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EU Inc. – Unlocking European ambition · Espresso Briefings by BusinessEurope

• 0:03
  SPEAKER_01: Welcome to Espresso Briefings by Business Europe.
• 0:06
  SPEAKER_01: Timely insights and expert perspectives served in short, sharp episodes to fuel your thinking.
• 0:14
  SPEAKER_01: It's YWINK, it's an European type of company.
• 0:19
  SPEAKER_00: Welcome back to Espresso Briefings, Business Europe's podcast on the big issues shaping European business.
• 0:24
  SPEAKER_00: I'm Sofia Yevchuk, communications director at Business Europe.
• 0:28
  SPEAKER_00: Europe has a single market.
• 0:30
  SPEAKER_00: So why growing a company across the EU still means navigating different company law systems, procedures, and paperwork.
• 0:38
  SPEAKER_00: That is the problem EU Inc.
• 0:40
  SPEAKER_00: is trying to address.
• 0:41
  SPEAKER_00: The proposal would create an optional company form with common corporate rules across the EU.
• 0:47
  SPEAKER_00: But the EU Inc.
• 0:48
  SPEAKER_00: also sparkled plenty of debate and misconceptions about what it would change and what it would not.
• 0:54
  SPEAKER_00: So today we're going to unpack the proposal with my colleague Pedro Oliveira, Legal Affairs Director at Business Europe.
• 1:01
  SPEAKER_00: Pedro, thanks for joining me.
• 1:03
  SPEAKER_01: Thanks for the invite, Sofia.
• 1:04
  SPEAKER_00: Let's start from the basics.
• 1:06
  SPEAKER_00: If Europe already has a single market, why is it still so unnecessary complicated for a company to set up and grow across Europe?
• 1:14
  SPEAKER_01: In the age of AI, language models and all the technologies around us, you would be amazed at the differences that still exist among company laws in the EU.
• 1:24
  SPEAKER_01: You have around 60 types of companies among the member states.
• 1:29
  SPEAKER_01: Some of them have behind one or two boards of directors, others have different rules, are organized by shares, others by quotas.
• 1:38
  SPEAKER_01: There are some countries where you need to pay up to 10,000 euros up front to be able to set up a company.
• 1:44
  SPEAKER_01: This is, for example, Austria, which used to be 35,000 euros as a minimum capital.
• 1:51
  SPEAKER_01: So there are quite a number of differences, and even in my own country, just to get the appointment to meet with the business register or with the notary to set up the company can take from weeks to months.
• 2:03
  SPEAKER_01: So there are still some substantial differences that frustrate entrepreneurs across this Europe.
• 2:08
  SPEAKER_00: Let's look at the EU Inc.
• 2:09
  SPEAKER_00: in more detail.
• 2:10
  SPEAKER_00: There's a lot of technical language about the project, about the proposals, but let's imagine I'm an entrepreneur or a potential entrepreneur business owner.
• 2:19
  SPEAKER_00: What actually would be different for me?
• 2:21
  SPEAKER_00: Why would I use EU Inc.
• 2:23
  SPEAKER_00: setting up my company?
• 2:24
  SPEAKER_01: So EU Inc.
• 2:25
  SPEAKER_01: is an optional form of company.
• 2:27
  SPEAKER_01: You can set it up fast, in up to 48 hours, cheap.
• 2:32
  SPEAKER_01: With 100 euros of register fees, you would be able to set to set it up.
• 2:38
  SPEAKER_01: Then it would automatically connect the information of the company with the tax social security authorities.
• 2:46
  SPEAKER_01: So this makes it much easier to fulfill already from the start quite burdensome, let's say, requirements.
• 2:53
  SPEAKER_01: And it also allows to or includes a lot of provisions and rules around changes of capital, transfer of shares, changes of statute.
• 3:05
  SPEAKER_01: So really to make it easier to operate, to make it easier to obtain investment.
• 3:09
  SPEAKER_01: What also is quite important, it's the brand as well.
• 3:13
  SPEAKER_01: It's EU Inc., it's an European type of company, and this would be recognized across the EU and validated and attractive for not only entrepreneurs but to the investors and for all those that connect with this type of legal entity.
• 3:30
  SPEAKER_00: Indeed, so it would give already a European angle to the business model of the future.
• 3:36
  SPEAKER_01: Absolutely.
• 3:37
  SPEAKER_01: It's about branding as well.
• 3:39
  SPEAKER_00: EU Inc.
• 3:40
  SPEAKER_00: will sit alongside national company form, right?
