Kobrin A.Y. Problematic issues of notion of small and medium-sized enterprises in the European Union and Ukraine

Kobrin A.Y. Problematic issues of notion of small and medium-sized enterprises in the European Union and Ukraine // Матеріали міжнародної науково-практичної конференції «Міжнародні та національні правові виміри забезпечення стабільності», Львів; Західноукраїнська організація «Центр правничих ініціатив», 2015. — С. 93-95.

First of all, let’s figure out why it is important to single out a separate notion of small and medium-sized enterprises (hereinafter — SMEs). Statistically these enterprises embrace the huge share of the EU and Ukrainian markets. In the EU in 2013 “some 21.6 million SMEs In the non‐financial business sector employed 88.8 million people and generated €3,666 trillion in value added. Expressed another way, 99 out of every 100 businesses are SMEs, as are 2 in every 3 employees and 58 cents in every euro of value added” [2] and in Ukraine there are 99,8% of the SMEs (392 668 out of 393 327 enterprises) [15] with 67,3% employed people (~4 901 900 out of ~7 285 600 people) [14]. Therefore, we can see that national economics of the EU and Ukraine mostly depends on SMEs and it is important for the states to support and help SMEs by different regimes and simplified procedures.

SMEs in the context of this work can be considered in 3 dimensions: in the European Union, its member states and Ukraine.

Concerning legal and non-legal sources of the EU concerning SMEs there are the following ones:

1) Lisbon treaty which consists of the Treaty on European Union and the treaty on the Functioning of the European Union (hereinafter — TFEU) [5].

2) Small Business Act for Europe [1].

3) Commission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises [4].

4) European Charter for Small Enterprises [9].

5) Some Regulations and Directives which influence on SMEs’ activity: Directive 2011/7/EU on combating late payment in commercial transactions [7].

6) Plans and programmes. For example, Entrepreneurship 2020 Action Plan [8].

7) Reports. For example, Report from the Commission on the implementation of the Commission Recommendation (2003/361/EC) of 6 may 2003 concerning the definition of micro, small and medium-sized enterprises [11].

8) Guidebooks, models and so on. For example, Guide to EU definition of SME [12].

SMEs are mentioned 3 times in Lisbon treaty — in arts. 153, 173 and 179. Articles are located in different chapters and it means that competence is different between the EU and Member States. To define the competence we can apply the following approach based on arts. 2-6 of TFEU. If the main essence of the act is the competition rules or common commercial policy it is exclusive competence of the EU(arts. 2(1) and 3 of TFEU), if it is matter of the economic cohesion it is question of the shared competence which must be also checked within criteria on the principle of subsidiarity and the principle of proportionality (arts. 2(2), 4 and 5(3, 4) of TFEU), but if it deals with industry it is a competence of a EU member state (arts. 2(5) and 6 of TFEU). But it is not always clear with the competences and it can make problems, especially art. 6. under which art. 173 of TFEU is lying, where the EU can only support, coordinate or complement the action of EU member states. In Paul Craig’s opinion “there will be boundary problems” because some issues can be under different competence [6, 86].

As a result of such an application of the competence Commission Recommendation concerning the definition of micro, small and medium-sized enterprises (hereinafter — Commission Recommendation) was adopted and this document defines what SMEs are:

» …The category of micro, small and medium-sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding EUR 50 million, and/or an annual balance sheet total not exceeding EUR 43 million … Within the SME

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category, a small enterprise is defined as an enterprise which employs fewer than 50 persons and whose annual turnover and/or annual balance sheet total does not exceed EUR 10 million … Within the SME category, a microenterprise is defined as an enterprise which employs fewer than 10 persons and whose annual turnover and/or annual balance sheet total does not exceed EUR 2 million» [4].

At the same time at the EU member states’ level every country can choose its own definition of SMEs. For example, «In Germany, SMEs are defined with a limit of 255 employees; in Belgium, a limit of 100 employees» [10, 128].

In Ukraine there are also definitions of some type of SMEs. In accordance with art. 378 of Association Agreement Between the European Union and Its Member States, of the One Part, and Ukraine, of the Other Part: «The Parties shall develop and strengthen their cooperation on industrial and enterprise policy, thereby improving the business environment … with particular emphasis on … SMEs … Enhanced cooperation should improve the administrative and regulatory framework for both Ukrainian and EU businesses operating in Ukraine and the EU, and should be based on the EU’s SME and industrial policies, taking into account internationally recognised principles and practices in this field» [3]. Therefore, Commission Recommendation is not obligatory source of law, but this is one of such pointers for this cooperation set in art. 378 of the Association Agreement.

In article 55(3) of Economic code of Ukraine [13] SMEs are defined and mainly similar to EU approach, but some differences exist:

1) Commission Recommendation uses 3 criteria to define SMEs and they are quantity of employed persons, annual turnover, annual balance sheet, but in Ukraine only 2: annual income and quantity of employed persons.

2) Ukraine applies different treatment to individuals and legal entities, because large entrepreneur can be only legal entities in accordance with Economic code’s text.

List of References

1. A “Small Business Act” for Europe // http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2008:0394:FIN:EN:PDF

2. Annual Report on European SMEs 2014 // http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/performance-review/files/supporting-documents/2014/annual-report-smes-2014_en.pdf

3. Association Agreement Between the European Union and Its Member States, of the One Part, and Ukraine, of the Other Part // http://eeas.europa.eu/ukraine/docs/association_agreement_ukraine_2014_en.pdf

4. Commission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2003:124:0036:0041:EN:PDF

5. Consolidated versions of the Treaty on European Union and the Treaty on the Functioning of the European Union // Official Journal of the European Union, C 115, 09 May 2008 http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:C:2008:115:FULL&from=EN

6. Craig, Paul P. EU law : text, cases, and materials / Paul Craig and Gráinne de Búrca. 5th ed. Oxford : Oxford University Press, 2011. clvii, 1155 p.

7. Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions // http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2011:048:0001:0010:en:PDF

8. Entrepreneurship 2020 Action Plan // http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2012:0795:FIN:EN:PDF

9. European Charter for Small Enterprises // http://ec.europa.eu/enterprise/policies/sme/files/charter/docs/charter_en.pdf

10. Ngura, S., Kimwele, M. & Rotich, G. (2015). Determinants of Information Security among Small and Medium Enterprises in Kenya. European Journal of Business Management, 2(1), pp. 124-143.

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11. Report from the Commission on the implementation of the Commission Recommendation (2003/361/EC) of 6 may 2003 concerning the definition of micro, small and medium-sized enterprises // http://ec.europa.eu/enterprise/policies/sme/files/sme_definition/sme_report_en.pdf

12. User guide and model declaration “The new SME definition” // http://ec.europa.eu/enterprise/policies/sme/files/sme_definition/sme_user_guide_en.pdf

13. Господарський кодекс України // Відомості Верховної Ради України від 02.05.2003, 2003 р., № 18, ст. 144

14. Кількість найманих працівників на підприємствах за їх розмірами за видами економічної діяльності у 2013 році // http://www.ukrstat.gov.ua/operativ/operativ2013/fin/kp_ed/kp_ed_u/knp_ed_u_2013.htm

15. Кількість підприємств за їх розмірами за видами економічної діяльності у 2013 році // http://www.ukrstat.gov.ua/operativ/operativ2013/fin/kp_ed/kp_ed_u/kp_ed_u_2013.htm

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