EU Omnibus IV: 0further simplifications for businesses

On 21 May 2025, the European Commission issued its fourth package of simplification legislation (Omnibus IV) as part of the EU’s commitment to simplifying rules and reducing the administrative burdens placed on EU businesses. The latest package includes a new draft directive and regulation which will amend key pieces of legislation, including the General Data Protection Regulation (EU) 2016/679 (GDPR), the Prospectus Regulation (EU) 2017/1129, and the Markets in Financial Instruments Directive (EU) 2014/65 (MiFID). Omnibus IV will open up certain advantages and exemptions – currently the preserve of small and medium-sized enterprises (SMEs) –to a wider cohort of EU enterprises.

Introducing ‘small mid-caps’

The headline change proposed by Omnibus IV is the creation of the new company type of ‘small mid-cap’ (SMC). Companies with fewer than 750 employees and either up to €150m in turnover or up to €129m in total assets will qualify as SMCs. This new designation will be entitled to avail of some of the benefits and derogations currently accorded to SMEs.

By introducing a standardised SMC designation, the Commission seeks to recognise the importance of these companies to the EU’s economic ecosystem and to mitigate the increase in obligations faced by companies which currently become large enterprises once they exceed 250 employees. It is estimated that nearly 38,000 companies in the EU will benefit from this new designation.

The new designation is being introduced by way of a Commission Recommendation on the definition of small mid-cap enterprises, which recommends the use of a common definition by Member States, the European Investment Bank and the European Investment Fund. The Recommendation advises that the criterion of employee numbers (the ‘staff headcount criterion’) is the main criterion for determining whether a company qualifies as an SMC. An enterprise that satisfies the staff headcount criterion should be excluded from the definition of SMC only if both its turnover and its balance sheet totals exceed the ceilings set out in the Recommendation.

The Annex to the Recommendation offers more detailed guidance on the definition, including on how a distinction should be made between various types of enterprises, depending on whether they are autonomous, publicly funded, or linked to other enterprises. 

Legislative impact

Extending certain SME benefits to SMCs involves the amendment of a number of primary legislative acts as follows:

1. GDPR

The simplified record-keeping obligations applied to SMEs under the GDPR will be extended to SMCs. This means that entities with fewer than 750 employees will only be required to maintain records on the processing of personal data when the processing is ‘high risk’ under the GDPR.

2. MiFID

Access to SME growth markets will be extended to SMCs.

3. Prospectus Regulation

SMCs will be able to use the simplified EU Growth issuance prospectus from 5 March 2026 (when this new form of prospectus becomes available).

4. Regulation (EU) 2016/1036 on protection against dumped imports

5. Regulation (EU) 2016/1037 on protection against subsidised imports 

These two regulations are part of the EU’s trade defence system, which allows the EU to investigate and address dumping and subsidisation by non-EU countries. Once amended, SMCs will have access to a helpdesk offering information on trade defence to SMEs, and it will also be easier for SMCs to provide data in investigations.  

6. Critical entities resilience Directive (EU) 2022/2557 

Each Member State must adopt a strategy to enhance the resilience of critical entities by 17 January 2026. In this strategy, Member States must describe the measures they already have in place that facilitate the implementation of the obligations by the SMEs that are identified as critical entities. This requirement will now include SMCs identified as critical entities.

7. Fluorinated greenhouse gas Regulation (EU) 2024/573 (F-gas Regulation)

The proposed amendments to the F-gas Regulation are not specific to SMCs, but have been devised with the intention of relieving the burden on these smaller companies. The Commission proposes limiting the registration requirement under the F-gas Regulation to imports already subject to reporting requirements (which include de-minimis thresholds) and to exports that are covered by limitations on the global warming potential of the F-gas contained in the products and equipment.

8. Batteries Regulation (EU) 2023/1542 

The proposed amendments to the Batteries Regulation are not specific to SMCs, but will benefit many such companies nonetheless. The Batteries Regulation sets due diligence rules for operators who must verify the source of raw materials used for batteries placed on the EU market. Companies having a net annual turnover of less than €40m are currently except from this requirement. If the proposed amending regulation is introduced, it will expand this exemption to companies with a net turnover of less than €150m. The Commission also proposes postponing these due diligence requirements by two years until 18 August 2027 and changing the frequency of public reporting for in-scope companies from yearly to once every three years.

9. Digitalisation of product information

Finally, Omnibus IV includes a directive and a regulation which will eliminate the requirement for paper-based declarations of conformity and product information documents for certain products (including electrical and electronic equipment, and waste batteries). The new legislation will also provide easier ways for companies to demonstrate that their products conform to EU requirements where harmonised standards are not available.

Further information on all of the above is available in the Commission's Q&A and in the proposal documents. All of the proposals must go through the EU's ordinary legislative procedure, so most likely will not become law before Q4, 2026 at the earliest. However, the due diligence obligations under the Batteries Regulation are due to come into effect on 18 August 2025, so this proposal will need to be fast-tracked.

For further information in relation to this topic, please contact Anne O'Neill, Senior Knowledge Executive or your usual ALG Corporate M&A contact.

Date published: 30 May 2025