Explanatory Memorandum to COM(2025)501 - Amendment of Regulations (EU) 2016/679, (EU) 2016/1036, (EU) 2016/1037, (EU) 2017/1129, (EU) 2023/1542 and (EU) 2024/573 as regards the extension of certain mitigating measures available for small and medium sized enterprises to small mid-cap enterprises and further simplification measures

Please note

This page contains a limited version of this dossier in the EU Monitor.



1.1.CONTEXT OF THE PROPOSAL

Reasons for and objectives of the proposal

European businesses create employment, innovation and prosperity. Competitiveness and productivity are essential conditions for businesses to flourish; they have been at the heart of EU policy for decades 1 . To set the EU economy on a sustainable growth path, the EU and its Member States need to make structural improvements to the business environment, including through well-focused investment and regulatory measures.

President von der Leyen has set out a plan for Europe’s sustainable prosperity and competitiveness in the political guidelines for the European Commission’s 2024-2029 term 2 . Making business easier and deepening the Single Market are among the plan’s key priorities.

The Commission’s better regulation agenda 3 also supports the competitiveness of European enterprises by aiming to ensure that EU laws deliver on their objectives without imposing unnecessary burden. In 2023, the Commission identified the need to rationalise and simplify reporting requirements for enterprises and administrations 4 and committed to reduce them by 25%, without undermining the policy objectives of the relevant legislation. This commitment was subsequently increased to 25% reduction of all administrative costs and 35% for small and medium-sized enterprises (SMEs) 5 .

Mario Draghi in his report on ‘The future of European competitiveness’ 6 , argues that EU regulation imposes a proportionally higher burden on SMEs and small mid-cap enterprises (SMCs) 7 than on larger enterprises. The report suggests that the Commission should extend the existing mitigation measures, currently available to SMEs, to small mid-caps to extend proportionality in EU law to them. The Draghi report also observes that EU lacks a commonly agreed definition of small mid-caps and readily available statistical data.

According to Enrico Letta’s ‘Much more than a market’ report, distinguishing between mid-caps and large corporations in EU regulations will enable more suitable rules, fostering their growth and equitable participation in the Single Market, especially during crises 8 . Mid-cap enterprises can therefore contribute to completing the Single Market and making it work better.

Back on 12 September 2023, the Commission published the SME Relief Package 9 , announcing its goal to help small and medium sized enterprises to compete and grow, by -amongst others - being attentive to the needs of enterprises that outgrow the thresholds of the SME definition 10 , and the broader range of small mid-cap enterprises (SMCs). Under Action 18 of the relief package, it was announced that the Commission would ‘develop a harmonised definition for small mid-cap enterprises, build a dataset based on such definition and assess possible measures to support these enterprises in their growth (including potential application in adapted form of certain measures favouring SMEs)’.

A study to ‘Map, measure and portray the EU mid-cap landscape’ 11 shows that mid-cap enterprises play a vital role in the EU economy, providing 13% of overall employment. They are prominently present in industrial ecosystems that are key to the EU’s competitiveness and technological sovereignty, such as electronics, aerospace and defence, energy, energy-intensive industries and health. Mid-caps represent a segment of the business sector that clearly distinguishes itself from SMEs, but also from large firms. Compared to SMEs, they tend to demonstrate a higher pace of growth - around 20% of them were SMEs three years earlier, and a higher level of innovation and digitisation, although they face certain similar challenges such as administrative burden and share the need for more proportionality in new legislation and for targeted support. To enable the smooth transition of SMEs into small mid-cap enterprises, it is important to address these challenges in a coherent manner.

The objective of this proposal is indeed to provide targeted policy support that can help companies to scale, in particular in relevant and important sectors. In the current economic context and with a view to the sectors with high shares of companies in the bracket 250-749 employees 12 the definition for SMCs therefore covers enterprises that are three times the size of SMEs 13 . This is to better accompany scaling up of enterprises and to cover a larger number of companies. The Commission has issued a recommendation formalising such definition (Commission Recommendation of 21.5.2025 on the definition of small mid-cap enterprises - C(2025) 3500 final), as part of a simplification package for small mid-caps, which also includes this proposal for a Directive that introduces into existing legislation mitigating measures for SMCs.

