February 28, 2019
The European Council has agreed a position to ease access to financial markets for Small and Medium Enterprises (SMEs), and to help them access new sources of funding.
EU ambassadors endorsed the Council’s position on a proposal to give an easier access to SMEs trying to list and issue securities on financial markets, while safeguarding investor protection and market integrity. The initiative concerns specifically “SME growth markets”, a recently introduced category of trading venue dedicated to small issuers. On the basis of this text, the Presidency will start negotiations with the European Parliament on 6 March.
“SMEs are the largest contributor to jobs and growth in Europe,” said Eugen Teodorovici, Minister for Finance of Romania. “However, they greatly depend on bank loans for their funding. That’s why it is crucial to actively help SMEs diversify their financing sources and provide them with a simpler, easier access to capital markets.”
Of the 20 million SMEs in Europe, only 3,000 are currently listed on stock-exchanges. This is partially due to high compliance costs on the one hand and insufficient liquidity on the other. Therefore, the proposed rules aim to reduce the administrative burden and cut red tape faced by smaller companies.
The proposal contains amendments to the market abuse and the prospectus regulations which make the obligations placed on SME growth market issuers more proportionate while preserving market integrity, in particular: A more streamlined administrative burden, “that maintains market integrity and information to investors, in particular as regards reporting obligations as regards persons that have access to price-sensitive information”; and a lighter “prospectus” more suited to SMEs that have already been listed on an SME growth market.
The Parliament voted on its position on SME listing on 7 December 2018. Negotiations between the Council and the Parliament are therefore ready to start.
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