EU Inc., a proposal for a new single set of corporate rules, will make it easier for businesses to start, operate and grow across the EU, and incentivise them to stay in Europe, says the European Commission.
“The Single Market is too fragmented for our companies to thrive”, said EC executive vice-president Henna Virkkunen: “So much so, that innovators look elsewhere to grow and expand. Today, we are delivering a pragmatic revolution. We are giving reason for future founders to grow and scale in Europe. We are making things easier for people with good ideas.”
The complexity of 27 national legal systems can delay the setting-up of a company for weeks or even months, slowing growth, raising costs and discouraging scale, according to the EU executive.
The result is delays in the setting-up of a company for weeks or even months, slowing growth, raising costs and discouraging scale. The EU Inc. proposal aims to reduce fragmentation, boost EU competitiveness, and respond to the needs of innovative companies.
Main features of EU inc. include:
- Faster registration: Entrepreneurs, founders, and companies will be able to found an EU Inc. company within 48 hours, for less than €100 and with no minimum share capital requirements.
- Simpler procedures: EU Inc. companies will only need to submit their company information once, via an EU-level interface connecting national business registers together. In a second step, the Commission will establish a new central EU register. EU Inc. companies will obtain their tax identification and VAT numbers without having to resubmit paperwork.
- Fully digital operations: Corporate processes will be digital by default throughout a company’s lifecycle.
- Helping founders restart faster and cheaper: EU Inc. companies will have access to fully digital liquidation procedures. Innovative startups will have access to simplified insolvency procedures to facilitate the winding down of operations. This enables founders to try and test innovative ideas and start again if needed.
- Better conditions to attract investment: Today’s proposal will remove in-person formalities, provide digital procedures for financing operations, and simplify the transfer of shares. There will be no more mandatory involvement of intermediaries for share transfers, and liquidation procedures.The proposal will also allow Member States to give EU Inc. companies access to the stock exchange.
- Better means to attract talents: EU Inc. companies will be able to set up EU-wide employee stock option plans. The stock option will only be taxed on the income generated once it is sold. This is a crucial factor in ensuring attractiveness, particularly for innovative startups.
- Full access to the Single Market: EU Inc. companies will be free to choose the Member State in which they incorporate. The proposal includes a blacklist of prohibited practices to ensure that EU Inc. companies are treated the same way as any other national companies.
- Strong safeguards against abuse: National employment and social laws are not affected by the proposal. They will apply to EU Inc. the same way they apply to any other business under national company law. The applicable safeguards of the Member State of registration will apply in full to the EU Inc. company, including when it comes to rules regarding co-determination.
- Flexibility of shares: EU Inc. companies will have the flexibility to create different classes of shares with varying economic or voting rights. This can, for example, help founders protect their business against hostile takeovers.
In addition, the Commission has adopted a Communication outlining the ongoing and future initiatives to complete the 28th Regime in other policy areas.
The Communication proposes maximum digitalisation of interactions between companies and public authorities, for example with the European Business Wallet.
The Communication also calls on the EU Member States to consider setting up specialised judicial chambers or courts with the authority to handle disputes on EU Inc. company law, allowing for an effective, efficient and uniform application of the EU Inc. rules.
The Commission says it will further explore the possibility to allow 100% cross-border telework for innovative start-ups and scale-ups across the Union with the forthcoming Fair Labour Mobility Package.
The EU Inc. proposal will now be discussed by the European Parliament and the Council.
Factsheet: Proposal for an EU Inc. corporate legal framework
EU Inc.: A new harmonised corporate legal regime