A definition of small mid-cap enterprises is already in use under the General Block Exemption Regulation 14 and the Guidance on Risk Finance 15 , for the purpose of identified market failures susceptible to be addressed through targeted public financial support from national resources. The purpose of a general SMC definition is, however, not to replicate the definition used in State aid rules per se, but to serve as a basis for targeted policy support that can help companies to scale in relevant and important sectors. The definition of SMCs in said Recommendation remains, of course, without prejudice to the thresholds deemed appropriate in the State aid context.

In light of the above, the present proposal aims to include consideration for SMCs and proportionality when it comes to administrative burden, following the logic explained above to cover enterprises that are three times the size of SMEs, in a number of legal acts where mitigating or supporting measures are already available for SMEs. Therefore, in acts where SMEs are defined by reference to parts of the Annex to Commission Recommendation 2003/361/EC, such as the thresholds set out in Article 2 of that Recommendation, a similar approach will be applied when defining SMCs.

The aim is to support SMCs dealing with similar challenges to those of SMEs. Insofar as they are still at their growth stage, they may equally benefit from proportionality in regulation, rather than being subject to the same rules as large enterprises which are better equipped and have more resources to deal with these rules

This proposal thus aims to extend to SMCs certain provisions currently applied to SMEs and propose simplification measures to the benefit of SMEs and SMCs in the following legislation acts:

·Regulation (EU) 2016/679 lays down provisions on general data protection (GDPR). Article 30 of Regulation (EU) 2016/679 states that each controller and processor must maintain a record of processing activities and sets out what information this record should contain. Paragraph 5 of Article 30 provides for a derogation for SMEs and organisations with fewer than 250 employees, whereby such entities do not have to keep such record, provided that certain conditions are fulfilled. This proposal aims to simplify and clarify the derogation from the record-keeping obligation under that article by making the record-keeping mandatory only when the processing activities are likely to result in a ‘high risk’ to data subjects’ rights and freedoms. At the same time, the scope of the derogation should be broadened to include SMCs and organisations with fewer than 750 employees.

Article 40 of Regulation (EU) 2016/679 lays down that the Member States, the supervisory authorities, the Board, and the Commission must encourage associations and other bodies representing categories of controllers or processors to draw up codes of conduct, taking account of the specific features of the various processing sectors and the specific needs of micro, small and medium-sized enterprises. The scope of this provision should be extended to SMCs, so that their specific needs are also taken into account when codes of conduct are drawn up.

Article 42 of Regulation (EU) 2016/679 lays down that the Member States, the supervisory authorities, the Board and the Commission must encourage, in particular at Union level, the establishment of data protection certification mechanisms and of data protection seals and marks by certification bodies referred to in Article 43 GDPR, or by competent supervisory authorities, and in that context the specific needs of SMEs shall be taken into account. The scope of this provision should be extended to SMCs, so that their specific needs are also taken into account when certifications are issued.

·Regulation (EU) 2016/1036 on protection against dumped imports from countries not members of the European Union, includes provisions to facilitate access of SMEs to trade defence instruments, namely by providing general information and, where possible, facilitating procedures for them. Article 5 (1a) of Regulation (EU) 2016/1036 aims at facilitating access to the trade defence instrument. In that context, assistance to SMEs is provided through a dedicated helpdesk which helps them with general information and explanations on procedures and on how to submit a complaint, or by releasing standard questionnaires. In order to ensure that SMCs also benefit from the guidance and assistance of a helpdesk, the scope of this provision should be extended to them. Article 6 (9) of Regulation (EU) 2016/1036 provides for the timing of the investigation procedures. It lays down a provision whereby investigation periods shall, whenever possible, coincide with the financial year for fragmented sectors largely composed of SMEs. The scope of this provision should be extended to SMCs so that they also benefit from the facilitation and predictability brought about by aligning investigation periods with the financial year.

·Regulation (EU) 2016/1037 on protection against subsidised imports from countries not members of the European Union, includes provisions to facilitate access to the trade defence instrument. In that context, assistance to SMEs is provided through a dedicated Helpdesk which helps them with general information and explanations on procedures and on how to submit a complaint, or by releasing standard questionnaires. In order to ensure that SMCs also benefit from the guidance and assistance of a helpdesk, the scope of this provision should be extended to them. Article 11 (9) of Regulation (EU) 2016/1037 provides for the timing of the investigation procedures. It lays down a provision whereby investigation periods shall, whenever possible, coincide with the financial year for fragmented sectors largely composed of SMEs. The scope of this provision should be extended to SMCs so that they also benefit from the facilitation and predictability brought about by aligning investigation proceedings with the financial year.

