SME Update

January 2023

  • Commission proposes new insolvency and listing rules to improve SMEs’ access to capital markets 
  • Commission to unveil tax enablers proposal in June
  • European Parliament publishes new study on national SME digitalisation support measures
  • Commission launches public consultation on the revision of Late Payment Directive

European Commission

EC proposes new rules to improve EU’s insolvency framework

European Commission (EC) proposed streamlining the EU’s corporate insolvency framework on 7 December. The proposed measures address 3 key areas, namely: 

  • maximising the recovery value of the liquidated estate, including improving insolvency practitioners’ access to asset registers, also in a cross-border setting 
  • enhanced procedural efficiency 
  • fair and predictable distribution of recovered value 

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.

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EC proposes a new framework to promote SMEs’ listing

On the same day, EC proposed new measures to alleviate further burdens related to SMEs’ listings (see here, here and here). The key changes consist of the following: 

  • simplified, shorter and streamlined prospectus requirements, particularly for SMEs. This is a long-standing demand from Accountancy Europe (see here and here) 
  • a requirement for all Member States to allow companies to use multiple-vote shares when they list for the first time on SME Growth Markets 
  • changes to the unbundling rules to improve SME market research coverage. One of the main changes includes a higher market capitalisation threshold below which the unbundling rules do not apply. Firms providing SME research can therefore bundle the price of the study with that of the brokerage services 

As with the insolvency proposal, the Parliament and Council will form their respective positions on the proposals in the coming weeks and months. 

EC plans tax enablers proposal for June 

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 mediumsized tax advisory practices. 

October SME V fund secures €35 million backing from EIF and Invest-NL 

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.

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EC launches public consultation on the revision of Late Payment Directive

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. 

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European Parliament

Parliament publishes study on national measures to support SMEs’ digitalisation 

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.

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EC explains how it is supporting SMEs in the textiles sector 

  • Question by MEP Gianantonio Da Re (ID/Italy) 
  • Reply by Commissioner Breton 

EC elaborates on how it supports SMEs to cope with post-Brexit price increases 

  • Question by MEP Angelo Ciocca (ID/Italy) 
  • Reply by Commissioner Breton

UK SMEs being asked to report and perform on climate by large businesses 

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.

Read moreThis curated content was brought to you by Johan Barros, Accountancy Europe policy manager since 2015. You can send him tips by email, follow him on Twitter and connect with him on LinkedIn.