EU Commission Creates New Category for Companies: SMCs (Small Mid-Caps)

A new EU company category is intended to close the gap between SMEs and large compa-nies – with concrete relief in terms of data protection, reporting obligations and capital market access. Anyone who is considered a Small Mid-Cap in the future could benefit significantly.

In 2025, the EU Commission presented a series of so-called omnibus packages – legislative packages that amend or update several existing regulations or directives at the same time and are primarily aimed at reducing the bureaucratic burden on companies. The administrative burden for all companies is to be reduced by an average of 25%, and for medium-sized companies by as much as 35%. 

This goal is also served by the Omnibus Package IV, published on 21 May 2025, which proposes a new category for companies located between traditional SMEs (small and medium-sized enterprises) and large companies – the so-called SMCs (Small Mid-Cap Enterprises).

SMCs are supposed to be companies that are no longer formally SMEs but still do not have the structure or resources of large companies. Specifically, according to the proposal, a company is an SMC if it

• employs more than 249 and less than 750 employees, and
• either generates an annual turnover of more than EUR 50 million and less than EUR 150 million or has a balance sheet total of more than EUR 43 million and less than EUR 129 million.

With this new classification, the EU wants to ensure that medium-sized companies are not crushed between the sets of rules for SMEs and large companies.

The new definition is to be incorporated into several EU directives and regulations – with the aim of providing targeted relief to SMCs:

1. General Data Protection Regulation (GDPR): Currently, certain companies with up to 250 employees are exempt from the obligation to keep records of processing activities. This threshold is to be extended to SMCs. In addition, the obligation is to apply only to particularly risky data processing.
   According to the Commission, the projected savings potential is up to EUR 66 million per year.
2. Prospectus requirements for listed companies: A simplified EU Growth Issuance Prospectus is planned for SMCs. This significantly reduces the expenses for corporate actions and IPOs.
   Projected savings potential: up to EUR 20,000 per issue and up to EUR 12.7 million total savings potential for affected companies.
3. Finally, (1) SMCs are to be exempted from due diligence and traceability obligations in connection with the supply chain for battery raw materials (Batteries Regulation), (2) access to a special helpdesk that can assist them with trade complaints in the area of dumping and subsidies (basic Anti-Dumping and Anti-Subsidy Regulations) is to be opened up for SMCs, and (3) the registration requirement for importers of equipment containing fluorinated greenhouse gases is to apply to SMCs only if the product is actually affected by reporting obligations or limitations (F-gas Regulation).

Notes and Practical Advice

Many SMEs in Europe are now confronted with an excess of bureaucracy that was originally intended for large companies. Especially in capital market-related areas (e.g. IPO), the effort is often a deterrent. Omnibus IV addresses this malpractice.

If the Commission's proposals are implemented, SMEs could be significantly relieved – financially, in terms of personnel and organisation. This will not only improve competitive conditions but also access to the capital market.

It remains to be seen whether and in what form the European Parliament will accept the Commission's proposals. What is clear, however, is that the new SMC category brings much needed differentiation to corporate regulation – and thus gives many medium-sized companies in Europe hope for noticeable relief.

A ray of hope in the thicket of EU regulations – and perhaps a first step towards a real SME agenda at European level.

Gerhard Manz
Julius Bauer

This post also appears in the Haufe Wirtschaftsrechtsnewsletter.