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Welcome to EQUITY ISSUES, a short note on a relevant issue in the private equity and venture capital industry.

If you would like to discuss any of the points we raise below, please contact me or one of our other lawyers.


Claire Cummings

020 7585 1406


European Commission consultation on CMU: SME listings

The European Commission has published a consultation “Building a proportionate regulatory environment to support SME listing” on how to make it easier for small and medium-sized enterprises to access public markets due to the fact that, despite the strong benefits of stock exchange listings, EU public markets for SMEs are struggling. According to the European Commission, there appear to be three main reasons for this, namely (i) a weak pipeline of companies seeking a listing, (ii) the fact that the local ecosystems that support companies at the IPO stage, meaning the network of SME specialists surrounding the local exchanges are under pressure in many Member States and (iii) a lack of institutional and retail investors for financial instruments in SMEs.


A key goal of the CMU has always been to facilitate access to finance for SMEs in order to support jobs and growth in the EU. Since the publication of the CMU Action Plan in 2015, a number of actions have been taken to develop adequate sources of funding for SMEs through all their stages of development.

In 2017, the Commission’s Mid-term Review of the CMU drew attention to the fact that more needed to be done to ensure that EU companies and investors reap the full benefits of access to public markets and strengthened the Commission’s focus on capital-raising by SMEs.

The Commission notes that many of the aims of the CMU have already been achieved, notably simplified prospectus rules, as well as requirements for SME growth markets that will enter into force under MiFID II from 3 January 2018. However, more still needs to be done, as the number of SME initial public offerings has halved to date compared to 2005-2007. The Commission is therefore launching a public consultation on how to make it easier for SMEs to access public markets.

The consultation

The Commission notes that SME financing through public markets has not fully recovered since the financial crisis, but that listing on stock exchanges can give a significant boost to this type of businesses. This includes the listing of shares and bonds on 'SME Growth Markets', which is a new category of trading venues dedicated to small issuers. The Commission is assessing whether targeted amendments to EU rules could deliver a more conducive regulatory environment to support SME listings. The consultation will help the Commission identify ways to cut red tape and build a supportive environment for SMEs wanting to list on public markets. At the same time, the rules will continue to safeguard investor protection and market integrity.

The consultation document is divided into two sections. The first includes questions aimed at eliciting views on the main challenges that SME-dedicated markets are currently facing, starting with the relative importance of those three drivers.

The second section includes questions designed to help the Commission assess the benefits and the impact of possible changes to EU legislation. It, in turn, is divided into three sub-sections:
  1. the first identifies provisions that could be changed in order to encourage SME-dedicated multilateral trading facilities to seek registration as SME Growth Markets;
  2. the second sub-section examines provisions that could be modified in order to alleviate the administrative burden on small issuers, including whether there is any scope for reducing obligations placed on future SME Growth Markets issuers, for example in the area of market abuse, while still maintaining a high level of investor protection and market integrity; and
  3. the third sub-section explores barriers that may put the local ecosystems, most notably the brokerage ecosystem, under pressure, and asks what can be done to foster those ecosystems and enhance liquidity.

Next Steps

Responses to the consultation are required by 26 February 2018.

At this stage in the process, the Commission is not planning to prepare an implementation plan. An implementation plan could be necessary at a later stage if there is to be a legislative proposal in the form of an EU Directive and an EU Regulation. The consultation can be found here:

This document is for general guidance only. It does not contain definitive advice.


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Cummings Law
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25 05 2019

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