A bit of Delaware in Europe? The EU wants to simplify company law. Two specialists looked at the plans.
Anyone who founds a startup in Germany knows the ritual: appointment with the notary, paying in share capital, waiting for weeks – for the account, the commercial register entry and the tax number – and all of this before you can even really get started.
Delaware model
The EU Commission now wants to change exactly that. For the first time, a unified European corporation is to be created, which will enable startups in particular to be founded within a very short time and scale across Europe. The idea for EU Inc. comes from the European startup and venture capital community: A proposal for a European startup company form was developed based on the US Delaware model: Fast, cheap and digital formation, flexible capital structures and clear rules for investors.
A guest post from Karen Frehmel-Kücklawyer, and Ann Kristin Lochmanntax advisor, at the law firm Osborne Clarke.
On March 18, 2026, the EU Commission presented the formal proposal for a corresponding regulation. This was welcomed by the startup scene, although criticism quickly arose that the proposal is not a “real” 28th regime, i.e. not a corporate form that applies uniformly to all EU member states and completely displaces national law.
National law as a fallback
In all cases where the regulation does not regulate issues conclusively, the national law of the respective country of residence continues to apply – for example, German law if the company is founded in Germany. Tax law, labor law and co-determination remain regulated nationally. With all the complexities that this entails, especially when it comes to employee participation. This patchwork quilt was actually not what the initiators wanted.
Nevertheless, if the regulation comes as announced, it will bring various improvements for European startups:
Digital, fast, cheap
The heart of the proposed regulation is the complete digitalization of the life cycle of society (“digitally only“principle). All processes – from founding to share transfers to shareholder meetings – should take place exclusively digitally. The so-called “once only“Principle obliges authorities not to re-request information that is already stored in the register. Anyone who is registered once does not have to submit anything twice.
Anyone who uses the EU Commission’s model statutes can have EU Inc. registered within 48 hours using the fast-track procedure – at a maximum cost of 100 euros. No paperwork and no weeks-long marathon with authorities. A preventive check of the statutes does take place, but is priced into the 48 hours. But even if an individual statute was used, the formation would be completed after just five working days. A very ambitious project if you just consider the status of digitalization in Germany.
No mandatory minimum capital – but clear distribution rules
A key difference to the German GmbH: EU Inc. does not have any mandatory statutory minimum capital. Instead of the obligation to pay in at least 12,500 euros when founding a company, the proposed regulation relies on a balance sheet and solvency test before every profit distribution. The model protects creditors without tying up start-up capital, which is often urgently needed elsewhere in the early stages. However, great care is required here: If the directors pay out dividends without the balance sheet and solvency test being positive, they may be personally liable.
VC-ready capital structure
Although EU Inc. is open to everyone, it is primarily designed for typical venture capital financing structures: different share classes can be issued, for example Common and Preferred shareseach with differentiated rights regarding profit distribution, liquidation proceeds, multiple voting rights and veto rights. Furthermore, share transfers and the issuance of new shares should be able to take place completely digitally – expressly without notarial involvement and without fees. This saves considerable time and money with each round of financing.
Involve employees in success
The proposed regulation enables EU Inc. to establish an employee participation program – the EU-ESO Warrantswhich entitle directors and employees to acquire EU Inc. shares upon exercise. While the taxation of the (subsequent) income from the EU Inc. shares is governed by national law, the EU Commission determines the taxation point: Income in connection with the EU-ESO is only deemed to have been received when the EU Inc. shares are sold and corresponding liquidity has been received. The EU Commission is thus addressing the “dry income” problem, which has already been solved in Germany with the introduction and conceptual revision of Section 19a EStG.
A step in the right direction
The EU Inc. is a real opportunity for Europe – if everyone gets involved. EU Inc. would not only represent a quick, simple and cheap alternative for founding startups, but would also be suitable for scale-ups – especially in their European expansion and for exit scenarios – as the shares of EU Inc. can be traded in the over-the-counter market without a change of legal form.
What would be desirable – and still included in the original proposal from the startup scene – would be standard forms for a complete employee participation program and for a simple (change) financing instrument. Such templates would save enormous legal planning effort, especially in the early phase.
However, it will take some time before the EU Inc. can be used in practice: the proposal is now going through the European legislative process, so that the EU Inc. should not be accessible to founders until 2028 at the earliest.
It will be crucial that the EU Inc. is not watered down in the further legislative process, that the member states – especially Germany – design the interfaces to national law in a practical manner and provide the necessary digital infrastructure in a timely manner. If this succeeds, EU Inc. can become a real competitive advantage for the European startup location.
