On 25 February 2026, three committees of the European Parliament voted to endorse proposals introducing the concept of small mid-cap enterprises (“SMCs“) and extending to them various exemptions that so far have been available to small and medium enterprises (“SMEs“). The aim is to avoid cliff-edge situations where a company’s obligations drastically increase when they grow beyond the SME threshold.

The committees want to see SMCs defined as companies with fewer than 1,000 employees; and either up to EUR 200 million in turnover or up to EUR 172 million in total assets (the Commission proposed 750 employees, EUR 150 million in turnover and EUR 129 million in total assets). At the same time, the European Parliament wants to ensure that support for SMEs is not diluted, that EU support follows a “think small first” principle, and that the thresholds are reviewed every five years.

Under the new law, current SME exemptions from record-keeping obligations under the General Data Protection Regulation (“GDPR“) would be extended to SMCs when processing data that is not considered high-risk for the subject’s rights. The exemption will not apply to processing sensitive data including biometrics and data on ethnic origin, political opinions, religion, health, or criminal convictions.

The new definition of SMCs in the Markets in Financial Instruments Directie (MiFID) would reduce administrative burdens. It would allow these companies (SMCs) to access SME growth markets and benefit from simpler prospectus disclosure rules, in line with the updated Prospectus Regulation. This would make it easier for SCMs to raise money on capital markets. An SME Growth Market is a special type of multilateral trading facility created to help MSP access public funding, with rules that are adapted to smaller companies.

Under the Batteries Regulation, SMEs are exempt from certain obligations on battery due diligence policies. To reduce the administrative burden, te committees want the requirement for economic operators to review, update and make publicly available their due diligence policy to be extended to SMCs and apply every five years or more often if a significant change occurs (instead of every three years as in the Commission’s original proposal). The package also applies to legislation on the resilience of critical entities, where member states need to support SMC critical entities as they implement the obligations, and to trade defence instruments, access to which should be made easier for SMCs alongside SMEs.

Once the mandates have been endorsed by the European Parliament plenary (planned for March 2026), negotiations on the packae with the Council can begin.