Changes from report parliamentary committee draft to plenary report

Added17. Strongly emphasises the need to improve the financial literacy of EU citizens and entrepreneurs and promote better saving and investment conditions that enable a shift from saving to investing in an informed and independent manner; calls on the Commission to include entrepreneurship in the scope of the incoming financial literacy strategy and in a toolkit for Member States to enhance coordination in this regard;

Removed14. Calls on the Commission to introduce flexibility in the implementation of Basel III requirements so as to ensure more lending is made available to SMEs and scale-ups; notes that appropriate flexibility could free up financing capacity and boost competitiveness vis-à-vis other jurisdictions in this regard;

Added18. Calls for public funding not to be used as subsidies, but rather as a catalyst to mobilise private investments and make more private funding available to MSMEs; recalls that most of this investment must be private and underlines that this must be stimulated by attractive and stable tax and regulatory frameworks that are appealing to both professional and retail investors; recalls the current structural bias towards loans and considers it necessary to open a debate on the need for equity tax incentives, as well as to encourage venture capital as part of the business model of traditional banking without compromising financial stability;

Removed15. Calls on the Commission to make the securitisation regulatory framework more flexible so as to allow credit institutions to provide further funding to companies and support their growth;

Added19. Highlights that the public sector can play a key role in mobilising private capital, especially in information-asymmetric sectors or regions with underdeveloped financial markets; calls for public instruments to be designed efficiently, with competitive neutrality and a focus on impact, maximising their crowding-in effect on private investment; stresses, to this end, that the European Investment Bank (EIB) Group’s potential must be fully leveraged to crowd in private investment, and it must dedicate more resources to SMEs’ innovation projects, start-ups and scale-ups; highlights, furthermore, the role of the Regional Development Fund, especially in regions with limited credit availability and given the fact that the cost of loans varies across the EU, which disadvantages SMEs in some Member States;

Added20. Takes note of the publication of the review of the securitisation framework and calls on the Commission to make it more flexible so as to allow credit institutions to provide further funding to companies, including SMEs, and support their growth without transparency and credit quality being eroded; stresses, to this end, that the robustness of the significant risk transfer framework must be enhanced by introducing greater risk sensitivity and improving supervisory oversight, thus contributing to simplification;

Added21. Acknowledges the Commission’s aim to develop a blueprint for an EU investment savings account, which should include (i) a simplified tax declaration procedure, (ii) accompanying tax incentives, and (iii) the absence of restrictions on investment geography, sector, deposit limits, or minimum holding periods;

Added22. Recognises the central role played by the private sector in the economic growth and prosperity of the EU; stresses that any progress towards the integration of capital markets must be built on the principles of economic freedom, competition and legal certainty;

Added23. Highlights that a European marketplace for direct secondary transactions, which would allow the trading of shares of late-stage and pre-IPO (initial public offering) start-ups, would enhance the Union’s financing ecosystem as long as it ensures a level playing field among Member States, prevents the concentration of financial activity in only a few jurisdictions, and fully respects national competences;

Added24. Notes that the recast of the Market in Financial Instruments Directive (MiFID II) provides for a dedicated category of SME growth markets that are supposed to cater for the specific needs of smaller companies; calls on the Commission to further develop this instrument by providing a more flexible regulatory regime that fits the needs of small and mid-cap companies;

Bridging the funding gap for scale-ups

Change 8

Changed16.25. Regrets thatthat, as a consequence of the lack of attractive financing options for scale-ups in our market and of a competitive regulatory environment, many European businesses end up using venture capitalists based in non-EU countries and settling in non-EU country markets to scale up their businesses; expresses concern over the growing number of SME failures in the EU; considers it a priority to address the underlying causes, such as the lack of long-term capital, tax pressure during scaling and disproportionate administrative burdens;

Change 9

Changed17.26. Understands that mobilising European institutional investors, notably insurance companiescompanies, banks and pension funds, is key to reducing the scale-up gap; notes that an increase in the share of venture capital funds in Europe is needed to provide more funding to scale-ups;scale-ups, for which a more favourable framework for venture capital financing and safe foreign direct investments in the EU is needed; calls on the Commission to encourage Member States with underdeveloped pension systems to develop supplementary (Pillar 2) pension sectors, which could help build venture capital markets, and to create a regulatory environment that promotes equity investments by institutional investors; recalls the Commission’s commitment to working on risk-absorbing measures to crowd in private funding from commercial banks, investors and venture capital;

