Access to capital markets finance for SMEs: Prospectus Directive consultation will be key

As we noted in a previous blog post, the European Commission in February published a Green Paper setting out a consultation on building a Capital Markets Union. On Wednesday last week, the Commission published an Action Plan setting out its priorities following the consultation.

The Commission’s Action Plan identifies a number of priorities, including modernising the Prospectus Directive, launching a package of measures to support venture capital and equity financing in the EU and tackling the barriers that stand in the way of cross-border investment.

The Quoted Companies Alliance, which champions the interests of small to mid-sized quoted companies, welcomed the measured approach of the Commission to enhancing access to finance, but did make the point that very few of the measures announced in the Action Plan focus on directly helping companies to raise public equity finance and instead focus more on private equity, venture capital, bank lending and pension funds. As a result, the European Commission’s upcoming proposals on the Prospectus Directive will, in the QCA’s view, be particularly important in ensuring that growth companies are able to raise finance efficiently and access public equity markets.