What is the 28th Regime?
The European Commission is developing a new legislative initiative known as the “28th regime” — a harmonised, optional legal form for innovative companies, start-ups, and scale-ups. The regime aims to simplify incorporation and operation across the EU by offering a single set of EU-wide rules, focused on fast digital formation, flexible governance, and cross-border scaling.
The new form will coexist with national company types, such as Bulgaria’s OOD, AD and Variable Capital Company (VCC), and is expected to be particularly attractive for founders seeking access to pan-European markets, funding and partnerships.
Public Consultation: 8 July – 30 September 2025
A public consultation and call for evidence is currently open until 30 September 2025. Stakeholders — including founders, investors, and business organisations — are invited to share feedback on the scope, objectives and practical implementation of the new regime. The final legislative proposal is expected in early 2026.
Key Features Under Consideration
The Commission’s policy documents outline a future company form that may include:
- Fully online incorporation and registration, potentially within 48 hours;
- A standardised European Unique Identifier (EUID) and interoperable EU company certificate;
- Integration with the EU Business Wallet and other digital tools;
- Flexible rules for capital raising, including multiple share classes and simplified investor onboarding;
- A modular structure allowing gradual harmonisation of insolvency, labour and possibly tax law.
The objective is to create a recognisable, trusted EU company identity that facilitates growth, cross-border operations and access to capital markets.
What About Bulgaria’s Company Law Reforms?
Bulgaria has taken notable steps in modernising its company law, most recently by introducing the Variable Capital Company (Дружество с променлив капитал) — a flexible form for small and medium-sized enterprises (SMEs) that allows changes in capital without requiring registration with the Commercial Register.
However, the VCC — like the traditional OOD and AD — remains a national legal form. It offers no inherent benefits or simplified procedures when operating in other Member States. The 28th regime, by contrast, is explicitly designed to bridge national borders, enabling one company form to function seamlessly across the EU.
Tax and Labour Law: Still Outside the Frame?
The 28th regime’s scope may eventually expand into labour and tax law, but for now, these areas remain undefined. Two scenarios are possible:
1. Minimal Harmonisation
The regime may initially focus only on company law. In this case:
- Companies will need to choose a registered seat in a Member State;
- That country’s corporate tax, VAT, and employment rules will apply;
- Founders should not expect any regulatory shortcuts on tax or payroll compliance.
2. Modular Expansion
The EU could gradually introduce harmonised elements for:
- Simplified insolvency procedures,
- Standardised employee onboarding, or
- Common rules on reporting and digital compliance.
However, these would likely follow in separate legal instruments and require broad political consensus.
Innovation & Intellectual Property: Eligibility Under Scrutiny
The 28th regime is intended for “innovative” companies — but what qualifies as innovation remains undefined.
What Might Be Expected:
- Ownership or licensing of patents, trademarks, software or industrial designs;
- Documented R&D activity or product-based innovation;
- Demonstrable use of protected IP to attract funding or scale internationally.
Risks if Left Undefined:
If the EU fails to clearly define “innovation”, this could result in:
- Uneven national interpretations, undermining the regime’s consistency;
- Legal disputes over eligibility or perceived discrimination;
- Access barriers for early-stage firms without formal IP protection.
ESG as Part of the Innovation Equation?
It is also unclear whether companies with a strong ESG (Environmental, Social, Governance) focus — such as those in circular economy, social entrepreneurship or climate tech — will qualify. While EU policy increasingly frames ESG-aligned businesses as innovative, the absence of binding definitions or measurement tools creates ambiguity
Bulgarian founders working in sustainable or impact-driven sectors should consider documenting ESG outcomes and business models, in case these are later reflected in the eligibility framework.
Strategic Outlook for Bulgarian Founders
While no immediate action is required, Bulgarian entrepreneurs should begin to consider:
- Legal form strategy
When and why might the 28th regime become preferable to OOD, AD or VCC? Particularly for companies seeking EU-wide visibility or investment, the decision may be strategic — not just administrative. - Innovation and IP readiness
If innovation becomes a core eligibility criterion, founders should begin reviewing their IP assets, R&D activities, or ESG metrics now. Formal registration and clear documentation may prove decisive. - Jurisdictional planning
Without harmonised tax and labour rules, where you incorporate will still matter. Founders should consider jurisdictional advantages and compliance capacity in the chosen Member State. - Participating in the consultation
The consultation (until 30 September 2025) offers an opportunity to raise concerns from the perspective of smaller ecosystems like Bulgaria, and to advocate for fair, inclusive criteria that reflect the diversity of innovation across the EU.
Final Word
The 28th regime is more than just a new company form — it reflects the EU’s ambition to make its internal market truly accessible for innovation-driven businesses. While Bulgaria’s company law reforms are a step in the right direction, the 28th regime could create a new standard for startups aiming to grow, attract funding, or operate cross-border from day one.
As a legal advisor supporting entrepreneurs at every stage, I will continue to monitor this legislative process and share key developments as they unfold
To make the most of the upcoming changes, Bulgarian start-ups and innovation-driven companies can already begin reviewing their structure, intellectual property, and market orientation in light of the forthcoming EU legislation.
Gabriela Ivanova is a Bulgarian attorney focused on competition and EU law. She has worked on legal teams advising significant mergers in Bulgaria and holds a Master’s degree in Finance as well as a Postgraduate Diploma in Economics for Competition Law from King’s College London. Her practice bridges legal expertise and market insight to help clients navigate complex regulatory landscapes.
