The European Parliament has moved to clear the way for venture capital into the continent’s innovative companies. The legal committee overwhelmingly passed a favourable report on the so-called 28th regime, simplifying corporate law issues across the bloc.
The Parliament’s legal committee (JURI) passed the report on Thursday, 11 December, by 18 votes in favour, with four against and one abstention. The rapporteur for the file, MEP René Repasi (S&D/DEU), was visibly emotional. “In order, among other things, to create trust amongst venture capitalists, we want to have speedy decision-making. If there are judgments needed requiring alternative dispute resolution mechanisms for B2B cases with regards to this 28th regime, we need speedy decision-making,“ Mr Repasi said.
“We want to make sure that if you go for innovation, and the only thing that you actually can sell is hope that your innovation will fly, that you can attract talent, by also capitalising this hope with either employee stock option plans or stock ownership plans,“ the rapporteur exhorted his colleagues before the vote.
Removing barriers
The so-called 28th regime refers to a proposed new legal framework designed to simplify company law for innovative firms across the European Union. Its aim is to remove barriers that start-ups and small and medium-sized enterprises (SMEs) face when incorporating and operating across different member states. The regime seeks to provide a uniform set of rules enabling quick, efficient creation and governance of companies, ideally boosting cross-border business and innovation.
At present, diverse national company laws complicate the formation and scaling of businesses in different EU countries. Firms face costly and time-consuming procedures when registering or adapting their structure abroad. The 28th regime intends to act as an optional, standardised system independent of national frameworks but fully recognised across the EU. This “one-stop-shop” approach should encourage entrepreneurs to expand their innovative ventures quickly and with fewer legal hurdles.
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This proposal is, as Mr Repasi suggested, motivated by the goal of deepening the single market and enhancing Europe’s competitiveness. Small and innovative companies significantly contribute to economic growth and jobs, yet suffer most from fragmented legal environments. By creating a harmonised framework, the EU hopes to unlock investment and entrepreneurship at a scale comparable with competitors abroad.
A seamless legal environment
The 28th regime would enable companies to incorporate swiftly and maintain simple governance structures. Such flexibility caters well to the agile nature of high-growth start-ups. It would provide legal certainty for cross-border operations, allowing firms to pursue markets across the union without negotiating complex national rules.
Importantly, the regime remains optional. Member states and businesses can continue using current national laws. The regime becomes an alternative rather than replacing long-established national frameworks. Yet, its adoption offers clear benefits to firms seeking rapid internationalisation.
“This all was put together in the spirit of compromise, in the spirit of this parliament for once building and constructing something together instead of destroying what we have achieved in past decades. I’m very grateful to the shadows to go with me in this encounter and to be open-minded to create something innovative. ambitious in terms of substance and we do not want to compromise this ambition by being ambitious in form,“ the German Socialist MEP said.
When the only thing that you actually can sell is hope that your innovation will fly, we want to make sure that you can attract talent by capitalising this hope with either employee stock option plans or stock ownership plans. — MEP René Repasi (S&D/DEU)
The regime also addresses capital and shareholder requirements, balancing investor protection with simplicity. It envisages mechanisms for cross-border mergers, transfers of registered offices, and dissolution, further easing the relocation and scaling of firms. Simplified annual reporting rules and digitally enabled processes form part of the regime’s modern approach.
Growth, innovation in focus
By lowering administrative burdens and legal uncertainty, the 28th regime aims to attract more investment, especially venture capital. Growth-oriented start-ups often face difficulties accessing funding due to regulatory fragmentation. A harmonised, transparent company law could stimulate financial markets and boost co-operation among investors.
The regime aligns with the EU’s broader effort to strengthen the internal market and foster a robust ecosystem for technological innovation. It could contribute to closing the innovation gap with global competitors by enabling a more agile, integrated network of innovative firms.
Critically, the regime is designed with proportionality and subsidiarity in mind. It respects member states’ authority while offering a tool to remove legal obstacles at the EU level. Its success depends on effective cooperation among governments, businesses and regulators.
The plenary vote on the matter is sheduled for May 2026.
