Imagine you are a young innovator with a promising proof of concept. You’re looking to build a network, you turn to your university, reach out to potential investors, and search for people with complementary skills to yours.
But now imagine you’re a young entrepreneur, or part of a promising team, somewhere in the Czech Republic.
You have an idea that, if scaled up, could help France better manage its hospital infrastructure. To make it happen, you need to raise funds in France, but your technology is Czech, and you’re considering establishing the company in Berlin.
Now imagine you’re in the United States, say in Iowa—there would be no issue in setting up your company in California.
The European Continent is not the United States, as one speaker reminded us during this 5th of June JURI Workshop. So how can Europe lift the structural barriers to investment, innovation, and scaling?
That is precisely the challenge the 28th regime seeks to address.
The workshop entitled “The 28th Regime: A New Legal Framework for Innovative Companies” was organised by the Policy Department for Justice, Civil Liberties and Institutional Affairs in cooperation with the JURI Secretariat of the Committee on Legal Affairs. It took place on Thursday, 5 June 2025, from 09:00 to 10:30, in room ANTALL 6Q2.
The session began at 09:00 with introductory remarks by Ilhan Kyuchyuk, Chair of the Committee on Legal Affairs.
From 09:05 to 09:20, Frant Marcus and Dr Apostolos Thomadakis (CEPS) presented an overview of the hurdles faced by companies in the EU, with a particular focus on the structural and regulatory barriers that hinder the development of innovative start-ups across Member States.
Between 09:20 and 09:30, a recorded video intervention by Prof. Dr Anu H. Bradford from Columbia School of Law offered a comparative view from the United States, emphasising differences in legal, capital and cultural environments for scaling innovation.
From 09:30 to 09:40, Prof. Dr Jacques Ziller (Professor emeritus at Université Paris 1 Panthéon-Sorbonne and Università di Pavia, and Honorary President of the Societas Iuris Publici Europaei) discussed the harmonisation of corporate law within the framework of the proposed 28th regime and outlined the legal competences of the Union that would be necessary to implement such a framework.
From 09:40 to 09:50, Prof. Dr Charles Delavenne and Prof. Dr Véronique Goncalves, both from the Catholic University of Lille, addressed the need for safeguards to prevent regulatory circumvention and reflected on the lessons learned from the failure of similar legal initiatives in the past.
From 09:50 to 10:00, Prof. Dr Florian Möslein of Marburg Law School explored the legal and administrative simplification of company registration procedures as a critical tool for supporting cross-border entrepreneurship.
Finally, from 10:00 to 10:10, Prof. Dr Anne Sanders of the University of Bielefeld examined the possible scope of the 28th regime, focusing on the balance between universal applicability and targeted regulatory advantages for innovative businesses.
Position statement
Legal optionality is neither a guarantee of success nor a safeguard against failure. While the voluntary nature of these regimes can help navigate institutional and political sensitivities, their real-world feasibility depends on deeper structural, legal, and economic factors.
There is no one-size-fits-all institutional model for success. For instance, the UCITS framework succeeded through gradual harmonisation, backed by strong supervisory coordination and an international distribution strategy.
On the other hand, the Unitary Patent reached its objective via enhanced cooperation, showing that flexible integration can work when economic benefits are clear and administrative systems are robust.
Ultimately, the interplay between legal design, institutional context, and stakeholder alignment is what separates successful projects—like UCITS and the Unitary Patent—from failures such as PEPP, CESL, SPE, or SUP.
At Ave Europa, we believe that Europe must lead the way in legal innovation. The European Union should not merely be seen as a regulatory apparatus, but as a modernised, digitalised, and agile legal ecosystem that empowers rather than discourages individual entrepreneurial initiative. The 28th regime represents a unique opportunity to offer targeted legal options that make the EU a proactive enabler of innovation.
