European lawmakers are moving to close a long-standing regulatory gap for companies that outgrow small and medium-sized enterprise (SME) status but are not yet corporate
giants. A new category — small mid-cap enterprises (SMCs) — is set to benefit from simplified rules designed to support growth without triggering a sudden surge in compliance costs.
On Wednesday, three committees of the European Parliament approved proposals to formally recognise small mid-caps and extend to them a range of exemptions currently reserved for SMEs. The objective is clear: prevent “cliff-edge” effects where businesses face sharply higher obligations the moment they cross the SME threshold.
Clear thresholds for a new company category
MEPs propose defining SMCs as firms with fewer than 1,000 employees and either up to €200 million in annual turnover or up to €172 million in total assets. This is more generous than the original proposal from the European Commission, which suggested lower ceilings.
At the same time, Parliament is keen to protect traditional SMEs. Lawmakers insist that EU support must continue to follow a “think small first” principle and that the new thresholds should be reviewed every five years to reflect economic realities.
GDPR: lighter paperwork for low-risk data
One of the most immediate changes concerns data protection. Under the proposal, existing SME exemptions from certain record-keeping requirements would be extended to SMCs when they process low-risk personal data. The relief would not apply to sensitive information such as biometric data, health records, political opinions, religious beliefs, or criminal history.
Easier access to capital markets
Small mid-caps would also benefit from reduced red tape when raising money. By updating financial market rules to include SMCs, lawmakers aim to lower administrative burdens and give these companies access to SME Growth Markets, which offer tailored requirements and simplified prospectus disclosures.
The move is expected to make it easier for growing firms to tap public capital markets without the complexity typically faced by large listed companies.
Simpler rules for batteries and F-gases
Environmental compliance is another area targeted for simplification. Under EU battery rules, SMEs are already exempt from some due-diligence obligations. MEPs want similar treatment for SMCs, including less frequent reviews of due-diligence policies — every five years instead of every three.
For fluorinated greenhouse gases (F-gases), Parliament proposes narrowing mandatory registration requirements to imports and exports above specific emissions thresholds, easing the burden on smaller operators whose climate impact is limited.
Support for critical infrastructure operators
The package also strengthens support for SMCs operating critical infrastructure. Member states would be required to assist these firms in meeting resilience obligations, while access to EU trade defence instruments would be simplified, aligning treatment of SMCs more closely with SMEs.
Competitiveness at the core
The idea of tailored support for small mid-caps echoes recommendations from the competitiveness report led by **Mario Draghi** and the single market review chaired by **Enrico Letta**. Both argued that Europe risks losing fast-growing companies if regulation becomes too heavy too soon.
The proposals form part of the Commission’s fourth “Omnibus” simplification package, unveiled in May 2025.
What happens next
The economics and civil liberties committees approved changes to financial markets and critical-entity resilience rules by a large majority, clearing the way for negotiations with EU member states. A second vote covering data protection, prospectuses, batteries, F-gases and trade defence measures also passed comfortably.
Once endorsed by the Parliament’s plenary session, expected in March, formal talks with the Council can begin — bringing the EU a step closer to a smoother regulatory runway for its growing companies.