• 3:43
  SPEAKER_00: It will not substitute the existing company forms.
• 3:47
  SPEAKER_01: Basically, it's an additional option that you will have.
• 3:50
  SPEAKER_01: The EU Inc.
• 3:51
  SPEAKER_01: will have to operate within the member states' laws.
• 3:55
  SPEAKER_01: Whether those laws are related to labor, to workers' participation in companies, all the rules around licensing as well.
• 4:05
  SPEAKER_01: So if your e-wink is supposed to provide a financial service, you will need, of course, the licensing to be able to do that.
• 4:12
  SPEAKER_01: It is an additional option, this speedboat that enables you to go faster and also to be more prosperous and to grow in Europe basically, to compete better.
• 4:24
  SPEAKER_00: I think it's also important to explain, to understand a little bit what the EU Inc.
• 4:28
  SPEAKER_00: does not do, right?
• 4:30
  SPEAKER_00: Because we hear many claims that the U Inc.
• 4:33
  SPEAKER_00: would allow companies to escape some rules, tax rules, anti-money laundering obligations.
• 4:38
  SPEAKER_00: Are there any grounds for these claims?
• 4:40
  SPEAKER_00: Which rules would continue to apply?
• 4:42
  SPEAKER_01: The U Inc.
• 4:43
  SPEAKER_01: debate has created a lot of misconceptions.
• 4:46
  SPEAKER_01: It is purely a company law instrument, so it only regulates corporate law, how you create a company, what are the requirements, who can be behind the company, how do you operate it, what are the statutes, etc.
• 5:00
  SPEAKER_01: So it's very, very basic rules relating to the creation and operation of company.
• 5:06
  SPEAKER_01: But definitely what it does not do is to go into the realm of labor law.
• 5:12
  SPEAKER_01: Companies will still have to be submitted to this type of rules.
• 5:14
  SPEAKER_01: So this changes absolutely nothing.
• 5:17
  SPEAKER_01: They will have to continue to pay their taxes where they're registered or where they're generating income.
• 5:22
  SPEAKER_01: The fact that you opt for a new ink does not subtract you from the rules that are applicable to any normal company forms from the member states.
• 5:32
  SPEAKER_00: Thank you, Pedro, for clarifying that because yes, we can read and hear a lot of stories which probably are exaggerated, and at the same time, would EU Inc.
• 5:41
  SPEAKER_00: solve everything, all the issues that companies are facing as a startup in a scale-up process.
• 5:47
  SPEAKER_00: Do you think it's one silver bullet that will solve all the issues of current European economy?
• 5:52
  SPEAKER_01: You need to obtain specific licenses, you need to work with all your suppliers.
• 5:57
  SPEAKER_01: Then there's multiple rules that you have to face, both on privacy, consumer rights, competition law.
• 6:03
  SPEAKER_01: So there's a lot of rules that companies have to face, and none of those are changed by the U Inc.
• 6:10
  SPEAKER_01: proposal.
• 6:11
  SPEAKER_01: So basically, you will still need to bring back again, let's say, the image of the speedboat, you will still have to respect the rules of navigation and respect all the other boats that are navigating alongside or next to you.
• 6:26
  SPEAKER_01: So it will not solve every single problem, but it is a start.
• 6:30
  SPEAKER_01: Companies are desperate in Europe is to have a signal from the EU that we are able to give something, instruments that make it easier to grow, to exploit all the potential of the internal markets, which is not happening for the moment.
• 6:44
  SPEAKER_00: Yes, building a little bit more on the issue you speak about broader competitiveness challenges of the EU.
• 6:52
  SPEAKER_00: You believe that EU Inc.
• 6:54
  SPEAKER_00: would be a signal for foreign investors, also for potential and current business community, that such a simple and pan-European company form would make a difference, would make doing business in Europe simpler, more attractive, more predictable.
• 7:09
  SPEAKER_00: Is that correct?
• 7:10
  SPEAKER_01: We have heard a lot of requests from venture capitalists outside of the EU, from investors, investor community in general, that they are rather frustrated about how to invest in Europe.
• 7:24
  SPEAKER_01: Because for them, Europe is complicated.
• 7:27
  SPEAKER_01: You have 60 forms of companies in the EU.
• 7:30
  SPEAKER_01: Some of them you cannot transfer them, you cannot transfer the shares, you cannot have investors coming in at a certain point because the legal frameworks are too different, too complicated.
• 7:40
  SPEAKER_01: This is where the EU Inc.
