New legislation is being considered by the European Parliament to support small “mid-cap” companies (SMCs) as they expand beyond the traditional small and medium enterprise (SME) category. The proposals aim to provide targeted exemptions and reduce regulatory burdens for these businesses, which are seen as crucial for EU competitiveness.
On Wednesday, three committees in the European Parliament voted in favor of measures that would formally define SMCs and extend certain benefits currently reserved for SMEs. According to Members of the European Parliament (MEPs), SMCs should be defined as companies with fewer than 1,000 employees and either up to €200 million in turnover or up to €172 million in total assets. This differs from the European Commission’s original proposal, which set lower thresholds.
The intention behind these changes is to prevent situations where a company faces a sudden increase in obligations after surpassing SME status. MEPs also emphasized that support for SMEs should not be weakened and called for regular reviews of these thresholds every five years.
Under the new rules, SMCs would receive lighter record-keeping obligations under the General Data Protection Regulation (GDPR), similar to current SME exemptions. These would apply only when processing data that does not pose high risks to individuals’ rights. However, this exemption would not cover sensitive categories such as biometric data or information on health, ethnicity, religion, political opinions, or criminal convictions.
In addition, proposed changes under the Markets in Financial Instruments Directive (MiFID) would allow SMCs easier access to capital markets by reducing administrative requirements. They could also benefit from simplified prospectus disclosure rules according to updates in the Prospectus Regulation. This adjustment is intended to help SMCs raise funds more efficiently through public markets designed for smaller enterprises.
The legislation includes further simplification measures affecting environmental regulations. For example, while SMEs are already exempt from some battery due diligence policies under the Batteries Regulation, MEPs propose extending this exemption to SMCs with less frequent review requirements—every five years instead of three—unless significant changes occur sooner.
Regarding fluorinated gases (F-gases), all importers and exporters must register their activities under current EU rules—a requirement viewed as disproportionate for smaller businesses. The new proposal seeks to limit registration only to those importing or exporting larger quantities of F-gases above specific CO2 equivalent thresholds.
Support measures are also planned for critical infrastructure entities classified as SMCs. Member states will be required to assist these organizations in meeting legal obligations related to resilience and security.
Introducing tailored support for SMCs was recommended by both the Draghi report on EU competitiveness and the Letta report on single market reforms. The two acts adopted form part of a broader simplification package proposed by the European Commission in May 2025.
The economics and civil liberties committees approved amendments concerning MiFID and critical entity resilience directives with 98 votes in favor, 6 against, and 5 abstentions; authorization was given for inter-institutional negotiations with 102 votes supporting it. Related changes affecting GDPR compliance, prospectuses, F-gases regulation, batteries policy, and trade defense instruments were adopted by a wider group of committees with substantial majorities.
Parliamentary plenary endorsement is expected in March before negotiations begin with the Council.
