Brussels, 14/07/2016 (Agence Europe) - The Commission has drawn conclusions from the implementation of the rules of European legislation on the activities of European venture capital funds (EuVECA) (345/2013) and social entrepreneurship funds (EuSEF) (regulation 346/2013).
On Thursday 14 July, it responded to the problems encountered by the industry in its short experience of these two texts. For instance, as Michael Collins, Deputy Director General of Invest Europe, which represents the sector, anticipated, the regulation proposed by the Commission clearly stipulates that the member states must not charge fees or levy other charges when a fund is registered (EUROPE 11590). According to Collins, however, a number of member states apply a financial charge of several tens of thousand euros that has to be paid before the passport can be used.
Venture capital fund managers in charge of portfolios of more than €500 million and which fall within the scope of the directive on alternative investment funds will henceforth have access to the EuVECA and EuSEF markets. They will still have to comply with the requirements of the directive and a number of rules of the two regulations.
Additionally, the Commission has relaxed the definition of 'SME' in which a fund must invest 70% of the capital subscribed by its clients in order to obtain the European passport. The requirement for a maximum turnover has been removed, and the proposal provides flexibility regarding the maximum number of employees at an SME in question may have (fewer than 250, the figure rises to 499). This also applies to SMEs listed on a 'growth market'. These requirements must be met when the first investment is made, which therefore gives growing SMEs a little latitude.
The Commission has also decided to make no changes to the highly political question of the minimum threshold for each investor, which has been set at €100,000. Invest Europe did not ask for it to do so and the member states which responded to the public consultation expressed a broad range of opinions. The Commission justifies its choice by the fact that as EuVECA and EuSEF are niche markets at the moment, it would appear more appropriate to allow the market to develop under a more proportionate regime before bringing in new requirements on investor protection.
These changes “will enhance the options the capital to be raised and invested into the growing European businesses that need it most”, Collins said in a press release. This, incidentally, was the last brick in the Capital Markets Union to be laid by the outgoing Commissioner for Financial Services, Jonathan Hill, who will officially step down from his position this Friday 15 July (EUROPE 11593). (Original version in French by Elodie Lamer)