More fundamentally, this approach lays the groundwork for a distinct and autonomous body of European company law, one that encourages upward legal convergence not through competition between Member States, but by establishing high standards to which national systems must align if they wish to remain relevant. In doing so, we can foster legal excellence without fuelling regulatory rivalry within the Union.
A well-designed 28th regime has the potential to bring legal clarity, reduce costs, and foster genuine integration across the European market. But if poorly conceived, it could exacerbate market fragmentation, promote a two-speed Europe, and weaken the ambitions of the Capital Markets Union.
Contextual elements
According to the Columbia professor, the European Union actually creates more start-ups than the United States, but the real challenge lies in helping these start-ups grow and mature.
While the EU once accounted for 20% of the world’s unicorns, that share has now dropped to 7%. Moreover, two-thirds of these successful companies are concentrated in just four Member States—France, Germany, the Netherlands, and Sweden.
This disparity raises questions about the relationship between digital regulation and innovation, and what it would truly take for Europeans to achieve technological sovereignty and close the gap with the United States in terms of technological success.
A common narrative suggests that what is holding Europe back is excessive digital regulation. However, the professor challenges this assumption, arguing that it is a false dichotomy to pit regulation against innovation. There are more fundamental structural reasons behind Europe’s lag, and they have little to do with regulatory overreach.
First, Europe still lacks a fully integrated digital single market. Scaling a business across 27 different national markets, each with its own language and set of regulations, remains extremely difficult.
Second, the absence of a Capital Markets Union severely limits funding opportunities for start-ups. European entrepreneurs often struggle to raise sufficient capital, relying instead on risk-averse banks, which stifles their growth potential. While they may succeed in early funding rounds, many eventually turn to American venture capital, leading to mergers or acquisitions by U.S. tech giants. Currently, 50% of global venture capital is in the U.S., 40% in China, and only 10% in the EU.
Third, Europe is constrained by strong legal and cultural barriers to failure. Bankruptcy and insolvency laws are rigid, and there is a pervasive social stigma around failure. In contrast to the U.S., where failure is often viewed as part of the entrepreneurial journey, in Europe it is frequently a career-ending event. This prevents people from taking risks or trying again after an initial setback.
Fourth, and crucially, Europe lacks access to top global talent. One cannot expect to lead global innovation without attracting the world’s best innovators. In the U.S., over half of start-ups are founded by immigrants. Many of the leading American tech companies were launched by individuals who came from other countries. The American university system serves as a powerful magnet for talent, and immigration is broadly treated as an opportunity rather than a threat.
In conclusion, attracting talent and creating a truly integrated digital single market are essential steps. Without them, Europe cannot hope to match the innovation ecosystem that the United States has built.
The issue is not whether to regulate or not, but whether Europe is willing to build the structural conditions that allow innovation to thrive.
Elements of definition
The 28th regime is intended to apply to at least 30 states within the broader European Economic Area.
The instrument should be capable of being adopted across the entire EEA, including Iceland, Norway, and Liechtenstein.
This approach reflects a broader context inspired by the Letta Report and aims to overcome structural burdens in Europe by creating an innovative and supportive legal environment in which companies can grow and develop, particularly by addressing complexity and difficulties in accessing talent.
The 28th regime forms part of a wider agenda associated with the EU’s Competitiveness Compass, which seeks to harmonize rules across Member States and establish a predictable and coherent legal environment, particularly in areas such as corporate law and insolvency.
This initiative aligns with the broader EU strategy on start-ups and scale-ups, which requires a clear legal definition of what constitutes an innovative company and seeks to address digital and regulatory obstacles in the cross-border European context.
The preliminary discussions on the 28th regime focus on the creation of a voluntary and harmonized legal framework that would complement national laws.
Companies would have the freedom to opt into this supranational regime, which aims to reduce administrative burdens, offer legal clarity and certainty, promote cross-border scaling, and facilitate access to funding across Europe.
