Spain: European Commission Proposes New ‘EU Inc’ Company Structure

The European Commission has presented a proposal to introduce a new European company structure, known as the EU Inc, with the aim of making it easier for businesses to establish and expand operations across the European Union.

The proposal is intended to reduce barriers to cross-border business, provide a more flexible corporate framework and create greater legal certainty through a harmonised set of rules applicable across Member States. It also seeks to strengthen the EU’s attractiveness for investors, entrepreneurs, venture capital firms and innovative start-ups.

However, the EU Inc is not yet in force. Its implementation will require approval through the EU legislative process, amendments to national legislation and a transitional period before it becomes effective. As a result, it is not expected to be available before 2029.

Key Features

Under the proposal, companies could be incorporated entirely online within 48 hours, provided they adopt the standard articles of association. The incorporation fee would be capped at €100.

The proposed framework also introduces a highly flexible internal governance regime, with relatively few mandatory rules. Matters not specifically regulated by the EU Inc framework would be governed by the national law of the Member State in which the company is incorporated.

One of the proposal’s most notable features is the removal of any minimum share capital requirement. Instead of relying on share capital to protect creditors, the proposal introduces a new solvency-based approach. Directors would be responsible for ensuring that the company maintains positive equity and remains able to meet its financial obligations for at least the following 12 months before making any distributions to shareholders.

The proposal also aims to encourage employee participation by making it easier to implement share option schemes and other equity-based incentive arrangements. In addition, it seeks to simplify certain liquidation procedures for both solvent companies and, in some circumstances, innovative start-ups experiencing financial difficulties.

Challenges Ahead

While the proposal has the potential to simplify cross-border business within the EU, several important issues remain.

Its success will depend largely on how it is implemented across Member States. As national laws would continue to apply in areas not covered by the EU Inc framework, differences between jurisdictions may remain. Questions have also been raised regarding the absence of a single jurisdiction and whether the proposed creditor protection measures will provide sufficient safeguards in a corporate model without minimum share capital.

If adopted, the EU Inc could represent one of the most significant developments in European company law in recent years. However, businesses and investors should be aware that the proposal remains at an early stage of the legislative process, and its final form may evolve before implementation.

By Marimón Abogados, Spain, a Transatlantic Law International Affiliated Firm.

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

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