{"id":143076,"date":"2024-10-30T16:33:30","date_gmt":"2024-10-30T15:33:30","guid":{"rendered":"https:\/\/www.startupbusiness.it\/28th-regime-and-eu-inc-the-blueprint-for-a-borderless-start-up-ecosystem\/143076\/"},"modified":"2024-10-30T16:45:13","modified_gmt":"2024-10-30T15:45:13","slug":"28th-regime-and-eu-inc-the-blueprint-for-a-borderless-start-up-ecosystem","status":"publish","type":"post","link":"https:\/\/www.startupbusiness.it\/en\/28th-regime-and-eu-inc-the-blueprint-for-a-borderless-start-up-ecosystem\/143076\/","title":{"rendered":"28th regime and EU Inc, the blueprint for a borderless start-up ecosystem"},"content":{"rendered":"\n

In a European scenario where companies are forced to operate within a single market that, however, forces them to encounter various obstacles and criticalities such as bureaucracy and regulations that differ from one member country to another, a <\/strong>petition<\/a> <\/strong>was launched on 14 October that has already collected around 11,000 signatures to date in favour of start-ups and companies that want to innovate.<\/strong> As it says, the petition’s ambitious goal is to make Europe ‘home to the world’s most valuable and innovative companies and a magnet for top talent in robotics, climate technology, artificial intelligence, manufacturing and beyond’. <\/p>\n\n

The 28th regime, what it is and why it matters<\/h2>\n\n

The background to the petition concerns what is now called the ’28th regime’<\/strong>: the creation of a new, single, harmonised legal regime<\/strong> that would operate in parallel to the existing national regimes in the 27 EU Member States. Single’ means that businesses would be guaranteed, should they wish to adopt it, a set of rules applicable in all Member States<\/strong>, thus avoiding the differences in national regulations that often make it complicated and burdensome to operate across national borders. <\/p>\n\n

The benchmark: the Delaware C Corporation<\/h2>\n\n

To date, the 28th regime as it is envisaged is reminiscent of something already existing and very familiar in the US: the Delaware C Corp.<\/strong> The Delaware C Corporation is a US form of corporation incorporated in the state of Delaware. It is very popular among start-ups<\/strong> and large corporations due to the tax, legal and governance<\/strong> advantages<\/strong> that the state of Delaware offers over other US states. The tax designation ‘C Corporation’ identifies a corporation that is taxed separately from its owners. Unlike S Corporations, C Corporations are taxed as entities independent of their shareholders: the profits of the corporation are taxed at the corporate level, and shareholders are taxed on any dividends received (double taxation). Delaware C Corporations can therefore issue multiple classes of shares, offering flexibility to attract investors of different types<\/strong> such as venture capital and private equity<\/strong>. This makes this structure particularly popular with start-ups and growth companies wishing to attract investors. Furthermore, in terms of privacy, <\/strong>Delaware does not require public disclosure of the names of directors or shareholders, providing greater privacy for the owners of the company. <\/p>\n\n

The 28th regime, everyone wants it: the ‘recipes’ of Letta and Draghi<\/h2>\n\n

The 28th regime is a hot topic that has already been addressed by various political actors, such as our own Enrico Letta and Mario Draghi.<\/p>\n\n

In fact, Letta’s<\/strong> Much More than a Market<\/a> report states that “the 28th regime would represent a real game changer for SMEs,<\/strong> allowing them to finally exploit the full potential of the single market” and “would directly address and overcome the current patchwork of national regulations<\/strong>, acting as a key tool to unlock the full potential of free movement within the EU”. <\/p>\n\n

In the now nicknamed ‘Draghi Report’,<\/a> the former Italian prime minister cites the 28th regime as helping to speed up European decarbonisation<\/strong> with respect to its deadlines, citing as an example energy networks – to date difficult to unblock due to the authorisations required, the mobilisation of adequate public or private funding and the innovation of plants and processes: “This regime should reduce the duration of national procedures and integrate them into a single process,<\/strong> preventing projects from being blocked by individual national interests”.<\/strong> Not only that, but again according to Draghi, ‘if the EU is not able to set up a special regime for innovative companies within the ordinary procedures, a voluntary 28th regulation on companies could be explored in the framework of an enhanced cooperation by member states willing to cooperate, harmonising company law and insolvency legislation, as well as some key aspects of labour law and taxation, to be made progressively more ambitious’. <\/p>\n\n

The petition of EU Inc<\/h2>\n\n

Returning to the petition, the grassroots movement that launched it is supported by entrepreneurs and VCs <\/strong>who have already given a name to the possible new company form that would be inspired by the 28th regime: ‘EU Inc’, <\/strong>a standardised pan-European corporate structure. The initiators are aiming for the petition to be submitted by 31 December<\/strong>, precisely because the moment is hot: in six weeks’ time the new EU commissioners will start working on their agenda for the next five years. <\/p>\n\n

Such an EU Inc would thus be a European answer to the Delaware C Corp, and precisely because it was created under the 28th regime, according to proponents, this new entity would establish the institutional foundations for Europe’s future competitiveness,<\/strong> producing exponential returns. The new entity that proponents advocate would provide for: <\/p>\n\n