EU vows to cut stock market red tape for small firms

EUROPEAN commissioners have unveiled plans to make it easier for small firms to list on stock markets and raise capital after figures showed businesses were still struggling to access traditional bank finance.

Following yesterday's SME finance forum in Brussels, markets commissioner Michel Barnier and industry commissioner Antonio Tajani pledged to review European Union directives on listed companies.

They said a conference would be organised for 11 June to review the directive on transparency obligations and that the directive on market abuse would also be examined.

The commissioners said a "think small first" principle needed to be applied to reduce the burden on small firms that wanted to float on the continents' stock exchanges.

Barnier said: "Capital markets must remain attractive to SMEs.

"One improvement would be for listing requirements to be proportionate to the size of issuers – without undermining investor protection. And we also need to act to attract investors' interest in smaller issuers."

The commissioners said medium-sized firms were being disregarded by investors and that, at present, investment and liquidity were concentrated in the very large stocks, to the detriment of smaller firms seeking to raise capital.

A spokesman for the Federation of Small Businesses (FSB) in Scotland said: "This is encouraging but will not be suitable for a significant proportion of the small business community. It can only ever be part of the solution.

"In Scotland, we need more banks on our high streets, the introduction of a credit adjudicator and the creation of a post office bank."

Only 39 per cent of FSB members are limited companies so the relevance of listings is limited, the spokesman added.

The European Commission said it also wanted to make an "efficient European venture capital market a reality" to provide investment in "innovative firms with high-growth potential".

Insurance firms and pension funds should be able to invest in innovative businesses through venture capital funds that are large enough to be able to benefit from economies of scale and scope, the commission said.