Ensuring the 28th Regime
Delivers

What happened

The Commission has proposed a new European company form — the "EU Inc." The proposal delivers real improvements: digital incorporation within 48 hours, no minimum capital, harmonised employee stock options, simplified liquidation procedures. The corporate form is genuinely well designed.

The risk is in the operating environment. When you actually run the company, each Member State applies the regulation differently. An EU Inc. registered in France would mean French courts, French tax, French labour law. Register in Estonia — entirely different regime. Same company form, 27 different operating realities. The Societas Europaea produced a similar pattern: fewer than 4,000 registrations in two decades. A complementary architecture can help prevent the same result.

The implementation risk

The EU Inc. harmonises the corporate form — a genuine achievement. The operating environment, however, remains fragmented. As a founder, you would still face:

The fragmentation risk in practice

Even if the regulation passes — and it may well pass, since it requires only qualified majority, not unanimity — the implementation phase introduces significant coordination requirements. The regulation is directly applicable, but 27 Member States must each operationalise it: designate competent authorities, set up or adapt national court chambers, integrate with the central registry, and interpret every gap that Article 4 leaves to national law.

We have seen this before. The Societas Europaea, created in 2001, was meant to be Europe's unified company form. Because it deferred extensively to national law, it produced 27 different variants — effectively 27 different companies sharing a name. Fewer than 4,000 SEs have been registered in two decades, compared to millions of national formations. As economists Garicano and Malmendier have warned: deferring to national law will "de facto result in 27 different 28th regimes."

The Unified Patent Court — an intergovernmental treaty, not a regulation — took a decade from signing (2013) to operation (2023). Spain and Poland never signed it. Most of the delay was caused by ratification problems that cannot occur with a regulation (which is directly applicable). But the UPC does illustrate a broader point: even with political consensus, EU institutional build-out takes longer than planned.

The EU Inc. regulation is more ambitious in scope but relies on the same fragmented implementation machinery. Twenty-seven different judges, trained in 27 legal traditions, developing 27 independent interpretations of the same rules, with the CJEU's preliminary reference procedure averaging 16.8 months per question — a significant source of uncertainty for fast-moving companies and their investors. The realistic timeline for a fully coherent operating environment may extend well beyond the regulation's formal entry into force.

This already exists — outside Europe

Dubai, Abu Dhabi, and Kazakhstan each built a zone inside their country with its own courts, its own company law, and its own registry. These zones (DIFC, ADGM, AIFC) compete on institutional quality and legal predictability — creating the procedural certainty that lawyers and investors anywhere in the world can rely on. Established under different governance conditions, the institutional design principles — procedural certainty, judicial specialisation, administrative unity — are transferable to the EU context through enhanced cooperation. The EU Inc. Zone applies this model, built on six pillars:

The Delaware model

Delaware is not special because of its company statute — every US state has one. Delaware is special because of the Court of Chancery: a single specialised court that has spent decades building a body of corporate case law that every lawyer and investor on the planet relies on. That is the real competitive moat. The Zone applies this logic to Europe — starting with transparent arbitration and building toward a specialised court:

Where the Zone adds value — and where it doesn't

● = clear structural advantage    ◑ = same in both — honest about limitations

What the Zone does not do. It does not harmonise tax systems. It does not override local employment law for remote workers. It does not replace all national administrations. It does not bypass the CJEU. It provides unified corporate law administration — one court, one registry, one set of procedures — within a bounded space.

Trust is what matters — and it takes years. Delaware took decades to build the Court of Chancery's reputation. No founder or investor will choose a new jurisdiction over Delaware, Singapore, or the UK on day one. The Zone's structural advantage: one specialised body builds a coherent body of case law faster than 27 national courts developing 27 independent traditions. But in the first 5–10 years, this remains an uphill battle. The Zone is a long-term bet on institutional quality, not a short-term fix.

The sovereignty question

Before proceeding, a common political objection deserves direct engagement. does a European jurisdiction where national law does not fully apply undermine sovereignty? Special Economic Zones already operate across the EU — Shannon (Ireland, 1959), Madeira (Portugal), the Canary Islands (Spain). Member States voluntarily create zones with differentiated rules as instruments of economic policy. The Zone, established via enhanced cooperation among willing states, operates on an opt-in basis — a different approach to sovereignty that complements the regulation's universal applicability. The deeper sovereignty concern may be European founders incorporating in Delaware because no European jurisdiction yet offers comparable certainty.

What the Zone actually does

The core innovation is narrow but decisive. The EU Inc. regulation gives every Member State the same corporate law text. Article 4 sends everything the regulation doesn't cover — directors' duties, board liability, dividends, share transfers, minority protection, insolvency — back to national law. Twenty-seven different gap-fillers for one regulation.

The Zone takes the same regulation and replaces Article 4's national law default with a single, self-contained supplement — modelled on the DIFC Companies Law, constrained by EU governance standards. Same regulation. Different gap-filler. One court interprets it. One registry administers it. That is the entire structural difference.

The EU Inc. Policy Proposal was the right vision. The regulation delivers genuine improvements. The remaining challenges — dispute resolution across 27 courts, insolvency enforcement, administrative divergence — are not failures of drafting but structural properties of the EU Treaties. The Zone provides the complementary anti-fragmentation infrastructure to close that gap.

How it gets built

The proposal is deliberately sequenced so that each phase earns the next through evidence — not assumption:

Phase 1 — Voluntary corporate framework + arbitration centre + registry prototype. No autonomous jurisdictional claim. No new EU body exercising sovereign powers. This can be authorised through four amendments to the regulation currently before Parliament.

Phase 2 — Enhanced cooperation by willing states, only after a 12-month feasibility study and five-year fragmentation review have generated real evidence. Requires Council authorisation. Open to all Member States at any time.

Phase 3 — Specialised court under Article 257 TFEU, only after demonstrated demand and jurisprudential maturity. The CJEU remains the ultimate interpreter through preliminary references.

The Zone continues unless affirmatively terminated by legislative act — mandatory review at fifteen years, independent evaluation at ten. No sunset cliff. An insurance policy, not an alternative.

There is a deeper structural reason why a zone works better than a regulation alone: it can iterate. An EU regulation is frozen once adopted — amending it takes years. A zone can update its procedures, respond to market feedback, and ship improvements continuously. For founders used to continuous deployment, this is the difference between a legacy system and a living product.