EU Inc. could shake-up Germany’s corporate system

Earlier this year, European Commission president Ursula von der Leyen confirmed that the Commission would take forward plans to establish a new ‘28th regime’, having consulted on the idea in 2025.

The 28^th regime concept is a new legal framework that would sit alongside the existing national frameworks that govern how new companies are set up and operate. Businesses that meet eligibility criteria would be able to opt into the new regime rather than, when seeking to expand into different markets within the EU, be forced to try to navigate the 27 different national frameworks that currently operate.

Von der Leyen wants to make it much easier for companies to grow and scale up within the EU. “While on paper the market of 450 million Europeans is open to them, it is far more complicated in reality,” von der Leyen told delegates at the World Economic Forum in Davos in January. “And that acts as a handbrake on the growth and profit potential of companies.”

“Ultimately, we need a system where companies can do business and raise financing seamlessly across Europe – just as easily as in uniform markets like the US or China. If we get this right – and if we move fast enough – this will not only help EU companies grow. But it will attract investment from across the world,” she said.

The 28^th regime, dubbed ‘EU Inc.’ is von der Leyen’s proposed solution. This, she said, will offer “a single and simple set of rules that will apply seamlessly all over our Union”. It will enable businesses to “operate across member states much more easily”.

Full details of what the EU Inc. framework will look like are set to be confirmed on Wednesday 18 March. A leaked draft version of what the Commission may be proposing has been circulating and been reported on by media outlets. It, together with an industry blueprint published in January 2025, the subsequent Commission consultation, and the comments made by von der Leyen at Davos, offer some clues as to its possible make-up.

A streamlining of various aspects of company law rules and procedures forms part of the intention, with fully digital procedures for everything ranging from registering companies to the signing of documents, amending of articles of association, holding of shareholder meetings, and closing of companies, apparently under consideration. The Commission also asked stakeholders whether changes to insolvency, tax and employment law should be built into its proposals too.

If the industry’s blueprint is endorsed by the Commission, there would be no minimum capital requirement for the formation of an EU Inc. company under the new 28^th regime. They said this would allow company founders “the flexibility to determine the amount of capital necessary for their specific business needs”.

Von der Leyen did not confirm that approach would be taken, but did say all companies registered as EU Inc. companies “will enjoy the same capital regime all across the EU”.

Many countries in the EU already provide for streamlined requirements for the setting up of small, innovative companies. In Germany, for example, there is a specific law enabling the establishment of small limited liability companies (UG), as opposed to larger limited companies (GmbH). Minimum share capital requirements of just €1 apply to UGs, compared to €25,000 for GmbHs, though shareholders must place at least 25% of annual profits into a reserve until their capital reaches €25,000. This reserve can only be used for specific purposes – for capital increases, to cover annual losses, or offset losses carried forward from previous years.

Applying no minimum capital requirements would correspond to the current legal situation in the Anglo-American world, but for countries like Germany, it does raise the question of whether there will be adequate creditor protection around EU Inc. companies.

In her speech, von der Leyen confirmed that entrepreneurs and innovative companies will be able to register a company in any EU member state within 48 hours via a “fully online” process. This digitisation of company registration also contrasts with existing German law covering GmbHs, as these can only be founded with the involvement of a notary.

The notary advises on all essential legal issues, assists in drafting corporate documents, notarises them, and subsequently registers the company with the commercial register. They also verify the identity of those involved and perform the legally required anti-money laundering checks. Since 2022, it has been possible to form a GmbH online in Germany, but even this procedure still requires notarial involvement.

The EU proposals appear set to make the digital incorporation of companies possible without any notarial involvement. The company would then be entered into a central EU register managed by a newly established EU authority.

The absence of notarial involvement is unlikely to pose a problem for every EU member state. For Germany, however, a complete omission of notarial oversight represents uncharted territory – due in part to the publicity effect of the commercial register, which helps protect trust in legal transactions.

It remains to be seen how member states will respond to the European Commission's proposal and whether Germany will be prepared to depart from its established notarial practices. Nevertheless, the introduction of the 28th regime could enhance the attractiveness of the European single market and encourage investment in small, innovative EU companies.

A version of this article was first published by Frankfurter Allgemeine Zeitung.