Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL laying down the rules for the participation of undertakings, research centres and universities in actions under the Seventh Framework Programme and for the dissemination of research results (2007 to 2013) (Text with EEA relevance) Modifications proposed by THE COURT OF AUDITORS in its Opinion No 1/2006 (see paragraph of Opinion No 1/2006)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 167 and the second paragraph of Article 172 thereof,

Having regard to the proposal from the Commission (1),

Having regard to the opinion of the European Economic and Social Committee (2),

Having regard to the opinion of the Court of Auditors (3),

Acting in accordance with the procedure referred to in Article 251 of the Treaty (4),

WHEREAS:

(1) The Seventh Framework Programme was adopted by Decision No (…/…/EC) of the European Parliament and of the Council of (…) concerning the seventh framework programme of the European Community for research, technological development and demonstration activities (2007 to 2013) (5). 5.

It is the responsibility of the Commission to ensure the implementation of the framework programme and its specific programmes, including the related financial aspects. 6.

(2) The Seventh Framework Programme is implemented in accordance with Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities (6), hereinafter ‘the Financial Regulation’, and Regulation (EC, Euratom) No 2342/2002 laying down detailed rules for the implementation of the Financial Regulation (7), hereinafter ‘the Implementing Rules’. (2) The Seventh Framework Programme is to be is implemented in accordance with Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities (6), hereinafter ‘the Financial Regulation’, and Regulation (EC, Euratom) No 2342/2002 laying down detailed rules for the implementation of the Financial Regulation (7), hereinafter ‘the Implementing Rules’.

(3) The Seventh Framework Programme is also implemented in accordance with the State aid rules, in particular the rules on State aid for research and development (8). (3) The Seventh Framework Programme is also to be implemented in accordance with the State aid rules, in particular the rules on State aid for research and development (8). 15, 16.

(4) The rules for the participation of undertakings, research centres and universities should provide a coherent and transparent framework to ensure efficient implementation and ease of access for all participants in the Seventh Framework Programme.

(new whereas (4a)) This Regulation is also to apply to the activities funded in the framework of the European Research Council (ERC). 2, 17.

(5) The Seventh Framework Programme should promote participation from the outermost regions of the Community, as well as from a wide range of undertakings, research centres and universities.

(6) The definition of micro, small and medium-sized enterprises (SMEs) provided in Commission Recommendation 2003/361/EC (9) should apply, for reasons of coherence and transparency.

(7) It is therefore appropriate to permit not only the participation of legal persons, provided that they are entitled to exercise rights and assume obligations, but natural persons. The participation of natural persons will ensure that the creation and development of scientific excellence and ability are not limited to Community funding of projects involving only legal persons, ensuring also the participation of SMEs that are not legal persons. (7) It is therefore appropriate to permit not only the participation of legal persons, provided that they are entitled to exercise rights and assume obligations, but also of natural persons, provided that they are entitled to exercise rights and assume obligations. The participation of natural persons will ensure that the creation and development of scientific excellence and ability are not limited to Community funding of projects involving only legal persons, ensuring also the participation of SMEs that are not legal persons.

(8) It is necessary to establish the minimum conditions for participation, both as a general rule and with regard to the specificities of indirect actions under the Seventh Framework Programme. In particular, rules should be laid down regarding the number of participants and their place of establishment.

(9) It is appropriate that any legal entity should be free to participate once the minimum conditions have been satisfied. Participation over and above the minimum should ensure the efficient performance of the indirect action concerned. (9) It is appropriate that any legal entity should be free to participate once the minimum conditions have been satisfied. Participation over and above the minimum legal requirements should not impair ensure the efficient implementation performance of the indirect action concerned. 22, 23, 24.

(10) International organisations dedicated to developing cooperation in the field of research in Europe and largely made up of Member States or Associated countries should be encouraged to participate in the Seventh Framework Programme.

(11) In line with the objectives of international cooperation as described by Articles 164 and 170 of the Treaty, the participation of legal entities established in third countries should also be envisaged, as should the participation of international organisations. However, it is appropriate to require that such participation be justified in terms of the enhanced contribution thereby made to the objectives sought under the Seventh Framework Programme.

(new whereas (11a)) The Commission should implement the Seventh Framework Programme in accordance with the principles of an integrated internal control framework.

(12) In line with the objectives mentioned above, it is necessary to establish the terms and conditions for providing Community funding to participants in indirect actions. (12) In line with the objectives mentioned above, it is necessary to establish the terms and conditions for providing Community funding, as set out in part (a) of Annex III to Decision (…/…) establishing the Seventh Framework Programme, to participants in indirect actions.

(13) It is necessary for the Commission to establish further rules and procedures, in addition to those provided for in the Financial Regulation and its Implementing Rules, to govern the submission, evaluation, selection and award of proposals. In particular the rules governing the use of independent experts should be established. (13) It is necessary for t The Commission is to establish and to adopt further rules and procedures, in addition to those provided for in the Financial Regulation and its Implementing Rules and this Regulation, to govern the submission, evaluation, selection and negotiation award of proposals and the award of grants. In particular these rules should include provisions governing the use of independent experts should be established. 32, 33.

