Brussels, 18/10/2000 (Agence Europe) - On Wednesday, the European Commission approved, on the initiative of Commissioners Pedro Solbes and Frits Bolkestein, its interim report to the Council and to the European Parliament on the implementation of the action plan on risk capital. The Commission thus follows up the request made by the Lisbon Summit, which had called for such a report and, at the same time, had fixed the deadline for full implementation of the Union's action plan in this field for 2003.
The Commission notes that the European risk capital market performed very well in 1999 but remains small and fragmented in comparison to that of the United States. It also lacks transparency. It would not be appropriate to speak of generalised failure of the system but early stage and technology investment remains particularly low. The aims sought require the acceleration of market integration, lightening of national constraints and the promotion of an entrepreneurial culture. Among the more indispensable and urgent measures, the Commission cites:
a) Implementation within a satisfactory time of the financial services action plan. Several measures were recently adopted by the Commission, and others are still being prepared. The creation of the Lamfalussy Committee should facilitate the progress required, including, as the Commission points out, the updating of directives on the prospects, the diffusion of best practices, the prudential rules authorising institutional investors to invest in risk capital (last week the Commission presented its proposal concerning complementary pension funds).
b) Creation of the Community patent. The Commission proposes that the Council should give its opinion as soon as possible.
c) Continued national structural reforms in Member States. Some regulatory constraints that restrict the activity of institutional investors have been made more flexible in some member States, and the administrative procedures needed for the establishment of a company have been made less unwieldy. However, nothing has been done concerning bankruptcy and insolvency, and very little as far as tax obstacles are concerned (taxation of corporate profits and extra value). Tax reforms must be accelerated and extended if one wants the risk capital action plan to be fully implemented by the deadline set. The Commission gives three priorities that come under the responsibility of Member States: i) making the quantitative restrictions more flexible to limit the investment of institutional investors; ii) the relaxing of the provisions on bankruptcy, so that a second chance is given to entrepreneurs should they fail, while protecting the rights of creditors; iii) a more favourable tax framework for investment and the entrepreneurial spirit.
The Commission also recalls the Community measures aimed at promoting the entrepreneurial spirit, the support of the Social Fund to the training and educational programmes in this field, the measures taken for promoting innovation, etc. But there is still much to be done. The report describes the situation and comprises graphics allowing for enlargement of the risk capital investment market in 1999 to be assessed, and, at the same time, the delay that remains compared to the US market.