EUROPE: EU Commissioner Michael Barnier Makes a Statement welcoming the Trilogue between the Commission, Parliment and Council on European Venture Capital Funds

Thursday June 28 2012

Funds-Axis would like to draw your attention to a recent statement by EU Commissioner Michael Barnier welcoming the trilogue due to take place between the commission, parliament and the council in relation to European Venture Capital Funds and the European Social Entrepreneurship Funds. Please find details below of the statement and a link to the source document.

 Statement from EU Commissioner Michael Barnier

 “This agreement sends an important signal that taking concrete measures to aid growth in Europe is at the heart of our work. At their meeting on 1 March 2012, the Heads of State and Government underlined the importance of `creating an effective EU-wide venture capital regime, including an “EU passport`.¹ Once the new rules are fully in place, funds investing in SMEs and social businesses will be able to raise money more easily across the 27 countries of the EU. The funds will benefit from strong European labels to attract investors. The adoption of these two Regulations will boost financing for European SMEs and social entrepreneurs. I congratulate the European Parliament and the Council on their efficient work which has led to an agreement within a very short timeframe,” stated Michel Barnier, European Commissioner for Internal Market and Services.

Background

The two new regulations introduce a label for funds investing in SMEs and social enterprises in order to make them more easily identifiable for investors.

1. The proposal for a Regulation on European Venture Capital Funds will make it easier for venture capitalists to raise funds across Europe for the benefit of start-ups. The approach is simple: once a set of requirements is met, all qualifying fund managers can raise capital under the designation “European Venture Capital Fund” across the EU. No longer will they have to meet complicated requirements which are different in every Member State. By introducing a single rulebook, venture capital funds will have the potential to attract more capital commitments and become bigger.

2. The proposal for a Regulation on European Social Entrepreneurship Funds lays the foundations for a European market for social investment funds. It introduces a new “European Social Entrepreneurship Funds” label so investors can easily identify funds that focus on investing in European social businesses. To get the label the funds must invest for the most part in SMEs or social businesses. The label is part and parcel of the registration of the fund with the home country regulator. The approach is simple: once the requirements defined in the proposal are met, managers of social investment funds will be able to market their funds across the whole of Europe. To get the label, a fund will have to prove that a high percentage of investments (70% of the capital received from investors) is spent in supporting social business. Uniform rules on disclosure will ensure that investors get clear and effective information on these investments.The two regulations have now to be formally adopted both by the European Parliament and the Council (in the coming months), and we expect that they will enter into force shortly after that.

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