(14) It is appropriate for the Commission to establish further rules and procedures, in addition to those provided for in the Financial Regulation and its Implementing Rules, to govern the assessment of the legal and financial viability of participants in indirect actions under the Seventh Framework Programme. (14) It is appropriate for t The Commission should establish and adopt further rules and procedures, in addition to those provided for in the Financial Regulation and its Implementing Rules, to govern the verification of the existence, legal status and operational and financial capacity assessment of the legal and financial viability of participants in indirect actions under the Seventh Framework Programme. 34, 35, 36.

(15) In this context, the Financial Regulation and the Implementing Rules, govern inter alia the protection of the Community's financial interests, the fight against fraud and irregularity, the procedures for the recovery of sums owed to the Commission, exclusion from contract and grant procedures and related penalties, and audits, checks, and inspections by the Commission and the Court of Auditors, pursuant to Article 248(2) of the Treaty. (15) In this context, the Financial Regulation, its and the Implementing Rules, and Council Regulation (EC, Euratom) No 2988/1995 (10) govern inter alia the protection of the Community's financial interests, the fight against fraud and irregularity, the procedures for the recovery of sums owed to the Commission, exclusion from contract and grant procedures and related penalties, and audits, checks, and inspections by the Commission and the Court of Auditors, pursuant to Article 248(2) of the Treaty. 19.

(16) The agreements concluded for each action should provide for supervision and financial control by the Commission, or any representative authorised by the Commission, as well as audits by the Court of Auditors and on-the-spot checks carried out by the European Anti-Fraud Office (OLAF), in accordance with the procedures laid down in Council Regulation No 2185/96. (16) The agreements concluded for each action are to should provide for supervision and financial control by the Commission, or any representative authorised by the Commission, as well as audits by the Court of Auditors and on-the-spot checks carried out by the European Anti-Fraud Office (OLAF), in accordance with the procedures laid down in Council Regulations No 2185/96, No 1073/99 and No 1074/99 . Similarly, the agreements are to provide for audits by the Court of Auditors, which, pursuant to Article 248(2) of the Treaty, may carry out its audits according to its own rules. 18, 19.

(17) The Commission should monitor both the indirect actions carried out under the Seventh Framework Programme and the Seventh Framework Programme and its Specific Programmes. (17) The Commission should monitor the implementation of both the indirect actions carried out under the Seventh Framework Programme, and the Seventh Framework Programme and its Specific Programmes and the completion of previous framework programmes. The Commission presents the results of its monitoring activities to a committee composed of representatives of Member States, and chaired by the Commission. 57.

(18) The rules governing the dissemination of research results should ensure that, where appropriate, the participants protect the intellectual property generated in actions, and use and disseminate those results. (18) The rules governing the dissemination of research results should ensure that, where appropriate, the participants and their affiliated entities protect the intellectual property generated in actions, and use and disseminate those results.

(19) While respecting the rights of the owners of intellectual property, those rules should be designed to ensure that participants have access to information they bring to the project and to knowledge arising from research work carried out in the project to the extent necessary to conduct the research work or to use the resulting knowledge. (19) While respecting the rights of the owners of intellectual property, those rules should be designed to ensure that participants and their affiliated entities have access to information they bring to the project and to knowledge arising from research work carried out in the project to the extent necessary to conduct the research work or to use the resulting knowledge.

(20) The obligation established in the sixth Framework Programme for certain participants to take financial responsibility for their partners in the same consortium will be waived. Depending on the level of risk associated with non-recovery of sums, part of the Community financial contribution may be retained to cover amounts due and not reimbursed by defaulting partners. The participants that would have been obliged to cover the financial responsibility for other participants would contribute to risk avoidance, which the Commission shall retain at the time it makes payments. (20) The obligation established in the sixth Framework Programme for certain participants to take financial responsibility for their partners in the same consortium will be waived. Depending on the level of risk associated with non-recovery of sums, part of the Community financial contribution may be retained to cover amounts due and not reimbursed by defaulting partners. The participants that would have been obliged to cover the financial responsibility for other participants would contribute to risk avoidance, which the Commission shall retain at the time it makes payments. 34, 35, 36, 80, 81.

(21) Community contributions to a joint undertaking or any other structure set up pursuant to Article 171 of the Treaty, or pursuant to Article 169 of the Treaty do not fall within the scope of this Regulation. (21) Community contributions to a joint undertaking or any other structure set up pursuant to Article 171 of the Treaty, or pursuant to Article 169 of the Treaty do not fall within the scope of this Regulation.

(22) This Regulation respects the fundamental rights and observes the principles recognised in particular by the Charter of Fundamental Rights of the European Union. (22) Any action covered by t This Regulation should respects the fundamental rights and observes the principles recognised in particular by the Charter of Fundamental Rights of the European Union.

(23) The Community may award a grant to the European Investment Bank (EIB) to foster private sector investment in eligible large European RTD actions by increasing the capacity of the Bank to manage risk, thus allowing for (i) a larger volume of EIB lending for a certain level of risk, and (ii) the financing of riskier European RTD actions than would be possible without such Community support. (23) The Community may award a grant to the European Investment Bank (EIB) to foster private sector investment in eligible large European RTD actions identified in part (b) of Annex III to Decision (…/…) establishing the Seventh Framework Programme by increasing the capacity of the Bank to manage risk, thus allowing for (i) a larger volume of EIB lending for a certain level of risk, and (ii) the financing of riskier European RTD actions than would be possible without such Community support. 2.

