Changes from plenary report to adopted text

RemovedArticle 114(1) TFEU is the appropriate legal basis for the approximation of the provisions laid down by law, regulation or administrative action in Member States which has as its objective the establishment and functioning of the internal market.

RemovedAccording to the case-law, Article 114 TFEU empowers the Union legislature to adopt measures to improve the conditions for the establishment and functioning of the internal market and they must genuinely have that object, contributing to the elimination of obstacles to the economic freedoms guaranteed by the Treaty, which include the freedom of establishment. Furthermore, recourse to Article 114 TFEU as a legal basis is also possible if the aim is to prevent the emergence of obstacles to trade resulting from heterogeneous development of national laws; the emergence of such obstacles must, however, be likely and the measure in question must be designed to prevent them.

RemovedAs mentioned in the draft INL (recitals A and D), the progressive introduction by Member States of specific corporate forms for start-ups may negatively affect the proper functioning of the internal market by distorting fair competition. Such divergencies may also have an impact on access to capital, an issue which the draft INL addresses in paragraphs 21 and 22 as well as in Sections 2 and 7 of the annex.

RemovedIt results clearly from the draft INL that the aim is to help SMEs, start-ups and scale-ups and their founders to operate and expand across the internal market by setting a clear legal framework of the new corporate form.

RemovedIt is worth mentioning, in this regard, that the new corporate form would be a national corporate form which would have to be made available in all Member States with a number of its elements being harmonised by Union law. Therefore, the present situation differs from the situation at issue in case C-436/03 concerning the European Cooperative Society (SCE). The SCE constitutes a European legal form which has specific Union character and is governed by a regulation which leaves unchanged the different national laws already in existence. In its judgment of 2 May 2006 in the above-mentioned case, the Court ruled that the creation of such a supranational corporate form could not be regarded as aiming to approximate (‘harmonise’) the laws of the Member States and that the Regulation was therefore correctly based on Article 352 TFEU (ex Article 308 TEC).

Removed(c) Other aspects

RemovedAs part of the safeguards to be introduced to prevent the abuse of the 28th regime, the draft INL evokes employee participation in paragraphs 10 and 20 as well as in Sections 1 and 4 of the annex. It is proposed to resolve matters pertaining to employee participation by means of a ‘conflict of law rule’: the applicable law should be determined by the law of the real seat of the company, that is to say, the place of the company’s central management.

RemovedFor existing forms of limited liability companies, rules on employee participation aiming to prevent circumvention have been adopted in a legislative act based on Article 50 TFEU. Analogous anti-circumvention rules may be based on Article 50 TFEU.

RemovedWith regard to the employee stock ownership plans (paragraph 17 and Section 6 of the annex) and specialised dispute resolution (paragraph 23 and Section 8 of the annex) it is worth drawing attention to two potential issues:

RemovedHarmonised rules across the Union on the structuring of employee stock ownership plans, even if construed as optional rules, might not be covered by Article 50 TFEU and are, since they are ‘relating to the rights and interests of employed persons’, explicitly excluded from the scope of Article 114 TFEU, pursuant to paragraph 2 of the latter.

RemovedDispute resolution mechanisms understood as ‘out-of-court’ or ‘alternative’ mechanisms, as long as they are ancillary to reach the aims of the measure, could be covered by Article 114 TFEU (see, to that effect, Article 21 of the Digital Services Act, and Directive on alternative dispute resolution for consumer disputes). Requiring Member States to change the organisation of their courts, by contrast, might go beyond the scope of Articles 50 and 114 TFEU.

RemovedVII – Conclusion

RemovedAt its meeting of 3 December 2025 the Committee on Legal Affairs accordingly decided, by 22 votes to 2, with 1 abstention, to recommend that the draft own-initiative legislative report pursues aims in the area of company law as well as approximation of laws that are indissociably linked and that, therefore, Articles 50 and 114 TFEU seem to be the appropriate legal basis.

RemovedYours sincerely,

RemovedIlhan Kyuchyuk