00:00:01: In Europe, it can still take weeks or even months to set up a company.

00:00:07: Obviously this must change and so here comes EU

00:00:11: Inc.,

00:00:11: the twenty-eighth regime.

00:00:13: EU Inc creates a single European Company framework.

00:00:18: It will make it drastically easier to start and grow business in Europe.

00:00:24: Any entrepreneur would be able create a company within forty eight hours

00:00:29: A company that can operate in Europe for only forty-eight hours without a lot of paper or costs.

00:00:37: This is the central promise from EU

00:00:40: Inc.,

00:00:40: an new pan-European company.

00:00:43: President Ursula von der Leyen had set up a plan with him where to invest in EU Inc.

00:00:46: It was possible for companies to start their own digital business, without any capital.

00:00:53: Is Ewing the Game Changer for European Start-ups?

00:00:56: Today we will talk about it at EU To Go, the podcast for Europe politics of the Jagdelost Centers in Berlin.

00:01:03: My name is Tuneun and I am speaking with my colleague Marlene Schörner today – our expert on EU finance markets!

00:01:10: Hello Marlene!

00:01:11: Hello Tu!

00:01:12: Before we get to how Ewing should work, let's take a look at this problem first….

00:01:21: I founded a startup in Germany, which actually works quite well and would like to produce in France or Spain.

00:01:28: What's coming up right now?

00:01:31: Currently

00:01:32: the situation is that my company then has to re-apply in all countries.

00:01:39: And again there are national different proposals for legal structure and organization of companies and bureaucratic processes that run a bit differently in all countries.

00:01:53: And this is then very quickly complicated, which also leads to risks for the founders.

00:02:00: That means if they do something wrong we may have to bear legal consequences as well.

00:02:06: It's particularly difficult for startups because they don't have enough money to pay their employees, which they advise or also hire staff so that I can take care of complex bureaucracy.

00:02:21: That means this status quo is definitely going down from an expansion in my country and we actually want young innovative companies to be able to use the European binding market as well as the specialized centres for different

00:02:38: countries.

00:02:40: This legal flicking carpet in the EU is not only a problem for startups, but also international investors who are scared of

00:02:49: it.

00:02:49: Exactly.

00:02:50: This is because the right and duties of an investor are defined by the company's law, which means that if a business form isn't known to you it means risks and uncertainty.

00:03:07: So as investors I don't know for example whether or not with my household when companies in another country want to invest go bankrupt but have to pay out loans.

00:03:19: In other words, investors actually have to get a legal advice before an international investment.

00:03:27: And that is often not worth it because there are also many promising companies in my own country and as a consequence we see that about sixty-six percent of risk capital investments take place nationally And also that there is very little risk capital in Central and Eastern Europe, because these countries are not just known startups.

00:03:53: There's hardly any national investors either.

00:03:56: That means European start-ups have it hard as soon they want to cross the border with their business model .

00:04:04: And they get worse at risk capital especially compared to USA.

00:04:09: Now the commission has a kind of additional legal form, because it was too difficult to say that we would like the company's right in all of the European Union.

00:04:21: Instead there is now this proposal for EU Inc or for the twenty-eighth regime – an increasingly existing system of member states' new regime.

00:04:34: How should this twenty- Eighth regime work?

00:04:38: What are your ideas on that?

00:04:39: Exactly how

00:04:40: you...

00:04:41: As you just explained, there is a lot of resistance from the member states against direct harmonization between their national right-wing parties.

00:04:51: Therefore, this additional company's form for which companies can then make decisions about the foundation.

00:05:00: That means I only founded my company once as EU

00:05:04: Inc.,

00:05:04: allow me to apply it... And then I can operate in the whole EU under uniform regulations.

00:05:12: And with that, EU Inc.

00:05:13: also helps investors.

00:05:15: So if they get to know each other with this company's form once more , they will be able to invest without further effort or risks throughout Europe and it is good for these companies again which are easier to capitalise on.

00:05:28: Now

00:05:29: the idea is to create a European company.

00:05:33: Not quite new, we have it since the nineteen seventies.

00:05:36: Why should this work?

00:05:37: And where are the strengths of the proposal that's on the table

00:05:45: now?

00:05:45: For me there is an important factor in political context.

00:05:50: The competition with USA and China has intensified At least at the political level.

00:05:58: There is actually a awareness that the EU can only be competitive here if it stands together and really works as an economic space.

00:06:10: And there's also another awareness for the importance of startups, innovation and growth and the need to be attractive as a location for these too .