The envisioned framework would be harmonized, recognizable, and adaptable for start-ups with high growth potential, particularly in sectors such as deeptech, biotech, and artificial intelligence. It would simplify the establishment and operation of companies across borders within the EU, reduce administrative and market access costs, and improve the EU’s overall attractiveness to both European and international investors.
However, the regime must also be carefully designed to prevent companies from using it as a vehicle for abusive regulatory arbitrage or for engaging in social or fiscal dumping. The objective is to promote fair competition while creating the structural conditions necessary to support and incentivize innovation.
Past realisations
The Pan-European Personal Pension Produt
The Pan-European Personal Pension Product (PEPP) offers an illustrative case study of a voluntary, supranational legal instrument designed under the model of the 28th regime. PEPP was developed to provide individuals with a personal pension product that is portable across borders, transparent in terms of information and cost structure, and accessible throughout the EU.
PEPP introduced several key features that align with the 28th regime logic: cross-border portability for workers moving between Member States, a standardised disclosure system for better consumer understanding, a cost ceiling capped at 1% per year to ensure affordability, and a default investment option to simplify user choices.
It is based on a voluntary and complementary regime, does not replace national pension schemes, and relies on a unified EU framework. The authorisation process is centralised through the European Insurance and Occupational Pensions Authority (EIOPA), which grants a single EU passport for product distribution.
From this initiative, several success factors have emerged.
A clear value proposition—in terms of reduced costs, simplified access, and enhanced legal certainty—was crucial. The voluntary and complementary nature of the regime allowed for coexistence with national systems. Harmonised baseline rules were designed pragmatically to ensure compatibility across jurisdictions. Success also depended on the alignment of stakeholders, including Member States and industry actors. Simplicity and accessibility were particularly important for SMEs and smaller providers, ensuring that the administrative burden did not become a barrier to entry.
However, the PEPP experience also highlights common difficulties encountered in similar EU initiatives. One of the main challenges has been the lack of tax coordination across Member States, which undermines the full potential of cross-border portability and investment returns.
Political and legal resistance—particularly regarding subsidiarity, tax sovereignty, and social protection law—has limited the effectiveness of implementation. The hybrid legal nature of such instruments can lead to complexity and confusion, both for administrators and users.
Additionally, a lack of consensus across sectors and industries has often weakened the political momentum. For SMEs in particular, entry into such regimes may still be constrained by compliance costs or administrative requirements. Finally, uncertainty about the appropriate legal basis continues to challenge the legal design and adoption process at the EU level.
The Societas Unius Personae (SUP)
The Societas Unius Personae (SUP) was conceived as a European single-member private limited liability company aimed at facilitating the creation of businesses by individuals across the EU. Its core objective was to offer a simplified and accessible legal structure open to any natural or legal person, with the possibility of online formation and no minimum capital requirement.
The proposal sought to modernise company law by allowing entrepreneurs to establish a limited liability company remotely, using harmonised procedures and benefiting from a core set of common rules that would ensure legal certainty across borders.
The anticipated benefits of the SUP included making individual entrepreneurship easier while providing limited liability protection, simplifying formalities for company formation, and enhancing legal security through a uniform European framework. It was presented as a tool to lower barriers to business creation, particularly for start-ups and small enterprises that may not have the resources to navigate complex national regimes.
However, the SUP project encountered significant limitations and uncertainties. Despite being proposed in 2014, it was never adopted. One of the main issues was the broad discretion left to Member States, which undermined the harmonisation objective and limited the instrument’s practical utility.
The attractiveness of the SUP would have depended heavily on its ability to offer a process that was not only simple and accessible but also reliable and protective for entrepreneurs. In the absence of such guarantees, and amid concerns about potential regulatory competition and forum shopping, the initiative failed to gather sufficient political support.
The SUP’s trajectory reflects a broader trend in EU company law reform: the challenge of reconciling integration with national autonomy. Its failure, like that of the SPE and other similar initiatives, highlights the difficulty of creating genuinely supranational legal forms within the current institutional and political context.
