EU Council backs optional EU Inc framework for start-ups and scale-ups
The Council of the European Union has adopted its negotiating position on EU Inc, a proposed optional company-law framework intended to make it easier for innovative businesses to operate across the bloc. The decision, taken on 23 October, does not put a new legal regime into force. It gives the Council presidency a mandate to negotiate the text with the European Parliament once Parliament has agreed its own position.
The proposal would create a 28th company-law regime alongside the 27 national systems already used by businesses in EU member states. A company would be able to choose the EU Inc framework rather than replace national company law for everyone. The stated aim is to reduce some of the friction faced by start-ups and scale-ups seeking to establish themselves or attract investment in more than one member state.
An optional cross-border route
Under the framework described in the Council’s position, a business choosing EU Inc could register online within two days for a maximum fee of €100. It could then operate across the EU single market under the proposed regime. Those are proposed features, not services that businesses can yet apply for. The detailed rules, including the final legal text and timing, still depend on the legislative process.
The Council said its position retains the main objective of making cross-border business and investment easier, while changing elements of the initial proposal. The mandate is designed to clarify the regulation’s scope and its relationship with national and sector-specific rules. It also seeks to keep dealings with national administrations to a minimum, while adjusting registration, listing and withdrawal rules.
The digital share register would be simplified under the Council position. The text also refines trade-mark provisions and proposes a leaner approach to the once-only and digital-only principles. These changes are part of the negotiating mandate, so they may still change during talks with Parliament.
Safeguards and employee rules
The proposed regime is not solely a faster-registration measure. The Council position strengthens checks intended to protect the internal market from abuse. It would allow member states, in line with national law, to refuse registration on grounds connected to anti-money-laundering requirements, countering the financing of terrorism or other criminal activity.
Employee participation would generally follow the rules of the member state where an EU Inc has its registered office. The mandate also includes an optional mechanism for cases in which a company registered in one member state crosses employee-participation thresholds in another country where it operates. Companies would have flexibility over how to meet those national requirements.
The position preserves a proposed EU employee stock-option plan intended to help EU Inc companies recruit and retain staff. The Council has added safeguards by limiting its scope to small mid-caps, defined in the position as businesses with up to 750 employees and annual turnover of up to €150 million. That limit applies to the proposed stock-option arrangement, not to every possible company using the framework.
Negotiations are the next test
The Council’s agreement formalises its side of the negotiating process. Talks with the European Parliament can begin after Parliament adopts a position. Any final framework would need agreement through the EU legislative process before it could become law.
The Council position also envisages a 21-month period for member states to implement the regulation. That timetable is part of the mandate rather than an operative deadline today. For founders and investors, the immediate significance is political: the proposal has moved from an initial plan to a Council negotiating position, but its eventual rules and start date remain unresolved.