00:06:22: I hold the proposal of the Commission in general very promising.

00:06:27: So the company's funding should be fast and easy within forty-eight hours, at a maximum of one hundred euros.

00:06:35: And there is a strong focus on simple digital processes.

00:06:40: In addition, standardized documents are also prepared – for example, for the implementation of the company.

00:06:50: The founders can then simply use it as resources that help them And it also creates additional harmonization when all these companies are structured in a similar way.

00:07:02: In addition, the legal framework of the EU Inc is also designed for common venture capital financing structures which currently is not always the case with national company rights so that would be an improvement as well.

00:07:18: and The EU Inc.

00:07:19: is also an easy-going process for innovative startups and that's important because many of these companies fail, so founders have to be able to develop the company quickly in order then to create new ones if one idea didn't work out.

00:07:40: Also as a last point I think it was the right decision to focus on business rights And the right to work and tax until very specific aspects, first of all not to include them in the proposal so that negotiations don't get too complicated.

00:07:59: There are

00:07:59: also aspects at the proposal where you say there could actually improve the commission a little bit?

00:08:06: Yes

00:08:08: I see two problems currently.

00:08:11: One is a return on national regulation.

00:08:15: In other words, it is explicitly stated that if the law applies to EU Inc.

00:08:23: and does not regulate the implementation of the company, then national business rights should be granted.

00:08:30: And here it's really important for this to happen in as few situations as possible.

00:08:36: otherwise we will have again the legal flicking tab which we actually wanted to win over.

00:08:42: Another problem is the question of co-determination for employees in companies.

00:08:46: In EU member states, the legal system is very different here and in the proposal of the Commission it depends on the right to settle the company's settlement.

00:08:59: This leads us to the reason why these reasons could be strategically laid down around co-affirmation rights in some countries, and safeguards should be installed here.

00:09:11: And

00:09:12: how can these safeguars

00:09:14: look like?

00:09:16: An option would be to limit the wall of satin seats for example by connecting them to conditions or directly saying that satin seat and administrative

00:09:31: seat of the company must be adjusted.

00:09:33: What happens when there are legal disputes around an EU ink?

00:09:42: Which court is taking care

00:09:43: of it then?

00:09:44: That's also a very important question that actually still has to be addressed.

00:09:50: Currently, according to the commission's proposal, it is planned for national courts in other firms as well.

00:09:58: Here, however there is the concern that these courts then interpret and apply the actual legal article of the EU Inc.

00:10:07: in a different way.

00:10:08: Especially for international investors it could then increase the legal uncertainties again.

00:10:17: The Commission is planning to set up specialized courts or courts to make quick and highly qualified procedures, but many voices from the start-up scene are not far enough.

00:10:34: Instead they demand that there should be one central court on EU level which is responsible for the right speech.

00:10:42: That means the final exhibition is still open and will definitely play a big role in the attractiveness of the EU Inc.

00:10:51: Marlene, you

00:10:51: said at the beginning that there is great resistance in the member states to compare their national companies with each other.

00:11:00: How does EU Inc come about?

00:11:05: Do they see the potential for start-ups or are they worried that national law will be lifted by this additional right form and hop?

00:11:18: On the outside, there is a lot of support for the EU Inc.

00:11:23: The European Council has positioned itself positively in March on behalf of the Commission and put an end to it as a deadline for negotiations.

00:11:35: If this really goes around the details, that's another question I have.

00:11:41: There are not so many public positions from the member states on this topic.

00:11:50: But countries that already have well-functioning startup ecosystems and very modern business rights, such as Estonia perhaps have less profit through EU

00:12:01: Inc.,

00:12:02: and member states with very clear standards for company control or also employment rights ... We are of course concerned that mobile companies might be able to handle this.

00:12:16: For example, France, Sweden, Denmark and Finland.

00:12:21: And when we look at Germany, Vice Chancellor Lars Klingmeil has expressed himself in support.

00:12:28: At the same time, Germany also has very strong partnerships which stand very critically against the proposal.

00:12:39: And that's where we come to a very important point.

00:12:41: There are various lobby groups of interest on this topic, which try to influence the opinion-building in the government.

00:12:51: For example, we have the companies who make sure they could lead into an underground national standard.

00:12:59: That is why they tend to be more against it.

00:13:05: and would only want to open for small companies with as few employees as possible.

00:13:12: The business associations, an industrial and trade association are more likely to be on the opening of the regime for all companies and regulations from which larger corporations could profit.

