The European Parliament is taking steps to support small companies as they expand, introducing a new category of “small mid-cap” enterprises (SMCs) to bridge the gap between
traditional SMEs and large corporations.
On Wednesday, three parliamentary committees voted to endorse measures that would extend certain regulatory exemptions to SMCs—companies that have outgrown the SME classification but are not yet large enterprises. The aim is to prevent a “cliff-edge” scenario where businesses suddenly face a heavy administrative burden as they grow.
Defining the small mid-cap
MEPs proposed that SMCs be defined as companies with fewer than 1,000 employees and either up to €200 million in annual turnover or €172 million in total assets. These thresholds are slightly higher than the European Commission’s original proposal, which suggested a cap of 750 employees, €150 million in turnover, and €129 million in total assets. The Parliament also emphasized that SME support should remain robust, and that SMC thresholds should be reviewed every five years.
Lighter GDPR record-keeping
Under the new rules, exemptions from record-keeping under the General Data Protection Regulation (GDPR) for SMEs would extend to SMCs—but only for low-risk data processing. Sensitive data, such as biometric information, political opinions, health records, or criminal convictions, would remain fully protected.
Easier access to capital markets
The proposals also aim to simplify capital-raising for SMCs. By recognizing them under the Markets in Financial Instruments Directive (MiFID), companies could access SME growth markets with lighter prospectus disclosure requirements. This adjustment is designed to help SMCs attract public funding more efficiently.
Regulatory simplifications in key sectors
MEPs also targeted administrative burdens in environmental regulations. Under the Batteries Regulation, SMCs would update their due diligence policies every five years—rather than every three—as SMEs currently do. For F-gases, registration requirements would apply only to significant imports or exports, reducing disproportionate obligations on smaller operators.
Support for critical infrastructure and trade
SMCs operating in critical infrastructure sectors will receive guidance and support as they implement resilience obligations. Trade defense measures would also be easier to access for SMCs, mirroring provisions already available to SMEs.
Background and next steps
The initiative follows recommendations from the Draghi and Letta reports on EU competitiveness and the single market. It is part of the fourth Omnibus package on simplification proposed by the European Commission in May 2025.
The economics and civil liberties committees approved the MiFID and resilience directives with strong majorities, while environmental, GDPR, and other measures were approved by a combined vote of 158 in favor, 9 against, and 10 abstentions. Negotiations with the European Commission and Council can now begin, as no objections were raised during the March 9–12 plenary session.