·Regulation (EU) 2017/1129, as amended by Regulation (EU) 2024/2809, refers to the possibility of creating an alleviated form of a prospectus – an EU Growth issuance prospectus. That type of prospectus may typically be drawn up by SMEs and, in certain cases, also by other types of companies. It would be appropriate to extend the use of that alleviated prospectus also to SMCs to reduce their cost of listing and potentially make those companies more attractive to investors, thus facilitating the access to funding by SMCs.

Since Regulation (EU) 2017/1129 has been amended by Regulation (EU) 2024/2809, the provision concerning the EU Growth issuance prospectus will apply as of 5 March 2026. It is therefore appropriate to also delay the application date of the amendments to Regulation (EU) 2017/1129 set out in this Regulation until 5 March 2026.

·Regulation (EU) 2023/1542 lays down provisions on batteries. Article 47 of Regulation (EU) 2023/1542 exempts SMEs from certain obligations on battery due diligence policies. The scope of this provision should be extended to SMCs, so that they are also exempted from these obligations. Further to Article 52, the economic operators referred to in Article 48(1) are required - on an annual basis – to review and make publicly available, including on the Internet, a report on their battery due diligence policy. With a view to reducing the administrative burden on economic operators, this requirement to review and make publicly available their due diligence policy should be amended so that it applies every three years instead of annually. This burden reduction measure should apply to all economic operators, including SMCs.

·Regulation (EU) 2024/573 on fluorinated greenhouse gases 16 (F-gas Regulation) lays down provisions, among others, on products and equipment containing fluorinated greenhouse gases. The F-gas Regulation that entered into force in 2024 expanded a registration requirement in the F-gas Portal to all imports of products and equipment, including those imports that are not subject to reporting requirements. It also includes a new registration obligation for exports of products and equipment containing F-gases, including those exports that are not subject to an export restriction. If a trader is not able to present a valid registration in the F-gas Portal, customs should block the goods. Such trade licenses mainly serve the purpose of facilitating enforcement.

Since the entry into force of the Regulation, the Commission received many registration requests and inquiries from traders in products and equipment containing F-gases. They mostly concern relatively small companies that trade with used cars that have F-gases in the air-conditioning equipment, for which there are no restrictions, that require enforcement.

To register, importers and exporters must submit an electronic application form to the Commission and provide the required information related to their business activities and their legal and financial identity. The Commission validates the registration in the F-gas Portal.

It appears that this requirement is not fully proportionate, and that the registration requirement should be better targeted to companies that perform activities that are covered by other obligations in the F-gas Regulation to serve the purpose of facilitating the enforcement. It is therefore proposed to limit the obligation to imports that also need to be reported and to exports that are covered by limitations on the global warming potential of the F-gas contained in the products and equipment. Furthermore, this amendment is in line with the Commission’s Impact Assessment 17 that did not include any extended obligation for importers and exporters of products and equipment in the preferred option, while at the same time respecting the intervention logic regarding the need to facilitate the enforcement of a new limitation on certain exported products and equipment that was introduced by the co-legislators. This simplification is expected to mainly benefit SMEs and SMCs.

Consistency with existing policy provisions in the policy area

This proposal is part of a package of measures aimed at cutting red tape for SMCs by extending to them certain provisions that SMEs currently benefit from. Its purpose is to deliver on the Commission’s commitment to i) make business easier and reduce administrative burden, and ii) extend proportionality in EU law to SMCs.

The rationalisation introduced by these measures will not affect the achievement of the objectives in the concerned policy area nor the rationale of the legislative acts.

The proposed amendment to the F-gas Regulation only targets registration requirements for importers and exporters of products and equipment, typically in small quantities, which do not affect the effectiveness of the Regulation or the fulfilment of international obligations under the Montreal Protocol.

Consistency with other Union policies

The current proposal intends to mirror the SMCs situation to the one of SMEs in a number of legal acts, covering different policy areas. It aims at making the achievement of the objectives of those legislations more efficient and less burdensome for enterprises, organisations and public authorities.