00:13:24: then we have in Germany especially the notary public loan.

00:13:28: The notes were that a too strong simplification of processes can also open the doors for pressure.

00:13:36: And on the contrary, of course, the start-up connections which say all processes should go as fast and easy as possible .

00:13:43: So we already see that the negotiations will definitely be complicated.

00:13:48: Which signals come from the European Parliament?

00:13:51: They are not exactly in line with what EU Ingang

00:13:57: is doing Exactly.

00:13:58: There is a lot of support for the initiative here, but there is also a conflict between EVP and social democrats.

00:14:08: Social democrats are based on protection measures against the misuse by EU

00:14:14: Inc.,

00:14:14: e.g.

00:14:14: for environmental rights.

00:14:16: And the EVP sees rather possible economic disadvantages that such regulations could then mean.

00:14:24: The legal framework for startups is one, the other is money.

00:14:29: And in order to prepare more risk capital for European scale-ups, i.e.

00:14:34: startups that are going through the founding phase and now want to grow further, the EU Commission wants to start the scale up Europe fund.

00:14:44: So a fund where private and public investments will be linked together with a private company managed by a clear political proposal of the EU commission.

00:14:57: Marlene, you recently wrote a paper about the Scalep Europe Fund.

00:15:02: What is the basic idea behind this fund and what teaching areas in the European Scalap ecosystem should be filled to help start-ups in Europe?

00:15:14: Exactly!

00:15:15: The basic diagnosis that stands behind it is that we have already improved a lot with our startup financing in Europe over the last few years but... Scale-ups require a lot more money for their growth phases.

00:15:32: And the VC funds, venture capital funds that prepare risk capital in Europe are currently too small to invest enough

00:15:45: money on them.

00:15:45: And now perhaps once again at the end Marlene can combine both, i.e.

00:15:50: EU Inc and the scale up fund.

00:15:53: Will the startup landscape really change

00:15:56: in the EU?

00:15:57: I would say that the scale-up Europefond is drastically more of a curve.

00:16:04: The current gaps in the financial system are filled, but with a size of only five billion which isn't much in this context it can be no structural game changer at all.

00:16:22: This is different with the twenty-eighth regime, because there's already a great potential.

00:16:28: First of all it's really important to have structural hurdles and secondly also additional efforts for further changes can be created.

00:16:39: so if we then have a joint business law as starting point and then continue building on that and,

00:16:46: e.g.,

00:16:46: easy tax explanations for border crossing companies or the right to insolvency for these companies.

00:16:53: Then there can really develop a positive dynamic, but it still needs further measures in order to make Europe more attractive for startups and scale-ups both at the SPA and investment unions so as to mobilize more capital for EU companies than also with the legal harmonization of the Binnenmarkt.

00:17:20: Vielen Dank, Marlene.

00:17:22: Bevor wir komplett zum Ende unserer Folge kommen habe ich wie immer noch unsere Kategorie drei Fragen.

00:17:29: ein Wort für dich und das Prinzip ist das gleiche wie in jeder Folge.

00:17:33: Ich stelle die drei Fragen, die du bitte jeweils mit einem Wort beantwortest auf einer Skala von eins bis

00:17:39: zehn.

00:17:40: Wie einfach wird es durch EO Inc einen Unternehmen in der EU zu gründen rechtlich gesehen?

00:17:47: Eins so einfach wie Brot kaufen?

00:17:49: Ten, you actually need a PhD in business law.

00:17:52: The

00:17:53: admission is three.

00:17:55: If that's how it should be, we'll see!

00:17:59: Who or what is the biggest obstacle for EU Inc?

00:18:03: With certain rights?

00:18:04: And

00:18:06: the third and last question... Is EU Inc the Game Changer for Europa Startup?

00:18:12: I hope so.

00:18:13: Okay Thank you Marlene.

00:18:16: That was your premiere today in our podcast to talk more about IO Inc.

00:18:23: and scale-up.

00:18:24: I was

00:18:26: also happy, it was

00:18:27: fun!

00:18:28: And to all of you who are watching us here with the new episode of EUTOGO Podcast in Europe's politics of Jack The Law Center in Berlin All of these episodes will be available on Spotify and other Genging Podcasts and of course on our website www.delawcenter.eu.

00:18:46: There you will also find Malenes, Policy Briefs for the EU Inc.

00:18:50: or the twenty-eighth regime and for the scaleup.

00:18:53: JUPFAND.

00:18:54: My name is Thurnüren.

00:18:55: thanks to listeners and see you next time!