About 30 tech startups organisations called for a pan-European a corporate status to help "growing European tech champions" to compete with their counterparts in the US and China, in a non-paper published this morning.
It is the second such call to be released in the last week. Over 10,000 people have signed a similar petition dubbed EU Inc, supported by major tech founders, CEOs, and venture capitalists, in Europe and beyond; from Wise, Revolut, and Stripe, to Y Combinator.
EU institutions are signaling yes to EU Inc: European Commission President Ursula von der Leyen favoured a similar initiative in her political guidelines and tasked Irish Commissioner-Designate for Democracy, Justice and the Rule of Law Michael McGrath to lead the work. Many MEPs are on board, Simon Schaefer, founder at Founder Factory and co-founder of the EU Inc petition, told Euractic "The Council should be on board as well, as we do not suggest suppressing national regimes, but create an alternative," added Schaefer. FranceDigitale, who led today's call, shares this opinion.
Delivering "quickly" will be of essence, said Schaefer, who would like a Commission legislative proposal by the end of 2025.
The whole entrepreneurship ecosystem is behind the idea.
The new pan-European corporate legal status is expected to allow founders to create companies by themselves, from scratch, fully online, and with "very low" capital -suggested at €1- in the non-paper.
They suggest additional measures to simplify administrative burdens for entrepreneurs, such as equity payments and contractual freedoms for entrepreneurs.
This pan-European legal status is expected to create clarity for EU and international founders and investors, who will not have to dive into local legislation before taking an investment decision, as well as opening them up to an EU-wide pool of investors.
“If we unify the founder and investor systems, we finally will be able to compete with the US, China, or India,” Andreas Klinger, investor at Prototype Capital and co-founder of the group who published the aforementioned petition told Euractiv.
But, it is not a panacea.
Complementary measures include further integration of the tax systems, establishing minimum standards on employment policies, changing public procurement rules, and better unifying business laws.
An EU-wide company status has existed since 2001, called Societas Europaea. But it has "proven to be virtually unworkable" for innovative companies, say the signatories of the non-paper.
To apply for this status, companies must already have a legal entity, presence in at least two EU countries, a minimum capital of €120,000, as well as decide to merge, form a holding company or a subsidiary, or convert from a public limited liability company to a Societas Europaea.
It’s no surprise that mostly big companies shifted to this EU legal status, including European Airbus, German Allianz, BASF, E.ON, SAP, and Zalando.
"For these German [...] companies, the Societas Europaea [status] has primarily served as a stopgap for their national law," Clotilde Hocquard, public affairs lead at FranceDigitale told Euractiv. | 