Proposal for European corporate law: EU Inc.

On 18 March 2026 the European Commission launched its proposal for EU Inc. In addition to the 27 national legal systems, a 28th corporate-law regime hereby appears that is applicable in all Member States. The Netherlands retains the BV and Germany the GmbH, but in addition entrepreneurs will also be able to choose the legal form ‘EU Inc.’ It is expected that this 28th regime will enter into force in 2028. Extensive negotiations will still take place on this as well. Nevertheless, the current proposal regulation already contains a number of interesting elements, of which we have highlighted several.

Innovative enterprises (start-ups and scale-ups) are central in the proposal. According to the Commission, national differences in corporate law, procedures and investment rules make the EU too complex and too costly. Therefore, the proposal lowers the costs of incorporation, registrations and investment rounds.

The starting point is that the EU Inc. can be incorporated and managed fully digitally via a central European system. As a result, the same information no longer has to be submitted multiple times to different authorities. Corporate housekeeping is simplified by harmonised trade register extracts (the EU Company Certificate) and digital share transfers, shareholder registers and powers of attorney. Through the use of standard models, articles of association must be adopted within 48 hours and for a maximum of €100 after review by a public authority, judge or notary. Compared to current Dutch practice, the proposal seems to assign a relatively limited role to the notary.

The EU Inc. has a flexible share structure without nominal value or minimum capital. In this lies an important distinction from the Societas Europaea (SE), which has existed since 2004. After all, the incorporation of an SE requires a starting capital of at least €120,000, making this form less suitable for smaller and starting companies.

In addition, within an EU Inc., differentiation can be made through different types of shares (in practice often referred to as Class A shares and Class B shares) in voting rights and profit rights. The Commission states that founders of start-ups could thereby arm themselves against so-called ‘killer acquisitions’.

The proposal provides for options and convertible instruments, with which it is intended that start-ups and scale-ups can organise investment rounds more easily. Moreover, the proposal regulation describes an ‘EU Employee Stock Option Plan’ (or: EU-ESO). Start-ups and scale-ups should thereby be able to bind talented employees to themselves because they share in the intended success of the company.

The proposal regulation prescribes that EU-ESO options may only be taxed by the Member States at the moment that the acquired shares are disposed of. A much debated Dutch tax act currently pending in parliament (Wet werkelijk rendement Box 3) also contains an exception to the principle of tax on accrued wealth for shares (options) in start-ups. In the proposal, however, EU-ESO does not appear to be limited to start-ups. Therefore under the EU-ESO scheme, also for established companies accrued wealth on shares (options) would then remain untaxed until the moment that the shares are sold.

The management board of an EU Inc. consists of natural persons, of whom at least one must be resident in the EU. Perhaps this offers opportunities for trust offices or other business service providers to provide smaller companies from outside the EU with a director.

Directors of an EU Inc. may amend the articles of association without the consent of the general meeting for “editorial changes of non-substantive nature.” It will be interesting to see how this is interpreted in practice. Amendments to the articles of association which seem insignificant at first sight, can nevertheless have substantial consequences. If, however, it concerns purely typing errors and obvious clerical errors, then it seems unnecessary that the board adjusts the articles of association on its own initiative for that purpose.

In principle, directors are liable towards the EU Inc. for every act or omission contrary to the EU Inc. Regulation, the articles of association or a shareholders’ resolution, that causes loss or damage to the EU Inc. A director can subsequently exonerate himself if he demonstrates that he acted in good faith, with the care of a reasonably prudent person and with the reasonable belief that he acted in the interest of the EU Inc.

With this approach, the Commission seems to choose a lower threshold for directors’ liability than the personal serious reproach that is required for director’s liability under current Dutch law. It will in many cases be up to the director to demonstrate that he acted correctly. However, the relevant article in the proposal regulation concludes with a paragraph that states that directors’ liability is otherwise governed by the applicable national law. In the case of an EU Inc. established in the Netherlands, the director may therefore still have to be personally and seriously reproached in order for directors’ liability to arise.

The proposal also prescribes a kind of inquiry procedure. Shareholders who together hold at least 10% of the shares of the EU Inc. may submit an inquiry request to the competent court. This threshold may be lowered by the articles of association. For now, there seems to be no room for other stakeholders (such as the legal entity itself or the works council, who in the Netherlands are allowed to go to the Enterprise Chamber) to request an inquiry.

The regulation as currently proposed also provides for a withdrawal request. A shareholder who states that she has been prejudiced by the course of affairs within the EU Inc., can request the competent court to order the EU Inc. and the other shareholders to repurchase her shares for a price to be determined by the court. Under circumstances comparable to those of a BV, the EU Inc. will also be able to be subjected to fast-track liquidation or a regular dissolution. Specifically for start-ups, the proposal regulation contains a simplified digital insolvency procedure.

Particularly for starting companies, the lower costs and the emphasis on digitalisation will have a positive effect. Certain aspects will most likely still change in the Commission’s proposal for a European corporate-law regime. Nevertheless, based on the proposal it appears that the EU Inc. will become an interesting legal form for start-ups, scale-ups and all entrepreneurs who do business in several Member States.