Allied For Startups' Position on the 28th Regime

Startups and scale-ups are Europe’s engines of innovation, jobs, and competitiveness – but 27 national company regimes fragment the Single Market, blocking incorporation, investment, and cross-border growth. This costs the EU hundreds of billions annually and drives founders to “flip” abroad, taking talent and value with them.

The solution is a true 28th regime: a single, optional EU-wide company form via Regulation. Unlike the Societas Europaea or directive-based proposals, only a uniform regime can cut duplication and complexity. It would allow founders to incorporate online, operate seamlessly across borders, attract pan-European investment, and offer employees equity recognised EU-wide – one company, one registry, one market.

Key features:

• Digital-first incorporation and governance with a central EU registry.
• Modern, flexible corporate structures (share classes, EU-wide venture instruments, model agreements).
• Cross-border employee ownership with standardised ESOP frameworks.
• Seamless operations and recognition of company actions across all Member States.
• Efficient exit and failure procedures enabling entrepreneurs to try, fail, and start again.

Allied For Startups stresses three conditions for success:

1. The legal base must be Article 352 TFEU to create a self-standing EU form;
2. Scope must remain lean, avoiding overload with unrelated tax or labour law harmonisations;
3. The regime must be co-created with startups and investors to ensure usability. A compromise that delivers 27 variations instead of one uniform framework would be a false victory, perpetuating fragmentation rather than fixing it.

Implemented ambitiously, the 28th regime would be transformative: cutting costs and delays for founders, building investor confidence, keeping talent and IP in Europe, and making the EU the best place in the world to start and scale a company.

The Commission’s timeline to propose legislation by early 2026 should be met with urgency, piloting incorporations as soon as 2027 and tracking impact through clear KPIs.

1. Why Startups Matter

Startups drive technological advancement, address societal challenges, and create jobs. Yet fragmented national regimes hinder cross-border growth, costing the EU hundreds of billions and limiting competitiveness. Over 35,000 startups and 3,400 scale-ups are affected. A unified EU company form would reduce administrative burdens, boost investment, and let startups treat the Single Market as home.

2. The Problem: Fragmentation and Barriers to Scaling 

Legal fragmentation: Entrepreneurs navigate 27 national laws, slowing incorporation, cross-border operations, and investment.

Costs and delays: Setting up abroad can take weeks or months; corporate actions differ by country, raising legal fees.

Investor reluctance and “flipping”: Complexity drives founders to relocate abroad, taking jobs and value with them.

Lessons from the SE: The Societas Europaea had high capital requirements and partial national implementation, limiting uptake by startups.

3. The Solution: A Single EU Startup Company Form – “The 28th Regime”

A single EU startup company form under a Regulation ensures uniform rules, opt-in choice, and pan-European incorporation. Only a Regulation ensures one uniform legal form across all Member States. Directive-based approaches risk 27 variants, perpetuating fragmentation.

Key features and principles:

• Fast, digital incorporation: Fully online, synchronised with national registers, “once-only” principle.
• One company, one registry, one market: Registration valid EU-wide; open, interoperable central EU registry.
• Flexible governance: Multiple share classes, simplified capital increases, standardised venture financing instruments.
• Cross-border ESOPs: Employee equity recognised EU-wide, enabling mobility without loss of rights.
• Seamless operations: Mutual recognition of documents and resolutions; electronic signatures valid EU-wide.
• Low-cost exit: Fast-track dissolution and “honest debtor” protections, encouraging entrepreneurial experimentation.

In implementing these features, it is crucial that the 28th regime remain focused. We strongly advise against overloading this initiative with unrelated harmonisations (e.g. comprehensive tax or labour law changes), because that could delay or derail it. The 28th regime should aim to be a Minimal Viable Product (MVP) in company law: deliver a lean but powerful common framework now, and handle other policy areas in parallel tracks or future enhancements.

4. Avoiding Pitfalls

As the Commission designs this framework, there are several pitfalls to avoid, learned from past attempts and recent debates:

• No “27+1” models: Avoid hybrid forms that replicate national quirks.
• Legal basis: Article 352 TFEU enables a standalone EU company form.
• Startup priorities: Avoid over-accommodating legacy interests; focus on growth and mobility.
• Avoid overscope: Keep tax and labour harmonisation separate.

5. Co-Creation and Implementation

The 28th regime must be developed closely with the startup community – the people who will use it. Allied For Startups welcomes the Commission’s consultations with entrepreneurs, investors, and associations and is ready to contribute. We recommend creating an ongoing expert group to co-design and pilot the framework, testing incorporation processes and governance tools to ensure the regime is user-friendly and fit for purpose. Early involvement of innovators will build trust and encourage rapid adoption.

Timeline and success metrics:

• Engage startups, investors, and legal experts in design and piloting.
• Target legislation by Q1 2026, first incorporations by 2027.
• Track success via KPIs: faster incorporation, fewer duplicative procedures, reduced startup relocations.
• Governance should remain adaptable, incorporating feedback from founders and investors.

Conclusion: One Company, One Market

The 28th regime is a once-in-a-generation opportunity to eliminate fragmentation and empower European startups. A digital-first, uniform EU company form will save time and costs, boost investor confidence, retain talent and IP, and position the EU as a global leader in startup growth. Half-measures will not suffice – Europe must act boldly to deliver a genuine single company form, not 27 variations of the same problem.