The 28th Regime as a Pathway for Non-Extractive Business Models: Designing Start-Ups the “European Way”

N-EXTLAW Working Paper Series No. 5/2026

Abstract

The EU’s proposed 28th legal regime seeks to offer a harmonised private law structure for innovative companies across the single market. This whitepaper argues that the regime should reflect the EU’s commitment to innovation “the European Way”: combining social values, environmental ambition, and economic progress within the Union’s social market economy. Drawing on innovation theory, the history of EU industrial policy, and comparative private law scholarship, the whitepaper shows that Europe’s strongest growth coincided with active state steering and socially embedded markets, while the shift toward horizontal, market-facilitating policies left distributive safeguards behind. Current policy goals — decarbonisation, digital sovereignty, resilience, and social rights — require enterprise structures whose governance and financial architecture are aligned with those purposes rather than at odds with them. The whitepaper proposes that non-extractive ownership forms, specifically steward ownership and employee ownership, can serve as modular building blocks within the 28th regime. These forms embed purpose and long-termism into corporate governance by design. A modular approach avoids the political deadlock that stalled previous harmonisation attempts, while enabling purpose-driven enterprise to coexist alongside conventional company forms within the same legal framework.

Key words: 28th legal regime, industrial policy, innovation theory, start-ups, scale-ups, steward ownership, ESOP