(24) The Community may provide financial support, as established in the Financial Regulation, inter alia by means of: (24) The Community may provide financial support, as established in the Financial Regulation, inter alia by means of:

(a) public procurements, in the form of a price for goods or services established by contract and selected on the basis of calls for tender; (a) public procurements, in the form of a price for goods or services established by contract and selected on the basis of calls for tender;

(b) grants; (b) grants;

(c) subscriptions to an organisation in the form of a membership fee; (c) subscriptions to an organisation in the form of a membership fee;

(d) honoraria for independent experts identified in Article 17 of this Regulation. (d) honoraria for independent experts identified in Article 17 of this Regulation.

HAVE ADOPTED THIS REGULATION:

CHAPTER I Introductory provisions

Article 1 Article 1

Subject matter Subject matter and scope

This Regulation lays down the rules for the participation of undertakings, research centres and universities and other legal entities in actions undertaken by one or more participants by means of funding schemes identified in part (a) of Annex III to Decision (…/…) establishing the Seventh Framework Programme, hereinafter ‘indirect actions’. (1.) This Regulation lays down the rules for the participation of undertakings, research centres and universities and other legal entities in actions undertaken by one or more participants by means of funding schemes identified in part (a) of Annex III to Decision (…/…) establishing the Seventh Framework Programme, hereinafter ‘indirect actions’ , with the exception referred to in paragraph 8 of this Article. 20, 21.

It also lays down rules, in accordance with those laid down in Regulation (EC/Euratom) No 1605/2002, hereinafter ‘the Financial Regulation’, and Regulation (EC/Euratom) No 2342/2002, hereinafter ‘the Implementing Rules’, concerning the Community financial contribution to participants in indirect actions under the Seventh Framework Programme. (2.) It also lays down rules, in accordance with those laid down in Regulation (EC/Euratom) No 1605/2002, hereinafter ‘the Financial Regulation’, and Regulation (EC/Euratom) No 2342/2002, hereinafter ‘the Implementing Rules’, concerning the Community financial contribution to participants in indirect actions under the Seventh Framework Programme.

As regards the results of research carried out under the Seventh Framework Programme, this Regulation lays down rules for the disclosure of foreground by any appropriate means other than that resulting from the formalities for protecting it, and including the publication of foreground in any medium, hereinafter ‘dissemination’. (3.) As regards the results of research carried out under the Seventh Framework Programme, this Regulation lays down rules for the disclosure of foreground by any appropriate means other than that resulting from the formalities for protecting it, and including the publication of foreground in any medium, hereinafter ‘dissemination’.

In addition, it lays down rules for the direct or indirect utilisation of foreground in further research activities other than those covered by the indirect action concerned, or for developing, creating and marketing a product or process, or for creating and providing a service, hereinafter ‘use’. (4.) In addition, it lays down rules for the direct or indirect utilisation of foreground in further research activities other than those covered by the indirect action concerned, or for developing, creating and marketing a product or process, or for creating and providing a service, hereinafter ‘use’.

In respect of both foreground and background, this Regulation lays down rules concerning licences and user rights thereto, hereinafter ‘access rights’. (5.) In respect of both foreground and background, this Regulation lays down rules concerning licences and user rights thereto, hereinafter ‘access rights’.

(6.) This Regulation shall apply to actions funded within the framework of the European Research Council (ERC). 2, 17.

(7.) This Regulation shall apply to grants to the European Investment Bank (EIB) to contribute to the provisioning and capital allocation for its loan and guarantee financing, for actions identified in the Annex III to Decision (…/…) establishing the Seventh Framework Programme.

(8. moved from whereas (21)) Community contributions to a joint undertaking or any other structure set up pursuant to Article 171 of the Treaty, or pursuant to Article 169 of the Treaty, identified in part (b) of Annex III to Decision (…/…) establishing the Seventh Framework Programme shall do not fall within the scope of this Regulation.

Article 2 14.

Definitions

For the purposes of this Regulation, the following definitions shall apply in addition to those set out in the Financial Regulation and the Implementing Rules:

(1) ‘foreground’ means the results, including information, whether or not they can be protected, which are generated by actions. Such results include rights related to copyright; design rights; patent rights; plant variety rights; or similar forms of protection;

(2) ‘background’ means information which is held by participants prior to their accession to the grant agreement, as well as copyrights or other intellectual property rights pertaining to such information, the application for which has been filed before their accession to the grant agreement, and which is needed for carrying out the indirect action or for using the results of the indirect action; (2) ‘background’ means information which is held by participants prior to the conclusion of their accession to the grant agreement, as well as copyrights or other intellectual property rights or applications thereof pertaining to such information, the application for which has been filed before their accession to the grant agreement, and which that is needed for carrying out the indirect action or for using the foreground results of the indirect action;

