Commissioner McGrath has justified the choice of Article 114 TFEU as the legal basis for the proposed 28th regime corporate framework, 'EU Inc.', arguing it will improve internal market functioning by approximating national laws and facilitating capital movement. In a written answer to a parliamentary question from MEP Dan-Ştefan Motreanu (PPE), McGrath outlined safeguards against abuse, including preventive controls on company formation, creditor protections via balance sheet and solvency tests, and full application of EU and national employment law.
The answer, published on 28 April 2026, responds to Motreanu's question of 18 March 2026, which raised concerns about the suitability of Article 114 for company law in light of prior court rulings, and about coordination with national systems for social security, taxation, and dispute resolution. McGrath referred to the explanatory memorandum of the proposal (COM(2026) 321 final, presented on 18 March 2026) for detailed legal justification.
Concrete proposals and coordination mechanisms
a centralised EU interface for company registration, linked to the Business Registers Interconnection System, enabling 'once-only' digital data exchange with national authorities. However, it offers no specific measures on social security, taxation, or dispute resolution, leaving these to national legislation. The Commission commits to preventive legality checks for all EU Inc. formations, but does not detail how these will be enforced across member states.
Policy orientation and stakeholder impact
The answer signals a pro-integration, pro-business orientation, aiming to reduce cross-border compliance costs for companies. This benefits EU businesses and investors seeking a single corporate form, but may raise concerns for national authorities tasked with coordinating complex areas like taxation and social security without harmonised rules. Creditors gain from modern safeguards on asset distributions, while workers retain existing protections under EU and national law. The choice of Article 114, rather than a company-law-specific treaty base, may face legal challenges, creating uncertainty for early adopters.
Expected institutional follow-up
The proposal now enters the ordinary legislative procedure, with the European Parliament and Council expected to scrutinise the legal basis and coordination mechanisms. The Commission's answer suggests it will defend Article 114 robustly, but amendments may be tabled to strengthen safeguards or clarify national competences. No timeline for adoption is given, but typical EU company law files take 18–24 months.
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