The 28th Regime: The Missing Piece in Europe’s Competitiveness Puzzle? 

The EU has spent decades building and trying to complete a Single Market, yet fragmentation persists. Confronted with a patchwork of national legislation and varying administrative processes, European startups are at a systemic competitive disadvantage. The absence of a single, recognisable EU-wide company form has long been one of the missing foundations in Europe’s ability to scale companies.

In the wake of recommendations by Enrico Letta and Mario Draghi, the European Commission long-awaited “28th regime” proposal, or EU Inc. is meant to change that. The idea is straightforward but ambitious: create a single, optional EU-wide company form that reduces fragmentation and allows firms to operate seamlessly across Member States. The proposal has been received as a step forward, but not as the breakthrough that many had hoped for, highlighting how the EU’s competitiveness ambitions continue to be constrained by the limits of its current legal framework.

What is it about? 

The “28th regime” proposal seeks to reduce obstacles for companies to enter the Single Market and scale. Concretely, it introduces a harmonised company law framework enabling firms to expand across the EU without re-incorporation. This is supported by new digital procedures (such as fast-track online registrations) and a “once only” data principle, whereby company information is automatically shared among relevant authorities. It establishes a more flexible, investor-friendly structure, with low capital requirements, multiple share classes, simplified rules for financing and restructuring, and improved stock option frameworks aimed at attracting both capital and talent. Importantly, the Commission chose to make it a Regulation (rather than a Directive), meaning the rules will apply evenly and directly across Member States. At the same time, company registration and key administrative processes remain linked to national systems, meaning integration is improved but not unified. The legal form is European, but the administrative reality remains national.

Why this matters  

For startups and scaleups, the fragmentation of the Single Market is a structural constraint. Despite formal integration, companies expanding within the EU still face 27 different legal, administrative and regulatory systems, creating administrative burdens, legal uncertainty and higher transaction costs. These barriers undermine investments and contribute to Europe’s ability to innovate and retain high-growth companies compared to other jurisdictions. A recognizable, EU-wide company form, close to a “Delaware Inc.”, has long been seen as the missing piece in the EU’s competitiveness puzzle.

Where the proposal falls short 

Three structural gaps remain. Taxation continues to be fragmented, labour law remains national, and there is no single legal jurisdiction governing companies operating across the EU.

Importantly, the proposal does not create a unified legal space. Courts, insolvency regimes and the interpretation of corporate rules remain national, meaning that legal predictability will continue to depend on domestic systems.

Corporate taxation is excluded from the proposal. Companies operating across the EU will face different tax bases, and compliance requirements across jurisdiction.

Labour law is equally unaffected. Cross-border hiring will still involve navigating different national systems for employment contracts, social security and termination rules, leaving operational complexity unchanged.

These limitations are not incidental. They reflect the constraints of the current EU legal and political framework, in which taxation, labour law and key aspects of judicial systems are Member State’s competence. In that context, the proposal represents an attempt to advance integration without triggering political deadlock, as it has in the past.

A long story of partial solutions 

The concept of establishing a 28th regime for companies is not new. It has been a recurring theme in the EU’s history, and has repeatedly run into the same obstacle: Member States are reluctant to lose control over fundamental economic regulations.

The most notable example is the ‘Societas Europaea (SE)’. First proposed in 1970, it was only adopted in 2001 after over thirty years of negotiations. Its delay persisted because of unresolved disagreements concerning worker participation and corporate governance structures.

Designed as a purely European company operating under a unified legal system, the SE ultimately became a compromise: it allows cross-border mergers and registered office transfers, but still relies heavily on national laws for crucial areas like taxation, insolvency, and governance. This mixed nature has restricted its potential. Although thousands of SEs are in existence, they are mostly used by large public companies.

More broadly, the SE exemplifies a consistent trend: Member States tend to favour partial solutions over full integration when deeper harmonisation would require them to give up control over core economic rules. The unsuccessful 2014 proposal for a Single-Member Company (SUP), which was abandoned in 2018, highlights that this challenge remains.

What comes next 

The focus now shifts to interinstitutional negotiations. Last week, EU leaders called on co-legislators to reach an agreement by the end of this year, signaling political momentum behind the file.  

Whether the 28th regime ultimately becomes the “missing piece” enabling the EU to achieve its competitiveness ambitions, it will depend on how far co-legislators are willing to go in addressing the remaining gaps. Once again, it will hinge on the EU’s willingness to confront deeper questions about the future of the European project. 

This blog was written by Fiona Wright, Angelika Gruber, Lorene De Gouvion, Sara Fornasiero, Aymane Guenaou and Viktor Jencus, who all work within Flint’s EU policy practice.  

Flint Global has exceptional people in Brussels, London and across Europe and the Asia-Pacific, able to help clients navigate the increasingly complex EU Policy and financial services environment, steer government policy, overcome regulatory and political barriers to financial services, enter new markets and achieve their commercial objectives.     

To find out more about how Flint can help you navigate and understand EU and financial services policy, advise on the risks and opportunities of these developments, and support your investments, get in touch.