Lagarde: 'Make life easier for publicly listed SMEs

In June 2008 the 'Small Business Act' for Europe was adopted, which act reflects the Commission´s political will to recognise the central role of SME´s in the EU economy and for the first time puts into place a comprehensive SME policy framework for the EU and its member states. It aims to improve the overall approach to entrepreneurship, to irreversibly anchor the ´Think Small First´ principle in policy making from regulation to public service, and to promote SME´s growth by helping them tackle the remaining problems which hamper their development. The Small Business Act for Europe applies to all companies which are independent and have fewer than 250 employees, 99% of all European businesses.

´Now is the time, once and for all, to cement the needs of SME´s in the forefront of the EU´s policy. The SBA brings the full weight of Europe behind SME´s - enlisting all the resources of Europe to help small business in their daily business and to clear the path for those that want to create more jobs and grow in Europe and beyond.' (Gunther Verheugen, EC vice president responsible for enterprise and industry)

The Small Business Act is:

  • a set of 10 principles which should guide the concdeption and implementation of policies both at EU and national level. This is essential to create a level playing field for SME´s throughout the EU and improve the administrative and legal environment to allow these enterprises to release their full potential to create jobs and growth

  • an ambitious package of concrete abd far reaching new measures including 4 legislative proposals which translate these principles into action both at EU and member state level

  • is designed to be adopted by the European Council to ensure the full political commitment of both the Commission and the member states together with regular monitoring of its implementation

Thursday 18 March 2010 ECMI arranged a conference about necessity of an EU listing of small business act. Present were not only representatives of government (Mme C. Lagarde and the Spanish Ministry of Economy), policy centres (CEPS), financial markets (EIB, MAZARS, EIF, LSE, US SEC and Federation of European Securities Exchanges), EU (EP and EC), regulators (Federation of European accountants and committee of European Securities Regulators), but also from business (European Venture Capital Association, European Issuers).

  • Welcome remarks by H. Onno Ruding
    Opening remarks by Mme Christine Lagarde
  • is the single market still offering long term financing through the capital markets to small and medium sized issuers? What has been the impact of the FSAP directives on listed Small and Medium sized Companies? On the IPO market? Is the lack of IPO´s cyclical or structural in the EU? How can long term investment in Small and Mid Caps be favored? How can the visibility and thje liquidity on Small and Medium sized be improved?
  • presentation Timothy A. Geishecker (US SEC) : is the current legal and regulatory environment a barrier for small and medium sized issuers listings? How can we establish a more favorable listing environment in the EU for Small and Mid Companies? What is an EU Small and Medium sized issuer? Should the current EU legislation applicable to listed companies be more proportionate?
  • concluding remarks

The idea is to create a strong more accessible environment for SME's. Key recommendations are ade in the report on categories 'definition of SMILEs and policy', 'proportionate offering and listing requirements', 'proportionate on-going requirements', 'market integrity', 'investor's interest for SMILEs' and , 'Think Small - Act Big".

Read the full report 'An EU listing Small Business Act Establishing a proportionate regulatory and financial environment for Small and Medium sized Issuers Listed in Europe (SMILEs) March 2010'.

France wants EU stock trading for 'high-growth' SMEs:

French Finance Minister Christine Lagarde wants the EU to create a single access point for trading shares of young, high-growth businesses and has proposed a range of measures to encourage innovative companies to list on European stock exchanges. Lagarde is also keen to simplify market obligations for small, medium and intermediate companies, allowing them more time to publish quarterly reports, ease accounting standards and produce less detailed prospectuses when listing on stock markets. "There are many things we disagree about but there is hardly ever disagreement on the importance of small businesses as drivers for growth, employment and R&D," she told a meeting in Brussels, hosted by the European Capital Markets Institute (ECMI).

The proposal for a joint EU system for trading shares in innovative companies is contained in a report by Fabrice Demarigny, a capital markets expert, who produced a detailed plan for Lagarde (Madame Christine Lagarde, French Minister of Economy, Industry and Employment asked to prepare the report) which she published last week (18 March).


The new system would make it easier for investors to access smaller "secondary" markets across Europe like the London Alternative Investment Market (AIM), most of which specialise in high-tech stocks. Listing functions and revenues would remain at national level and trading revenues would be shared by the joint owners of the platform.

The joint trading platform would be licensed and supervised directly by the European Securities Markets Authority (ESMA).
Lagarde said the move would form part of a series of measures which, if adopted on an EU basis, would help small companies rapidly grow into bigger players. She said a single definition of small listed companies was needed but that this should be broader than the definition of SMEs currently used in EU legislation.

The French minister said the term 'Small and Medium-sized Issuers Listed in Europe' (SMILEs) would be more appropriate and that any company meeting the definition should be subject to less demanding market obligations. This would include using a simplified, harmonised prospectus – a key document outlining a company's business plan – before listing on a stock exchange. SMILEs would also have three months to prepare quarterly accounting, rather than the two months currently required of all publicly-listed firms.

Spyros Capralos, president Federation of  European Securities Exchange
A more "proportionate" level of regulation and accounting standards is at the heart of Lagarde's vision for encouraging high-growth companies to issue IPOs.
Lagarde said she hoped Demarigny's report would inspire the Commission to take a serious look at proposals to make it easier for smaller companies to list on stock exchanges. She said several EU directives are currently under review and this would be an ideal time to rethink the rules under which smaller companies access capital markets. The report was broadly welcomed by investors, although some expressed concerns that lowering the bar on accounting rules could hamper the flow of information to the market.
CEPS reported:

The creation of a more favourable listing environment for small and medium enterprises (SMEs) in the EU was the subject of the debate at a conference organised by the European Capital Markets Institute on March 18th. The French Minister of Economy, Industry and Employment, Christine Lagarde, opened the conference with yhe key points of a report on this topic commissioned by her ministery.

Lagarde underlined the importance of SMEs as drivers of growth, employment and innovation, and called for a more 'proportionate' approach towards regulatory and accounting requirements for SMEs. The speakers analysed the financing tools available to SMEs and confirmed the downward trend for IPOs (initial public offers) in Europe. Excessive disclosure, administrative burdens and lack of liquidity are the main obstacles to SMEs'access to capital markets. Regulators warned that a new regime for SMEs should take account of investor protection and market integrity.