As part of Capital Markets Union, the European Commission accepted an agreement reached by the European Parliament and the bloc’s 28 members on helping Small and Medium-Sized Enterprises (SMEs) with gaining further access to capital markets in an attempt to finance their growth and create jobs.
The next step is the formal approval of the rules by European Parliament and Council.
The core element of the Union’s agenda is to ensure that the new rules encourage small businesses in the EU to access financial resources at every step of their development. By means of these new rules, SMEs will gain access to public markets in a cheaper and easier way over ‘SME Growth Markets’ – a new category of commerce dedicated only to small business issues.
The goal is to give a critical boost to SMEs by reducing their dependence on bank funding by providing a broader investor base and ensuring easier access to additional equity capital and debt finance. This is likely to guarantee a higher public profile and brand recognition for the companies.
“Given their importance for the EU economy, we need to make sure that SMEs enjoy the best possible financing conditions to grow and innovate. Today’s political agreement is an important step in making the rules on SME’s access to capital markets fit for that very purpose. These measures will enable SMEs to develop and prosper without being hindered by unnecessary costs and red tape, while preserving a high level of market integrity and investor protection,” European Commission Vice-President Valdis Dombrovskis, responsible for the Euro and Social Dialogue, also in charge of Financial Stability, Financial Services and Capital Markets Union, said recently.
His comments were backed by Commission Vice-President Jyrki Katainen, responsible for Jobs, Growth, Investment and Competitiveness, who said,” I wish to thank Parliament and Council for acting swiftly to reach a political agreement which demonstrates how important SMEs are for the Capital Markets Union. The measures agreed will help funnel more investment into Europe’s SMEs, fostering innovation, jobs and growth”.
The agreement proposes two main changes to the Market Abuse Regulation (MAR) and to the Prospectus Regulation. For the former, the proposal aims to reduce bureaucratic hurdles while protecting the investor and the integrity of the market. It also gives flexibility to the national authorities to make the market conditions more suitable for SMEs. For the Prospectus Regulation, lightening the prospectus when passing from SME Growth Markets to a regulated market will help save costs.