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How private equity invests in privately-owned businesses, supports jobs and creates prosperity.
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SME definition
The European Commission Recommendation 2003/361 sets out the main factors for determining whether a company is an small and medium-sized enterprise (SME). These include the total number of employees and either turnover or the size of the balance sheet. In June 2017, the European Commission announced it was considering reviewing the 2003 definition, although no proposal has since been introduced.
How does it affect private equity?
Under the current EU SME definition, only companies that do not receive a majority or controlling investment from a venture capital firm are able qualify for SME status. For a private equity-backed portfolio company, SME status is important as it allows the firm to be eligible for government support programmes or state aid. Moreover, the regulator is typically trying to make it easier for SMEs to operate by either providing them with regulatory exemptions or by placing fewer requirements on the investors that back them. For example, the AIFMD provides an exemption for SMEs from certain disclosure and asset stripping requirements.
SME definition library
Positions & consultation responses
Letter to the European Commission on state aid issues relating to the use of the SME Definition
28 Apr 2020Positions & consultation responses
Response to Commission Consultation on the review of the SME definition
06 Jul 2017Positions & consultation responses
Response to Capital Markets Union Mid-Term Consultation
17 Mar 2017Positions & consultation responses
Response to European Commission Call for Evidence on EU Regulatory Framework for Financial Services
31 Jan 2016Positions & consultation responses
EVCA-PAE Response to Green Paper on Capital Markets Union
13 May 2015Positions & consultation responses
EC Green Paper on Capital Markets Union
18 Feb 2015Find out more
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Martin Bresson
Public Affairs
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Erika Blanckaert
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Senior Public Affairs Manager
Xandra Hjort
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Sofia Garrido Perez
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Public Affairs Officer
Christophe Verboomen
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Public Affairs Manager