A4-0202/98

Resolution on the communication from the Commission on European capital markets for small and medium-sized enterprises: prospects and potential obstacles to progress (COM(97)0187 - C4-0433/97)

The European Parliament,

- having regard to the communication from the Commission (COM(97)0187 - C4-0433/97),

- having regard to the communication from the Commission on the feasibility of the creation of a European Capital Market for smaller entrepreneurially managed growing companies (COM(95)0498) and its own resolution of 4 July 1996 on this subject ((OJ C 211, 22.7.1996, p. 40.)),

- having regard to the report from the Commission on the future operation of the information and cooperation networks in the framework enterprise policy (COM(95)0435) and its own resolution of 4 July 1996 on this subject ((OJ C 211, 22.7.1996, p. 45.)),

- having regard to the report of the Committee on Economic and Monetary Affairs and Industrial Policy (A4-0202/98),

A. whereas SMEs form a crucial part of the EU¨s job-creation strategy, with the Delors White Paper on Growth, Competitiveness and Employment placing SMEs at the heart of the Community¨s policy for generating employment,

B. whereas, with 18 million currently unemployed in the EU, Heads of Government reasserted this commitment at the 1997 Luxembourg employment summit,

C. whereas it is small and micro enterprises in particular that account for more than 80% of European businesses, create jobs and foster regional development,

D. whereas SMEs are particularly valuable in pushing forward new technologies; whereas this reinforces Europe¨s competitiveness by creating high-quality, high-tech jobs in fields such as software, telecommunications, biotechnology and microelectronics,

E. whereas SMEs are equally valuable in developing new activities in the area of eco-business, a market which is considered to be as important for SMEs as the information and communication technology market,

F. whereas an oft-cited barrier to the establishment and expansion of SMEs, especially small and micro enterprises, is the difficulty in obtaining capital for start-ups and investment,

G. whereas it is necessary to boost the formation of associations amongst SMEs, both at European and national level,

H. whereas a Commission communication in 1995 highlighted the need for action, and led indirectly to the establishment of EASDAQ,

I. whereas in its abovementioned resolution of 4 July 1996 the European Parliament welcomed moves to form EASDAQ , but noted that major barriers remained in the way of effective capital markets in Europe for SMEs,

J. whereas the United States has proved itself far more effective than Europe in supporting new ideas, with companies involved in the IT and Internet industries experiencing massive growth rates,

K. whereas part of the reason for America¨s success is the size of its domestic market of 250 million customers who speak the same language and use the same currency,

L. whereas American investors are much more prepared to accept the risks inherent in investing in small companies; whereas Europe¨s big institutional investors are more wary of involvement in SMEs than their American counterparts,

1. Welcomes the Commission's communication on European capital markets for SMEs, which gives a concise assessment of the progress made in the development of SME capital markets in Europe and the obstacles and barriers to further progress;

2. Notes the huge success of NASDAQ, a stock market for SMEs that enables easy investment in small firms to fund their expansion and development;

3. Notes the simplicity with which American private investors can buy shares, and the new opportunities offered by electronic commerce; employee share ownership in the US is exploring new forms of worker participation in firms, and is opening up share ownership to a new public;

4. Notes the lack of common accounting rules in Europe, which is hindering the exchange of expertise between the Member States;

5. Notes that attitudes to investment in Europe are changing, with massive demand for shares during the privatisation of state utilities such as telecom companies, but considers that this demand must now be extended to encompass the higher yielding, but also higher risk stocks on SME capital markets;

6. Commends the establishment in the EU of a number of capital markets for growing SMEs which allow these firms direct access to capital; notes that the range of markets which exists allows both innovative firms and more traditional/mature SMEs the possibility of a listing;

7. Notes that there are currently 50 companies listed on Euro-NM and 22 companies listed on EASDAQ, that the total capital raised is over EUR 170m, and that this has contributed to the creation of more than 10,000 jobs in Europe;

8. Urges the Commission to analyse how direct and indirect share ownership by individuals may be encouraged, with the aim also of identifying best practice, as share-owning traditions vary greatly from one Member State to another, and to give consideration to information campaigns to encourage individuals and organisations to invest in SMEs through these capital markets; calls on the Member States to incorporate incentives in their tax systems to encourage individuals to provide venture capital for SMEs;

9. Commends the Commission on aspects of its Green Paper on Pensions which aim to remove restrictions preventing institutions such as pension funds from buying securities issued in Member States other than their own, which in turn stands in the way of expansion of SME markets;

10. Considers that there are still too many barriers to SME start-ups in the EU; reaffirms its support for the EIB¨s Employment Package, specifically the genuine assumption of risk by the Bank in supporting high-technology and growth-orientated SMEs through loans and venture capital assistance;

11. Urges the adoption of employment-friendly tax policies to make the reduction of the tax burden on labour a priority; considers that lower labour costs will allow rapidly growing SMEs to expand with confidence;

12. Considers that the taxation of capital and assets must not have an adverse effect on the investment of venture capital by individuals;

13. Firmly rejects the ideas for a 'Tobin tax', as such a tax would represent a direct threat to capital markets;

14. Believes Member States should examine whether their bankruptcy laws contain obstacles to the setting-up of new firms which could be removed; points out that the debate on a statute for European companies must also address the subject of bankruptcy;

15. Recalls that the regional dimension in SME start-ups is also hugely important, and that regional successes with Business Links, Euro Info Centres and loan guarantee schemes make a vital contribution to the employment situation;

16. Points out that criteria already exist for listing on European stock markets and that such criteria therefore do not need to be formulated by the Commission or any other institution; SMEs can use those criteria to determine whether they can obtain capital through the stock markets;

17. Notes the shortage of financial skills in smaller firms and is aware of the requirements associated with stock market listing; is therefore of the opinion that training in entrepreneurial skills needs to be developed in the Union;

18. Assumes that the existence of a variety of markets for shares in SMEs is likely to encourage flotation and boost interest in various business sectors, but notes the need for such niche markets to possess sufficient credibility and interest through having enough liquidity and players;

19. Points out that to reduce the requirements for financial information from SMEs would be counter-productive in making potential investors more wary of investing, and believes that a better solution lies in promoting a culture of financial transparency across Europe; observes therefore that sound research into such firms is necessary in the financial sector;

20. Calls upon the Commission to address urgently the lack of a common definition of a public offer in the EU, and to amend the Prospectus Directive (89/298/EEC) ((OJ L 124, 5.5.1989, p. 8.)) to allow for mutual recognition of existing definitions throughout the single market area, applying the definition of the Member State in which the stock market is located;

21. Urges rapid completion of the single market which forms the foundations of the new European capital markets for internationally orientated SMEs, as the success of these markets depends on the implementation and enforcement of single market legislation; takes the view that with strict implementation and enforcement of single market legislation, many of the problems which are faced by these markets in Europe will be overcome;

22. Notes that currency risk is one of the greatest barriers to cross-border transactions, and considers European capital markets to be one of the areas which have most to gain from introduction of the euro; considers further that the single currency will make capital markets more transparent and improve their liquidity, while strength and stability will attract inward investment;

23. Believes that a mix of appropriate regulation and low costs is another key to the success of these markets; takes the view that the wipe-out of a previous generation of 'small cap¨ markets in the 1987 crash was attributable to lax regulation and a consequent lack of confidence;

24. Instructs its President to forward this resolution to the Commission, the Council, the governments of the Member States and the governing bodies of the European Investment Bank, the European Investment Fund and EASDAQ.

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