On March 18, 2026, the European Commission published its proposal for an EU-wide legal framework establishing a new form of limited-liability company – the EU Inc. With this draft, the Commission aims to promote start-ups and scale-ups by creating a new European legal form. Digitalization, standardization and greater flexibility in company law are at the forefront.
Codetermination as the key touchstone for the EU Inc.
From an employment law perspective, the EU Inc. offers significant structuring potential with regard to corporate codetermination, while also reflecting familiar tensions. A distinction must be drawn between EU Inc.s that are newly incorporated and those formed through conversion transactions.
New incorporation: codetermination based on the statutory seat
For newly incorporated EU Inc.s, the draft provides that the codetermination regime of the Member State of the statutory seat (registered office) shall be decisive. Because the draft (as is already the case for the SE1) does not require an economic nexus between the statutory seat and the place of the company’s actual activities, it would be possible to establish an EU Inc. with its registered office in a Member State with limited codetermination requirements and to operate – on a permanent basis – in Germany without codetermination.
This would make it legally possible, even where employee headcount exceeds the thresholds under Germany’s One-Third Participation Act or Codetermination Act, to operate...
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