Brussels, 14/01/2014 (Agence Europe) - On Wednesday 13 January, the European Commission unveiled new guidelines on state aid to promote investment in risk financing by small businesses and mid-caps in the early stages of their development. The new rules will replace the current risk capital guidelines from 30 June 2014 to 31 December 2020, because the 2006-2013 rules proved over-restrictive. The Commission says the new rules will also increase aid to be granted for start-ups which are unable to demonstrate solvency or business viability despite having good prospects, and which therefore find it difficult to find investment on the money market.
The new rules cover aid for investors, financial intermediaries and managers and direct aid to companies that are in receipt of investment. They cover risk capital for companies that do not meet all the criteria laid down in the EU regulation on exemptions by category (small businesses on the cusp of becoming midcaps, innovative R&D midcaps, companies in receipt of investment for risk capital more than five years after their sale or aid of above €10 million, and so on) and aid designed differently or with a different budget from the types of aid covered in the regulation (with private investor participation below the level set in the regulation, aid for more than the amounts laid down in the regulation, investors or intermediaries selected to protect against the risk of loss arising from lopsided profits distribution and tax incentives for institutional investors).
The new guidelines also list criteria for the granting of state aid (- a country acting as a market operator by intervening at the same time and under the same criteria as a private investor; - aid must help achieve a public interest objective; - the need for the state to intervene because of failure by the market; - the aid must be proportionate and appropriate when viewed against the other instruments available; - the aid acting as an incentive; - limiting any negative impact on competition and trade; - transparency; - aid accumulation), and criteria for assessing various aid systems (meeting compatibility preconditions, effectiveness of the aid measures in achieving the objectives and the risk capitals' “ex-post” impact on the markets and competition). (FG/transl.fl)