EU Inc. – The 28th Regime Corporate Legal Framework: A Practical Analysis of Commission Proposal COM (2026) 322

The proposal for the EU Inc. covers the full company lifecycle: formation, governance, share structure, financing, employee equity and closure. Its ambition is to give every entrepreneur who finds the form suitable for their business model a single corporate form recognisable across all 27 Member States while providing investors with a familiar, legally certain environment for cross-border investment.

"The EU Inc. is not a supranational company. It is a national legal form, introduced in each Member State's legal order by EU regulation. It acquires legal personality under the law of the Member State of registration and remains anchored to that national legal system for everything the regulation does not expressly address which, as discussed below, is substantial."

The most important provision for practitioners is article 4 of the proposed regulation. The EU Inc. is governed first by the regulation, then by its articles of association, and for all other matters by national law – specifically the law applicable to the national legal form designated by each Member State. The designation of the applicable national legal form is left entirely to each Member State. A German EU Inc. will likely sit on a GmbH substrate, an Austrian EU Inc. on the substrate of either the GmbH or the FlexCo, a Hungarian EU Inc. on the law governing the Kft. (Korlátolt felelősségű társaság), etc. The label is the same across all 27 Member States; the legal foundation is not.

Fast-track route: Registration within 48 hours for a maximum of EUR 100, but only where EU Inc. is formed using EU standard templates through the EU central interface. Tailor-made articles or formation directly with a national business register: 5 working days. The cost ceiling applies to the fast-track procedure only.

Standard templates: The EU templates will be established by the Commission via implementing act within 9 months of entry into force. Their content is not yet known. Whether the fast-track is genuinely usable for companies with any complexity remains to be seen depending on how flexible the standard templates will be.

Preventive control: Before registration, a competent authority must verify the articles of association, name compliance, legal capacity and, where applicable, the adequacy of in-kind contributions. The regulation permits administrative, judicial or notarial control, or any combination thereof. The choice of mechanism is left entirely to each Member State. For example, Estonia will likely run a fast administrative check, while France, Germany and Austria involve notaries. The 48-hour window is only as reliable as the Member State's chosen mechanism.

Digital-only: The EU Inc. framework is built around a digital-only approach spanning the entire company lifecycle, from formation to dissolution, with no paper-based alternatives. Share transfers and capital increases are executable by electronic signature; shareholder and board meetings may be held fully online. Corporate documents can be authenticated and shared cross-border via the EU Company Certificate and a digital EU power of attorney, both compatible with the European Business Wallet.

Language: Articles of association must be drawn up in the national language of the Member State of registration and in a language customary in international business, in practice likely English. Where standard templates are used, both versions have equal legal value. Where tailor-made articles are used, the national language prevails in case of discrepancy. Most investor-backed startups will use tailor-made articles: their English-language documents will be persuasive, but the local language version will govern any dispute.

Board of Directors: The EU Inc. is managed by a board of directors of one or more natural persons. At least one director must be resident in the Union. Directors jointly represent the company by default, subject to modification in the articles of association.

Business judgment rule: Article 44 codifies harmonised directors' duties: good faith, best interests of the company, and reasonable care, skill and diligence. A director is not liable for loss resulting from a business decision taken in accordance with those duties. Liability beyond this is governed by national law.

Related party transactions: Article 46 takes a permissive approach: it allows, but does not require, the articles of association to establish approval or disclosure requirements for related party transactions. In the absence of such provisions, there is no statutory framework governing transactions between the company and its directors, shareholders or other related parties. Therefore, (minority) shareholders should ensure that appropriate provisions are included in the articles of association.

Minority shareholder withdrawal: Article 52 grants shareholders the right to apply to court for a forced buyout of their shares if the company is being run in a way that is oppressive to them. If the court upholds the application, the EU Inc. and the remaining shareholders must purchase the departing shareholder's shares at fair value, determined by the court as of the date the application was served. This right should be considered carefully in the context of founder-investor agreements and exit mechanics.

Digital shares: All shares in an EU Inc. exist only in digital form. There are no physical share certificates, and ownership is always registered in the name of a specific person. Registration in the digital share register has constitutive effect: ownership exists and shareholder rights can be exercised only upon registration.

Digital share register: Every EU Inc. must maintain an up-to-date digital share register from incorporation, containing extensive data per share (article 54): identity, consideration, encumbrances, restrictions. Transfers must be registered within 3 working days of complete notification. Failure attracts penalties. The regulation does not prescribe a standardised tool.

Share classes and voting: Multiple share classes with differentiated economic and voting rights are expressly permitted (article 55). Multiple voting rights, exclusion of voting rights and preference arrangements are all available. Member States cannot prohibit such structures for EU Inc. companies (recital 40). This is the full venture capital toolkit, explicitly enabled.

Share transfers: Shares are freely transferable by default, subject to restrictions in the articles of association. Transfers are fully digital and no notarial deed is required, constituting a concrete simplification in jurisdictions like Austria and Germany that currently require notarial involvement. A transfer is effective only upon registration in the digital share register.

