Home › Guides › SME status and investor ownership

Is your company still an SME if an investor owns 30 percent of it?

Source last checked: 27 September 2026

Where the 25 and 50 percent lines fall

One stake, two lines. Below 25 percent of capital or voting rights, whichever is higher, you are autonomous and only your own figures matter. From 25 percent up to and including 50 percent, the other enterprise is a partner. Above 50 percent, or wherever one enterprise can otherwise control the other, the two are linked (User guide to the SME Definition, p. 7).

The line is drawn on capital or voting rights, whichever is the higher of the two. A 30 percent shareholding that carries 55 percent of the votes is a link, not a partnership.

Control, not just shareholding, is what the definition is after. An enterprise is also linked if it can appoint or remove a majority of the management or supervisory body of another, if a contract or a provision in the articles of association lets one exercise a dominant influence over the other, or if one can by agreement exercise sole control over a majority of the votes (User guide to the SME Definition, p. 21). Veto rights over the budget, the business plan, major investments or the appointment of senior management can confer that influence even on a minority shareholder (User guide to the SME Definition, p. 35).

What a 30 percent stake actually changes

It moves you out of the autonomous category and into the partner category. That is a change in how you calculate, not a verdict on your eligibility. An enterprise is a partner enterprise when it holds at least 25 percent of another, or another holds at least 25 percent of it, and the two are not linked (User guide to the SME Definition, p. 18).

From there the arithmetic is proportionate: a 30 percent stake means 30 percent of the partner's headcount, turnover and balance sheet total is added to your own before the figures are compared with the ceilings (User guide to the SME Definition, p. 19). A company with twelve staff and an investor holding 30 percent of it stays comfortably inside the ceilings unless that investor is very large indeed. The stake only becomes fatal through the totals, never on its own.

Those ceilings are the headcount and financial tests: fewer than 250 staff, and either turnover of no more than EUR 50 million or a balance sheet total of no more than EUR 43 million. Meeting the headcount test is mandatory; you may choose between the turnover and the balance sheet figure and may exceed one of them without losing SME status (User guide to the SME Definition, p. 10, User guide to the SME Definition, p. 11).

The investors that may hold up to 50 percent and leave you autonomous

Some investors are read out of the calculation entirely. If one of them reaches or passes 25 percent, the company is still treated as autonomous and that investor is not a partner at all.

An enterprise may still be considered autonomous, and thus as not having any partner enterprises, even if the 25 % threshold is reached or exceeded by any of the following types of investors:

• public investment corporations, venture capital companies and business angels;
• universities and non-profit-making research centres;
• institutional investors, including regional development funds;
• autonomous local authorities with an annual budget of less than EUR 10 million and fewer than 5 000 inhabitants.

One or more of the above investors may individually have a stake of up to 50 % in an enterprise, provided they are not linked, either individually or jointly, to the enterprise under SME assessment.

User guide to the SME Definition, p. 17

That exemption carries its own limits. It is individual: each such investor may go to 50 percent, but it collapses if the investors are linked to each other or to you. And for business angels the guide sets a money limit rather than a percentage one — their financial involvement in the same enterprise must stay below EUR 1 250 000 (User guide to the SME Definition, p. 17).

The guide's glossary explains both terms. It says the Commission does not formally define an institutional investor, but reads one as an investor that trades large volumes of securities on behalf of many individual small investors and has no direct involvement in the management of the firms it invests in: insurance companies, pension funds, banks, investment companies, and other institutional wealth such as endowments and foundations (User guide to the SME Definition, p. 36). A business angel is a private individual investing his or her own cash, alone or in a syndicate, normally with no previous family connection to the business and making the investment decision personally rather than through an independent manager (User guide to the SME Definition, p. 34).

Which investors do not get the exemption, and the rule that is harsher

Two of them are worth naming, because both are easy to read the wrong way round.

A corporate venture arm is not a venture capital company. An ordinary operating company in, say, pharmaceuticals, transport or energy that invests in a start-up as an ancillary activity while continuing its core business is an ordinary company for this purpose, not the type of investor the exemption was written for (User guide to the SME Definition, p. 37). Its 30 percent stake is a partnership like any other, and if it goes above 50 percent you are linked to a large corporate group.

