Europe needs its own Delaware – the tiny US state that’s home to most of the country’s corporate entities, MEPs were told on Thursday.
Enrico Letta, the former Italian Prime Minister who earlier this year prepared a 150-page report on how to save Europe’s flagging economy, takes inspiration from across the Atlantic.
"In the US, the big change happened when they decided to have Delaware: Delaware is the fast-track in the US,” he told members of the European Parliament’s Economic and Monetary Affairs Committee, adding: “My proposal on corporate laws is to have something similar with the 28th virtual state."
“I'm not a fan of an Americanisation of Europe ... Europe is a fantastic mix between small and big, and we have to keep this mix,” he said – but added that corporate Europe needs greater scale to compete against the US and China.
While the EU is supposed to have a unified single market for companies, many startups say it’s too hard in practice to navigate legal divergences between countries.
Letta is promoting the idea of an extra, optional governance structure that EU companies could pick instead of using the national law of one of its 27 member states.
In reality, Brussels has already set up the Societas Europaea (SE) structure, a pan-European equivalent of the UK’s Limited company or Germany’s GmbH. But the SE has seen limited take-up in practice.
Entrepreneurs complain that the structure is unworkable due to the legal and financial requirements, and that they’re still left dealing with a patchwork of national laws even if they manage to set an SE up.
Despite its population of just one million, the state of Delaware – which outgoing President Joe Biden represented as Senator for 36 years – is home to hundreds of thousands of corporate entities, including 80% of 2023 US initial public offerings and two thirds of Fortune 500 companies.
But the stripped-down paperwork the state offers also has as dark side, that some say enables dodgy dealings and money laundering.
Delaware is “a place where extreme corporate secrecy enables corrupt people, shady companies, drug traffickers, embezzlers and fraudsters to cover their tracks when shifting dirty money from one place to another” and a “haven for transnational crime,” activist group Transparency International said in 2016.