02 Nov 2026, 11:17 am
Businesses looking to establish operations in the EU could find that the proposed new ‘EU Inc.’ corporate structure offers a meaningful alternative to existing company forms in France.
The EU Inc. regime, proposed by the European Commission earlier this year, remains subject to agreement by EU lawmakers. If adopted, however, it would introduce a new corporate legal framework that companies could opt into, allowing them to establish themselves in a single EU member state and operate across the EU under one harmonised corporate regime.
Below, we explore the proposals in more detail and assess how they compare with France’s existing corporate regime.
The EU Inc. option is likely to be most attractive to start-ups, scale-ups and high-growth businesses seeking funding from investors across multiple EU jurisdictions. In particular, companies with cross-border ambitions may benefit from operating under a single harmonised corporate framework.
The proposed structure may also appeal to innovative businesses seeking to attract talent across several countries through harmonised employee share option arrangements. Its pan-European character and proposed framework for warrants and employee incentives could prove especially attractive to companies looking beyond the French market.
By contrast, purely domestic businesses may have less incentive to adopt EU Inc., especially given the flexibility already available under the French société par actions simplifiée (SAS), currently the preferred vehicle for start-ups, scale-ups and investor-backed businesses. The SAS already offers significant contractual flexibility and flexible governance arrangements, and can be incorporated with share capital of just €1.
While there is no direct French equivalent of the proposed EU Inc., the SAS is likely to be its closest practical comparator. Both structures emphasise flexibility and are particularly well suited to founder-led and growth-oriented companies. However, EU Inc.'s principal added value would lie in its EU-wide recognition and harmonised legal framework rather than introducing entirely new concepts to the French market.
For that reason, uptake in France is likely to be moderate initially, with adoption growing gradually as the framework matures, case law develops and investors become more familiar with the regime.
Compared to French company incorporation requirements, the proposed EU Inc. would not represent a fundamental shift.
France already allows companies to be incorporated entirely online through the ‘guichet unique’, the centralised digital portal for company registrations operated through the Institut National de la Propriété Intellectuelle (INPI). As a result, many of the administrative efficiencies envisaged under EU Inc. are already available domestically.
The proposed EU Inc. incorporation timeframe of two working days for standard-form articles (and five working days for bespoke articles) does not necessarily compare favourably with existing French procedures, given that company registrations in France are, in principle, processed within one business day.
French law does not generally require notarisation for company incorporations. However, EU Inc. could further simplify the process by reducing or eliminating certain formalities, including publication requirements and potentially aspects of the capital deposit process, which can be one of the more time-consuming elements of incorporation.
The most significant differences arise in relation to capital requirements and capital maintenance rules.
Under the current proposal, EU Inc. would not be subject to any minimum capital requirement and could operate entirely without share capital. Shares would not have a nominal value by default, reducing the importance of traditional concepts such as subscribed capital, paid-up capital and capital maintenance.
French law takes a different approach. French companies are generally subject to a capital-based framework, including requirements surrounding capital preservation and mandatory reserve accumulation. Companies must allocate 5% of annual profits to the ‘réserve légale’ until it reaches 10% of share capital. No equivalent requirement would apply under the proposed EU Inc. regime.
The distribution regime would also differ significantly. The proposal would introduce a balance-sheet test and a forward-looking 12-month solvency test supported by a directors’ solvency certificate. This represents a shift towards a solvency-based model of creditor protection, whereas French law traditionally relies more heavily on capital preservation and restrictions on distributions.
EU Inc. could therefore prove particularly attractive to founders seeking international investment or looking to implement employee incentive arrangements across multiple jurisdictions.
One of the most significant differences between EU Inc. and French company law concerns minority shareholder protections.
The proposal would allow minority shareholders to apply to a court to withdraw from a company and receive the fair value of their shares where they can demonstrate that the company’s affairs are being conducted in an oppressive manner. Under the proposal, payment could be sought jointly from both the company and remaining shareholders.
French law currently offers no direct equivalent. Minority shareholders may seek damages, challenge corporate decisions or, in exceptional circumstances, seek dissolution of the company, but they do not benefit from a statutory court-ordered buyout mechanism. As a result, EU Inc. could introduce a materially different approach to shareholder protection.
The proposal may also reduce a number of creditor protections familiar under French law.
French company law contains a range of mechanisms designed to safeguard creditors, including mandatory legal reserves, capital maintenance requirements and specific procedures that apply where losses reduce a company’s net assets below certain thresholds.
Notably, where a company’s net equity falls below half of its share capital, shareholders must decide whether the company should continue or be dissolved. No equivalent mechanism appears in the current EU Inc. proposal.
Similarly, the proposed framework would rely less heavily on mandatory capital accumulation and more heavily on solvency testing, director certification and post-distribution liability. This would be a shift away from structural creditor protection towards a more behavioural model centred on directors’ assessments and responsibilities.
