René Repasi publishes draft JURI report on EU Inc with enhanced safeguards

René Repasi, the European Parliament's rapporteur for EU Inc, has published a draft JURI report introducing significant safeguards that diverge from the Commission's original proposal, including sector exclusions, extended registration timelines for fraud investigation, and mandatory worker participation rules tied to place of employment rather than registration.

The draft report from the S&D MEP represents the first formal parliamentary position on the 28th regime following his appointment as rapporteur in April 2026. According to Accountancy Europe, while the European Commission promised 48-hour, €100 online setups in COM(2026) 321, Repasi's draft allows registration extensions to investigate fraud and excludes low-innovation sectors like construction, transport, and hospitality.

Background on the legislative process

The EU Inc proposal emerged as a cornerstone of the EU's competitiveness agenda, formally presented by the Commission on March 18, 2026. The European Parliament had endorsed the concept with 492 votes in favor, 144 against, and 28 abstentions on January 20, 2026, representing 77% support for the initiative.

The ordinary legislative procedure requires parallel examination by both the European Parliament and the Council. In Parliament, the Legal Affairs Committee (JURI) holds primary responsibility, with Repasi designated as rapporteur. The Council Working Party on Company Law has held twelve examination sessions as of late June 2026. Ireland assumed the Council Presidency on July 1, 2026, and will chair negotiations through December with an end-2026 political agreement target.

Repasi's draft report, expected for presentation on July 23, 2026, follows an extensive consultation process where the rapporteur received more than 100 contributions from stakeholders. A stakeholder dialogue on June 24, 2026 included representatives from ETUC, BusinessEurope, the European Startup Network, and national business associations, reflecting the contested nature of the proposal.

Key provisions in Repasi's draft report

Sectoral exclusions and scope limitations

The draft report fundamentally recalibrates the Commission's open-access approach. According to reporting by Accountancy Europe, Repasi excludes low-innovation sectors including construction, transport, and hospitality from eligibility. This represents a significant departure from the Commission's proposal, which placed no sectoral restrictions on the EU Inc form beyond general company law requirements.

The exclusion reflects concerns raised by labour representatives and Member States about regulatory arbitrage. During the EESC Workers' Group examination, trade union representatives warned that unrestricted access could enable companies to exploit regulatory differences across Member States. The sectoral exclusions appear designed to limit the proposal to genuinely innovative companies, aligning with the narrower scope anticipated in earlier Commission communications about a "28th Regime for Innovative Companies."

Registration procedures and fraud prevention

While the Commission proposal mandated 48-hour registration with a maximum €100 fee, Repasi's draft permits extensions where authorities need to investigate potential fraud. This modification addresses concerns highlighted in academic analysis about weakened preventive controls compared to existing national systems.

The Commission's Article 14 prescribed preventive administrative, judicial or notarial control but limited review to formal requirements. Critics warned this could create "a European analogue" to Delaware's shell company vulnerabilities. Repasi's registration extension provision attempts to balance speed with substance verification, though implementation details remain subject to amendment.

Capital structure and governance

The Commission proposal eliminated minimum capital requirements, permitting companies to operate with €0 in capital. This provision appears retained in Repasi's approach, maintaining the Commission's departure from continental European capital maintenance traditions.

The draft includes harmonised rules for employee stock ownership plans (ESOPs), building on the Commission's Article 79 framework. This addresses a key competitiveness gap identified in the Draghi Report, where fragmented equity compensation rules across Member States deterred talent recruitment.

Enhanced safeguards and anti-abuse measures

Worker participation and employment law

Repasi's most significant intervention concerns worker participation rights. According to the Socialists and Democrats press release, the draft report mandates that board-level worker participation rights follow the place of employment, applying the highest national protection threshold across Member States, not the law of the country of registration.

This provision directly contradicts the country-of-origin principle underlying much of the Commission's approach. The Commission proposal stated that national employment and social laws are not affected, with safeguards of the registration country applying in full. Repasi's modification ensures companies cannot circumvent stronger worker protection regimes by registering in jurisdictions with minimal participation requirements.

"A European company legal form can be more than just a simplified registration procedure. It can become a seal of quality for founders, highly qualified professionals, and investors. This will only succeed if the new legal form not only promises legal certainty but guarantees it: through automatic recognition in all member states, fully digital procedures, and clear, abuse-proof rules."

Source: René Repasi, MEP and JURI Rapporteur, June 2026

The worker participation modification represents a core demand from the S&D group, which had warned that without closing loopholes regarding labour law and workers' participation rules, the proposal could become "a vehicle for circumvention and forum shopping."

Country-of-origin principle limitations

According to Accountancy Europe, Repasi's draft limits the country-of-origin principle to prevent corporate forum shopping. This provision addresses concerns from both labour representatives and academic observers about regulatory arbitrage opportunities.

The limitation likely restricts which substantive law provisions follow the country of registration versus other connecting factors like place of effective management or principal place of business. Specific implementation details will emerge during the JURI Committee's amendment process, with the deadline set for July 17, 2026.

Winding-up and insolvency procedures

The draft broadens the scope of simplified winding-up proceedings to cover "start-ups" rather than just "innovative start-ups" as defined in the Commission Recommendation. This expansion makes fast-track liquidation available to a wider pool of companies, supporting the "second chance" policy objective highlighted in the Commission's Impact Assessment.

The Commission proposal included fully digital insolvency procedures with electronic asset auctions for companies qualifying as innovative startups. Repasi's broader scope designation could significantly expand access to these streamlined procedures, reducing exit costs for failed ventures.

