EU Inc: Europe is Trying Again – Why Might It Succeed This Time?

The current plans for the EU Inc. respond to one of the issues highlighted in two influential 2024 reports: the Letta Report and the Draghi Report. In his report, Mario Draghi argues that Europe is losing the race against the United States and China due to a lack of innovation. This concerns not only the development of new technologies, but also the creation of new structures that can stimulate technological development.

The Draghi Report calls for the creation of a new legal form enabling “Innovative European Companies” to operate across the Union under the same widely accepted body of European company rules. The European Commission has broadened this idea by making the EU Inc. available not only to innovative companies, but to all European businesses. In our view, this is a sensible approach: it avoids the debate over what exactly constitutes an Innovative European Company, and the broad availability of the EU Inc. will allow (professional) stakeholders to become familiar with it more quickly, which in turn promotes wider knowledge of the structure.

The EU Inc. will have full legal personality, allowing it to exercise rights and assume obligations independently. In addition to uniform rules across all Member States, the Commission highlights several advantages over traditional capital companies:

• Fast and inexpensive: An EU Inc. can be established within 48 hours, without any minimum capital requirement. Formation costs will be capped at €100.
• As digital as possible: Incorporation is carried out fully online. Procedures traditionally held in person—such as the General Meeting of Shareholders—may in the future be conducted in hybrid or fully digital form.
• No intermediaries: An EU Inc. can be incorporated without a notarial deed. Subsequent share issuances or transfers can also take place digitally, again without the involvement of a notary.
• A single register: When the EU Inc. is formed, its information is registered centrally with a European body. As a result, the company does not need to register locally each time it expands across borders.

Insolvency procedure: The EU Inc. will have its own fast‑track insolvency procedure. This procedure will apply only to “innovative” EU Inc.'s.

In the Netherlands, two types of capital companies currently exist: the Naamloze Vennootschap (NV) and the Besloten Vennootschap (BV). While the BV was significantly liberalised in 2012, the NV still requires a minimum capital contribution of €45,000. Book 2 of the Dutch Civil Code also contains many mandatory rules for the NV.

Although the BV is more flexible—thanks to, among other things, the abolition of the minimum capital requirement—incorporation, share issuance, and amendments to the articles of association all still require a notarial deed. These steps typically cost around €1,000 and take several weeks. In the Dutch context, the EU Inc. would therefore introduce significant additional flexibility.

At the European level, the Societas Europaea (SE) already provides a company form with uniform rules across the EU. However, the SE is still little used, likely due to its burdensome requirements. A company must already be active in at least two Member States, or its founders must be based in at least two Member States, and a minimum capital requirement of €120,000 applies. For many start‑ups and scale‑ups—already struggling to secure financing—this is simply not feasible.

The EU Inc. proposal has faced substantial criticism. A notary typically performs essential checks—both on the identity of the founders and the content of documents such as the articles of association. Without such checks, companies may end up operating under articles that conflict with mandatory law and are therefore invalid.

Another frequently raised argument is that the EU Inc. would enable companies to “shop” within the EU for the most employer‑friendly labour law by choosing to establish their statutory seat in such a jurisdiction. This, critics argue, would deprive employees of necessary protections. We do not agree with this reasoning. European private international law protects certain groups, including employees, against the choice of a legal system that would diminish their inalienable rights under their own national law. In such cases, the employee may still rely on those protections.

Furthermore, bringing legal proceedings against an employer—or against a seller in the case of a consumer dispute—does not become more difficult through such “shopping,” as European private international law allows employees and consumers to litigate in their home country.

At the same time, this protection is not absolute: determining the habitual place of work and identifying mandatory rules both require factual assessments, which can create uncertainty in cross‑border or hybrid work arrangements. Rome I therefore provides a solid minimum level of protection, but does not entirely prevent indirect pressure on these protections through structural choices.

We are particularly curious about how the new insolvency procedure will function. The Commission aims to enable entrepreneurs to restart quickly. Although it is already possible to establish a new company separate from the bankrupt entity, the question arises whether this new procedure would sideline national law entirely.

In the Netherlands, substantial importance is placed on the trustee’s investigation into whether any irregularities occurred prior to the bankruptcy. Such investigations require time—time the Commission suggests entrepreneurs do not have. Will this investigation remain mandatory or even possible under the new system?

The European Commission has submitted its proposal for the EU Inc. to the European Parliament and the Council of Europe. It has emphasised the importance of adopting this regulation and hopes that the Parliament and Council will reach agreement before the end of this year.

The Societas Europaea will celebrate its 25th anniversary in 2029. Yet by that time, it may well have been overtaken as the EU’s most prominent corporate form. If adopted, the EU Inc. would offer a fully fledged alternative to many national company structures. The European Commission has clearly taken the recommendations of Enrico Letta and Mario Draghi to heart—at least from a legal perspective.

We are eager to see how the EU Inc. will take shape in the coming period and will continue to monitor developments closely.

Our corporate law attorneys are pleased to explain the opportunities and possibilities that the EU Inc. will offer.