In insolvency situations, the proposal also appears to shorten certain procedural deadlines for creditors. Creditors could have just 30 days to declare or challenge claims following notification of the opening of proceedings, compared with two months under French law, or four months for creditors based outside France.
The directors’ duties envisaged under the proposed EU Inc. framework are broadly consistent with those recognised under French law.
In both regimes, directors would be expected to act loyally, exercise appropriate care and act in the interests of the company. The proposal therefore appears largely aligned with the core principles of French corporate governance.
However, one potentially significant difference concerns the role of shareholders. French company law is based on the principle that shareholders cannot generally give binding management instructions to directors, who remain responsible for acting in the company’s interest and accountable for management decisions. The proposal appears to contemplate a greater ability for shareholders to direct management decisions, potentially creating tension with existing French governance concepts.
National liability regimes would also continue to play an important role.
These include liability for management faults (‘faute de gestion’), personal liability towards third parties for faults separable from directors' functions (‘faute séparable des fonctions’), liability for insufficiency of assets in insolvency proceedings (‘insuffisance d'actif’) and criminal liability for offences such as misuse of corporate assets, fraud and false accounting.
The principal uncertainty is how these existing French liability principles would interact with protections available under the proposed regulation, particularly where directors act pursuant to shareholder instructions or resolutions. Under French law, directors may remain personally liable even where shareholders have approved a particular course of action.
The interaction between EU Inc. and French insolvency law is likely to be one of the most important issues for businesses.
For solvent companies, the proposed winding-up regime does not appear to offer substantial simplification. Indeed, because it includes a creditor opposition period, the process could in some circumstances take longer than the winding-up of traditional French companies.
For insolvent businesses, French insolvency law would largely continue to play a central role. Existing procedures, including safeguard proceedings, restructuring measures and judicial liquidation, would remain available and relevant. Unlike the proposed EU Inc. framework, French law does not generally treat insolvency as an automatic pathway to liquidation and instead seeks, where possible, to preserve businesses and facilitate transfers of viable operations.
The proposal introduces a simplified, digitised winding-up process for qualifying start-ups, intended to facilitate faster business closure. However, its practical utility may be limited by strict eligibility criteria, including restrictions relating to creditor numbers and employee obligations. As a result, access to the regime may be limited to a relatively narrow range of companies.
Important uncertainties also remain regarding the interaction between the proposed regime and existing French insolvency practice, including the role of commercial courts, the appointment of insolvency practitioners and the treatment of avoidance actions and insolvency-related director liabilities.
National rules would continue to apply in relation to matters such as security interests, creditor ranking, employee protections, set-off rights, insolvency sanctions and various restructuring and liquidation procedures.
EU Inc. could prove a valuable vehicle for companies looking to implement employee stock option plans. One of the persistent challenges under existing national frameworks — including in France — is the lack of harmonised rules governing the timing of taxation of gains arising from warrants. The proposed EU Inc. regime would offer greater clarity on this point, establishing a more predictable and consistent framework for when revenues derived from warrants are taxed. This could significantly reduce uncertainty for both employers and employees participating in incentive schemes, and make EU Inc. an attractive structure for businesses seeking to roll out cross-border equity compensation plans across multiple EU jurisdictions.
The most significant impact of EU Inc. in France would be its potential shift away from capital-based creditor protection towards a framework focused on solvency assessments and directors’ responsibilities. The absence of mandatory capital build-up and legal reserve requirements would be a notable departure from existing French corporate law principles.
The proposal would also introduce a fundamentally different approach to distributions, relying on forward-looking solvency assessments rather than primarily on historical financial information. This could provide greater flexibility but would also increase the importance of directors’ judgments and potential liability exposure.
For innovative start-ups and scale-ups seeking international investment, EU Inc. could provide a meaningful alternative to domestic structures, particularly due to its pan-European recognition and harmonised approach to employee incentives and warrants.
However, many of the procedural efficiencies associated with the proposal already exist in France through the guichet unique, while the flexibility offered by the SAS means that French entrepreneurs already have access to a highly adaptable corporate vehicle. Some investors may also remain cautious about concepts such as the absence of minimum capital requirements, the removal of legal reserve obligations and the use of no-nominal-value shares.
The greatest uncertainty concerns how French courts will interpret and apply the EU Inc. framework alongside existing domestic company and insolvency law. Because important aspects of those areas would remain governed by national law, there is a risk that EU Inc. companies established in different member states could ultimately be subject to materially different legal outcomes despite operating under a common European framework.
EU Inc. is unlikely to displace existing French company forms entirely. However, it could emerge as a meaningful alternative for innovative, investor-backed businesses seeking to operate across multiple EU markets under a single harmonised corporate framework.
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