2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

Legal basis

This proposal is based on Article 16, Article 114, Article 192 (1) and Article 207 (2) of the Treaty on the Functioning of the European Union, which are the legal basis of the acts it amends. To the extent that this Regulation amends Regulation (EU) 2023/1542, the appropriate legal basis in so far as those amendments are concerned, is Article 114. This proposal does not amend specific rules on the management of waste batteries which would be based on Article 192(1) of the Treaty. To the extent that this Regulation amends Regulation (EU) 2024/573 the appropriate legal basis, in so far as those amendments are concerned, is Article 192(1) TFEU.

All the legal acts referred to in point 1 and affected by this proposal contain similar provisions that are intended to cut red tape for SMEs or help them fulfil the obligations imposed on them through the relevant acts, with the aim of making such legislation easier to apply and less burdensome for them. In order to extend this proportionality where administrative burden is concerned, it is considered warranted to extend the provisions towards small mid-caps.

Subsidiarity (for non-exclusive competence)

The obligations imposed on companies are done so directly and indirectly by Union law and can therefore only be amended at Union level. Member States, enterprises, and the Commission will benefit from extending to SMCs the rules currently applicable to SMEs, as well as from the amendment of the F-gas Regulation.

Proportionality

Extending to SMCs certain provisions already applicable to SMEs simplifies the legal framework by making minimum changes to existing obligations for Member States, which should hereinafter confer to SMCs the same treatment as SMEs. The proposal is limited to those changes that are necessary to ensure SMCs benefit from the same legal framework as SMEs.

The targeted amendments only concern aspects applicable to SMEs (defined in various ways, depending on the context of the legal act and the choice of the co-legislator) which will now be extended to SMCs and which are suitable for inclusion in a single proposal. The definitions of SMCs that are to be included in the acts will follow the approach to define SMEs chosen by the co-legislator for those acts, and cover enterprises that are three times the size of those SMEs.

As regards the amendment of the F-gas Regulation, the simplification is ensuring that the proportionality of the registration requirement is improved.

3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS

Ex-post evaluations/fitness checks of existing legislation

N/A.

Stakeholder consultations

In line with the commitment made in the SME Relief Package 18 to assess possible measures to support small mid-cap enterprises in their growth, the Commission has analysed the acquis with a particular focus on initiatives either considered as burdensome or including dedicated lighter regimes or mitigating measures for SMEs. The screening has revealed a range of possibilities to ensure better proportionality for small mid-cap enterprises.

The Commission has also engaged with and listened to the business community to determine how to use the definition of small mid-cap enterprises for horizontal policy purposes, and to identify fields for proportionate regulatory, funding or policy measures. In that respect, the position papers sent by stakeholders make a number of recommendations, such as ‘considering the specific characteristics of mid-caps in the better regulation context’, or ‘ensuring that EU regulation is more sensitive to business size’.

The Commission consulted European industry representatives for specific ideas on providing tailored support to SMCs. This was done through bilateral meetings and a ‘Roundtable on Simplification’ on the necessary policy support for small mid-cap enterprises on the 6th February 2025.

As regards the F-gas Regulation, the Commission is in direct contact with all traders that need to register in the F-gas Portal. During the early months of 2025, the Commission received around 2000 registration requests per month, typically from micro and small enterprises that were not covered by the requirement to register under the previous F-gas Regulation and that have no prior knowledge about the F-gas Regulation or the F-gas Portal. Many of those stakeholders had equipment that was being blocked by customs at the border and consider the requirements to register to be disproportionate. In addition, one Member State in which many of the traders are active, has requested the Commission to simplify the rules.

The results of all these discussions have contributed to the list of proposals put forward in this document.

Collection and use of expertise

The measures currently applicable to SMEs to be extended to SMCs have been identified following a process of internal and external scrutiny of existing legislation and are based on the experience of implementing the related legislation. Since this is one step in the process of continuous assessment of the need for mitigating measures for small enterprises so that they can comply with obligations arising from Union legislation, the scrutiny of the administrative burden and its impact on stakeholders will continue.