Zero minimum capital and non-par value shares: The EU Inc. is not required to have any minimum capital; it can remain at EUR 0 throughout its lifetime. Shares have no nominal value by default.

Creditor protection through distribution tests: Instead of minimum capital, any distribution to shareholders requires all directors to sign a statement confirming that total assets will still exceed total liabilities (balance sheet test) and the company will be able to pay its debts as they fall due during the next 12 months (solvency test). Directors who sign a false statement are jointly and severally liable. This is a shift from capital-based to cash-flow-based creditor protection.

SAFEs, convertibles and warrants: Article 68 provides a clear statutory framework for convertible instruments, warrants and other instruments entitling holders to new shares. An exchange of claims under a convertible is treated as cash consideration, removing the need for an independent expert's valuation report. Pre-emptive rights apply but may be modified or excluded by the general meeting or board.

Issuance of warrants: Chapter VIII (article 78 et seqq.) introduces a harmonised employee stock option plan (EU-ESO). The general meeting establishes the plan and authorises the board to issue warrants to eligible persons: board members and employees of the EU Inc. and its subsidiaries. Warrants cannot be issued to persons holding more than 25 % of voting or economic rights, or who have done so in the preceding 24 months. Mandatory minimum vesting period: 24 months from issuance.

Taxation deferred to disposal: Article 79 provides that no taxable income arises at grant, vesting or exercise. Taxation arises only when the underlying shares are sold. The taxable amount is the difference between fair market value at disposal and acquisition price. Member States determine how income is characterised and the applicable rate, but must ensure EU-ESO warrants receive treatment no less favourable than other employee stock options under national law.

The deferred taxation rule is potentially transformative for cross-border talent attraction. However, it raises material questions the regulation does not resolve: how 'fair market value' is determined in illiquid private company contexts (national valuation rules apply); how taxing rights are allocated where employees are tax resident in multiple Member States between grant and disposal (not addressed – bilateral treaty rules apply); and whether Member States that currently tax on exercise will amend their laws in time. Specialist tax advice is essential before relying on the EU-ESO for cross-border teams.

Fast-track solvent liquidation: Where a company has ceased activity, has no assets, no liabilities and faces no pending proceedings, a fast-track liquidation procedure is available (article 83). Creditors have 30 days to object; the tax authority has 30 days to provide clearance (extendable by a further 30 days). If no objections are received, the business register removes the company without delay. Directors remain personally liable for unsatisfied creditor claims after removal.

Simplified insolvency for innovative startups: Chapter X of the regulation provides a simplified digital winding-up procedure for insolvent EU Inc. companies qualifying as "innovative startups" (article 88). No legal representation required. Asset realisation via national electronic auction platforms. Target closure: six months, extendable once. The definition of "innovative startup" is not in the regulation itself. Until a definition is available, the scope of Chapter X is formally uncertain.

The following areas fall outside the scope of the regulation and remain governed by national law:

Tax: Beyond the EU-ESO timing rule, the Regulation does not touch corporate taxation. CIT rates, loss carry-forwards, R&D credits, transfer pricing and VAT all remain national.

Accounting: The EU Inc. follows the accounting law of the Member State of its registered office (article 105). No harmonised EU Inc. accounting standard.

Employment law and employee participation: The EU Inc. is subject to the employee participation rules of the Member State of registration. Co-determination requirements, for example in Austria, apply in full.

Access to public markets: SME Growth Markets and multilateral trading facilities are accessible without Member State permission (article 60 (1)). Access to regulated markets is optional for Member States (article 60 (2)). Some EU Inc. companies may need to convert to a national form before an IPO, depending on where they are incorporated.

Specialised courts: Recital 81 encourages, but does not require, Member States to designate or establish specialised judicial chambers or courts for disputes involving EU Inc. companies on matters covered by the regulation. The rationale is that centralising expertise would improve consistency in rulings, minimise procedural bottlenecks and deepen judicial understanding of the EU Inc. framework. However, there is no binding operative article compelling Member States to act.

The EU Inc. proposal is a serious and overdue step. A digital-only lifecycle, modern financing instruments and EU-ESO taxation deferred to disposal are genuine structural advances. The choice of regulation avoids transposition delays and gold-plating. But the proposal's ambition is constrained by its own architecture: article 4 means that the label is harmonised while the legal substrate remains national. Investors operating cross-border will still need to understand which national substrate applies in each jurisdiction.

The EU-ESO is the proposal's most immediately useful feature, but its survival through the legislative process is not guaranteed, and even if it survives, employment law and social security remain national. The central commercial register is, for now, a shared interface over 27 separate systems. Whether the EU Inc. becomes a genuine single form (i.e. 28^th regime) or 27 variants of the same brand will be decided in the legislative process and, ultimately, in the national registers that apply it.