Commissioner McGrath Presents 28th Regime Proposal to European Parliament JURI Committee

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. - title: "Commissioner McGrath Presents 28th Regime Proposal to European Parliament JURI Committee" description: "Analysis of Commissioner McGrath's landmark 28th regime proposal presented to the JURI Committee and its implications for EU company formation." slug: commissioner-mcgrath-28th-regime-proposal-juri-committee date: 2026-05-02 category: legislation . -

Commissioner Michael McGrath presented the European Commission's EU Inc proposal to the European Parliament's Legal Affairs Committee on May 4, 2026, marking a pivotal moment in the legislative journey of the 28th regime. The presentation comes six weeks after the Commission published its proposal for COM(2026) 321 on March 18, 2026, and signals the beginning of intensive Parliamentary scrutiny of Europe's most ambitious corporate law reform in decades.

The presentation, scheduled for 15:45 to 16:45 during the JURI Committee meeting in Brussels, represents the formal handover of the legislative file from the Commission to the Parliament. According to the European Commission, the proposal would create an optional, fully digital corporate framework allowing companies to incorporate within 48 hours for under €100, with no minimum capital requirements.

Key Highlights of the Presentation

Commissioner McGrath's presentation to the JURI Committee focused on addressing the fragmentation that has long hindered European businesses. According to Justice Commissioner McGrath, the current patchwork of 27 national frameworks "complicates scaling" and "slows growth." The proposal aims to establish EU Inc as a single, harmonized corporate legal form available across all member states.

The Commission is calling on the European Parliament and Council to reach agreement on the proposal by the end of 2026, reflecting the political urgency surrounding competitiveness. European Council leaders endorsed this timeline on March 19, 2026, just one day after the proposal's publication, naming the 28th regime as a priority measure. European Council President António Costa confirmed at the summit press conference that implementation targets are focused on end of 2027 but mostly within 2026.

The presentation addressed several core elements of the proposal. First, the EU Inc would provide 48-hour digital registration when using standardized templates, with a maximum cost of €100. Second, the framework includes a harmonized EU-wide employee stock option scheme (EU-ESO) with deferred taxation until shares are sold. Third, the proposal enables cross-border seat transfers without dissolution, allowing companies to relocate while preserving legal identity.

"We will offer instead to innovative companies to operate all across our Union under one single set of rules."

. European Commission political framing

The 28th Regime Framework Explained

The Commission chose to structure EU Inc as a regulation under Article 114 TFEU, requiring only qualified majority voting rather than unanimity. This legal basis decision proved controversial. While it accelerates adoption timelines, some legal scholars argue it may invite legal challenges.

The proposal establishes a new legal form applicable in all 27 member states, but with a critical gap-filling mechanism. Article 4 of COM(2026) 321 states that matters not covered by the regulation or articles of association shall be governed by national law. Each member state must designate which national legal form's rules fill these gaps, likely resulting in Belgium using BV/SRL, Germany using GmbH rules, and so forth.

This design choice has drawn sharp criticism from corporate law experts. Professors Luca Enriques, Casimiro A. Nigro, and Tobias H. Tröger published analysis warning that "for every harmonised rule, there is room for member state discretion or a gap-filling reference to national law that quietly reintroduces the very fragmentation the regime purports to eliminate."

The following table compares key aspects of the EU Inc proposal against typical national incorporation requirements:

The proposal is legally open to all companies, not limited to startups. According to the Explanatory Memorandum, the EU Inc framework "responds in particular to the needs of startup and scaleup companies but should be legally open to all founders and companies who see it fit for their business model." Existing companies of any size can convert to EU Inc status.

JURI Committee Response and Questions

The JURI Committee received the presentation in the context of having already adopted its own legislative initiative report in January 2026. The Parliament had recommended a maximum harmonization directive creating a "European Start-up and Scale-up Company" (ESSU) or "Societas Europaea Unificata" (S.EU), contrasting with the Commission's regulation approach.

According to the European Parliament's press materials, MEP René Repasi of the Socialists and Democrats serves as the Committee's rapporteur on this file. Repasi stated that while measures such as digital company creation within 48 hours and harmonized stock option regimes are "vital steps" for integrating the internal market, important elements from Parliament's report are missing from the proposal.

MEP Pascal Canfin, Renew Europe's shadow rapporteur, indicated that since Parliament has already stated its position, "we have everything we need to go fast." Canfin believes agreement by end of 2026 is possible if negotiations stick closely to the Commission's proposal.

Critical questions raised during the legislative process include concerns about the standard templates. The actual content of EU templates is not defined in COM(2026) 321 but delegated entirely to future implementing acts under Article 8. Whether templates will accommodate multiple share classes, preferred equity, weighted voting rights, and other features high-growth companies need remains unclear.

