The 28th European Regime: Toward a New Optional Company Law Framework Serving EU Competitiveness

The European Parliament is calling for the creation of a “28th regime” aimed at reducing the legal fragmentation that hinders the development of businesses within the European Union. This fragmentation, highlighted in particular by the Letta (2024) and Draghi (2024) reports, has prompted the EU institutions to reassess existing instruments of legal integration. Against this backdrop, the creation of an optional “28th regime”, based on a set of harmonised rules applicable across the EU, has gradually emerged as a potential means to strengthen the competitiveness and attractiveness of the internal market.

The idea is straightforward: to offer a common framework that can be used in all Member States, in order to reduce costs, repeated formalities and legal uncertainty for companies seeking to expand at European level. The Parliament presents this project as a tool to enhance competitiveness, particularly for SMEs, start-ups and scale-ups.

At this stage, however, this is not binding positive law. The resolution of 20 January 2026 contains recommendations addressed to the European Commission, which the Parliament has asked to submit a proposal for a directive by no later than the end of the first quarter of 2026. The project therefore remains prospective.

The analyses carried out at the request of the European Parliament identify the existence of structural obstacles affecting the ability of companies—particularly SMEs, start-ups and scale-ups—to grow sustainably across the EU. These obstacles are said to stem, among other things, from the diversity of rules governing company incorporation, governance, financing, insolvency and cross‑border mobility, as well as from disparities in tax matters.

This normative fragmentation thus limits the capacity of European companies to reach a level of development, structuring and international reach comparable to that of their American or Asian competitors.

In response to this situation, the European institutions have for many years sought to promote harmonisation instruments in the field of company law. However, these initiatives have proven insufficient, particularly in addressing the specific needs of high-growth companies.

The European Company (SE) has in particular been found ill-suited to the expectations of young companies, due to the complexity of its incorporation procedures, the requirement of a high minimum share capital, and its close interaction with national laws.

The proposed European Private Company (SPE) and the Single-Member Private Limited Liability Company (SUP) were, for their part, abandoned due to the lack of political consensus, notably on issues relating to worker protection and corporate governance.

These successive failures have highlighted the difficulty of reconciling legal harmonisation, economic attractiveness and respect for national models. They therefore help explain the current orientation of the European institutions towards the design of a more readable, more accessible framework that is better adapted to the operational constraints of companies, particularly those operating in innovative sectors.

The Parliament does not present the future Societas Europaea Unificata (S.EU) as an autonomous company form intended to replace existing national forms. On the contrary, it indicates that the 28th regime should consist of “a set of rules” incorporated into “existing or new” national company forms.

The annex to the resolution is even more explicit: the S.EU “would not constitute an autonomous legal form”, but rather “a national company form existing in all Member States”, incorporating “a series of essential elements harmonised by EU law”. The text adds that the S.EU must “build on company forms established under national law”.

In practical terms, the Parliament’s approach is therefore as follows: a company would remain attached to a national legal form, but could voluntarily opt into a common set of harmonised European rules and include the abbreviation “S.EU” in its corporate name. Member States should be free either to allow existing national company forms to convert into an S.EU, or to create a new national company form enabling such an opt-in.

For a French company, this means that, under the Parliament’s proposal, the 28th regime is not presented as a complete disappearance of the national form in favour of a fully detached European form.

The Parliament places strong emphasis on one point: the rules applicable to S.EUs should be identical in all Member States. It adds that Member States should neither maintain nor introduce national provisions that deviate from those rules. For this reason, it considers that, in the field of company law, the appropriate instrument should be a directive of maximum harmonisation based on Articles 50 and 114 TFEU.

This requirement of uniformity reflects the stated objective of the 28th regime: to prevent each Member State from developing its own version of the framework, which would recreate the very fragmentation the project seeks to address. The Parliament also stresses that the choice to opt into the 28th regime should be automatically recognised in the national legal systems of all 27 Member States.

This legal basis avoids the blockages associated with the requirement of unanimity, while offering a degree of institutional flexibility conducive to rapid adoption of the future regime. It reflects an attempt to reconcile normative ambition with political feasibility.

That said, this option is not without weaknesses. Many actors in the entrepreneurial ecosystem fear that heterogeneous national transposition could lead to the re-emergence, in a new form, of existing legal divergences. As a result, recourse to a directive directly raises the question of the future regime’s effectiveness and its ability to overcome the shortcomings that characterised previous initiatives.