Public bodies run on the opposite rule. Where the exemption lets a qualifying investor go to 50 percent, Article 3.4 does the reverse: an enterprise is not an SME at all if 25 percent or more of its capital or voting rights are owned or controlled by one or more public bodies, directly or indirectly, jointly or individually (User guide to the SME Definition, p. 19). That is not a calculation you can pass by being small. The two regimes meet in one place: investors from the exempt list that happen to have public-body status under national law, such as a university or an autonomous local authority, are not caught by Article 3.4, and their holdings in the company may add up to 50 percent of the voting rights. Above 50 percent, the enterprise cannot be an SME (User guide to the SME Definition, p. 19).

Worked example: small stakes that add up

The case that catches companies out is not a single large investor but several small ones that turn out to belong together. The guide works three of them through.

Investors linked to each other. Enterprise A has investors B, C and D, each holding 20 percent of its capital or voting rights. At first sight A is autonomous, since no investor reaches 25 percent. But B holds 70 percent of C and C holds 60 percent of D, so B, C and D are linked to one another and as a group hold 60 percent of A. A must add the full data of all of them (User guide to the SME Definition, p. 27):

My total = 100 % of A + 100 % of B + 100 % of C + 100 % of D.

User guide to the SME Definition, p. 27

Exempt investors that stay exempt. B, C and D hold 25, 30 and 25 percent of A. B is a university and D is an institutional investor; they are not linked to each other and neither individually exceeds 50 percent. Their data drops out of the calculation altogether, and only the ordinary partner C is added (User guide to the SME Definition, p. 28):

My total = 100 % of A + 30 % of C.

User guide to the SME Definition, p. 28

The same investors, now linked. B, C and D hold 25, 25 and 30 percent. B is a university and D a public investment corporation, but this time they are linked to each other, so their combined holding of 55 percent passes the 50 percent limit on the exemption. Their data comes back in, and because they jointly hold a majority of the votes it comes back in full (User guide to the SME Definition, p. 29):

My total = 100 % A + 100 % B + 25 % C + 100 % D.

User guide to the SME Definition, p. 29

The guide adds a warning to that last one: if the linked entities are both public bodies, or are linked with public bodies, Article 3.4 applies instead and the company is not an SME at all (User guide to the SME Definition, p. 29). So between the second and third case nothing changed about the percentages the investors hold in you. What changed is their relationship to each other.

When the link runs through a person, not a company

Ownership by individuals can create a link just as a holding company does. Where one or more natural persons acting jointly hold a majority in your enterprise and a majority in another, the two enterprises are linked — but only if they operate on the same or adjacent markets (User guide to the SME Definition, p. 21).

Acting jointly is read broadly. Family links have been treated as enough to conclude that natural persons act jointly, and persons who work together to influence the commercial decisions of the enterprises concerned, in a way that stops those enterprises being economically independent of each other, are regarded as acting jointly whether or not there is any contract between them (User guide to the SME Definition, p. 34). Adjacent markets are read as closely related neighbouring markets: products or services complementary to each other, or belonging to a range generally bought by the same set of customers for the same end use, with vertical relationships in a value chain also taken into account (User guide to the SME Definition, p. 34).

This is also the one place where geography and sector matter. For links between enterprises, where the other enterprise sits and what it does are irrelevant; for a link arising through natural persons, the markets the enterprises operate on are the determining factor (User guide to the SME Definition, p. 15).

Where this definition applies, and where it does not

It governs less than its name suggests. The SME definition applies to all policies, programmes and measures the European Commission develops and operates for SMEs, and to State aid where no ad hoc guidelines apply (User guide to the SME Definition, p. 4).

Outside that, it is weaker than it looks:

• State aid is not uniform. Not all State aid rules follow the strict reading. Some are based directly on the definition, others apply it only in part, and specific guidelines apply in certain cases, so the legal basis of the particular support has to be checked (User guide to the SME Definition, p. 4).
• Member States are not bound. Use of the definition is voluntary for Member States; the Commission invites them, with the EIB and the EIF, to apply it as widely as possible (User guide to the SME Definition, p. 5). A national or regional scheme may therefore run a different test.
• There is no single register. There is no one point of entry at which a company is registered as an SME; registration depends on the programme and the managing authority, and the model self-assessment form is itself voluntary and may be adapted by national administrations (User guide to the SME Definition, p. 6).