Worker representatives and union groups have raised concerns about potential regulatory arbitrage. The European Trade Union Confederation criticized plans that could allow companies to select preferred labor, tax, and insolvency laws, warning of a race to the bottom in social standards. The proposal explicitly states it does not affect national labor law, with hiring, firing, and worker protections remaining governed by laws where employees are located.

Timeline and Next Legislative Steps

The May 4 JURI Committee presentation initiates the formal Parliamentary review process. Following standard procedure, the JURI Committee will now examine the proposal, prepare amendments, and draft a report. The rapporteur assignment, confirmed in April 2026, allows the Committee to begin substantive work immediately.

According to the ordinary legislative procedure, the Parliament and Council will negotiate the final text through a trilogue process. The Commission's ambitious timeline calls for agreement by the end of 2026. If achieved, the regulation could enter into force in early 2027, with a 12-month implementation period meaning first EU Inc registrations could become available in Q1 2028.

Key upcoming milestones include:

May-June 2026: JURI Committee examination and amendment drafting period
Summer 2026: Council Working Party technical examinations continue (sessions already held March 23, April 17, and April 27)
Fall 2026: Anticipated JURI Committee vote on draft report
Late 2026: Trilogue negotiations between Parliament, Council, and Commission
Target December 2026: Political agreement
2027: Formal adoption and entry into force
2028: First EU Inc companies registered

The Council has scheduled multiple working party sessions, with meetings listed for May 7, May 18, and June 2, indicating parallel technical work progressing on the Council side. Three Council Working Party sessions were held in March and April 2026, though no public readouts have been published.

Implications for EU Businesses and Formation

The proposal represents potentially transformative changes for EU company formation, though implementation details will determine practical impact. For startups and scaleups currently considering Delaware LLCs versus EU structures, EU Inc promises a unified alternative if the final legislation delivers on its commitments.

Founders in multiple markets face immediate strategic questions. Companies currently structured as German GmbHs, French SARLs, or Dutch BVs will need to evaluate whether conversion to EU Inc offers advantages or introduces new risks through the national law gap-filling mechanism.

For investors, the proposal's treatment of capital structures remains a critical question. The regulation enables non-par value shares and supports modern financing instruments including warrants and equity-linked instruments. However, the flexibility of the standard templates for venture-backed structures awaits implementing act clarification.

The EU-ESO employee stock option scheme addresses a major competitive disadvantage versus US counterparts. Taxation deferred until share sale rather than at grant, vesting, or exercise could significantly improve European talent attraction. However, member states retain substantial discretion over taxation implementation.

Cross-border mobility provisions enable EU Inc companies to transfer registered seats between member states without dissolution, a significant improvement over current limitations. This feature directly addresses the fragmentation identified in the One Europe, One Market roadmap.

For legal and regulatory compliance, companies must anticipate that national gap-filling rules create 27 variants of EU Inc. According to legal analysis, jurisdictions with sophisticated capital markets may apply enabling language generously, while others may anchor on narrow interpretations. This reintroduces fragmentation risk that national court interpretation could amplify.

"The competitiveness crisis cannot be tackled with one omnibus after another. We must create a space for innovation, risk and entrepreneurship."

. MEP René Repasi, JURI Committee Rapporteur

Business formation advisors should monitor the legislative process closely. The Commission's proposal forms the starting point, but Parliament amendments and Council negotiations will shape the final framework. Companies planning 2027-2028 incorporations should develop contingency strategies for both scenarios: successful implementation enabling rapid EU Inc adoption, or fragmented implementation requiring continued navigation of national systems.

What This Means for Founders and Operators

Commissioner McGrath's JURI Committee presentation marks the beginning of intensive legislative scrutiny that will determine whether EU Inc delivers on its promise or becomes another underutilized pan-European corporate form like the Societas Europaea. The political momentum is unprecedented, with European Council endorsement and end-2026 target timelines. However, the technical details embedded in COM(2026) 321's gap-filling provisions, template specifications, and national discretions will ultimately determine practical utility.

Startups evaluating EU Inc for formation should engage with the legislative process through industry associations and monitor amendment proposals closely. Investors assessing portfolio company structures need to evaluate how national gap-filling rules in preferred jurisdictions align with investment thesis requirements. Legal advisors must prepare for a dual-track reality where EU Inc coexists alongside national forms, requiring sophisticated comparative analysis.

The next six months will prove decisive. As JURI Committee members draft amendments and Council working parties negotiate technical provisions, the substantive framework will take shape. The May 4 presentation initiated this process. The ultimate success will be measured not in regulatory text but in adoption rates when the first EU Inc companies register in 2027 or 2028.

For updates on legislative developments, consult our comprehensive guide and track our ongoing timeline analysis. Companies considering EU Inc should complete our eligibility assessment to evaluate strategic fit against current national alternatives.