On 19 January, the European Parliament adopted recommendations for a legal framework for new innovative companies. By adopting the report on the 28th regime, Parliament outlines the conditions under which companies in the European Union (EU) can compete on an equal footing. A key objective was to develop a uniform European legal form that does not create additional obstacles or administrative or financial burdens for business development, in particular for small and medium-sized enterprises (SMEs).

Directive rather than regulation

The parliamentary text adopted on 19 January contains several substantial amendments to the draft presented by the rapporteur René Repasi (S&D, DE) on 30 June 2025 (see also DSV News 9/2025). At the outset, it should be noted that the core approach has been maintained: no new pan-European company form is to be created by means of a regulation. Instead, the preferred approach is a directive providing for maximum harmonisation, under which the new legal form would build on company forms established under national law and be automatically recognised in all Member States. The legal basis would be Articles 50 (“freedom of establishment”) and 114 TFEU (“internal market”).

From ESSU to S.EU

What is new, however, is the designation. Whereas the previous proposal referred to ESSUs – European Start-up and Scale-up Companies – Parliament now recommends the more resonant term “Societas Europaea Unificata”. In German: “Einheitliche Europäische Gesellschaft” (S.EU). An S.EU would always take the form of a private limited liability company, would not be listed, and would require a minimum capital of EUR 1 paid in upfront. The requirement contained in the draft report to build up reserves amounting to 25% of annual profits until the minimum capital required under national law is reached has been dropped.

Portal instead of register

An S.EU would also be more modern in its set-up. Its formation is to be fully integrated into the initiative to develop a European business wallet, in order to ensure digital identification and authentication and to enable streamlined management of company documents. Its registration would no longer take place in a newly created register, as envisaged in the draft report from summer last year, but via a single digital portal at Union level. This portal would build on the existing European e-Justice Portal.

Social standards preserved

The important consensus that national labour and social standards must not be undermined by the S.EU has been maintained. To this end, effective safeguards would need to be provided for in substantive law and through conflict-of-law rules. Explicit safeguards are required for the involvement of employees and their representatives. Existing participation and co-determination rights must not be circumvented. The rights of trade unions and employers’ organisations to negotiate collective agreements should remain unaffected.

Better regulation

The 28th regime is to be reviewed every four years and assessed in terms of its acceptance by companies and its appropriateness in a changing environment. Parliament expects corresponding reporting by the Commission. Possibly as a result of the discussions on better regulation held over recent months, Parliament explicitly calls on the European Commission, in its recommendation, to carry out and publish a comprehensive and transparent impact assessment for each new legislative proposal related to the 28th regime. This may also bring renewed political attention to the European Insolvency Directive, which was recently provisionally agreed in trilogue.