Enterprise foundations – foundations that own business companies – play a crucial role in Europe’s economic and social fabric. They ensure long-term, responsible ownership of successful enterprises such as Robert Bosch, Inter IKEA, Novo Nordisk, Rolex and La Caixa, while supporting substantial philanthropic initiatives. Yet, despite their contributions, these unique entities operate under fragmented legal frameworks across Europe.

On 9 December 2025, the European Law Institute (ELI) released its Model Enterprise Foundation Law, a comprehensive legislative proposal designed to facilitate the creation and governance of enterprise foundations (EFs) and to inspire reform at both national and European levels.

Developed under the leadership of Prof Anne Sanders and Prof Steen Thomsen with the support of the Project Team, Advisory Committee, and ELI Members, the Model Law builds on extensive comparative research and consultations conducted between 2023 and 2025. It provides legislators with a practical toolkit to improve legal frameworks governing EFs, fostering responsible corporate ownership, competitiveness, and sustainability across Europe and beyond.

‘Enterprise foundations embody the idea of responsible capitalism,’ the Reporters explained. ‘They align long-term business success with public benefit. Our model law offers concrete legislative building blocks for countries wishing to modernise their frameworks and unleash the full potential of these institutions.’

The Model Law contains: 

 

• the definition and purpose of enterprise foundations;

 

• formation and registration procedures;

 

• governance structures, including directors’ duties and independence;

 

• audit, transparency and supervision mechanisms; and

 

• best practice guidelines for foundation governance and principles for taxation.

 

It also introduces the notion of optionality: rather than prescribing a one-size-fits-all regime, it provides adaptable modules that national legislators can adopt, modify, or exclude based on domestic legal traditions. This flexibility makes the model relevant for both civil law and common law jurisdictions.

‘The Model Law is not a blueprint to replace national laws,’ as the Reporters put it. ‘It is a pragmatic framework that respects Europe’s legal diversity while promoting coherence and responsible business ownership. Optionality is the key to ensuring broad applicability and real-world impact.’

The Model Law articulates clear principles for responsible ownership, including:

 

• recognising business ownership as a legitimate purpose for foundations;

 

• requiring EFs to act as responsible and transparent owners, considering stakeholder interests;

 

• introducing a business judgement rule for directors; and

 

• mandating disclosure and oversight of related-party transactions.

 

It further emphasises that supervisory authorities should possess business competence and encourage tax neutrality, ensuring that EFs are not established merely for tax avoidance but to contribute meaningfully to sustainable enterprise.

The drafting of the Model Law drew on comparative analysis of more than twenty jurisdictions, encompassing both civil and common law systems. It was informed by extensive input from legal scholars, practitioners, regulators, and policymakers across Europe, including members of ELI’s Advisory Committee.

‘Enterprise foundations represent a uniquely European approach to long-termism and social responsibility,’ the Reporters emphasised. ‘By codifying best practices, we hope to strengthen Europe’s competitiveness while fostering governance structures that serve both business and society.’

A launch webinar will take place on 29 January 2026, where the authors will present the Model Law, discuss its background and practical utility, and engage in dialogue with external experts and policymakers. More information here. Registration here.