Comparison of key provisions

Stakeholder reactions and analysis

Business and startup community response

The business community's reaction has been mixed. While startup advocates welcomed the streamlined procedures and digital-first approach in the Commission proposal, the sectoral exclusions and extended registration timelines in Repasi's draft have generated concern. An earlier Repasi draft report in 2025 on the pre-legislative file was described by the startup community as "too cautious and too narrow in scope."

The European Startup Network participated in the June 24 stakeholder dialogue alongside Repasi and EPP Shadow Rapporteur Axel Voss. Clark Parsons represented the Network, alongside trade union voices from ETUC and business representation from BusinessEurope, reflecting the tension between flexibility demands and worker protection concerns.

Labour and trade union perspective

Trade union representatives have consistently advocated for stronger safeguards. The EESC Workers' Group warned about regulatory arbitrage risks, arguing that without robust worker participation provisions, the EU Inc could undermine decades of social progress.

Isabelle Schömann from the European Trade Union Confederation (ETUC) participated in the June 24 stakeholder dialogue, representing labour concerns. The S&D position statement emphasized that the proposal "does not become a vehicle for circumvention and forum shopping," directly reflecting ETUC advocacy priorities.

Academic and legal analysis

Academic observers have raised fundamental questions about the proposal's design. An Oxford Law Blog analysis characterized the Commission proposal as "structurally flawed," warning it "dismantles preventive safeguards that protect the single market against money laundering, sanctions evasion, and corporate fraud."

The critique identifies the residual national law clause (Article 4) as creating "27 different versions of the EU Inc," replicating the design error of the failed Societas Privata Europaea proposal. Repasi's safeguard enhancements appear responsive to these concerns, though critics argue more fundamental restructuring is required.

Next steps in the legislative timeline

Parliamentary procedure

The immediate legislative calendar includes:

1. July 17, 2026: Deadline for JURI Committee members to submit amendments to Repasi's draft report
2. July 23, 2026: Expected presentation of the finalized draft report incorporating initial amendments
3. September 2026: Anticipated JURI Committee vote on the report
4. Fall 2026: Plenary vote in the European Parliament on the negotiating mandate

The JURI Committee will hold an initial exchange on the file in mid-July, providing the first formal debate on Repasi's proposals. Shadow rapporteurs from other political groups, including EPP's Axel Voss, will present alternative positions and amendments.

Council track

Parallel to parliamentary work, the Council Working Party on Company Law continues technical examination. Sessions are scheduled for July 2, 8, and 23. Ireland's Presidency, which assumed the chair on July 1, 2026, has identified the 28th regime as a priority file for delivery by year-end.

The Council's position will emerge through successive Working Party sessions, with Member State positions crystallizing around contentious issues like worker participation, tax provisions, and the scope of the country-of-origin principle. Significant divergence between Council and Parliament positions will trigger trilogue negotiations.

Political agreement target

All three institutions maintain the objective of reaching agreement by the end of 2026. The Commission's Communication explicitly stated this timeline "given its key importance for the EU's competitiveness."

However, the substantive differences emerging between the Commission proposal and Repasi's draft, combined with anticipated Council resistance particularly on tax provisions, create timeline pressure. Political agreement by December 2026 would require rapid trilogue progress in the final quarter, assuming Parliament votes its mandate by October.

What this means for entrepreneurs and investors

Immediate planning considerations

Entrepreneurs and investors evaluating EU Inc for future business structures should monitor three critical variables:

1. Sectoral eligibility: Companies in construction, transport, or hospitality sectors appear excluded under current Parliamentary thinking. Businesses in these sectors should plan for traditional national forms or await final legislative text before making incorporation decisions.

2. Worker participation obligations: The place-of-employment rule for worker participation rights fundamentally alters the compliance calculus. Companies with distributed workforces across Member States with varying participation thresholds will face complex compliance requirements not present in the Commission proposal.

3. Registration timelines: Extended registration periods for fraud investigation create uncertainty compared to the guaranteed 48-hour timeline in the Commission text. Businesses requiring rapid incorporation for time-sensitive transactions should factor potential delays.

Regulatory arbitrage constraints

The limitations on country-of-origin principles and worker participation rules substantially reduce regulatory arbitrage opportunities compared to the Commission proposal. Companies cannot register in jurisdictions with minimal worker participation requirements while operating predominantly in Member States with stronger protections.

This represents a significant shift from initial expectations. Early analysis comparing EU Inc to Delaware LLCs or Estonian e-Residency assumed broad regulatory choice. Repasi's safeguards constrain that choice, prioritizing worker protection over regulatory competition.

Practical next steps

Businesses and advisors should:

• Track the amendment deadline: Positions will clarify after July 17 amendments are tabled, showing support levels for Repasi's safeguards versus business-friendly alternatives
• Monitor Council positions: Member States with strong worker protection traditions (Germany, France, Nordic countries) will likely support Repasi's approach; those prioritizing attracting incorporations may resist
• Scenario plan for 2027-2028 availability: Even with end-2026 political agreement, formal adoption, publication, and the 12-month application delay push practical availability to 2028
• Evaluate existing alternatives: National forms like the Dutch BV, German GmbH, or Irish Limited Company remain certain options while EU Inc negotiations continue

Companies requiring cross-border structures now should proceed with established options rather than waiting for legislative outcomes that remain uncertain in both substance and timeline.