Criticism of EU Inc: Who Objects, Why, and What Has Already Changed

Criticism of the EU Inc proposal comes from five directions. Trade unions warn it lets companies escape worker co-determination, notaries and some academics warn its 48-hour online formation invites fraud and money laundering, several member states dispute the legal basis, company-law scholars argue national gap-filling will fragment it into 27 versions, and the startup side attacks it from the opposite flank as too watered down to matter. None of the union confederations, notarial bodies or academic critics rejects a European company form as such, and several of their demands are already reflected in Parliament's amendments. Every objection below is sourced to the critic's own publication or flagged inline as reported.

The Commission proposal COM(2026) 321 of 18 March 2026 is in the ordinary legislative procedure, so this page describes criticism of a moving target. We update it as positions change; the timeline and position tracker carry the current state, and the complete EU Inc guide covers what the proposal actually contains.

The five criticism clusters at a glance

Worker participation: the union case

The sharpest and politically heaviest criticism concerns co-determination. German services union ver.di warned on the day of publication that the new form would let companies of any size escape parity board-level co-determination, and demanded the form be restricted to startups with participation rights anchored at EU level (ver.di press release, 18 March 2026).

The structural argument is about connecting factors. Because participation rights would follow the member state of the registered seat rather than where people actually work, the EESC Workers' Group sees "a clear risk of evasion of existing legal protection and obligation" (22 April 2026), and the ETUC had already demanded in its March 2025 position that registered seat and real headquarters be identical, citing the Societas Europaea precedent where, by its count, 68 percent of SEs were registered without employees, freezing participation before it could arise. The ETUC's research institute ETUI argues, per summaries of its publications (the papers themselves restrict access), that near-overnight registration leaves registries and notaries no realistic window for due diligence and heightens the letterbox-company risk.

The Hans Böckler Foundation frames EU Inc as "the next loophole" in a longer trend, calculating that more than 2.4 million German employees are already excluded from parity co-determination through EU-law constructs (mitbestimmung.de, 15 April 2026). Austria's Arbeiterkammer argues the design makes it easy to circumvent the co-determination rights in § 110 of the Austrian ArbVG (AK Wien, July 2026). The lobbying-watchdog Corporate Europe Observatory adds a provenance critique: much of the proposal's content tracks the corporate coalition's own draft (CEO, 9 June 2026).

We covered the institutional version of these warnings when the EESC Workers' Group raised them in April.

Fraud, money laundering and the end of preventive control

The second cluster attacks the formation mechanics. Cologne notary Martin Thelen argued in Legal Tribune Online that the proposal is "a gateway for money launderers" ("Ein Einfallstor für Geldwäscher"): it replaces sovereign identity verification and notarially confirmed shareholder lists with an e-signature and self-managed registers, so that, in his words, nobody knows exactly who is founding an EU Inc (LTO, 19 May 2026). Thelen is himself a notary, and the notarial profession has a direct professional stake in this dispute, which does not by itself make the argument wrong.

The profession's formal positions go further. The Bundesnotarkammer's statement on the proposal argues that excluding legality review and notarial certification undermines the good-faith basis for share purchases and could cost tax authorities billions, while the Deutscher Notarverein warns that founding by "digital self-declaration" creates risks for legal certainty, register reliability and abuse prevention (DNotV, May 2026). The Deutscher Anwaltverein, by contrast, welcomes the proposal overall and asks for targeted fixes (SN 35/26).

Academic support for the AML worry comes from outside the guild. Leeds researchers Oriana Casasola and Ilaria Zavoli conclude the regime "lacks a meaningful anti-money laundering scrutiny process at the point of incorporation" and warn that fast-track solvent liquidation could let firms dissipate assets before creditors or authorities intervene (Oxford Business Law Blog, 14 April 2026). Notably, the large AML watchdogs (Transparency International, Global Witness) had published no position on EU Inc as of 1 September 2026, so the money-laundering critique currently rests on the legal professions and academia.

The legal-basis dispute

COM(2026) 321 rests on Article 114 TFEU, the internal-market harmonisation basis decided by qualified majority. The Bundesnotarkammer's Brussels office argues this is the wrong instrument for creating a parallel company form, especially since an EU Inc could be formed without any cross-border element (BNotK Intern, 20 April 2026).

The choice is not academic. The predecessor SPE sat on the unanimity basis of Article 352 TFEU and died by veto; Article 114 avoids that, which is precisely why its use is contested. The Council Presidency's state-of-play note ST 8598/26 of 13 May 2026 lists the legal basis first among open issues, and campaign trackers report that Austria has requested a Council Legal Service opinion and that several delegations question whether the tax provisions can rest on Article 114 at all (the28thregime.eu progress tracker; these working-party details are reported rather than published, since the underlying documents are restricted).

