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# Responding to critics: What EU Inc. strives for and what it does not
- URL: https://eutechloop.com/responding-to-critics-what-eu-inc-strives-for-and-what-it-does-not/
- Published: 2026-10-19T10:49:02.000Z
- Updated: 2026-10-19T10:49:02.000Z
- Description: EU Inc co-founder Simon Schaefer says building Europe’s first €1 trillion tech company requires ambitious EU Inc - backed by EU-wide digital registries, free registration, and a unified employee stock option regime.
- Author: Egle Markeviciute
- Tags: Red Tape Roadblocks, EU Inc

The proposed "EU Inc." regulation aims to create Europe's equivalent to Delaware, making it easier for companies to scale across the bloc. While critics often point to the existing [Societas Europaea](https://europa.eu/youreurope/business/growing/expanding-across-borders/setting-up-european-company/index%5Fen.htm?ref=eutechloop.com) (SE) model as an alternative, they miss a crucial legal distinction. The SE framework is based on Article 352 of the Treaty on the Functioning of the European Union (TFEU), which requires unanimity for any amendments - meaning a single member state can veto any proposed changes. In contrast, the EU Inc. model is built on Article 114 of the TFEU, which relies on qualified majority voting (QMV), effectively removing the single-state veto and making the framework much more adaptable as the time goes by. 

The initial plan for the EU Inc. seems to be deviating from the initial ambition the European founders were calling for. The three main hurdles the EU inc petition founders address in their [open letter](https://x.com/euinc%5Fpetition/status/2110639430809891086/photo/1?ref=eutechloop.com) this week are the limitations on the free choice of registry, potential limitation of companies that the EU inc would apply to, and the lack of standardized, unified registry for European companies. 

In his interview with EU Tech Loop, Simon Schaefer shared that the lack of urgency to enable European founders to act and scale within the EU stems from the rather comfortable and predictable decades following World War II, noting that the EU struggles to act as one without a real external threat:

> *“I think the real challenge is that we're not scared enough as Europe, or not afraid enough of the future without it, so that we actually act for it."*

## Why should less bureaucratic EU member states care? 

Bureaucracy levels and awareness of the EU Inc. regulation vary widely across Europe. While German founders endure hours of notaries reading statutes aloud to incorporate, those in less bureaucratic nations rarely face such hurdles. Consequently, many founders from smaller markets scale in the US first, returning to Europe only after building the capital needed to navigate its fragmented corporate legal landscape.

Simon Schaefer, co-founder of EU Inc., responds that although this sentiment is understandable, the reality that many European founders choose to scale in the US first *“makes no sense, because Europe has an internal market of 450 million people*”, adding that geopolitical, geostrategic, and shifting market trends necessitate immediate action to build a unified Europe.

> *“Being able to scale inside Europe without hurdles is really a low-hanging fruit. And if you look at Delaware, it's really interesting to think that even that framework is from before the internet. So not only should we have a standard that's comparable, but why aren't we innovating this and doing even better than Delaware is? Why are we not having something that's so purely well developed for startups that our startups have an unfair advantage in the global economy?”*

## Why are the EU member states pushing back against a common employee stock option regime?

One of the main points the EU member states are currently disagreeing on is creating a common employee stock option regime across the EU, essentially fearing opening up a loophole for further regulations by the European Commission to further interfere with member state tax rules.

Schaefer notes this is a mere technicality. Blocking it means the Commission will either pull and rewrite the proposal in a few years, or pass it without stock options—requiring a separate regulation later:

> *“It's really a technicality. For me as an entrepreneur, it's just like, "Oh my God, how?" <...> I think the urgency and the drama inherent in this innovation crisis are not fully understood by the upper echelons where this is being negotiated. We don't need this in five years; we need this as fast as freaking possible.”*

In Schaefer’s view, stock option regimes are not a “nice-to-have”, instead, they are central to how startups retain top talent. Pointing to the US, he added that European policymakers must recognize the powerful snowball effect stock options can have on the entire ecosystem:

> *“Another really important outcome is what is famously known in Silicon Valley as the "PayPal Mafia." These were former shareholders of PayPal that had enough money and funds from those initial exits to eBay in order to be able to find the next generation of companies or invest in other companies. So it's part of the flywheel that makes it all work.”*

## The risk of making the company scope of the EU Inc too narrow 

Another potential hurdle for the EU Inc regulation, according to EU Inc petition founders, is narrowing its scope too much. It was previously argued that EU Inc. status should apply only to innovative companies out of fear that too many businesses would apply for the regime. 

Schaefer notes that creating a working binary definition of an “innovative company” is unrealistic and argues that policymakers should instead ask whether they are *“adding bureaucracy and complexity, or taking complexity away”.* In his view, concerns about expanding EU Inc. across different industries stem from fears of abuse, which should be addressed separately: 

> *“Nobody knows where innovation is heading.<...> We're not against tackling abuse; abuse is not our optimization potential. Our optimization potential is the first trillion-euro company to exist in Europe. <..> Trying to anticipate where innovation is heading and providing a constraint on the basis of this is flawed, because neither Brussels, nor venture capital, nor startup founders can do that. That's looking into a crystal ball that we simply don't have.”*

## Central digital registry & free registration principle needed 

The EU Inc. petition's founders fear that restricting the free choice of registration, omitting a central digital registry, and over-relying on notaries undermine the ambition initially shared by the EU Commission and European founders. 

In Schaefer’s view, while notaries are needed in some cases, their involvement must be strictly defined - especially in Germany, where mandatory aloud-reading of corporate documents leaves plenty of “innovation potential” for process optimization. 

Furthermore, he argues that some EU member states' opposition to a centralized digital registry simply reflects deeper issues with Europe’s fragmented registry system and its lack of a customer-centric approach:

> *“The registries are changing their shape, in the future, it should have ultimate beneficial ownership checks and KYC checks, it should give you a cap table, i should be able to do simulations on the cap table depending on how much credit you take, et cetera. \[Currently\], for the startup or the venture capitalist, having to log into 27 systems instead of one is just ridiculous if the goal is creating one \[Single\] market. Of course we need to log into one product. So ultimately, this digital registry is the translation of a regulation, a policy, or legislation - whatever you want to call it - into a tangible product for the end customer. And that's what I'm really lacking: the customer foresight”*

Lastly, some EU member states are pushing back against the free choice of registration out of fear that certain countries will become more attractive to startup founders than others, proposing safeguards against what they call “forum shopping”. Schaefer argues that a free choice of registration is the only way to create a system that is truly comparable and competitive with the US Delaware model:

> *“Free choice of registered seat is what enables the same principle as Delaware for the Union as it is for the United States. That means we leave the innovation potential on the table because individual member states can do better than others. And you can call it a race to the bottom, you can call it forum shopping, but we call it the only surviving principle if you do not create one single standard for all of Europe that everyone has to unanimously subscribe to.”*