The European Commission has presented a proposal to create a single legal framework that would allow companies to be established and recognised across the entire European Union within a maximum of 48 hours through one digital registration and with fully online procedures.
The initiative, known as EU Inc. or the ‘28th regime,’ aims to remove part of the administrative barriers that currently force companies to adapt to 27 different legal systems before they can operate across the single market.
Brussels considers regulatory fragmentation to be one of the main obstacles to business growth. The legal analysis accompanying the proposal warns that “company registration procedures remain highly fragmented across Member States, forcing companies to navigate divergent systems and generating costs, delays and legal uncertainty.”
The objective is to allow a company to register once and be automatically recognised in all EU countries, without having to repeat procedures or create subsidiaries in each EU country. The central idea is to establish a common digital one-stop shop covering the entire bloc.
The new system would be based on fully digital procedures, with electronic identification valid throughout the EU and automatic data exchange between administrations. The proposal states that registration should be “digital by default, with common electronic authentication and real-time processing, enabling fast and secure incorporation in all Member States.”
It also foresees applying the “once-only” principle so that companies do not have to submit the same information in different countries. The system should allow authorities to “reuse data between administrations and automate legal checks to reduce administrative burdens and speed up registration.”
The Commission insists that the regime will be voluntary and will not replace national laws. It will harmonise only basic corporate rules, while taxation, labour law, and social security will continue to depend on the country where the company operates.
The model is intended to “establish a European legal instrument that complements national systems, allowing a corporate form valid across the Union without replacing existing laws.”
The reform responds to growing concern about the lack of European companies able to compete globally and about the difficulty small firms face when trying to expand within the single market.
The analysis acknowledges that “administrative burdens resulting from multiple registrations disproportionately affect SMEs, which often lack sufficient legal resources to operate in several countries.”
Despite support from the business sector, the initiative raises reservations in some member states that fear losing control over their national registers or having to adapt their legal systems.
The proposal also raises questions about the degree of harmonisation required and the division of powers, since “the creation of a central European register requires a clear definition of the distribution of responsibilities between the Union and the Member States.”
The so-called 28th regime is presented as the first step towards an additional common legal framework for companies wishing to operate across the EU under uniform rules, to simplify the single market and make it easier to create new businesses in Europe.
