Changes from report parliamentary committee draft to plenary report

RemovedPursuant to Article 8 of Annex I to the Rules of Procedure, the rapporteur declares that he received input from the following entities or persons in the preparation of the draft report:

AddedCommittee on Legal Affairs

RemovedOliver Coste

AddedCoordinators

RemovedÖsterreichische Notariatskammer - Transparency Register: 6475183729-37

AddedSubject: Opinion on the legal basis of the The 28th Regime: a new legal framework for innovative companies (2025/2079(INL))

RemovedPermanent Representation of Austria to the European Union

AddedDear Coordinators, Colleagues,

RemovedPermanent Representation of Estonia to the European Union

AddedI - Introduction

RemovedPermanent Representation of France to the European Union

AddedOn 6 January 2025, the Committee on Legal Affairs (JURI) requested an authorisation to draw up an own-initiative legislative report (INL) pursuant to Article 225 of the Treaty on the functioning of the European Union (TFEU) and Rule 47 of the Rules of Procedure of the European Parliament (RoP), with recommendations to the Commission on the 28th Regime: a new legal framework for innovative companies. The authorisation was granted by the Conference of Presidents on 3 April 2025.

RemovedPermanent Representation of the Federal Republic of Germany to the European Union

AddedIn accordance with Rule 47(3) RoP, the committee responsible for the subject-matter is to request an opinion on the appropriateness of the legal basis from the committee responsible for legal affairs, which is to be delivered without undue delay.

RemovedPermanent Representation of the Kingdom of the Netherlands to the European Union

AddedIn this case, the committee responsible for the subject-matter and the committee to provide the opinion on the legal basis are the same, the JURI committee. On 23 September 2025, the Coordinators of the JURI committee therefore took note that the committee would provide such an opinion.

RemovedStartup Portugal

AddedThe JURI committee considered the matter of the appropriateness of the legal basis proposed in the draft INL in question at its meeting of 3-4 December 2025.

RemovedStiftung Verantwortungseigentum e.V.- Transparency Register: 202064594750-82

AddedII - Background

RemovedStripe, Inc.- Transparency Register: 389356530261-76

AddedThe request for authorisation of the INL was made pursuant to point XVIII(5) of Annex VI to the Rules of Procedure, which confers on the JURI committee the competence in the area of company law.

Removedvbw - Vereinigung der Bayerischen Wirtschaft e. V. - Transparency Register: 49096067887-19

AddedThe purpose of the INL is to invite the Commission to put forward a legislative proposal for a Union-wide legal status, which would offer a new alternative for innovative companies. It would take the form of the so-called 28th regime and would allow companies to benefit from a simpler, harmonised set of rules in certain areas. With the INL, the JURI committee intends to map in detail Parliament’s position and expectations regarding both the legal basis of such initiative and its more detailed content, and thus shape the proposal up-front.

RemovedThe list above is drawn up under the exclusive responsibility of the rapporteur.

AddedIn the INL, the JURI committee would analyse the need for such a legislative instrument and the legislative options available, including safeguards to address the concerns that led to the failure of similar initiatives in the past.

RemovedWhere natural persons are identified in the list by their name, by their function or by both, the rapporteur declares that he has submitted to the concerned natural persons the European Parliament's Data Protection Notice No 484 (https://www.europarl.europa.eu/data-protect/index.do), which sets out the conditions applicable to the processing of their personal data and the rights linked to that processing.

AddedThe JURI committee also intended to address the following aspects in the INL: (i) the real hurdles that companies, in particular innovative start-ups, face in the Union that would justify the 28th regime to enhance competitiveness and productivity, (ii) to what extent, within the limits set by the Treaties, areas such as company and corporate law, insolvency law or commercial law can be harmonised under the 28th regime, (iii) safeguards that could mitigate the risk of misuse in order to circumvent applicable regulatory frameworks in the Member State where the company activities are carried out, and (iv) how to simplify registration without increasing the risk of evasion of the applicable regulatory framework, and without compromising the necessary guarantees for verification of the identity and good repute of the company founder. Lastly, the report would also assess whether the 28th regime should be accessible to all Union companies or limited only to particular categories (e.g., innovative start-ups).

AddedThe JURI committee specified that the possible legal basis would depend on further considerations, but tentatively envisaged Articles 50 and 114 TFEU as the legal basis.

AddedIII – CJEU case-law on the choice of legal basis

AddedThe Court of Justice has traditionally viewed the question of the appropriate legal basis as an issue of constitutional significance, guaranteeing compliance with the principle of conferred powers (Article 5 of the Treaty on European Union) and determining the nature and scope of the Union’s competence.

AddedAccording to well-established case-law, the legal basis of a Union act does not depend on an institution's conviction as to the objective pursued but must be determined according to objective criteria amenable to judicial review, including in particular the aim and the content of the measure.

AddedIf examination of a measure reveals that it pursues a twofold purpose or that it has a twofold component and if one of those is identifiable as the main or predominant purpose or component, whereas the other is merely incidental, that measure must be based on a single legal basis, namely that required by the main or predominant purpose or component. Only exceptionally, if it is established that the act simultaneously pursues a number of objectives, inextricably linked, without one being secondary and indirect in relation to the other, may such an act be founded on the various corresponding legal bases. This would however only be possible if the procedures laid down for the respective legal bases are not incompatible with and do not undermine the right of the European Parliament.

