European Commission (EC) proposed streamlining the EU’s corporate insolvency framework on 7 December. The proposed measures address 3 key areas, namely:
With more harmonised EU rules, companies and SMEs will benefit from more uniform conditions. EC believes this will encourage investors to invest across borders and in SMEs specifically, by reducing the perceived risk of investing in SMEs.
European Parliament and the Council will develop their respective positions on the EC proposal in the coming weeks and months.
As with the insolvency proposal, the Parliament and Council will form their respective positions on the proposals in the coming weeks and months.
Publication of the proposal is scheduled on 7 June. EC officials have claimed in previous public statements the proposal aims to tackle ‘aggressive tax planning’ advice provided by extra-EU advisors, but its exact scope remains to be seen. It might also apply to smaller and medium–sized tax advisory practices.
October, the European SME lending platform, has secured a EUR 35 million commitment from the European Investment Fund (EIF) and Dutch impact investor Invest-NL for its most recent debt fund for small businesses, titled October SME V.
The October SME V fund is expected to grant over 3 000 loans to European small businesses, targeting a total of EUR 400 million in lending over the next two years. It will offer investors a highly granular and diversified portfolio deployed across multiple locations in the European Union (France, Spain, Italy, the Netherlands and Germany) in more than 15 different sectors. Loan amounts will range from EUR 10 000 to EUR 2 million, with an expected average size of EUR 130 000.
The fund has a unique risk/return profile, addressing borrowers at the lower end of the market while offering attractive returns to investors. With a short duration, monthly distributions and pricing reviewed on a monthly basis, all measures are taken to best protect investors and their returns against inflation.
The consultation was launched on 20 January, and stakeholders may provide feedback until 17 March. It aims to collect information on late or unfair payment practices and payment behaviour in commercial transactions. The consultation seeks to understand how such late or unfair payments impact businesses’ daily management and their capacity to invest in green and digital transitions.
The current Late Payment Directive, adopted in 2011, has triggered a reduction in payment delays. However, more than 60% of businesses in the EU still need to be paid on time, with SMEs being the most affected. The consultation will be followed by a legislative proposal later in 2023.
European Parliament (EP) has published an insightful study that looks at national regimes in the EU to promote SMEs’ digital transition, funded by the EU’s post-COVID Recovery and Resilience Facility (RRF).
The study concludes that while there are many areas of good practice, risks remain due to the lack of outcome-based targets, the complexity of some schemes and relatively low levels of funding concerning the ambition in some cases. The authors conclude that targets based on (preferably harmonised) skills frameworks and digital maturity assessments could help establish the value add of initiatives to support SMEs.
ICAEW, Accountancy Europe’s member body, has noted that whilst large UK public companies are now required to report on climate-related issues, all companies within their supply chains, irrespective of size, must also reduce their emissions so that the larger organisations comply with the rules. The report demonstrates how SMEs can be affected by the trickle-down impacts of various sustainability related legislation, even if left out of scope.
For example, a similar situation can happen in the EU with the new corporate sustainability reporting Directive (CSRD) and the ongoing corporate sustainability due diligence Directive (CSDDD). The question of the concrete support measure granted to SMEs for adaptation is, hence, equally crucial to the questions around the scope.