50 CEOs and investors urge Brussels not to dilute the EU Inc law

Fifty European business leaders and investors have written to European policymakers, warning against weakening the EU Inc. law currently under discussion. This proposed legislation aims to streamline and simplify the process for businesses to operate across borders within the EU. Negotiations indicate the final version might not meet the expectations of many startup founders.

The EU Inc. law is part of the European Union's efforts to enhance competitiveness amid legislative fragmentation, resulting in bureaucratic hurdles and high administrative expenses that hinder business expansion within the single market.

The letter's signatories, which include representatives from prominent venture capital firms such as Index Ventures, Accel, Balderton, Atomico, and EQT, caution that the legislation could lose its effectiveness if excessively diluted. They emphasize the importance of preserving the free choice of a registered office, enabling companies to establish their headquarters without the obligation to operate from a single location.

The signatories argue that eligibility for EU Inc. should not be confined to only innovative startups, as a broader scope would benefit a wider range of businesses.

However, supporters of more stringent criteria maintain that a generalized approach could burden the system and diminish its efficiency. To address these concerns, the signatories propose the creation of a unified, authoritative European register to replace the current fragmented system of 27 national registers. This would facilitate easier access to company records and improve transparency.

Additionally, they advocate that employment protection should remain linked to the location where employees work, rather than being tied to the location of the company's registered office.