By Christopher Grew, Patrick Driscoll and James Badge
November.01.2024 | 6 minute read
The concept of a pan-European company has garnered renewed attention, with an online petition launched in mid-October amassing over 10,000 signatures in two weeks. The petition advocates for the creation of EU Inc., a new company vehicle envisioned as Europe's answer to the Delaware C-Corp – one corporate structure that would transcend national boundaries across Europe.
Former European Central Bank President Mario Draghi has highlighted how the fragmentation of European nations drives high-growth companies overseas, particularly to the U.S., where entrepreneurs find a more unified market and better access to venture capital. This exodus depletes Europe's innovation pipeline and hampers development of its capital markets.
A growing political consensus says European companies would benefit from a simpler, harmonized set of rules for businesses to foster a more unified single market and enhance EU competitiveness. While the single market has achieved considerable progress in goods and services integration, corporate structuring and broader legal frameworks remain firmly anchored in national jurisdictions. That often creates friction in cross-border operations and restricts investment flows.
The startup community has emerged as the driving force behind the EU Inc. movement. Prominent supporters include founders from Stripe, DeepL, Wise and Rohlik, alongside major investors from Atomico, Index Ventures and Sequoia. Their collective voice emphasizes the urgent need for reform, with the petition scheduled for submission to the EU on December 1 to coincide with the incoming EU commissioners' agenda-setting.
The proposal envisions a company vehicle that would apply in EU countries as well as in the UK and Switzerland.
While the European Company (Societas Europaea or SE) has existed since 2004 as a cross-border legal form for European businesses, its adoption has been limited. It is seen as impractical for startups and high-growth companies due to its relative complexity, rigid structure and incorporation cost.
EU Inc. offers a more ambitious, practical and integrated framework built on four key pillars that leverage the full potential of the single market:
The path to developing and implementing EU Inc. will not be without challenges. Key considerations include:
Full implementation may be years away given the effort involved, but EU Inc. represents a crucial initial step toward enhancing Europe's global competitiveness. Success will require careful study of existing models, particularly Delaware's corporate framework, along with sustained dialogue between policymakers, investors and entrepreneurs.
The initiative's timing is particularly significant as Europe seeks to strengthen its position in tech and innovation. The success of EU Inc. would align with and potentially accelerate other EU initiatives, particularly the Capital Markets Union and Digital Single Market strategies.
By removing administrative barriers and creating a more unified market, EU Inc. could help unlock Europe's full economic potential and create a more vibrant ecosystem for startups and scale-ups alike.