New EU Capital Market Reforms: A Boost for SMEs Seeking Investment

The EU has introduced new rules to help small and medium businesses access capital markets more easily. These changes aim to make public markets more attractive. They will fully apply from March 5, 2026, and June 5, 2026, simplifying the listing process and lowering costs for companies going public.

Easing the Path to Public Capital Markets

One of the core objectives of the reform is to make it easier for SMEs to issue shares and raise capital in public markets. Traditionally, many SMEs have faced significant regulatory burdens and high costs associated with initial public offerings (IPOs) and ongoing market compliance. The new rules address these concerns by:

• Streamlining IPO regulations – The revised Prospectus Regulation reduces administrative complexity, making it cheaper and faster for SMEs to prepare and publish a prospectus.

• Reducing disclosure burdens – Companies already known to investors will benefit from simplified requirements for follow-on share issuances.

• Standardizing prospectuses – A new format ensures that investors receive clear, concise, and comparable information.

Simplifying Compliance for Listed Companies

For businesses that have already gone public, the reforms introduce further improvements:

• Lighter reporting requirements – The revised Market Abuse Regulation provides more clarity on what constitutes inside information and reduces the risk of unnecessary disclosures.

• Digitalization and accessibility – Companies will now be able to issue prospectuses exclusively in digital form, with an option to prepare them in English, making cross-border investment easier.

• New SME growth market documentation – Instead of the previous “EU Growth Prospectus,” companies listed on SME Growth Markets will use a shortened EU Growth Issuance Document, further simplifying compliance.

A More Attractive Market for Investors and Businesses

The EU has recognized that, compared to markets in the US or Asia, European public capital markets have not been as attractive for SMEs. These reforms aim to close this gap by:

• Harmonizing rules across the EU, reducing legal fragmentation.

• Increasing the threshold for exemption from prospectus requirements to EUR 12 million, making it easier for smaller companies to raise funds.

• Enhancing investor confidence by ensuring standardized and easily accessible company information.

What This Means for Businesses

For growing companies, particularly in Central and Eastern Europe, these changes could unlock new opportunities to access funding. By reducing bureaucracy and costs, the EU hopes to encourage more SMEs to take advantage of public markets as a viable financing option.

By Mgr. Radek Werich LL.M.

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