EU startups face regulatory hurdles over EU Inc and financing rules

Startups and scale-ups in the European Union are facing regulatory hurdles regarding the proposed ‘EU Inc’ legal framework and existing definitions of companies in difficulty (OIM).

Regarding the EU Inc proposal, the organization EU-INC has raised concerns that a central European business register may have been removed from the draft text. The group advocates for a single register with uniform data to simplify bank account openings and investment attraction. Additionally, there are calls to maintain and standardize tax regulations for employee stock options to avoid future complications.

Separately, the Netherlands and ten other EU member states—including Belgium, Germany, France, and Italy—have submitted proposals to the European Commission to revise the definition of companies in difficulty. They argue that current rules may incorrectly label innovative growth companies as struggling because certain forms of financing, such as subordinated loans and quasi-equity, are not currently counted as full equity. This misclassification could prevent viable startups from accessing necessary subsidies or state aid.