• 7:42
  SPEAKER_01: comes in to try to provide with a company form that is also enabling this investment part and channeling all the necessary capital.
• 7:53
  SPEAKER_01: We don't want to have Delaware in Europe, so there's a lot of debate about we won't suddenly have Delaware like you have in the US, that will it's a type of form of company that uh does not follow exactly the same rules.
• 8:09
  SPEAKER_01: No.
• 8:09
  SPEAKER_01: What we want is to reproduce what Delaware does in the market of startups and scale-ups, really help them to attract capital and and to become prosperous and successful.
• 8:26
  SPEAKER_00: Over the last weeks, Business Europe has been very actively trying to separate facts from myths around the U Inc as there were plenty.
• 8:36
  SPEAKER_00: Can we do a quick round?
• 8:38
  SPEAKER_00: I will give you some statements and you will tell me quickly is uh myth or true, or maybe it's more complicated than that.
• 8:46
  SPEAKER_00: Let's try.
• 8:47
  SPEAKER_01: Let's go.
• 8:48
  SPEAKER_00: Faster digital registration means fewer checks.
• 8:51
  SPEAKER_01: Big myth.
• 8:52
  SPEAKER_00: The U Inc.
• 8:53
  SPEAKER_00: company would still have to comply with national labor law.
• 8:56
  SPEAKER_01: Of course it's true.
• 8:57
  SPEAKER_00: Businesses would no longer be able to use notaries.
• 9:00
  SPEAKER_01: Myth.
• 9:01
  SPEAKER_00: AU Inc.
• 9:02
  SPEAKER_00: would make it possible to register and manage more corporate procedures digitally.
• 9:06
  SPEAKER_01: True.
• 9:07
  SPEAKER_00: EU Inc.
• 9:08
  SPEAKER_00: weakens anti-money laundering safeguards.
• 9:10
  SPEAKER_01: Myth.
• 9:11
  SPEAKER_00: A company could use the EU Inc.
• 9:13
  SPEAKER_00: form as it grows and it expands across Europe.
• 9:16
  SPEAKER_00: True.
• 9:17
  SPEAKER_00: Thank you.
• 9:17
  SPEAKER_00: Thank you, Pedro.
• 9:18
  SPEAKER_00: And maybe as a summary of our nice discussion, let's look ahead a little bit.
• 9:22
  SPEAKER_00: We know that there is a broad agreement that Europe needs to make it easier to do business for companies, make it easier to grow.
• 9:29
  SPEAKER_00: But the EU Inc.
• 9:30
  SPEAKER_00: now is in the complicated legislative process and there are many changes, many discussions.
• 9:36
  SPEAKER_00: From your point of view, what would be two or three key things that should remain or should be in the EU Inc.
• 9:44
  SPEAKER_00: to make it actually usable for businesses?
• 9:47
  SPEAKER_01: I would like to start by urging the co-legislators not to create or to produce some differentiated treatment vis-a-vis EU inks, not to treat it differently from national company forms, not to make it more difficult to create, more difficult to operate with more extra checks that are totally unnecessary.
• 10:09
  SPEAKER_01: That's already a start.
• 10:10
  SPEAKER_01: For us, essential elements is we need to rely on one set of rules.
• 10:16
  SPEAKER_01: We need to be digital.
• 10:17
  SPEAKER_01: So this needs to be in the essence of the U Inc.
• 10:21
  SPEAKER_01: It needs to be easy to set up and to operate in the internal market smoothly.
• 10:27
  SPEAKER_01: So these are let's say the main characteristics.
• 10:30
  SPEAKER_01: If this balance is not achieved, nobody will use the EU inc.
• 10:35
  SPEAKER_01: And this project will lead just to failure.
• 10:38
  SPEAKER_01: And just another thing we will put in the drawer.
• 10:41
  SPEAKER_01: Europe has tried to do something, but nobody will be using it.
• 10:45
  SPEAKER_00: Thank you, Pedro.
• 10:46
  SPEAKER_00: EU Inc.
• 10:47
  SPEAKER_00: may sound like a technical company law debate, but the question behind this is much bigger.
• 10:52
  SPEAKER_00: Can Europe make it easier for a company with European ambition to start here, to invest here, and to grow across the single market?
• 10:59
  SPEAKER_00: And as we've heard today, simpler does not have to mean fewer safeguards.
• 11:04
  SPEAKER_00: Thanks for listening to Espresso Briefings.
• 11:07
  SPEAKER_00: If you enjoyed this episode, follow the podcast and subscribe to Business Europe's channels for more on the issues shaping European business.