Europe is looking for ways to strengthen its competitiveness in an increasingly challenging global environment. One practical reform currently being prepared at EU level is a new European company form, designed to make it easier for companies to grow across borders and reduce regulatory fragmentation in the single market.
The European Union is currently preparing a new European company form, provisionally known as EU Inc. The new company form would be a voluntary option for new businesses, offering a lighter and more harmonised EU-level regulatory framework. This would give companies such as startups, which aim for international growth from day one, better access to Europe’s single market.
National exemptions
There are still questions related to the proposed regulation that must be resolved carefully. In particular, concerns around an accelerated insolvency procedure, where a company’s payment difficulties would be handled through a lighter process than usual, are justified. Creditors’ legal protection, independent oversight and the ability to investigate misconduct must be safeguarded.
“The purpose of the proposed regulation is to harmonise a fragmented playing field. Every additional national exemption weakens the impact of the reform. That is why it is important that the challenges already identified are resolved at EU level,” says Amir Hassan, Economist at the Finnish Startup Community.
The risks raised around money laundering, misconduct and regulatory oversight are real, but they do not, as a starting point, require national exemptions. Effective electronic identification, information exchange between authorities, reliable data on beneficial ownership and risk-based supervision provide ways to address these issues without jeopardising the core objectives of the new company form.
Setting up a company must be fast and digital
It is important that, under the new model, setting up a company remains fast, digital and predictable in cost. The proposed regulation sets out a 48-hour deadline for company registration and a maximum fee of EUR 100. These are not particularly ambitious targets. They should be the minimum standard for a Europe that says it wants to pursue growth.