Nevertheless, the SUP also serves as a conceptual precedent for efforts such as the 28th regime, which seek to offer companies an alternative European framework that is both voluntary and sufficiently harmonised to foster innovation, cross-border activity, and legal certainty.
Other attempts
Previous efforts to create a societal framework for pan-European companies aimed to support a dynamic legal environment for innovative enterprises operating across Member States. These initiatives sought to enable cross-border activity by providing unified company forms such as the European Company (Societas Europaea), the European Economic Interest Grouping (EEIG), and the European Cooperative Society.
In practice, however, these instruments faced numerous limitations. The European Company, while carrying a “European” designation, deferred many essential matters—such as taxation and social protection—to national rules. It also imposed significant constraints on companies, including limited statutory flexibility and stringent capital requirements. These issues severely restricted its attractiveness and practical utility, especially for smaller, innovative firms.
Alternative instruments like the European Cooperative Society and the EEIG were also introduced with the ambition to foster cooperation and integration among businesses. However, they showed structural weaknesses, including limited uptake and insufficient capacity to adapt to the needs of fast-growing, innovative companies.
These past experiences demonstrate both the persistent institutional and legal challenges to creating genuinely European company law instruments, and the political sensitivities that must be carefully addressed in any future initiative.
Legal basis
The European Economic and Social Committee (EESC) supports the establishment of an optional regime offering a clearer, simpler, and more accessible regulatory environment.
This so-called “second regime” would be defined at the EU level and adopted via regulation. It would allow parties to choose between two contractual frameworks, thereby facilitating the drafting of cross-border contracts while ensuring a high level of legal protection.
The legal basis for such a regime remains to be determined. The EESC stresses the importance of continuing discussions within the framework of the Better Regulation agenda and invites the European Commission to thoroughly assess both the theoretical and practical feasibility of a 28th regime.
Legal analysis by Professor Jacques Ziller explores the appropriate legal bases for the project.
Article 114 of the Treaty on the Functioning of the European Union (TFEU) appears to be the logical foundation for matters of company law. Article 50 TFEU relates to the freedom of establishment.
Article 115 concerns tax law but only allows for the adoption of directives.
Article 153 addresses labour law and requires a specific legislative procedure.
Article 352, the so-called flexibility clause, does not allow for automatic harmonisation and has limited scope.
The combination of legal bases is problematic when the corresponding procedures or types of legal acts differ, complicating the legal architecture of any such initiative.
There are precedents for combining legal bases, such as the directive on insolvency (Articles 114 and 53) and the directive on cross-border associations (Articles 114 and 50). Past experiences, however, reveal significant limitations.
The European Company (Societas Europaea) and the European brand concept both relied heavily on national legal systems, particularly in matters like taxation and labour law. These instruments imposed strong constraints, such as high capital requirements and limited statutory freedom. Similarly, the European Cooperative Society and the European Economic Interest Grouping (EEIG) offered little practical effectiveness.
Some of the most notable failures include the European Private Company (SPE), the European single-member company, and the European association. The SPE, for instance, was designed as a simplified legal form with low capital requirements and aimed at SMEs, but it was ultimately rejected by Member States.
An appropriate legal foundation for the 28th regime must accommodate key aspects of company law, including tax law, labour law, and insolvency law. It should also contribute to the harmonisation of legislation concerning labour protection, fraud prevention, tax evasion, and the fight against corporate concentration and monopolies. Furthermore, any new framework must adhere strictly to EU rules on consumer protection.
Finally, the issue of pension schemes is identified as a significant legal and financial challenge that must be addressed when designing any comprehensive pan-European legal regime.
Three Scenarios for the 28th regime
Three possible approaches have been outlined for structuring the 28th regime, each with distinct implications for scope, accessibility, and legal design.
The narrow approach would restrict access to specific categories of companies. This may include businesses defined by legal form, financial structure, sectoral focus (such as AI, health, or deeptech), company size (start-ups or scale-ups), innovation capacity, or the European relevance of their projects.