(3) ‘research organisation’ means a non-profit making organisation which carries out scientific or technical research as its main objective; (3) ‘research organisation’ means a legal entity registered as a non-profit making organisation which carries out scientific or technical research as its main objective;

(4) ‘third country’ means a State that is not a Member State;

(5) ‘Associated country’ means a third country which is party to an international agreement with the Community, under the terms or on the basis of which it makes a financial contribution to all or part of the Seventh Framework Programme;

(6) ‘international organisation’ means an intergovernmental organisation, other than the European Community, which has legal personality under international public law, as well as any specialised agency set up by such an international organisation;

(7) ‘international European interest organisation’ means an international organisation, the majority of whose members are Member States or Associated countries, and whose principal objective is to promote scientific and technological cooperation in Europe; (7) ‘international European interest organisation’ means an international organisation, the majority of whose members are Member States or Associated Countries, or public research organisations or national funding agencies of those states and countries, and whose principal objective is to promote scientific and technological cooperation in Europe;

(8) ‘international cooperation partner country’ means a third country which the Commission classifies as a low-income, lower-middle-income or upper-middle-income country and which is identified as such in the work programmes;

(9) ‘public body’ means any legal entity established as such by national public law, and international organisations;

(10) ‘SMEs’ mean micro, small and medium-sized enterprises within the meaning of Recommendation 2003/361/EC in the version of 6 May 2003;

(11) ‘work programme’ means a plan adopted by the Commission for the implementation of a specific programme as identified in Article 3 of Decision (…/…);

(12) ‘funding schemes’ mean the mechanisms for the Community funding of indirect actions as established in part (a) of Annex III to Decision (…/…); (12) ‘funding schemes’ mean the mechanisms for the Community funding of indirect actions as established in part (a) of in Annex III to Decision (…/…); 20, 21.

(13) ‘RTD performer’ means a legal entity carrying out research and technological development activities for the benefit of specific groups in research projects for the benefit of those groups. (13) ‘RTD performer’ means a legal entity carrying out research and technological development activities for the benefit of specific groups in research projects for the benefit of those groups as established in part (a), section 6. of Annex III to Decision (…/…).

Article 3

Confidentiality

Subject to the conditions established in the grant agreement, appointment letter or contract, the Commission and the participants shall keep confidential any data, knowledge and documents communicated to them as confidential.

CHAPTER II Participation

SECTION 1 MINIMUM CONDITIONS

Article 4

General principles

1. Any undertaking, university or research centre or other legal entity, whether established in a Member State or Associated country, or in a third country, may participate in an indirect action provided that the minimum conditions laid down in this Chapter have been met, including any conditions specified pursuant to Article 12.

However, in the case of an indirect action as referred to in Articles 5(1), 7, 8 or 9, under which it is possible for the minimum conditions to be met without the participation of a legal entity established in a Member State, the attainment of the objectives laid down in Articles 163 and 164 of the Treaty must thereby be enhanced. However, in the case of an indirect action as referred to in Articles 5(1), 7, 8 or 9, under which it is possible for the minimum conditions to be met without the participation of a legal entity established in a Member State, the attainment of the objectives laid down in Articles 163 and 164 of the Treaty must thereby be enhanced.

A legal entity is any natural person, or any legal person created under the national law of its place of establishment, or under Community law or international law, which has legal personality and which may, acting under its own name, exercise rights and be subject to obligations. ( A legal entity is any natural person, or any legal person created under the national law of its place of establishment, or under Community law or international law, which has legal personality and which may, acting under its own name, exercise rights and be subject to obligations. )

However, in the case of an indirect action as referred to in Articles 5(1), 7, 8 or 9, under which it is possible for the minimum conditions to be met without the participation of a legal entity established in a Member State, the attainment of the objectives laid down in Articles 163 and 164 of the Treaty must thereby be enhanced.

2. In the case of natural persons, references to establishment shall be deemed to refer to habitual residence. (2. In the case of natural persons, references to establishment shall be deemed to refer to habitual residence. )

3. The Joint Research Centre of the European Commission, hereinafter ‘the JRC’, may participate in indirect actions on the same footing and with the same rights and obligations as a legal entity established in a Member State.

Article 5 22, 23, 24.

Minimum conditions

1. The minimum conditions for indirect actions shall be the following: 1. The minimum conditions for the participation in indirect actions shall be that the following:

(a) at least three legal entities must participate, each of which is established in a Member State or Associated country, and no two of which are established in the same Member State or Associated country; (a) at least three legal entities must participate, each of which is established in a Member State or Associated country, and no two of which are established in the same Member State or Associated country;

(b) the countries in which these legal entities are established must include at least three different Member States or Associated countries;

(b) all three legal entities must be independent of each other in accordance with Article 6. (b c) at least all three of the legal entities must be independent of each other in accordance with Article 6.

2. For the purposes of point (a) of paragraph 1, where one of the participants is the JRC, or an international European interest organisation or an entity created under Community law, it shall be deemed to be established in a Member State or Associated country other than any Member State or Associated country in which another participant in the same action is established.

Article 6

Independence

1. Two legal entities shall be regarded as independent of each other where neither is under the direct or indirect control of the other or under the same direct or indirect control as the other.

