The Risks of EU Inc: Why Speed Must Not Override Legal Integrity

The European Commission's current proposal for a 28th company law regime effectively bypasses the preventive checks that traditionally safeguard corporate formation. Without requiring founders to appear before a public authority or notary, the system lacks verification of legal capacity or intent. This structural gap allows for the potential rise of front men, complicating the recovery of assets for creditors and leaving employees vulnerable if a company fails to meet its obligations.

Beyond corporate law, the lack of rigorous verification impacts broader European stability. Reliable company data acts as a foundation for transparency in real estate ownership and the enforcement of financial sanctions. If ownership structures become opaque, the burden of verification shifts to banks and business partners, incurring costs that preventive controls are designed to avoid. Furthermore, the proposal sits in direct tension with recent European efforts to combat money laundering, including the establishment of the Anti-Money Laundering Authority (AMLA). By creating a legal form with minimal oversight, the EU risks providing a vehicle for sanctions circumvention at the very moment it seeks to harden its defenses.

To ensure success, the legislative framework must align with existing standards established by Directive (EU) 2017/1132. Integrating reliable identification of founders and public oversight of legal compliance does not necessitate a return to slow, bureaucratic processes. Many member states already facilitate digital company formation within 48 hours while maintaining full legal verification. The European Parliament and the Council of the European Union now face a choice: to transplant a litigation-heavy model that strains judicial resources, or to reinforce the European tradition of public preventive control as a cornerstone of the rule of law.