Proposed EU Corporate Regime to Tighten Eligibility Caps
Midsized firms will face stricter revenue and headcount limits for profit-sharing schemes under a new draft regulation.
Updated on Oct. 20, 2026 in Public Companies
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EU Member States are set to meet on 23 October to finalize a negotiating mandate for a 28th company regime. The proposed regulation includes updated eligibility criteria for employee profit-sharing and stock option schemes restricted to midsized enterprises.
Why it matters
The proposed shift lowers the eligibility threshold for businesses, which limits the scope of tax-advantaged employee incentive programs. Operators must track these regulatory developments to determine if their company size will remain eligible for upcoming compensation frameworks.
The draft regulation restricts participation in profit-sharing and stock option schemes to firms with fewer than 750 employees and annual turnover not exceeding €150 million. These figures mark a significant reduction from the initial proposal of 1,000 employees and €450 million.
The players
Irish Presidency
The current leadership body of the Council of the European Union responsible for navigating regulatory negotiations.
Coreper
The Committee of Permanent Representatives responsible for preparing the work of the Council of the European Union.
The details
The Irish Presidency submitted a compromise text that recalibrates the definition of midsized enterprises eligible for the 28th regime. By lowering the employee and revenue caps, the regulation narrows the pool of companies that can leverage specific cross-border incentive structures. Businesses currently relying on these schemes must evaluate their growth trajectories against these tighter thresholds to ensure ongoing compliance with the proposed EU framework.
Timeline
19 October 2026: The working party examined the latest compromise text.
23 October 2026: Member States will meet to negotiate the mandate.
Market Landscape
This move represents a calibration of the 28th company regime, a regulatory initiative aimed at providing a unified corporate framework across member states. The current negotiations mark a deliberate narrowing of eligibility criteria compared to the program's initial design.
Business owners should review their current employee profit-sharing structures to assess if they fall within the new 750-employee and €150 million revenue caps. Consult with counsel to determine how these proposed limits might constrain long-term equity incentive planning.
The takeaway
The tightening of these thresholds reflects a broader effort to contain the impact of cross-border incentive schemes to smaller entities. Operators should calendar the 23 October outcome to see if the mandate moves forward, as this will dictate the feasibility of future stock option programs.
Further reading
For more on evolving corporate frameworks, visit our Public Companies section.
More information
Access the latest compromise draft regulation text to review the full eligibility criteria.
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