Adapting Europe’s Company Law for a Changed Global Economy

In March 2026, the European Commission is expected to present its proposal for a new, optional legal framework for companies in the EU – often referred to as the 28th Regime.

Ingrid Bäcklund, Trade Policy Adviser

The initiative responds to long-standing fragmentation in EU-company law that has made it difficult for start-ups and scale-ups to grow across borders within the Internal Market. The framework is expected to include the creation of a pan-European company form now referred to as “EU-Inc”, and is expected to sit alongside existing national company laws.

After the proposal is tabled, subsequent negotiations in the European Parliament and Council will determine its final scope and legal form. The outcome will be pivotal for the EU’s internal market integration, with potential implications for investment flows, corporate governance practices and the EU’s global competitiveness. To create a truly borderless corporate environment, however, the 28^th Regime will need robust legal infrastructure, regulatory convergence and member state recognition.

Different registration rules and administrative procedures increase costs and create legal uncertainty.

Although the number of start-ups in Europe continues to rise, relatively few companies manage to scale up and compete globally. One key reason is the fragmentation of national company laws. Different registration rules and administrative procedures increase costs and create legal uncertainty for companies that want to expand across borders. EU institutions increasingly see these barriers as a factor behind Europe’s weaker productivity growth and declining global competitiveness. This perception has now strengthened political support for reform.

The Commission has signalled interest in developing the regime through a progressive and modular approach. This would combine broad access with targeted modules for companies with particular needs and balance inclusiveness with flexibility. The regime would be open to all companies but optimised for the needs of innovative start-ups and scale-ups, initially focusing on company law and then other legal areas over time.

Several actors have put forward concrete proposals. The European Parliament has suggested a harmonised national company form through a directive called the European Start-up and Scale-up Company (ESSU). Private initiatives such as the community-led policy initiative also called EU-Inc, however, favour a fully EU-level company form created through a regulation. A regulation would ensure equal implementation of the 28^th Regime and minimise risk of fragmentation. 

For a 28th Regime to have real impact, it must be made simple.

Supporters argue that a 28^th Regime could lower transaction costs, improve access to capital and strengthen the internal market. Critics including trade unions, however, warn that the regime could lead to regulatory arbitrage and potential erosion of labour and social protections.

Experience from earlier EU company law initiatives, such as the European Company (Societas Europaea, SE), shows that voluntary regimes risk limited uptake if they are legally complex or offer insufficient practical advantages. For a 28th Regime to have real impact, it must be made simple, digitally integrated and clearly complementary to national legal systems.

From a trade and internal market perspective, the initiative highlights a broader challenge for the EU: how to deepen market integration without exceeding its competences or undermining national regulatory models. Whether the 28^th Regime becomes a useful tool for cross-border business or remains a marginal option will largely depend on its final scope, legal basis and institutional balance. Ultimately, the initiative reflects the need for Europe to adapt to a far more digital, fast-moving and globally competitive environment. If designed well, the 28^th Regime could become a defining step toward a more dynamic and competitive Europe.

Ingrid Bäcklund
Trade Policy Adviser

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