QA2017-66 - Guidance T01.00

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Feb 01, 2024
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QA2017-66

Question


As per SRB’s instructions Micro and SME are “defined with regard to the annual turnover criterion referred to in Article 2 (1) of the Annex to Commission Recommendation 2003/361/EC (i.e. annual turnover not exceeding 50 million euro).” Since Article 2 (1) of the Annex to Commission Recommendation 2003/361/EC foresees the following three attributes in order to assess whether a counterpart can be included among Micro and SME: a. fewer than 250 employees; and b. annual turnover not exceeding EUR 50 million, and/or c. an annual balance sheet total not exceeding EUR 43 million; We would like to understand if only the annual turnover shall be assessed to determine whether a counterparty needs to be classified as MICRO and SME, or whether also the number of employee and the total annual balance sheet amount shall be considered; i.e. in case of a counterparty with an annual turnover not exceeding EUR 50 million but that employs more than 250 persons, shall this counterparty be considered as MICRO and SME or not?


Response


The criteria clearly include the and/or attributes, which signifies that the first criteria is in any case determining the classification. I.e. if more than 250 employees, an entity cannot be Micro and SME. If criteria a is not breached, but both b and c are breached, the entity still cannot be classified as Micro and SME. If only one of b or c are breached, this does not affect the SME status.