AddedIV – Aim and content of the INL

AddedThe aim as specified in the draft INL is to ‘further deepen the internal market’ (paragraph 4) by designing the “framework of such a corporate form, with a specific view on how such a status could benefit small and medium enterprises (SMEs), start-ups and scale-ups, and their founders wanting to operate and expand across the internal market, without being limited to them” (explanatory statement). In this broader context, the draft INL expresses the aim to help new and growing businesses (start-ups and scale-ups) to address problems such as access to finance and infrastructure, entering new markets, obtaining data and attracting talent.

AddedThe draft INL envisages inter alia the establishment of a ‘European Start-Up and Scale-Up’ (ESSU) corporate form to achieve those aims and reduce burdens by creating a simplified, digitalised and user-friendly regulatory environment tailored to the needs of SMEs, start-ups and scale-ups to create and strengthen innovation in Europe (explanatory statement). As envisaged in the draft INL, the ESSU, which is not conceived as an autonomous pan-European corporate form, but as a national corporate form in all Member States, would consist of certain elements that are harmonised by Union law and would take the legal form of a limited liability company. The draft INL contains provisions on the minimum paid-in capital and foresees the fully digital creation and registration of an ESSU. Furthermore, the draft INL proposes a uniform Union-level digital company register, measures to protect from ‘killer acquisitions’ and the introduction of harmonised equity-like debt instruments, including the development of model shareholder agreements and model articles of association.

AddedThe ESSU might have to be adopted through a set of legal acts instead of one comprehensive legal act, while the corporate law elements are proposed to be based on Articles 50 and 114(1) TFEU.

AddedV - The relevant Treaty Articles

AddedChapter 2 of Title IV of Part three TFEU, on “Right of establishment” reads, inter alia:

AddedArticle 50

Added(ex Article 44 TEC)

Added1. In order to attain freedom of establishment as regards a particular activity, the European Parliament and the Council, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, shall act by means of directives.

Added2. The European Parliament, the Council and the Commission shall carry out the duties devolving upon them under the preceding provisions, in particular:

Added(a) by according, as a general rule, priority treatment to activities where freedom of establishment makes a particularly valuable contribution to the development of production and trade;

Added(b) by ensuring close cooperation between the competent authorities in the Member States in order to ascertain the particular situation within the Union of the various activities concerned;

Added(c) by abolishing those administrative procedures and practices, whether resulting from national legislation or from agreements previously concluded between Member States, the maintenance of which would form an obstacle to freedom of establishment;

Added(d) by ensuring that workers of one Member State employed in the territory of another Member State may remain in that territory for the purpose of taking up activities therein as self-employed persons, where they satisfy the conditions which they would be required to satisfy if they were entering that State at the time when they intended to take up such activities;

Added(e) by enabling a national of one Member State to acquire and use land and buildings situated in the territory of another Member State, in so far as this does not conflict with the principles laid down in Article 39(2);

Added(f) by effecting the progressive abolition of restrictions on freedom of establishment in every branch of activity under consideration, both as regards the conditions for setting up agencies, branches or subsidiaries in the territory of a Member State and as regards the subsidiaries in the territory of a Member State and as regards the conditions governing the entry of personnel belonging to the main establishment into managerial or supervisory posts in such agencies, branches or subsidiaries;

Added(g) by coordinating to the necessary extent the safeguards which, for the protection of the interests of members and others, are required by Member States of companies or firms within the meaning of the second paragraph of Article 54 with a view to making such safeguards equivalent throughout the Union;

Added(h) by satisfying themselves that the conditions of establishment are not distorted by aids granted by Member States.

AddedChapter 3 of Title VII of Part three TFEU, on “Approximation of laws” reads, inter alia:

AddedArticle 114

Added(ex Article 95 TEC)

Added1. Save where otherwise provided in the Treaties, the following provisions shall apply for the achievement of the objectives set out in Article 26. The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, adopt the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market.

Added2. Paragraph 1 shall not apply to fiscal provisions, to those relating to the free movement of persons nor to those relating to the rights and interests of employed persons.

Added3. The Commission, in its proposals envisaged in paragraph 1 concerning health, safety, environmental protection and consumer protection, will take as a base a high level of protection, taking account in particular of any new development based on scientific facts. Within their respective powers, the European Parliament and the Council will also seek to achieve this objective.

Added4. If, after the adoption of a harmonisation measure by the European Parliament and the Council, by the Council or by the Commission, a Member State deems it necessary to maintain national provisions on grounds of major needs referred to in Article 36, or relating to the protection of the environment or the working environment, it shall notify the Commission of these provisions as well as the grounds for maintaining them.

Added5. Moreover, without prejudice to paragraph 4, if, after the adoption of a harmonisation measure by the European Parliament and the Council, by the Council or by the Commission, a Member State deems it necessary to introduce national provisions based on new scientific evidence relating to the protection of the environment or the working environment on grounds of a problem specific to that Member State arising after the adoption of the harmonisation measure, it shall notify the Commission of the envisaged provisions as well as the grounds for introducing them.

Added6. The Commission shall, within six months of the notifications as referred to in paragraphs 4 and 5, approve or reject the national provisions involved after having verified whether or not they are a means of arbitrary discrimination or a disguised restriction on trade between Member States and whether or not they shall constitute an obstacle to the functioning of the internal market.