The 28th regime – How do Parliament and the Commission align?

Written by Clare Ferguson with Áine Feeney.

Parliament has been engaging in preparatory work on the 28th regime, debating and adopting a legislative-initiative report from the Committee on Legal Affairs (JURI) during the January 2026 plenary session. The JURI report recommended allowing national limited liability companies to register as ‘Societas Europaea Unificata (S.EU) to allow automatic recognition in all Member States. However, the report also recommended implementing safeguards to ensure that the regime does not undermine labour and social laws.

The Commission’s March 2026 proposal for a regulation establishing the 28th regime corporate legal framework would allow for quick, digital registration that is automatically valid across the EU. It would also provide for a single tax treatment of employee remuneration and a framework for winding up companies. While Parliament’s resolution supports the approach, it remains cautious about the proposal’s chances of success.

Overall, the objectives of the 28th regime as defined by the Commission and the Parliament are well aligned, as both institutions believe the regime should support the EU’s competitiveness, harmonise the single market and modernise the business environment. However, there are some key differences; EPRS conducted a comparative assessment of the Commission’s proposal for a 28th regime corporate legal framework and Parliament’s legislative-initiative resolution, identifying limitations in six areas of the Commission’s proposal, which include:

• Harmonised legal form;
• Registration and exit;
• Closure of companies;
• Attracting talent;
• Governance and safeguards;
• Dispute resolution.

The EPRS assessment found that the Commission proposal could have an impact on the generation of European added value, with particular reference to three of the identified shortcomings. Firstly, the scope of eligible companies is broad, without ensuring a clear and consistent definition. Secondly, the proposed ‘dual-track’ system could vary across Member States, reducing legal certainty for investors and restricting possibilities for cross-border scale-up of innovative companies. Finally, there is a lack of measures to establish a specialised dispute resolution mechanism.

Ultimately, the Commission proposal focuses on company law and operations while Parliament takes a broader view, considering the need to support the entire ecosystem around innovative companies, including labour law, investment, and cross-border scale up.

The 28th regime is a key measure in the European Commission’s 2025 competitiveness compass; an economic framework which aims to close the innovation gap, decarbonise the economy and reduce foreign dependencies. The need for such a comprehensive legal framework was highlighted by the 2024 Letta and Draghi reports. Its objective is to create a uniform set of rules for companies applicable across the EU, simplifying the legal framework to facilitate the competitiveness of businesses and start-ups operating in the single market.

The Commission envisages that it should be possible to establish a company under the 28th regime within 48 hours, which EPRS predicts could lead to an increase in venture capital invested in European companies of about €445 billion, thus supporting the potential of European start-ups to grow and scale-up in Europe.

Links to EPRS publications:

• The 28th regime
• A competitiveness compass for the EU
• Scaling up European Innovation
• The 28th regime: A new legal framework for innovative companies
• Deepening the single market in the light of the Letta and Draghi reports
• The 28th regime corporate legal framework
• Comparing EU institutions’ positions on a new legal framework for innovative companies