The Confederation of British Industry (CBI) called for MEPs to vote against the Alternative Investment Fund Managers Directive (AIFM) legislation.
According to the organisation, the new law would see more transparency surrounding private equity investment, which could hamper firms struggling to stay afloat in the wake of the economic downturn.
Under the new directive smaller companies owned by hedge funds would be forced to reveal development plans, which could prevent these firms from investing in innovation, the CBI warned.
John Cridland, CBI deputy director-general, said: âThe proposed legislation would damage companies owned by private equity firms, and discourage investment. We are particularly concerned about the impact it would have on small and medium-sized companies.
âThe additional bureaucracy and forced disclosure of commercially-sensitive information would be a real problem, and impede companies that should be encouraged in order to foster economic recovery.â
More than 700 companies from across the eurozone have written to MEPs warning of the potential problems faced by the introduction of the new directive.
By Jim Ottewill