The justification for such restriction would lie in the EU’s specific competences or the exclusive advantages attached to the regime, such as access to targeted subsidies, favourable tax or social frameworks.
The horizontal approach would be open to any company willing to opt in, regardless of size, sector, or legal form. Its main advantages include reduced bureaucracy, simplicity of access, and a higher incentive effect for broader participation.
It also avoids discrimination against SMEs and encourages potential standardisation across the internal market. However, its main drawback is the lack of targeting, which might dilute the regime’s effectiveness for innovative companies.
The modular approach would combine elements of both. While the regime would be broadly accessible, certain features—such as tax benefits, social law exemptions, or insolvency tools—would be reserved for companies meeting specific innovation criteria.
This structure would make it possible to offer tailored legal instruments to innovative firms while maintaining general openness. The advantage of this approach lies in its flexibility and precision. However, it presents difficulties in defining objective eligibility criteria and carries the risk of unequal treatment or unintended forms of discrimination.
Each approach reflects a different balance between inclusiveness, legal targeting, and administrative complexity. The ultimate choice would depend on the political priorities assigned to the regime—whether to focus on supporting high-growth sectors or to foster a broad simplification of the internal market for all entrepreneurs.
Technical implementation
One of the core proposals for the effective implementation of the 28th regime is the creation of a single registration portal. This centralised portal would streamline the process of company creation across the EU, ensuring a unified entry point for all entrepreneurs and significantly reducing administrative burdens.
To support all innovative businesses, the proposal advocates for the availability of fair and unified model documents, drafted in collaboration with venture capital experts.
These documents—such as shareholder agreements and articles of association—should be usable throughout Europe and even globally. They would draw inspiration from already successful models, such as the SAFE financing documents used in the United States and the GESSI model agreements in Germany.
The framework would also support targeted harmonisation in company law, while preserving the freedom for companies to tailor their governance and contractual terms according to their specific needs. This would include the flexibility to implement worker equity schemes or create subsidiaries with customised structures. Innovative legal forms from Member States, such as the Austrian FlexCo and the Polish PSA, serve as references for balancing harmonisation with flexibility.
In addition, the regime should allow mechanisms to ensure long-term independence, including the possibility to issue different classes of shares, such as veto shares. Steward-ownership models should also be made available as options for founders wishing to embed mission-driven governance into their corporate structures.
Perspectives and challenges
Several factors can seriously undermine the feasibility of a 28th regime if not properly addressed.
Chief among them is institutional opposition, particularly when the proposed regime touches on areas of sensitive national competence such as labour law, taxation, or social protection.
Overly complex legal design can also alienate potential users, especially start-ups or SMEs that lack the resources to navigate intricate regulatory frameworks.
Weak stakeholder mobilisation—including insufficient engagement with small businesses, trade unions, and consumer representatives—can erode both legitimacy and political support.
Finally, the feasibility of the regime depends heavily on its legal foundation; subsidiarity constraints and the uncertainty surrounding the appropriate legal basis can pose significant barriers to adoption.
More broadly, legal optionality—offering a regime as an alternative rather than a replacement—is not, in itself, a guarantee of success. Nor is it a shield against institutional failure. There is no single institutional path to follow. The example of UCITS (Undertakings for Collective Investment in Transferable Securities) shows how incremental harmonisation over time can build a successful cross-border legal tool. Conversely, the Unitary Patent illustrates how enhanced cooperation can offer a functional alternative when full harmonisation is politically unviable.
Ultimately, the success of a 28th regime will be determined not just by the quality of its legal design, but by the interplay between three critical dimensions: legal architecture, institutional context, and stakeholder alignment. A well-conceived regime can foster genuine legal integration and provide clarity and certainty for innovative companies across the EU. A poorly constructed one, however, risks deepening market fragmentation and reinforcing existing barriers.