Change 10

Removed18. Encourages the Commission to strengthen co-investment platforms as a means to crowd in private investment;

Added27. Encourages the Commission to strengthen co-investment platforms, including regionally anchored vehicles and business-angel networks, to crowd in private capital and close persistent early-stage financing gaps for high-growth, innovation-driven SMEs; calls for the forthcoming European Tech-Champions Initiative 2.0 to be adequately capitalised and for dedicated EU funding schemes that support the fundraising and listing of start-ups and scale-up tech companies; underlines the EIB Group’s mandate to back SMEs, urging it to adopt a more flexible risk-assessment framework and to ensure that the new TechEU Platform is widely accessible across all Member States through streamlined procedures; agrees with the savings and investments union communication on the importance of EU-level public finance and therefore advocates a reorientation of EU funds towards fewer, more flexible programmes that can shift resources between priorities over time;

Change 11

Changed19.28. Highlights the importance of channellingcreating the right conditions for citizens’ savings to be channelled into productive investment instruments that can benefit SMEs and scale-ups; encourages the Commission to promoteeliminate simpleregulatory disincentives for retail investment products, and secureto ensure that retail investors are adequately protected when taking investment channelsdecisions; recognises that crowdfunding and technologies such as smart contracts and decentralised finance can broaden SMEs’ access to eliminatedirect finance, and urges the Commission to review its regulatory disincentives;framework with an innovation-focused, proportionate risk approach;

Change 12

Changed20.29. Emphasises that a more integrated innovation ecosystem, with networks of universities, start-ups, large enterprises and venture capitalists, underpinned by access to testing facilities and technology infrastructure, is instrumental in helping businesses scale up; highlights the positive role that entrepreneur forums, private accelerators and mentoring networks can play in supporting the growth of start-ups, and calls on the Commission and the Member States to build on initiatives such as the Trusted Investors Network, which aims to mobilise private capital in support of Europe’s innovation ambitions;

Reinforcement of a competitive ecosystem in the EU

Change 13

Changed21.30. Considers that a competitive ecosystem in the EU must be composed of both strong national markets and that national differences playa anstrong importantinternal rolemarket, inand fosteringthat healthy competition between Member StatesStates, andespecially in incentivisingterms of economic and regulatory approaches, incentivises them to keep their economies dynamic and attractive;attractive, but recalls that Member States are not to create barriers to the efficient cross-border allocation of capital or set priorities solely on the basis of the geographical origin of funding; calls for the Commission’s initiatives to respect and build on best practices that have already been successful in the Member States;

Change 14

Changed22.31. Urges the Commission to focus on enabling conditions for markets, relevant common denominators for the Member StatesStates, and voluntary and complementary frameworks,frameworks inaimed respectat ofgradually subsidiarity;reducing market fragmentation;

Change 15

Changed23.32. Calls on the Commission to clarify what the 28th legal regime willwould consist of and recalls thatthat, if it mustwere to be voluntaryintroduced, andit would have to be voluntary, fully respect Member States’ regimes;regimes, and be developed in close cooperation with the private sector in order to offer a simplified framework that attracts private investors to European start-ups, scale-ups and SMEs and helps European start-ups become global tech champions;

Change 16

Changed24.33. Calls on the Commission, with the support of Member State authorities, to develop businesssimplified guidelinesguidance tools and one-stop-shops for SMEs and scale-ups in order to help them navigate different legal systems across the EU on matters such as corporate law, labour law, insolvency law, tax law, intellectual property rights and national funding possibilities; calls on the Commission, furthermore, to improve SME access-to-finance monitoring tools, including the development of EU-wide indicators and dashboards that can help them identify opportunities across Member States without creating new reporting obligations or increasing administrative burdens;

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34. Instructs its President to forward this resolution to the Council and the Commission.