2. For the purposes of paragraph 1, control may in particular take either of the following forms:

(a) the direct or indirect holding of more than 50 % of the nominal value of the issued share capital in the legal entity concerned, or of a majority of the voting rights of the shareholders or associates of that entity;

(b) the direct or indirect holding, in fact or in law, of decision-making powers in the legal entity concerned.

3. However, the following relationships between legal entities shall not in themselves be deemed to constitute controlling relationships:

(a) the same public investment corporation, institutional investor or venture-capital company has a direct or indirect holding of more than 50 % of the nominal value of the issued share capital or a majority of voting rights of the shareholders or associates;

(b) the legal entities concerned are owned or supervised by the same public body.

Article 7 22, 23, 24.

Indirect actions concerning international cooperation partner countries

For collaborative projects addressing the participation of international cooperation partner countries in parity with Member States or Associated countries, as identified in the work programme, the minimum conditions shall be the following: For collaborative projects, as established in part (a), section 1., of Annex III to Decision (…/…), which involve addressing the participation of international cooperation partner countries in parity with Member States or Associated countries, as identified in the work programme, the minimum conditions shall be the following:

(a) at least four legal entities must participate; (a) at least four legal entities must participate;

(b) at least two of the legal entities referred to in point (a) must be established in Member States or Associated countries, but no two may be established in the same Member State or Associated country; (b) the countries in which at least two of the participating legal entities referred to in subparagraph (a) are must be established must include at least two in Member States or Associated countries, but no two may be established in the same Member State or Associated country;

(c) at least two of the legal entities referred to in point (a) must be established in international cooperation partner countries, but no two may be established in the same international cooperation partner country; (c) the countries in which at least two of the participating legal entities referred to in subparagraph (a) are must be established must include at least two in international cooperation partner countries, but no two may be established in the same international cooperation partner country;

(d) all four legal entities referred to in point (a) must be independent of each other in accordance with Article 6. (d) all at least four of the participating legal entities must be independent of each other in accordance with Article 6.

Article 8

Coordination and support actions, and training and career development of researchers

For coordination and support actions, and actions in favour of training and career development of researchers, the minimum condition shall be the participation of one legal entity.

The first paragraph shall not apply in the case of actions that coordinate research projects.

Article 9 2.

Investigator-driven ‘frontier’ research projects

For indirect actions to support investigator-driven ‘frontier’ research projects funded in the framework of the European Research Council, the minimum condition shall be the participation of one legal entity established in a Member State or in an Associated country. (1.) For indirect actions to support investigator-driven ‘frontier’ research projects funded in the framework of the European Research Council, as established in part (a), section 4., of Annex III to Decision (…/…), the minimum condition shall be the participation of one legal entity established in a Member State or in an Associated country.

(2.) The Commission shall take appropriate measures to ensure the portability of grants for investigator-driven ‘frontier’ research projects funded within the framework of the European Research Council between legal entities established within Member States or Associated countries. 25, 26.

Article 10 24.

Sole participants

Where the minimum conditions for an indirect action are satisfied by a number of legal entities, which together form one legal entity, the latter may be the sole participant in an indirect action, provided that it is established in a Member State or Associated country. Where the minimum conditions for an indirect action are satisfied by a number of legal entities, which together constitute form one legal entity, such as European Economic Interest Groups (EEIG) or international European interest organisations, the latter legal entity may be the sole participant in an indirect action, provided that it is established in a Member State or Associated country.

Article 11

International organisations and legal entities established in third countries

Participation in indirect actions shall be open to international organisations and legal entities established in third countries after the minimum conditions laid down in this Chapter have been met, as well as any conditions specified in the specific programmes or relevant work programmes.

Article 12

Additional conditions

In addition to the minimum conditions laid down in this Chapter, specific programmes or work programmes may lay down conditions regarding the minimum number of participants.

They may also lay down, according to the nature and objectives of the indirect action, additional conditions to be met as regards type of participant and, where appropriate, place of establishment.

SECTION 2 PROCEDURES

SUBSECTION 1 CALLS FOR PROPOSALS

Article 13

Calls for proposals

1. The Commission shall issue calls for proposals for indirect actions in accordance with the requirements laid down in the relevant specific programmes and work programmes. 1. The Commission shall issue calls for proposals for indirect actions in accordance with the requirements laid down in the relevant specific programmes and work programmes. 20, 21.

In addition to the publicity specified in the Implementing Rules, the Commission shall publish calls for proposals in the Internet pages of the Seventh Framework Programme, through specific information channels, and at the national contact points set up by the Member States and the Associated countries.

2. Where appropriate, the Commission shall specify in the call for proposals that the participants need not establish a consortium agreement.

Article 14 20, 21, 27, 28.

