The legal systems of the member states are subject to an ongoing harmonisation process, but at the same time national standards – for example in labour and tax law or in the area of corporate co-determination – must also be taken into account. ‘We will offer instead to innovative companies to operate all across our Union under one single set of rules. We call it the 28th regime.‘, said EU-Commission president Ursula von der Leyen. She is referring to an optional regulatory system at EU level to facilitate cross-border establishment and management of companies and to ease access to venture capital. However, critics fear that this will among other undermine the national standards already cited. While a consultation by the European Commission was open until the end of September, a draft report with proposals for the specific design of a 28th regime was debated in the European Parliament.

Strong voices calling for the creation of a 28th regime

Both the Letta Report in April and the Draghi Report published in September last year propose a 28th regime. The latter states that ‘(...) a voluntary 28th company rulebook harmonising legislation concerning corporate law and insolvency, as well as a few key aspects of labour law and taxation, to be made progressively more ambitious, could be explored.‘ The idea was further fleshed out by a lobby group of start-ups as part of the EU-INC proposal. According to the January 2025 document, the EU should introduce a company type that can be registered digitally and quickly (within 24 hours). Access to venture capital should be ensured and simplified via an investment instrument. Employees may be granted information and consultation rights, but the right to be represented on the supervisory board with voting rights is explicitly rejected. Corporate Europe Observatory presents the extensive lobbying activities to create a 28th regime and criticises the fact that the EU-INC proposal also dominates the Commission's discourse.

Debate in the European Parliament

The European Parliament is also active in this area, having prepared an own-initiative report on the 28th regime. Rapporteur, René Repasi (S&D), presented his report during a debate organised by MEP Evelyn Regner, AK EUROPA, the ÖGB European Office and the Austrian Chamber of Civil-Law Notaries. While he sees opportunities primarily in facilitating access to venture capital, he also points to the dangers of circumventing national property rights. The report proposes the introduction of a new type of company called a ‘European Start-Up and Scale-Up’ (ESSU). Unlike the EU-INC proposal, Repasi says the new EU company form should be implemented as a directive rather than a regulation to allow member states some flexibility to adapt it to national systems.

Another key question is whether the 28th regime can actually be limited to ‘innovative companies’ only, as envisaged by the European Commission. There is ultimately no clear definition of start-ups and scale-ups. Repasi therefore envisages eligibility requirements and restrictions imposed on companies to register as ESSUs. However, this is precisely what is seen as a problem in an analysis requested by the European Parliament's Legal Affairs Committee. It states: ‘Rather than restricting access, the 28th regime should be open to businesses of all kinds and designed to meet the needs of innovative businesses, including those with an exit strategy who wish to attract venture capital funding and those with a vision of long-term independence.‘

Criticism of the proposals from employees

The idea behind the 28th regime is by no means new. In fact, Since 2001, the European Company (SE) has enabled public limited companies to conduct business across Europe under a standardized regulatory framework. The European Trade Union Institute emphasises that, despite various protective provisions, the introduction of SEs has already led to a striking decline in opportunities for employee participation and co-determination and sees this danger also in connection with the 28th regime. Moreover, the European Trade Union Confederation strongly criticises all plans that envisage the integration of labour, tax or collective bargaining law. The main risk is that co-determination and trade union rights, as well as collective agreements, will be circumvented.

The Chamber of Labour points out that there is actually no need to create a 28th regime. Rather, the Digitalisation Directives I and II  have already laid the foundation for optimising digital tools, and the EU Mobility Directive also promotes and simplifies cross-border restructuring. By contrast, a 28th regime would allow companies to select their preferred labour, tax, and insolvency laws. This would lead to a race to the bottom in social and labour standards, the erosion of co-determination rights and a reduction in minimum standards under company law.

What happens next?

René Repasi's draft report is currently being discussed in the Legal Affairs Committee and is not expected to go to plenary before January 2026. The European Commission's proposal for the first quarter of 2026 is also expected, based in parts  on the results of the consultation.


Further information:

EU Commission: Consultation on the 28th Regime
AK EUROPA Position: Konsultation zum 28. Regime - ein EU Rechtsrahmen für Unternehmen
European Parliament: Draft Report on the 28th Regime
EU Parliament: In-Depth Analysis requested by the JURI Committee
ETUI Policy Brief: How a 28th company law regime jeopardises workers’ rights
European Trade Union Confederation: Response to the Commission’s plans
Corporate Europe Observatory: A social dumping disaster? EU´s 28th Regime´plans could help corporations bypass member states rules