Germany: The EU Inc. – what the Commission’s proposal means for SMEs

On 18.3.2026, the European Commission presented the proposal for a regulation for the “EU Inc.” (COM(2026) 321) – a new, optional corporation as the “28th regime” alongside the 27 national legal systems. After the failure of the Societas Privata Europaea (PES, 2008–2011) on the issue of co-determination and the unsuccessful Societas Unius Personae (SUP, 2014), this is already the third attempt to provide the European Company (SE) with a “little sister”. This time, however, the Commission is taking a different approach: it is basing the regulation on a legal basis that requires only a qualified majority in the Council instead of unanimity – this makes it much more difficult for individual member states to block it and significantly increases the chances of adoption. The public debate focuses on start-ups and venture capital – but EU Inc. could be of considerable practical importance, especially for SMEs.

The core elements of EU Inc.

The EU Inc. is to be founded in the fast-track within 48 hours completely digitally for less than 100 euros, provided that the EU standard statutes are used. A minimum capital is not required; creditor protection is secured by a combined balance sheet and solvency test, not by the complex German legal institutions of raising and maintaining capital. The legal form recognizes true no-par value shares as standard, flexible voting rights classes and enables conversion instruments such as SAFE and KISS, two popular instruments for start-up financing. The transfer of shares takes place purely digitally without (!) notarization – §§ 15 para. 3, 4 GmbHG are superseded in this respect. An EU-wide stock option programme (EU-ESO) provides for taxation only at the time of sale. In addition, EU Inc. will have access to multilateral trading facilities (Art. 60 para. 1).

Relevance for SMEs

Anyone who expands into several EU countries with a GmbH today establishes a subsidiary in each country under local law – with different register requirements, governance rules and disclosure obligations. The EU Inc. could replace this patchwork quilt with a single, EU-wide recognised legal form. The potential as a cross-border group building block is particularly relevant: If the standard articles of association were used, a subsidiary could be set up in each member state within 48 hours purely digitally. The explicit right of the shareholders’ meeting to issue instructions safeguards the management of the Group – a clarification that is of considerable practical value in the cross-border Group with its diverse compliance requirements. The guiding principles of “digital-only” and “once-only” are to apply to the entire life cycle – from incorporation to register applications to liquidation.

For owner-managed companies, the flexibility in voting rights classes opens up interesting possibilities for succession and participation models, which in the rigid German GmbH law currently often require elaborate drafting of the articles of association. The possibility of issuing redeemable shares can also hedge vesting agreements and offer investors clear exit options.

What open flanks are there?

Unfortunately, EU Inc. is not a 100% European legal form. As with the European Company (SE), the system of sources of law is cascading: EU Regulation – Articles of Association – National GmbH Law (Art. 4). Unfortunately, the regulation often only regulates individual aspects and the demarcation from national law will be the “core problem” in practice. In the case of directors’ and officers’ liability, there is a risk of the parallel application of two regimes – the European regime (Art. 44) and the national regime (Section 43 (2) GmbHG).

There is also a lack of a uniform EU jurisdiction. The Commission only recommends, without obligation, the establishment of specialised chambers. The obvious objection that the ECJ could ensure a uniform interpretation via Art. 267 TFEU is not convincing on closer inspection: the duration of proceedings of 15 – 17 months is unsuitable for time-critical company disputes; the ECJ is only acting reactively, while nationally divergent interpretative practices are becoming entrenched; and he is only responsible for the EU legal part – not for the supplementary applicable national law, which makes up a large part of the practical questions. Experience with the SE confirms this: despite more than 20 years of SE practice, there are only a handful of ECJ decisions on the SE Regulation. With the Court of Chancery, the declared model of Delaware has exactly the specialized, fast jurisdiction that the EU model lacks.

Conclusion

The EU Inc. is much more ‘European’ than all existing supranational legal forms. Its strength lies in the guiding principles of “digital-only” and “once-only”, the flexible financial constitution and the EU ESO as a real asset in the international competition for talent. But without uniform (fast) jurisdiction and without clarifying the demarcation between regulation and national law, the core promise – legal certainty across borders – remains fragile. Medium-sized companies with cross-border structures should now follow the trilogue with Parliament and the Council of Ministers closely. The Commission is pushing for an agreement before the end of 2026. We will continue to monitor the development from a corporate law perspective and keep you informed.

By MELCHERS, Germany, a Transatlantic Law International Affiliated Firm.

For further information or for any assistance please contact germany@transatlanticlaw.com

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