urope has no shortage of ambition when it comes to supporting its businesses. What it has historically lacked is coherence. For decades, the Single Market has promised scale but delivered fragmentation. For large companies, this has been manageable. For SMEs and start-ups, it has often been prohibitive. Twenty-seven sets of company law, administrative procedures and compliance cultures still shape how businesses grow or fail to.
The proposed “28th regime” seeks to change that. It is one of the most consequential Single Market initiatives in recent years. But like many EU projects, its success will depend not on its ambition, but on its execution and on whether SMEs actively engage in shaping it.
What is the 28th regime — and why does it matter?
At its core, the 28th regime is a simple idea: create an optional EU-wide legal framework that companies can choose instead of navigating 27 national systems. It does not replace national regimes. It sits alongside them as a voluntary, harmonised alternative. The Commission’s March 2026 proposal (“EU Inc”) is the first concrete step. It offers:
- A single EU company form
- Fully digital incorporation in as little as 48 hours
- Low administrative costs (targeted below €100)
- Harmonised rules for governance, operations and cross-border activity
For SMEs, the implications are profound. Today, expanding across borders often means re-incorporation, legal advice in multiple jurisdictions, and duplicated compliance. Under a functioning 28th regime, an SME could operate across the EU under one rulebook — with one set of procedures, one legal identity, and one administrative interface. This is not just simplification. It is a structural change.
Why SMEs should care — beyond the headline simplification
The political narrative around the 28th regime focuses heavily on start-ups and scale-ups. That is justified — but incomplete. For SMEs more broadly, three elements stand out.
1. Real access to the Single Market
The Single Market has long been asymmetric. It works best for goods, less well for services, and often poorly for SMEs. The 28th regime addresses one of the root causes: legal fragmentation. By standardising company law elements, from incorporation to governance, it reduces the “hidden costs” of cross-border activity. These are not always visible in regulation, but they are felt in: legal fees, administrative delays, and uncertainty in applying rules across jurisdictions.
For SMEs, these costs often determine whether expansion happens at all.
2. Improved access to finance and talent
A harmonised corporate framework also changes how investors and employees engage with SMEs. The proposal includes features such as:
- Standardised share structures
- Easier cross-border investment
- EU-wide employee stock option schemes
These are not technical details. They go to the heart of Europe’s competitiveness gap. Today, investors often favour jurisdictions with predictable legal frameworks. Talent, especially in high-growth sectors, increasingly expects equity-based incentives — such as employee stock option schemes that align remuneration with company performance — that are simple and comparable.The 28th regime could help level that playing field.
3. Digital-by-default administration
The promise of a fully digital company lifecycle, from incorporation to insolvency, is one of the most transformative aspects. But it is also one of the most fragile. Delivering a system based on interoperable registers, digital identity (eIDAS), and cross-border data exchange will require significant coordination between Member States. If done well, SMEs will benefit from faster procedures, reduced paperwork, and fewer interactions with multiple authorities. If done poorly, the risk is simply layering a new system on top of existing fragmentation.
The political reality: broad support, difficult trade-offs
On paper, the 28th regime enjoys unusually broad political backing. Most Member States support it as a tool to deepen the Single Market and boost competitiveness. Across the European Parliament, centrist and pro-business groups are strongly in favour. But this consensus masks real tensions.
Balancing competitiveness and social protection
Some stakeholders fear that an EU-wide corporate regime could be used to bypass national labour standards or collective bargaining systems. The Commission has included safeguards, including worker involvement and anti-abuse provisions, but these will be heavily scrutinised during negotiations. The outcome will determine whether the regime is seen as a tool for growth or as a source of regulatory arbitrage.
Scope and legal limits
Another key debate concerns how far the regime should go. While the proposal focuses primarily on company law, it touches on areas such as taxation, insolvency and labour — all sensitive from a subsidiarity perspective. There is a real risk that, in trying to do too much, the regime becomes legally fragile or politically diluted.
Optionality vs impact
The regime is voluntary by design. That is politically necessary, but it creates a strategic challenge. If the framework is not sufficiently attractive, companies will simply not use it. If it is too complex, it risks replicating the very fragmentation it aims to solve. The success of the 28th regime will ultimately be measured not by its adoption but by its uptake.
Where we are now — and what happens next
The legislative process has only just begun.
- The Commission tabled its proposal in March 2026
- The European Parliament is entering the committee phase
- The Council has started technical discussions in working parties
There is a political ambition to reach an agreement by the end of 2026, an ambitious timeline given the complexity of the file. No trilogue negotiations have started yet. The real shaping of the proposal is happening now in committees, working parties, and informal discussions. This is precisely the moment where stakeholders can have the greatest impact.
How SMEs can influence the outcome
Too often, SMEs engage with EU policy only once the rules are already fixed. The 28th regime is different. It is still open, and unusually receptive to input, especially from SMEs who are the target of this regime. There are three key entry points:
1. European Parliament (JURI Committee)
The Legal Affairs Committee will lead Parliament’s position. MEPs will table amendments on: scope, governance rules, and safeguards. This is where technical details become political choices.
2. Member States in the Council
National experts in the Council’s Company Law Working Party are already shaping positions. For SMEs, engaging at the national level is often more effective than at the EU level: through ministries, through permanent representations in Brussels or lastly through national business associations
3. The broader ecosystem
Initiatives like 28forall are critical in amplifying a coherent business voice. They help ensure that the regime remains ambitious, usable, and focused on real barriers faced by companies. Without this collective input, there is a risk that the regime becomes a compromise that satisfies institutions but fails businesses.
The risk of missing the moment
Europe has attempted similar initiatives before. Some succeeded, such as the EU trademark or the unitary patent. Others, like the Common European Sales Law, ultimately failed due to a lack of political alignment and stakeholder buy-in. The 28th regime sits at a similar crossroads. It could become: a cornerstone of a more integrated Single Market and a practical tool for SMEs to scale across borders. Or it could become another optional framework with limited uptake and a missed opportunity buried in complexity.
Conclusion: from concept to competitiveness
The 28th regime is not just another EU initiative. It is a test of whether Europe can move from coordination to integration. For SMEs, it offers something tangible: the possibility of operating in a truly European market without navigating 27 different systems. But this outcome is not guaranteed. It will depend on whether the final framework is:
- Simple enough to use
- Robust enough to provide certainty
- Balanced enough to gain political support
And crucially, it will depend on whether SMEs themselves engage in shaping it.
At Lykke Advice, we strongly support the ambition behind the 28th regime and the messages put forward by the 28forall initiative. But ambition alone is not enough.The next months will determine whether this becomes a transformative tool for Europe’s businesses or another well-intentioned idea that falls short. For SMEs, the message is clear: this is not a file to watch. It is a file to influence.
