Philea calls for foundations to be included in the EU’s proposed 28th regime “EU Inc.”
The European Commission’s proposed 28th regime for a single, harmonised EU company form, known as “EU Inc.” should be designed around the full range of actors that create innovation in Europe including foundations, social economy organisations and mission-driven enterprises.
Philea has previously argued that foundations should be considered within the 28th regime, noting that foundations are not merely funders of innovation but innovators in their own right, operating hospitals, elderly care homes, cultural and environmental initiatives, research hubs, think tanks, and other mission-driven activities. Under the current proposal, which focuses on companies as a legal form, only foundations that are legally organised as companies could be included.
The current proposal would still add value for foundations as investors. Many foundations provide patient capital, venture philanthropy and blended finance or invest their endowment in companies. Some hold majority shares in companies, including innovative companies. A simple, predictable and cross-border framework could help foundations deploy more resources towards innovation with social and environmental impact.
Philea is urging the Commission to keep the original ambition reflected in the Letta Report, the Draghi Report and the Competitiveness Compass: to create a targeted instrument for innovation and help close Europe’s innovation gap. As proposed it appears to introduce a general-purpose corporate vehicle with a very broad scope, which risks reintroducing the very fragmentation the regime seeks to eliminate.
Philea welcomes the proposal’s efforts to reduce administrative burdens, promote digital-only procedures and facilitate the cross-border use of company information. However, these advantages should not be limited to limited liability companies and be equally sought for foundations and other social economy organisations. The Commission should therefore expand its work on removing barriers for other legal forms such as the European Cross-Border Associations Directive.
The 28th regime can be a useful step forward, but it should be part of a broader agenda to ensure that all enterprises and organisations contributing to Europe’s competitiveness and resilience benefit from a fair and enabling Single Market framework.
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