The Parliament’s text sets out several conditions:

• the company must be a limited liability company;
• it must not be listed;
• it must have been incorporated by one or more natural or legal persons residing or established in a Member State;
• it must have its registered office in a Member State;
• it must be able to transfer its registered office to another Member State without dissolution or re‑incorporation, under harmonised procedures guaranteeing continuity of legal personality.

The Parliament also specifies that the ability to register as an S.EU should not be restricted to a new category of “innovative enterprises” or other restrictive criteria, in order to avoid excessive formalities and administrative burdens. In other words, although the project is politically driven by reference to start‑ups and scale‑ups, the text recommends a broader scope.

The minimum paid‑up share capital required for registration should be set at EUR 1, without prejudice to other creditor‑protection mechanisms. In this regard, the Parliament asks the Commission to propose a comprehensive framework incorporating, in particular, solvency tests. It further recommends that minimum requirements on transparency, founder identification and financial soundness complement the framework in order to protect creditors and business partners.

The resolution places strong emphasis on simplifying formalities. The Parliament calls for the incorporation and registration of an S.EU to be possible in a simple and fully digital manner, within 48 hours, while ensuring legal certainty. It also calls for full implementation of the “once-only” principle, whereby a company should not have to submit the same document multiple times in different Member States.

The Parliament also supports the creation of, or integration into existing systems of, a single EU‑level digital portal managed by the Commission. The text specifies, however, that this portal should not replace existing national rules on company incorporation; rather, it would serve as a harmonised entry point and common interface.

The law applicable to the incorporation of an S.EU should, in principle, be the law of the Member State in which the company is registered. The text adds that a company using the portal to register as an S.EU must choose a Member State as its place of incorporation, and thus as the national law governing that incorporation.

The Parliament recommends that the future framework incorporate various optional structuring mechanisms, including steward ownership, multiple‑voting‑right shares, protections against predatory acquisitions, and harmonised rules on employee share ownership.

The S.EU regime would be intended to establish common rules applicable to debt instruments that are quasi‑equity in nature, together with specific insolvency provisions designed to secure investments.

Access to financing would not be limited to venture capital, but would also include other sources such as impact investment, public funding and pension funds, in line with a diversification strategy.

With regard to legal documentation, the Parliament envisages the Commission appointing expert groups to develop standardised model articles of association and standardised shareholder agreement templates for S.EUs. The stated objective is to reduce costs and facilitate use of the regime across the Union.

The introduction of an optional European regime could encourage regulatory arbitrage, particularly in tax, social and governance matters. Preparatory work highlights the risk of circumventing national rules relating to employee information, consultation and participation. Recourse to S.EU status could, in some cases, make it possible to bypass more protective national systems, notably with respect to employee representation and social dialogue. Such developments could also increase normative complexity by adding an additional layer to existing frameworks, thereby complicating the readability of the applicable rules for companies, investors and supervisory authorities.

The Parliament repeatedly stresses that the 28th regime must not become a means of circumventing mandatory national protections. It therefore underlines that the framework must operate without prejudice to EU and national labour and social law.

The text further states that S.EUs should be subject to the same EU and national insolvency rules, and should not derogate from any rules granting workers preferential protection in insolvency proceedings. It also recalls that artificial recourse to S.EU status to circumvent existing levels of protection must be effectively prevented.

In other words, while the Parliament seeks a common company law framework, it does not propose that the S.EU should neutralise mandatory national rules in the social or insolvency fields. This is a significant limitation of the project, and also one of the conditions for its political acceptability.

As of today, the 28th regime is not yet in force. The Parliament has asked the Commission to present a proposal for a directive before the end of the first quarter of 2026. The precise content of the future text, its adoption timeline and its transposition arrangements therefore remain unknown.

The resolution outlines a fairly clear overall architecture: an optional, harmonised regime anchored in national forms and recognised across the Union. However, many operational questions remain open, particularly as regards how each Member State would articulate this regime with its own corporate forms.

The 28th regime envisioned by the European Parliament aims to offer companies a simpler, clearer and more genuinely European framework in which to incorporate, finance themselves and expand beyond national borders. However, on the basis of the adopted text, it is not conceived as a fully autonomous “28th corporate form”. Instead, the chosen approach is that of an optional, EU‑harmonised company law regime integrated into existing or new national forms.

For entrepreneurs, the key message is therefore the following: the project seeks to simplify business operations without entirely erasing national legal systems. It is based on a balance that is still being shaped between European uniformity, national anchoring and the preservation of mandatory protective rules, particularly in the areas of labour law and insolvency.