EU proposes new small mid-cap category to boost business growth
Three European Parliament committees this week voted to endorse proposals introducing a new category of small mid-cap enterprises to extend regulatory exemptions to growing businesses.
The move seeks to bridge the gap between small and medium enterprises and large corporations by creating targeted measures for companies that have grown beyond their initial status.
Lawmakers aim to avoid cliff-edge situations where the administrative obligations of a company drastically increase the moment they exceed current thresholds.
Under the proposal, MEPs want to define these entities as companies with fewer than 1,000 employees and either up to €200 million in turnover or €172 million in total assets.
This definition is broader than the original figures suggested by the European Commission, which had proposed limits of 750 employees, €150 million in turnover, and €129 million in total assets.
Parliament members insisted that these thresholds should be reviewed every five years to ensure they remain relevant to the economic climate.
To protect the interests of the smallest firms, the committees emphasised that support for existing small and medium enterprises must not be diluted and that EU policy should follow a think small first principle.
A significant part of the new law involves extending current exemptions from record-keeping obligations under the General Data Protection Regulation to these mid-sized firms.
This exemption applies to data processing that is not considered high-risk, though it will not apply to sensitive information such as biometrics, health, religion, or ethnic origin.
To improve access to capital, the new definition will be integrated into the Markets in Financial Instruments Directive, allowing these companies to access specialised growth markets.
By benefiting from simpler prospectus disclosure rules, it will become easier for these enterprises to raise necessary funds on public capital markets.
The committees also proposed simplification measures for environmental regulations, specifically regarding the Batteries Regulation and due diligence policies.
MEPs want the requirement for economic operators to review and update their policies to apply every five years, rather than every three years as originally planned.
Regarding the F-gases Regulation, lawmakers argued that current registration requirements are disproportionate for smaller players in the market.
They proposed that registration should be limited to specific import and export volumes, such as 10 tonnes of carbon dioxide equivalent or more for hydrofluorocarbons.
The legislative package also demands that member states support these entities as they implement obligations related to the resilience of critical entities.
Access to trade defence instruments should also be made easier for these businesses to ensure they can compete fairly on a global scale.
These tailored measures reflect recommendations from the Draghi report on competitiveness and the Letta report on the future of the single market.
The proposals form part of the fourth omnibus package on simplification which was first put forward by the European Commission in May 2025.
Following the vote, inter-institutional negotiations were authorised with a significant majority across the economics, civil liberties, and environment committees.
As no objections were raised during the plenary session held between March 9, 2026, and March 12, 2026, formal negotiations on the final laws can now begin.