Impact assessment

The proposal concerns limited and targeted changes of legislation in view of simplifying it or extending to SMCs certain measures currently applicable to SMEs. They are based on experience from implementing legislation. The changes only ensure a more efficient and effective implementation. Their targeted nature and the lack of relevant policy options make an impact assessment not necessary. However, the attached staff working document looks at elements on the impact of such measures, including quantification of expected savings.

As regards the amendment of the F-gas Regulation, the simplification is in line with the preferred option and intervention logic in the impact assessment accompanying the Commission’s proposal in 2022. The amendment will reduce the administrative costs for traders, in particular SMEs and SMCs, while having no negative impacts on reaching the climate objectives of that Regulation. On the contrary, it will enable the Member States’ authorities, customs and the Commission to instead focus on cases that are relevant for enforcing restrictions in the F-gas Regulation.

Regulatory fitness and simplification

Under the regulatory fitness and performance programme (REFIT), the Commission ensures that its legislation is fit for purpose, targeted to the needs of stakeholders, and minimises burdens while achieving its objectives. This proposal is therefore part of the REFIT programme, reducing unnecessary burdens for SMCs, by bringing the rules applicable to SMCs into line with those applicable to SMEs.

This is a REFIT proposal, aiming to simplify legislation and cut burdens for stakeholders.

Fundamental rights

N/A.

•4.BUDGETARY IMPLICATIONS

N/A.

5. OTHER ELEMENTS

Implementation plans and monitoring, evaluation and reporting arrangements

N/A.

Detailed explanation of the specific provisions of the proposal

1.

Regarding Regulation (EU) 2016/679 on General Data Protection (GDPR):


Article 30 states that each controller and processor shall maintain a record of processing activities and sets out what information this record should contain. Paragraph 5 of this Article provides for a derogation for SMEs and organisations with fewer than 250 employees, whereby such entities do not have to keep such a record, provided that certain conditions are fulfilled. This proposal aims to simplify and clarify the derogation from the record-keeping obligation under Article 30(5) by making the record-keeping mandatory only when the processing activities are likely to result in a ‘high risk’ to data subjects’ rights and freedoms. At the same time, the scope of the derogation should be broadened to include SMCs and organisations with fewer than 750 employees. Article 30(5) should therefore be amended accordingly.

A recital in this amending Regulation will clarify that also SMCs are exempted from the record-keeping obligation, unless their processing is likely to result in a ‘high risk’ to data subjects, as defined in Article 35, and that the processing of special categories of personal data in accordance with Article 9(2)(b) does not, as such, trigger the obligation to maintain records of processing.

Article 40 lays down that the Member States, the supervisory authorities, the Board and the Commission must encourage associations and other bodies representing categories of controllers or processors to draw up codes of conduct, taking account of the specific features of the various processing sectors and the specific needs of micro, small and medium-sized enterprises. The scope of this provision should be extended to SMCs, so that their specific needs are also considered when drawing up codes of conduct. Consequently, a reference to SMCs should be added to Article 40(1).

Article 42 lays down that the Member States, the supervisory authorities, the Board and the Commission must encourage, in particular at Union level, the establishment of data protection certification mechanisms and of data protection seals and marks by the certification bodies referred to in Article 43, or by competent supervisory authorities, and in that context, the specific needs of SMEs must be taken into account. The scope of this provision should be extended to SMCs, so that their specific needs are also considered when certifications are issued. A reference to SMCs should therefore be added to Article 42(1).

Regarding Regulation (EU) 2016/1036 on protection against dumped imports from countries not members of the European Union:

Article 5 (1a) lays down that the Commission must facilitate access to the trade defence instrument for diverse and fragmented industry sectors, largely composed of SMEs, through a dedicated SME helpdesk, for example by raising awareness, providing general information and explanations on procedures and on how to submit a complaint, by releasing standard questionnaires in all official languages of the Union and by replying to general, non-case-specific queries. This Article should be amended to extend its scope to SMCs and have them benefit equally from the guidance and assistance of a helpdesk. Definitions of both SMEs and SMCs should also be included.

Article 6 (9) lays down that investigation periods must, whenever possible, especially in the case of diverse and fragmented sectors largely composed of SMEs, coincide with the financial year. This Article should be amended to extend its scope to SMCs in order for them to equally benefit from this provision.

