By Ignacio Lacasa, Partner, Venture Capital / M&A, Across Legal SLP, Spain
For U.S. venture capital lawyers, Delaware is more than a jurisdiction — it is legal infrastructure: a predictable corporate statute, standardized financing mechanics, and a trusted court system.
Europe, by contrast, has never had a functional equivalent. While it operates as a single market economically, it remains fragmented in corporate law.
The European Commission’s proposed EU Inc. framework (the “28th regime”) is the first serious attempt to close this gap. It does not replicate Delaware or federalize European company law, but it aims to remove structural frictions that make venture capital transactions in Europe slower, more complex, and more expensive.
From a practical standpoint, the significance of EU Inc. lies in how it improves transaction execution.
Fragmentation as a Deal Problem in Europe
The starting point is familiar. Venture capital deals in Europe still operate across multiple national company law systems, each with its own rules on formation, capital, governance, and share transfers.
By contrast, the U.S. model benefits from a high degree of standardization. Delaware corporate law, combined with widely accepted market documentation, provides a common platform that supports efficient execution.
It is not surprising, therefore, that many European companies eventually adopt U.S. structures, typically through a Delaware “flip”, as they scale.
What EU Inc. Is
EU Inc. is designed as an optional corporate form that each Member State would make available across Europe.
A company would still be incorporated in a particular Member State and registered in its business register. However, its core corporate features would be governed by a single EU regulation, with national law continuing to apply where the regulation does not provide specific rules.
The framework is built around a few core ideas: a single corporate form usable across the EU, digital processes throughout the company lifecycle, and simplified incorporation — all of which are intended to make Europe more competitive with Delaware for venture-backed companies.
One structural feature is worth highlighting. EU Inc. separates the company’s legal existence from the ownership of its shares. The company itself remains registered at national level. Ownership is recorded in a digital share register maintained by the company. That distinction has practical consequences for how venture capital transactions are executed.
Not Limited to Technology Companies
Although the initiative is clearly aimed at improving conditions for startups and scaleups, it is not limited to technology companies. It is available to any limited liability company, regardless of sector.
This is not accidental. Limiting the regime to “innovative” companies would introduce definitional questions and additional administrative steps, precisely the type of friction the proposal is trying to remove.
At the same time, some features reflect its origins. The proposal includes streamlined procedures for dissolving solvent companies and simplified insolvency processes for certain innovative startups. These are intended to reduce the cost of failure and make it easier for founders to restart within Europe.
The Investment Layer: Where EU Inc. Impacts Venture Capital
The most immediate impact of EU Inc. is likely to be in the mechanics of venture capital transactions in Europe.
Capital Structure
EU Inc. adopts a flexible approach to share capital. Shares are generally issued without nominal value, although the articles of association may provide otherwise. Multiple share classes with differentiated rights are permitted, aligning more closely with structures used in Delaware venture capital deals.
Convertible Instruments
The framework accommodates convertible instruments, including structures functionally similar to SAFEs and convertible notes. It does not standardize documentation, but it removes a number of legal constraints that have limited their use in some European jurisdictions.
Share Capital Increases
Capital increases are intended to become simpler and largely digital. Companies may authorize the board to issue shares within defined limits, reducing the need for repeated shareholder approvals and formal steps.
Share Transfers
Share transfers can be executed digitally, without mandatory involvement of notaries or similar intermediaries. In jurisdictions where formal execution is still common, this represents a meaningful shift and brings Europe closer to Delaware-style efficiency.
Cap Table Management
Ownership is reflected in a digital share register maintained by the company. Shares are dematerialized, and transfers take effect upon registration in that system. In practice, this should make cap table management more straightforward, particularly in cross-border venture capital scenarios.
Incentives and Stock Options in Europe (EU-ESO)
Employee equity has long been an area where Europe has struggled to match U.S. and Delaware-based practice.
The issue is often taxation. In several Member States, stock options may be taxed at grant or exercise, rather than when value is actually realized. This creates the familiar “dry tax” problem and limits the effectiveness of equity compensation.
EU Inc. does not attempt to harmonize tax law in general. Taxation remains within the competence of Member States.
However, the proposal introduces an optional EU-wide stock option framework (EU-ESO). The key feature is the timing of taxation. As a general principle, income derived from stock options would be taxed when the employee disposes of the shares acquired upon exercise.
This does not create a uniform European tax regime. But it aligns taxation more closely with liquidity, which is often the decisive issue in venture-backed companies.
Governance and Enforcement
EU Inc. follows a relatively straightforward governance model. Management is entrusted to a board, and directors are subject to a set of harmonized core duties.
The articles of association play a central role, while investment and shareholder agreements remain governed by general contract law and are not harmonized.
The framework does not establish a unified court system comparable to the Delaware Court of Chancery. The Commission has, however, encouraged Member States to develop specialized judicial expertise for EU Inc.-related disputes.
What Remains National
EU Inc. does not replace national legal systems in Europe.
Key areas remain governed at Member State level, including tax, labor law (including employee participation), aspects of director liability, procedural rules, and dispute resolution.
Transaction documentation, such as shareholders’ agreements and investment agreements, will also continue to rely on national governing laws.
For U.S. practitioners and venture capital investors, this is the central limitation. EU Inc. simplifies the corporate layer, but it does not eliminate the need to navigate national law.
A Market Outcome to Watch
One of the more interesting questions is not addressed directly by the Regulation: which law will govern venture capital documentation in practice.
EU Inc. harmonizes the corporate framework, but it does not harmonize the law governing shareholders’ agreements or investment documents. These remain subject to choice of law.
This creates a dynamic that differs from the Delaware model. In Delaware, corporate law, investment agreements, and the courts interpreting them typically sit within the same jurisdiction.
EU Inc. separates these layers. The corporate form is European. The contractual layer remains national.
Over time, this may lead to a market-driven outcome: the emergence of one, or a small number of preferred national laws for venture capital documentation across Europe.
Institutional Momentum and Market Reality
EU Inc. is not emerging in isolation. It reflects sustained pressure from across the European startup and venture capital ecosystem to reduce legal fragmentation.
The proposal takes the form of a Regulation rather than a Directive, signaling an intention to achieve a higher degree of uniformity across Europe.
At the same time, expectations should remain grounded. Full convergence, of the kind seen in Delaware, is structurally difficult in a system built on multiple legal orders.
The more realistic outcome is layered convergence: a harmonized corporate form at EU level combined with market-driven standardization of venture capital practice.
Timing and Implementation
EU Inc. is currently at the proposal stage. The European Commission has indicated an objective of reaching political agreement by the end of 2026.
If adopted, it would apply directly across Member States, with implementation likely around 2028.
Conclusion
EU Inc. is not a European Delaware. It does not create a unified court system, and it does not eliminate national legal differences.
What it does is more focused. It standardizes key elements of corporate law that matter for venture capital transactions in Europe: formation, capital structure, share mechanics, digital processes, and employee equity.
EU Inc. may not replace Delaware, but it could, for the first time, offer Europe a credible alternative for startups and investors seeking to scale without leaving the EU.
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