From Proposal to Law: The EU Legislative Machine
The EU Inc proposal is one of the most ambitious pieces of corporate law legislation the European Union has ever attempted. But ambition alone doesn't pass laws. The proposal must navigate the EU's complex legislative machinery — a process that typically takes 2-4 years from initial proposal to member state implementation. Here's where things stand and what comes next.
The Legislative Journey So Far### Phase 1: The Genesis (2023-2024)
The idea of a unified European corporate form is not new. The European Commission explored similar concepts in the 1970s with the proposed Societas Europaea (SE), which eventually became law in 2004 but proved too complex and expensive for most businesses. The EU Inc represents a fresh, modernized approach.
Key milestones in the genesis phase:
-
April 2023: Enrico Letta presents his report on the future of the Single Market, prominently featuring the EU Inc concept- September 2023: The European Commission includes EU Inc in its legislative planning- January 2024: Public consultation launched, receiving over 5,000 responses from businesses, legal professionals, and civil society- March 2024: Mario Draghi's competitiveness report reinforces the case for a single European corporate form
Phase 2: The Proposal (2025)
The European Commission formally published the EU Inc legislative proposal in early 2025, taking the form of a directive rather than a regulation. This distinction is important:
A regulation applies directly in all member states. A directive sets objectives that member states must achieve through national legislation, allowing some flexibility in implementation. The Commission chose the directive route to accommodate different national legal traditions while ensuring harmonized outcomes.
The proposal consists of several interconnected legal instruments: -
The main EU Inc Directive establishing the corporate form- Amendments to the Company Law Directive (2017/1132)- Amendments to the eIDAS Regulation for the European Business Wallet- A delegated regulation for the EU-ESOP framework
Where We Are Now: The Parliamentary Phase
The proposal is currently in the European Parliament, where it has been assigned to the Committee on Legal Affairs (JURI) as the lead committee, with the Committee on Economic and Monetary Affairs (ECON) and the Committee on Employment and Social Affairs (EMPL) providing opinions.
Key Dates
Q1 2026: JURI committee begins detailed examination of the proposal- Q2-Q3 2026: Committee hearings with experts, stakeholders, and the Commission- Q4 2026: JURI committee vote on amendments and final committee report (expected)- Q1 2027: European Parliament plenary vote (targeted)
The rapporteur — the MEP leading the Parliament's work on the proposal — has indicated that the committee aims to maintain the Commission's ambitious scope while strengthening certain provisions around worker protections and anti-abuse measures.
The Council: Where National Interests Collide
Simultaneously, the Council of the European Union (representing member state governments) is examining the proposal through its Competitiveness Council configuration. This is where the real political negotiations happen.
Member states are broadly divided into three camps:
The Enthusiasts
Countries like Estonia, Ireland, the Netherlands, and the Nordic states are strongly supportive. These countries already have relatively modern corporate law frameworks and see the EU Inc as an opportunity to attract more European businesses.
The Cautious
Germany, France, and Italy are supportive in principle but concerned about specific provisions. Germany worries about the interaction with its robust Mitbestimmung (codetermination) system. France wants stronger worker protections. Italy is concerned about the impact on its notarial tradition in company formation.
The Skeptics
A smaller group of member states, including some Central and Eastern European countries, worry that the EU Inc could create regulatory competition that favors larger Western economies. They want guarantees that the new corporate form won't be used to circumvent national labor or tax protections.
The Council typically requires a qualified majority (55% of member states representing 65% of the EU population) to approve legislation. Achieving this threshold means the Commission must keep the larger member states on board while addressing the concerns of smaller ones.
Trilogue: The Final Negotiation
Once both the Parliament and Council have adopted their positions, the real negotiation begins in trilogue — informal three-way meetings between representatives of the Parliament, Council, and Commission. This is where compromises are struck and final text is agreed.
Based on current timelines, trilogue is expected to begin in mid-2027 and could take 6-12 months to complete. Key negotiation points are likely to include:
- Minimum capital requirements: The Commission proposes €1; some member states want a higher floor- Codetermination: How the EU Inc interacts with employee board representation rules- Anti-abuse provisions: Strength of measures to prevent letterbox companies- Tax coordination: The degree of tax harmonization within the EU-ESOP framework- Digital infrastructure: Funding and implementation timeline for the Business Wallet ## Transposition: The Last Mile After trilogue agreement, the directive must be formally adopted by both institutions and published in the Official Journal of the European Union. Member states then have a transposition period — typically 24 months — to incorporate the directive into national law.
This means the earliest realistic date for EU Inc companies to actually be formed would be late 2029 or early 2030, assuming the legislative process proceeds without major delays.
Risk Factors and Potential Delays
Several factors could slow the process:
- European Parliament elections (2029): If the dossier is not completed before the current parliamentary term ends, it could be significantly delayed- Political shifts: Changes in government in key member states could alter negotiating positions- Technical complexity: The digital infrastructure (Business Wallet, Single Digital Gateway) requires significant investment and coordination- Geopolitical events: External crises can divert legislative attention and resources ### Accelerated Path However, there's also an accelerated scenario. If the EU Inc is treated as a competitiveness priority — as both the European Parliament leadership and the Commission have signaled — the timeline could be compressed. An early agreement in trilogue could see the directive adopted by mid-2028, with first EU Inc formations possible by mid-2030.
For businesses and entrepreneurs watching the process, the message is clear: start planning now, because the EU Inc is not a question of if, but when.
Originally published on EU Inc News