Exceptions

The Commission shall not issue calls for proposals for the following: In accordance with the Financial Regulation and its Implementing Rules, t The Commission shall not issue calls for proposals for the following:

(a) coordination and support actions to be carried out by legal entities identified in the specific programmes or in the work programmes when the specific programme permits the work programmes to identify beneficiaries, in accordance with the Implementing Rules; (a) coordination and support actions to be carried out by legal entities identified in the specific programmes or in the work programmes where when the specific programme permits the work programmes to identify beneficiaries, in accordance with the Implementing Rules;

(b) coordination and support actions consisting of a purchase or service subject to the rules on public procurement set out in the Financial Regulation; (b) coordination and support actions consisting of a purchase of a good or a service established by contract and selected subject to the rules on public procurement set out in the Financial Regulation;

(c) coordination and support actions relating to the award of study, research or training scholarships and prizes following contests;

(c) coordination and support actions relating to the appointment of independent experts; (c d) coordination and support actions relating to the appointment of independent experts;

(d) other actions, where so provided by the Financial Regulation or the Implementing Rules. (e d) other actions implemented on the basis of decisions by the Council and the European Parliament (or by the Council in consultation with the European Parliament) identified in part (b) of Annex III to Decision (…/…) establishing the Seventh Framework Programme where so provided by the Financial Regulation or the Implementing Rules.

SUBSECTION 2 EVALUATION OF PROPOSALS SUBSECTION 2 EVALUATION, SELECTION, NEGOTIATION OF PROPOSALS AND AWARD OF GRANTS

Article 15 Article 15 30, 31.

Evaluation, selection and award Evaluation principles and, selection and award criteria

1. The Commission shall evaluate all the proposals submitted in response to a call for proposals on the basis of the principles for evaluation, and the selection and award criteria set out in the specific programme and the work programme. 1. The Commission shall evaluate all the proposals for indirect actions submitted in response to a call for proposals on the basis of the evaluation principles for evaluation, and the selection and award criteria set out in this Regulation, the specific programme and the work programme.

The work programme may set out specific criteria or further details on the application of the criteria.

(1a.) Specific selection and award criteria may in particular be defined for investigator-driven ‘frontier’ research funded within the framework of the European Research Council. 31.

(1b.) Where established in the work programmes or the calls for proposals, remote evaluations may be carried out. 4, 31.

2. A proposal which contravenes fundamental ethical principles or which does not fulfil the conditions set out in the specific programme, the work programme or in the call for proposals shall not be selected. Such a proposal may be excluded from the evaluation, selection and award procedures at any time. 2. A proposal which contravenes fundamental ethical principles or which does not fulfil the conditions set out in the specific programme, the work programme or in the call for proposals shall not be eligible for participation and selected. Such a proposal may be excluded from the evaluation procedures at any time. 31.

3. Proposals shall be selected on the basis of the evaluation results. 3. Proposals shall be selected on the basis of the evaluation results.

Article 16 Article 16 32, 33.

Submission, evaluation, selection and award procedures Submission, evaluation, selection, negotiation and award procedures

1. The Commission shall adopt and publish rules governing the procedure for the submission of proposals, as well as the related evaluation, selection and award procedures. In particular, it shall lay down detailed rules for the two-stage procedure for submission, and rules for the two-step evaluation procedure. 1. The Commission shall adopt and publish rules governing the procedure for the submission of proposals, as well as the related evaluation, selection, negotiation and award procedures. In particular, it shall lay down detailed rules for the two-stage procedure for submission, and rules for the two-step evaluation procedure.

2. Where a call for proposals specifies a two-stage submission procedure, only those proposals that pass the evaluation criteria for the first stage shall be requested to submit a complete proposal in the second stage.

3. Where a call for proposals specifies a two-step evaluation procedure, only those proposals that pass the first step, based on the evaluation of a limited set of criteria, shall go forward for further evaluation.

(3a.) Unless otherwise specified in the work programme, proposals for indirect actions must be submitted electronically. 4.

4. The Commission shall adopt and publish rules to ensure consistent verification of the existence and legal status of participants in indirect actions as well as their financial capacity. 4. The Commission shall adopt and publish rules to ensure consistent verification of the existence and legal status of participants in indirect actions as well as their financial capacity.

(4a.; moved from Article 15(3)) Proposals for indirect actions shall be selected on the basis of a comparative analysis of the evaluation results.

(5.) Participants shall be informed in writing of the evaluation result. In the case of indirect actions proposed by a consortium, the evaluation result and the information concerning the selection of the proposal may be communicated to the co-ordinator only.

(6.) For those proposals selected, the Commission may agree, if necessary, with participants to modify the scientific, operational and financial aspects of the indirect action, within the limits of the work programme and the call for proposal, and taking into account the results of the evaluation of the proposal.

(7.) Applying the verification procedure set out in Article 16a, the Commission shall ensure that participants have the operational and financial capacity needed to carry out the indirect action as and when needed.

(8.) The Commission shall award grants for those proposals for which negotiations have been successfully completed. All other proposals shall be rejected. 37, 38.

Article 16a 34, 35, 36, 42.

Verification of existence, legal status and operational and financial capacity of participants in indirect actions

The Commission shall be responsible for verifying the existence, the legal status and the operational and financial capacity of participants in indirect actions. The verification shall be based on appropriate supporting documents provided by the participant, allowing its existence and legal status as well as its financial and operational capacity to be ascertained. These documents must be up-dated periodically, or whenever requested by the Commission. To avoid double verification, the Commission shall certify a successful verification, which until further notice shall be considered as sufficient for all proposals submitted by the same participant. For this purpose the Commission shall set up a single verification and certification system and shall adopt and publish specific rules.