Two further points. It does not provide a mechanical answer for complicated structures: the guide says that for enterprises with a more complex structure a case-by-case analysis may be required, so that only enterprises within the spirit of the Recommendation are treated as SMEs, and it warns that its simplified approach must not be used to justify artificial corporate structures built to bypass the definition (User guide to the SME Definition, p. 4, User guide to the SME Definition, p. 5). And it does not care about legal form: what makes you an enterprise is economic activity, which is why the self-employed, family firms, partnerships and associations can all be enterprises for this purpose (User guide to the SME Definition, p. 9).

What this page does not cover

This page answers the classification question: which category an ownership stake puts you in, and which investors are read out of the count. It deliberately stops short of several neighbouring questions.

• The full arithmetic of combining partner and linked data in deep chains — a partner of a linked enterprise, a company linked to one of your partners, and the rule that the data of a partner's partner is never counted (User guide to the SME Definition, p. 23).
• How headcount itself is measured, in annual work units, and what counts as an employee.
• The split between micro, small and medium-sized, which uses the same relationship rules but different ceilings (User guide to the SME Definition, p. 11).
• What happens when you cross a ceiling in one year, and the stability rule that governs it.
• What documents you file: last approved annual accounts, or for a newly established enterprise a bona fide estimate in the form of a business plan, dated and signed (User guide to the SME Definition, p. 11, User guide to the SME Definition, p. 36).

Frequently asked questions

Does a 30 percent investor mean my company is not an SME?

No. It means the investor is a partner enterprise rather than an outside shareholder you can ignore. You add 30 percent of that investor's headcount, turnover and balance sheet total to your own figures and compare the total with the ceilings. Only the total decides SME status.

Can a single investor hold 50 percent and my company still count as autonomous?

Only if the investor is one of the types the definition exempts, such as a venture capital company, a university or non-profit research centre, an institutional investor, or a small autonomous local authority. Such an investor may individually hold up to 50 percent and the company is still treated as autonomous, provided the investor is not linked to it.

What happens if two of my investors belong to the same group?

Their stakes are counted together. The guide works through a case where each of three investors holds 20 percent, which on its own would leave the company autonomous, but the investors are linked to one another, so as a group they hold 60 percent and the full data of all of them must be added. Linked investors are the usual reason a company that looks autonomous is not.

Does a corporate venture arm of a large company count as venture capital?

No. The guide treats a company that invests in a start-up as an ancillary activity, while continuing its own core business, as an ordinary company. It is not the kind of investor the exemption was written for, so its stake counts in the normal way.

Is my company an SME if a public body owns part of it?

A company is not an SME if public bodies own or control 25 percent or more of its capital or voting rights, directly or indirectly, jointly or individually. Investors such as universities or small autonomous local authorities that are public bodies under national law sit outside that rule, and their holdings may together reach 50 percent.

Does it matter that the investor is based outside the EU?

No. Where the other enterprise is based, inside or outside the EU, and what business it is in do not affect whether the relationship counts. The one place the market matters is a link that runs through private individuals, where the enterprises are linked only if they operate on the same or adjacent markets.

Related guides

• What funding calls actually state about eligibility
• How much can you actually raise from an EIF-backed fund?
• Who actually issues an EU-backed loan guarantee — and how to find yours

Source throughout: User guide to the SME Definition, European Commission, 2020 edition (PDF produced 31 August 2020), cited by printed page. The corpus behind this page was last refreshed on 27 September 2026. Every citation links to the PDF itself, downloaded on 27 October 2026. Open the guide.

Written by Robert Grabarević, founder of Scalebiz. He built the radar as a tool for himself, so that he would not have to re-read the same funding rules for every application. Every guide on this site cites the regulation by section or page, so each claim can be checked against the source. About Scalebiz · Robert on LinkedIn.