Regarding Regulation (EU) 2016/1037 on protection against subsidised imports from countries not members of the European Union:

Article 10 (1a) lays down that the Commission must facilitate access to the trade defence instrument for diverse and fragmented industry sectors, largely composed of SMEs, through a dedicated SME helpdesk, for example by raising awareness, providing general information and explanations on procedures and on how to submit a complaint, by releasing standard questionnaires in all official languages of the Union and by replying to general, non-case-specific queries. This Article should be amended to extend its scope to SMCs and have them benefit from the guidance and assistance of a helpdesk. Definitions of both SMEs and SMCs should also be included.

Article 11 (9) lays down that investigation periods must, whenever possible, especially in the case of diverse and fragmented sectors largely composed of SMEs, coincide with the financial year. This Article should be amended to extend its scope to SMCs in order for them to equally benefit from this provision.

Regarding Regulation (EU) 2017/1129 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market:

Article 1 i and (5) of Regulation (EU) 2017/1129 sets out exemptions from the prospectus obligation for certain offers of securities to the public or admissions to trading on a regulated market. This article should be amended to include a new exemption from the obligation to publish a prospectus for offers of securities to the public where such offers result from the conversion of liabilities executed by EU resolution authorities under the EU framework for the resolution of banks or insurers (Directives 2014/59/EU and (EU) 2025/1) or by third-country authorities under a comparable legal framework. Additionally, the existing resolution-specific exemption from the obligation to publish a prospectus for the admission of securities to trading on an EU regulated market under Article 1(5), point (c) of Regulation (EU) 2017/1129 should be extended to actions taken by third-country authorities in a similar context.

Article 2 of Regulation (EU) 2017/1129 sets out the relevant definitions in the Regulation. This Article should be amended to introduce a definition for SMCs as a distinct category of enterprises from SMEs and to introduce, via a cross-reference to Article 2(1), points (88) and (90), of Directive 2014/59/EU and to Article 2, points (72) and (74), of Directive (EU) 2025/1, definitions for a ‘relevant third-country authority’ and ‘third-country resolution proceedings’.

Article 15a of Regulation (EU) 2017/1129, as amended by Regulation (EU) 2024/2809, refers to the possibility of creating an alleviated form of a prospectus – an EU Growth issuance prospectus. That type of prospectus may typically be drawn up by SMEs and, in certain cases, also by other types of enterprises. The use of that alleviated prospectus should also be extended to SMCs to reduce their cost of listing and potentially make those enterprises more attractive to investors, thus facilitating SMC access to funding.

2.

Regarding Regulation (EU) 2023/1542 on batteries and waste batteries:


Article 47 exempts SMEs from certain obligations on battery due diligence policies. SMEs are described as ‘economic operators that had a net turnover of less than EUR 40 million in the financial year preceding the last financial year, and that are not part of a group, consisting of parent and subsidiary undertakings, which, on a consolidated basis, exceeds the limit of EUR 40 million’. The scope of this provision should be extended to SMCs, so that they are equally exempted from these obligations. To ensure consistency, SMCs should be described in the same way bearing in mind that they are entities three times the size of SMEs, i.e. based on a net turnover which should therefore be less than EUR 150 million.

Further to Article 52, the economic operators referred to in Article 48(1) are required - on an annual basis – to review and make publicly available, including on the internet, a report on their battery due diligence policy. With a view to reducing the administrative burden on economic operators, this requirement to review and make publicly available their due diligence policy should be amended so that it applies every three years instead of annually. This burden reduction measure should apply to all economic operators, including SMCs.

Regarding Regulation (EU) 2024/573 on fluorinated greenhouse gases:

Article 20(4)(a) currently requires all importers and all exporters of products and equipment to register in the F-gas Portal. In accordance with Article 20(5), a valid registration in the F-gas Portal at the moment of import or export constitutes a required licence. To ensure that the requirement to register in the F-gas Portal is targeted at activities that are relevant for enforcement, Article 20(4)(a) is amended so that the registration requirement for imported products and equipment is limited to those imports subject to reporting requirements (which include de-minimis thresholds), and the registration requirement for exported products and equipment is removed, except if it concerns exports of certain products and equipment with F-gases having a Global Warming Potential of 1000 or more that are subject to an export restriction. This simplification measure is expected to mainly benefit SMEs and SMCs.