Article 17 39.

Appointment of independent experts

1. The Commission shall appoint independent experts to assist with evaluations required under the Seventh Framework Programme, and its specific programmes. 1. The Commission shall appoint independent experts to assist with evaluations of indirect actions and monitoring activities as required under the Seventh Framework Programme, and its specific programmes.

For coordination and support actions, referred to in Article 14, independent experts shall be appointed only if the Commission deems it appropriate. For coordination and support actions, referred to in Article 14, independent experts shall be appointed only if the Commission deems it appropriate.

2. Independent experts shall be chosen considering the skills and knowledge appropriate to the tasks assigned to them.

Independent experts shall be identified and selected on the basis of calls for applications from individuals and calls addressed to national research agencies, research institutions or enterprises with a view to establishing lists of suitable candidates.

The Commission may, if deemed appropriate, select any individual with the appropriate skills from outside the lists.

Appropriate measures shall be taken to ensure reasonable gender balance when appointing groups of independent experts.

(2a.) For the evaluation and the monitoring of investigator-driven ‘frontier’ research, experts shall be appointed by the Commission on the basis of a proposal by the Scientific Council of the European Research Council. 40.

3. When appointing an independent expert, the Commission shall take all necessary steps to ensure that the expert is not faced with a conflict of interests in relation to the matter on which the expert is required to provide an opinion. 3. When appointing an independent expert, t The Commission shall take appropriate measures all necessary steps to ensure that the expert is not faced with a conflict of interests in relation to the matter on which the expert is required to provide an opinion.

4. The Commission shall adopt a model appointment letter, hereinafter ‘the appointment letter’, which shall include a declaration that the independent expert has no conflict of interest at the time of appointment and that he undertakes to inform the Commission if any conflict of interest should arise in the course of providing his opinion or carrying out his duties. The Commission shall conclude an appointment letter between the Community and each independent expert. 44.

(4a.) The Commission shall adopt and publish rules governing the appointment and the use of independent experts. 32, 33.

5. The Commission shall publish periodically in any appropriate medium the list of the independent experts that have assisted it for each specific programme. 5. The Commission shall publish periodically in any appropriate medium the list and the function of the independent experts that have assisted it for each framework programme and its specific programmes.

Article 17a 4, 41, 42.

Databases and electronic exchange of data

(1.)The Commission shall take appropriate measures to ensure that data relating to all the indirect actions funded under the Seventh Framework Programme are recorded and processed in integrated databases and a common computerised system.

(2.) The Commission shall encourage the electronic exchange of data for all aspects regarding the management of proposals and grants.

SUBSECTION 3 IMPLEMENTATION AND GRANT AGREEMENTS SUBSECTION 3 IMPLEMENTATION OF INDIRECT ACTIONS AND GRANT AGREEMENTS

Article 18 Article 18

General General Provisions regarding the implementation of grant agreements

1. The participants shall implement the indirect action and shall take all necessary and reasonable measures to that end. Participants in the same indirect action shall implement the work jointly and severally towards the Community.

2. The Commission shall draw up, on the basis of the model provided for in Article 19.7 and taking into account the characteristics of the funding scheme concerned, a grant agreement between the Community and the participants. 2. The Commission shall draw up, on the basis of the model provided for in Article 19.7 and taking into account the characteristics of the funding scheme concerned, a grant agreement between the Community and the participants.

3. Participants shall make no commitments incompatible with the grant agreement.

4. Where a participant fails to comply with its obligations, the other participants shall comply with the grant agreement without any complementary Community contribution unless the Commission expressly relieves them of that obligation.

5. If the implementation of an action becomes impossible or if the participants fail to implement it, the Commission shall ensure the termination of the action. 5. If the implementation of an action becomes impossible or if the participants fail to implement it, the Commission shall ensure the termination of the action in accordance with Article 21. 56.

6. Participants shall ensure that the Commission is informed of any event which might affect the implementation of the indirect action or the interests of the Community.

Article 19 Article 19 43, 44, 45, 46, 47, 48, 49, 50.

General provisions for inclusion in grant agreements General provisions for inclusion in grant agreements

1. The grant agreement shall establish the rights and obligations of the participants with regard to the Community, in accordance with Decision (…/…), this Regulation, the Financial Regulation, and the Implementing Rules, and in accordance with the general principles of Community law.

It shall also establish, in accordance with the same conditions, the rights and obligations of legal entities who become participants when the indirect action is ongoing. It shall also establish, in accordance with the same conditions, the rights and obligations of legal entities who become participants when the indirect action is ongoing.

(1a. moved from Article 18(2)) For each indirect action, with the exception of those referred to in Article 14, tThe Commission shall draw up, on the basis of using the models provided for referred to in Article 19(7) and taking into account the characteristics of the funding scheme concerned, a grant agreement between the Community and the coordinator acting on behalf of the participants.