Fragmentation: the "27 versions" problem

Company-law scholars aim at the architecture rather than the safeguards. In a widely cited critique, Luca Enriques, Casimiro Nigro and Tobias Tröger argue that Article 4's reference to national law for unregulated matters means employee participation, directors' liability, accounting and insolvency all re-enter through the back door, recreating the fragmentation the form claims to abolish; their verdict is that the proposal is "strong on rhetoric, poor on substance", with projected administrative savings of EUR 328 to 440 million over a decade dismissed as "rounding-error territory" (Oxford Business Law Blog, 19 March 2026). The same authors credit the proposal's real innovations, including zero minimum capital and stock-option facilitation, which distinguishes this critique from outright opposition.

German practitioners make the same point from the applied side: the three-layer stack of regulation, articles and national GmbH law is "wenig übersichtlich", confusing and legally uncertain in application, in Jan-David Geiger's assessment (Otto Schmidt Gesellschaftsrecht-Blog, 23 March 2026). This is the criticism with the longest pedigree: the Commission said the same about the Societas Europaea in 2010, as we detail in the EU Inc vs SE comparison, and it maps directly onto the question of how 27 national courts will interpret the rules.

The opposite criticism: too weak to matter

The startup ecosystem attacks from the other direction. Germany's Startup-Verband calls the proposal a "minimum viable product": functional and extensible, but "not a true 28th regime in the supranational sense", because national law remains subsidiarily applicable and the central EU register is only promised for later; it warns that further watering down would create an instrument that fails in practice (Startup-Verband position paper, 14 April 2026).

That flank hardened after Parliament's rapporteur published his draft. The campaign organisation One Market One Law rejects the draft report's sector exclusions and innovation gating, arguing a European company should be open to every business that wants it: "One Market deserves One Law, not one label stretched over twenty-seven regimes" (open letter, 1 July 2026). Commentators in the same camp list what the proposal never attempted: no single register at launch, no European business court, and tax untouched (EU Perspectives, 2 April 2026).

What the critics have already changed

Criticism of this proposal is not shouting into the void; both legislative tracks have visibly absorbed parts of it. René Repasi's draft JURI report of 29 June 2026, with 246 amendments, answers the union and notary clusters point by point: pre-registration identity verification, fraud flags that can suspend the 48-hour clock, board-level participation tied to place of employment rather than registered seat, four-year protection of participation rights after conversion, and an annex excluding sectors like construction and hospitality. Those same amendments triggered the startup side's counter-campaign, which is the clearest sign both flanks now consider the text winnable.

On the Council side, ST 8598/26 officially lists legal basis, insolvency, taxation, forum shopping, co-determination and further safeguards as the open issues while recording "strong support" for the initiative overall. Tracker-reported working-party positions add color the official documents do not: France is said to push a 15-day formation window instead of 48 hours, Bulgaria to call zero minimum capital unacceptable, and delegations to split into an ambition camp of roughly eleven states and a safeguards camp of eight; treat these as reported, not published. The Irish Presidency's first compromise text is on the table, as covered in our working-party analysis, and Austria's Arbeiterkammer reports a majority forming to delete the insolvency chapter entirely. The fragmentation critique and the "not supranational enough" critique remain structurally unaddressed, because both Parliament and Council edits add national-law hooks rather than remove them.

What this does not mean

A map of objections is not a prediction of failure. The Presidency's May 2026 note records strong support alongside general scrutiny reservations rather than outright rejection from any delegation, and Parliament backed the concept 492-144-28 in January 2026, so the realistic range of outcomes runs from a heavily amended regulation to a delayed one, with outright collapse the tail risk rather than the base case.

Nor does listing a criticism endorse it. Several claims above are contested single-source positions, the union and notary clusters both defend institutional interests alongside their substantive points, and the Commission's own impact assessment argues the status quo carries its own costs for founders. Where a source could not be independently verified, we say so inline, in line with our methodology.

Frequently asked questions

What is the main criticism of EU Inc?

By political weight: that participation and labour-law safeguards follow the registered seat, letting companies choose the lightest national regime. This is the objection unions and the EESC Workers' Group share, it appears on the Council's official open-issues list, and it is the one Parliament's draft amendments most directly target.

Is EU Inc a money-laundering risk?

That is the position of the German notarial bodies and of academic work from Leeds, resting on the removal of notarial identity checks and the 48-hour deadline; the draft amendments respond with mandatory identity verification and suspendable deadlines. No major AML watchdog had taken a position as of September 2026.

Who supports EU Inc?

The Commission, a Parliament majority in the January 2026 concept vote, startup and investor associations across Europe, and, per the Council Presidency's May 2026 note, a broad group of member states; several of the sharpest critics, including the lawyers' association DAV, support the form while demanding changes.

Could the criticism kill the proposal like the SPE and SUP?

The failure mechanics differ: the SPE needed unanimity and the SUP died in Parliament, while EU Inc has a qualified-majority basis and a Parliament that already endorsed the concept. The history of both failed predecessors explains why the current safeguards debate is really a negotiation about avoiding their fate.

Bottom line

Every serious objection to EU Inc is now on the table, sourced and answerable: seat-based forum shopping, weakened preventive control, a contested legal basis, national-law fragmentation, and a startup flank warning against dilution. Watch two indicators to see who is winning: whether the place-of-employment rule for participation survives committee, and whether the Council keeps or strikes the insolvency chapter. Both will be visible in the amendments log and on the timeline as they happen.