European CEOs and investors urge EU not to dilute EU Inc. law

Fifty European CEOs and investors have urged EU legislators not to "dilute" the bloc's EU Inc. law, currently under negotiation in Brussels, according to a joint letter sent to policymakers on Thursday.

The law would make it cheaper and easier for businesses to launch and operate across EU borders and is expected to be approved by the end of the year.

However, negotiations in Brussels suggest the final version may fall short of what many startup founders had hoped for.

The EU Inc. law is among the legislative proposals the bloc is pushing to make Europe more competitive.

Firms in Europe struggle to scale up because of legislative fragmentation, which translates into red tape and heavy administrative costs — a real barrier within the single market.

"Policymakers must ensure that the final legislation delivers a genuinely European company form, rather than adding another layer on top of 27 national systems," the signatories argue.

Signatories, who also include investors from Index Ventures, Accel, Balderton, Atomico and EQT, are urging policymakers to decide "whether EU Inc becomes Europe's economic engine or a legal structure so diluted that nobody uses it".

The demands

Signatories are asking policymakers to preserve the "free choice of registered office," allowing founders to choose their company's home without being forced to locate all operations in the same place.

Eligibility for EU Inc should not be limited solely to "innovative" startups, the signatories argue. However, supporters of such restrictions contend that opening the scheme to everyone could overwhelm the system and undermine its effectiveness.

"EU Inc needs a single, authoritative European register — not merely an interface layered over 27 national systems," the signatories say among their demands. That would simplify the consultation of company records, they argue.

They are also calling for employees to be taxed only once they hold shares in the company and for employment protection to remain tied to the location where employees actually work.