FESE position on the 28th regime corporate legal framework – ‘EU Inc’

The Federation of European Securities Exchanges (FESE) welcomes the European Commission’s proposal for the creation of the 28th Regime corporate legal framework (‘EU Inc.’) as an optional, harmonised legal framework that companies across the EU can choose to adopt. The initiative has the potential to reduce fragmentation, facilitate cross-border activity and support scale-up across the Single Market.

While recognising the Commission’s objective of primarily supporting innovative and high-growth companies, FESE considers it important that the regime is designed to support companies throughout their full corporate lifecycle, regardless of their legal form. FESE, therefore welcomes Article 60 of the proposal, which allows EU Inc. shares to be admitted to trading on regulated markets (RMs) or multilateral trading facilities (MTFs).

In its position paper, FESE highlights the following considerations to strengthen the effectiveness and long-term viability of the 28th Regime:

• Ensure access to public markets: The 28th Regime framework should remain fully compatible with going public, issuing securities and accessing a broad range of financing sources. It should also enable a smooth transition from private to public status. Companies that adopt the EU Inc. framework should not have to revert to national company law regimes or convert into another legal form to access public markets.
• Ensure harmonisation across the EU: The framework should apply consistently across Member States and avoid national “gold-plating” that could lead to fragmentation. Consistent application of existing EU rules remains essential, particularly for access to regulated markets, the treatment of EU Inc. governance features by national competent authorities and trading venues, and the interaction between flexible corporate structures and disclosure-based securities regulation.
• Align with EU securities legislation: The proposal should align with existing EU securities rules, especially for dematerialised and tokenised securities. This would help avoid conflicts with frameworks such as CSDR and the DLT Pilot Regime.
• Support simplification and digitalisation: FESE supports measures that reduce administrative burdens, promote digitalisation and strengthen the “once-only” principle.
• Strengthen employee share ownership: FESE welcomes efforts to harmonise aspects of employee share ownership and employee participation, including the timing of taxation. Greater convergence of tax treatment across the EU would help start-ups and growing companies offer more competitive compensation packages.
• Create a 28th regime for digital securities issuance: Looking ahead, FESE sees the 28th Regime as an opportunity to reduce fragmentation in EU securities law by exploring a dedicated framework for the cross-border issuance of digital and dematerialised securities.

Find out more about our work the 28th Regime including our response to the Commission’s consultation here.