member States should provide in their national legal orders a set of rules which, when complied with, allow a national corporate form to include the abbreviation S.EU in its company name. In order to be eligible to register as an S.EU, a national corporate form should comply with the following:

– it must be a legal entity with legal capacity that is automatically recognised in all Member States on the date of its registration;

– it must be a limited liability company in which the owners’ liability for the company’s debts is limited to the amount of their contributions;

– it must not be a listed company;

– it must have been established by one or more natural or legal persons that reside in or are established in a Member State;

– it must be possible for it to serve as an autonomous single company or as a subsidiary company of an S.EU parent company;

– its registered seat must be located in one of the Member States;

– 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;

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.

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.

3. Creation of the corporate form

The creation and registration of an S.EU should be fully digital and comply with the ‘once only’ 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 S.EU must be finalised within 48 hours.

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

To facilitate the achievement of those objectives, a uniform Union-level digital portal that serves as a direct entry point for S.EUs should be created or integrated into existing structures and operated by the Commission. That portal should complement and extend 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. The digital portal should not replace existing national incorporation rules but, rather, serve as a common platform on which all relevant information necessary for investors would be aggregated. Member States should therefore automatically transmit documents to the portal, 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 portal 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 Union-level digital portal for companies should make it possible to register as an S.EU and to search for a company registered as an S.EU. Registration, fillings and updates should be administered via the digital portal only once and should be accessible across Member States on the basis of a multilingual interface and harmonised identification standards under Regulation (EU) No 910/2014. The digital 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.

4. Safeguards

The rules on S.EUs should be without prejudice to Union and national labour law including rules on the participation of employees, 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 continues to be determined exclusively under Article 8 of Regulation (EC) No 593/2008 and the jurisdiction over individual employment contracts continues to be determined under Section 5 of Chapter II of Regulation (EU) 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.

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 unless the legal order of the S.EU’s registered office provides 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 the applicable law cannot be determined in accordance with the principles set out in the previous paragraph, as a fallback option a negotiation procedure equivalent to that provided for in Articles 3 to 7 of Directive 2001/86/EC must be initiated once the number of employees reaches in at least one Member State any threshold triggering board-level employee representation rights in that Member State, provided that an S.EU has not yet introduced employee participation or provided that reaching the threshold implies changes to the existing employee participation.

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

5. Encouraging long-term strategies and optional forms

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;

 the qualification of voting rights as non-transferable and non-inheritable;

 profit distribution to investors or economic rights holders on the basis of a contractual agreement limited either in time or in amounts and which can be terminated by either party at any time;

 the limitation of cross-border conversion into entities that have opted for the additional legal protection scheme, in particular for asset locks.

Companies that have opted in to such additional legal protection schemes should be able to include the label ‘steward-owned’ in their company name.

Directive (EU) 2017/1132 should be amended as regards cross-border conversions, mergers and divisions 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.

6. Attracting and supporting talent

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 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. 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 legal entity, and the creation of employee stock option plans (‘ESOs’). This will enable SMEs, start-ups and scale-ups not only to attract talent, incentivise long-term commitment and facilitate their operations across different national markets due to the design of existing distinct frameworks, but also to 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 S.EU:

 as a pre-condition, employee 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 key principles throughout the design and implementation of such schemes;

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

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

 such schemes must be accompanied by mechanisms to safeguard employees against unreasonable financial risks.

The Commission, in consultation with social partners and relevant stakeholders and based on best-practice, should design guidance for S.EUs to ease implementation, to improve awareness about employee financial participation and to ensure the convergence of employee financial participation schemes across Member States. The guidance should include information about associated financial risks for employees, specify employee buy-out options and democratic governance, and consider the impact on employees.

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.

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:

 be created by concluding a contractual agreement between the company and the investor for a capital contribution; such an agreement must specify the invested principal amount, include a defined repayment date and provide for compensation which may take the form of fixed or variable interest, or profit participation;

 be subordinate to ordinary debt claims;

 be treated as equity or equity-replacing capital for regulatory and accounting purposes.

With a view to increasing legal certainty across the 27 national jurisdictions of the internal market and to reducing barriers to investing in S.EUs, the Commission should facilitate the development of standard multilingual model articles of association, shareholder agreements and all other relevant documents for S.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 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 support and build upon existing initiatives concerning research into and information on European and comparative business law to establish open-access and comparable information on business regulation in the Member States in all official languages of the Union.

8. Specialised dispute resolution

In order to accelerate dispute resolution concerning 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, and jurisdiction in such cases should be determined in accordance with Articles 20 to 23 of Regulation (EU) No 1215/2012.

Member States should furthermore consider introducing a special panel within their 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 S.EU corporate form, disputes arising from or in connection with the acquisition of S.EUs or shares in S.EU, and disputes between an S.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.