2. Where appropriate, the grant agreement shall provide which part of the Community financial contribution will be based on the reimbursement of eligible costs, and which part will be based on flat rates (including scale of unit costs) or lump-sums. 2. W here appropriate, t The grant agreement shall specify the duration of the action, the scientific and technical work to be carried out, a budget of total estimated costs and provide which part of the maximum Community financial contribution to the indirect action will be based on the reimbursement of eligible costs, and which part will be based on flat rates (including scale of unit costs) or lump-sums.

3. The grant agreement shall specify which changes in the composition of the consortium are to require the prior publication of a competitive call. 3. The grant agreement shall specify which changes in the composition of the consortium are to require the prior publication of a competitive call.

4. The grant agreement shall require the submission to the Commission of periodic progress reports concerning the implementation of the indirect action concerned. 4. The grant agreement shall require the submission to the Commission of periodic progress reports concerning the implementation of the indirect action concerned and, where appropriate, may also provide for reviews to assess the implementation of the indirect action concerned. 56.

5. Where appropriate, the grant agreement may provide that the Commission is to be notified in advance of any intended transfer of ownership of foreground to a third party. 5. Where appropriate, the grant agreement may provide that the Commission is to be notified in advance of any intended transfer of ownership of foreground to a third party.

6. Where the grant agreement requires participants to carry out activities that benefit third parties, the participants shall advertise this widely and identify, evaluate and select third parties transparently, fairly and impartially. If provided for in the work-programme, the grant agreement shall establish criteria for the selection of such third parties. The Commission reserves the right to object to the selection of the third parties.

7. The Commission shall establish a model grant agreement in accordance with this Regulation. 7. The Commission shall establish and adopt a model grant agreements specific to each of the funding schemes identified in part (a) of Annex III to Decision (…/…) establishing the Seventh Framework Programme in accordance with this Regulation.

8. The model grant agreement shall reflect the principles laid down in the European Charter for Researchers and the Code of Conduct for the Recruitment of Researchers (11). It shall address, as appropriate, synergies with education at all levels; readiness and capacity to foster dialogue and debate on scientific issues and research results with a broad public beyond the research community; activities to increase the participation and role of women in research; and activities addressing socio-economic aspects of the research. 8. The model grant agreements shall reflect the principles laid down in the European Charter for Researchers and the Code of Conduct for the Recruitment of Researchers (11). It shall address, as appropriate, synergies with education at all levels; readiness and capacity to foster dialogue and debate on scientific issues and research results with a broad public beyond the research community; activities to increase the participation and role of women in research; and activities addressing socio-economic aspects of the research.

(8a. moved from whereas (16)) The model grant agreements concluded for each action shall should provide for supervision and financial control by the Commission, or any representative authorised by the Commission, as well as audits by the Court of Auditors and on-the-spot checks carried out by the European Anti-Fraud Office (OLAF), in accordance with the procedures laid down in Council Regulations No 2185/96 , No 1073/99 and No 1074/99. 19.

Article 20

Provisions concerning access rights, use and dissemination

1. The grant agreement shall establish the respective obligations of the participants with regard to access rights, use and dissemination, in so far as those obligations have not been laid down in this Regulation. 1. The grant agreement shall establish the respective rights and obligations of the participants with regard to access rights, use and dissemination, in so far as those rights and obligations have not been laid down in this Regulation.

For those purposes, it shall require the submission to the Commission of a plan for the use and dissemination of foreground.

2. The grant agreement may specify the conditions under which the participants may object to a technological audit of the use and dissemination of the foreground being carried out by certain authorised representatives of the Commission.

Article 21

Provisions concerning termination

The grant agreement shall specify the grounds for its termination, in whole or in part, in particular for non-compliance with this Regulation, non-performance or breach, as well as the consequences for participants of any non-compliance on the part of another participant.

Article 22

Specific provisions

1. In the case of indirect actions to support existing research infrastructures and, where applicable, new research infrastructures, the grant agreement may lay down specific provisions relating to confidentiality, publicity and access rights and commitments that might affect users of the infrastructure.

2. In the case of indirect actions to support training and career development of researchers, the grant agreement may lay down specific provisions on confidentiality, access rights and commitments relating to the researchers benefiting from the action.

3. In the case of indirect actions in the field of security and space research, the grant agreement may lay down specific provisions on confidentiality, classification of information, access rights, transfer of ownership of foreground and the use thereof.

4. Where appropriate, the grant agreement for indirect actions addressing security issues, other than those referred to in paragraph 3, may also include such specific provisions.

(5.; moved from Article 47) In the case of investigator-driven ‘frontier’ research actions, participants shall actively ensure the grant agreement may lay down specific provisions relating to dissemination. of foreground, taking into account the need to safeguard intellectual property rights, the benefits of swift dissemination, confidentiality, and the legitimate interests of the participants.

Article 23 Article 23 45, 46, 47, 48, 49, 50.

Signature and accession Signature and accession in the case of multi-partner indirect actions

The grant agreement shall enter into force upon signature by the coordinator and the Commission. (1.) The grant agreement shall enter into force upon signature by the coordinator, acting on behalf of the other participants, and the Commission.

It shall apply to each participant that has formally acceded thereto. It shall apply to each participant that has formally acceded thereto to the consortium agreement.

(2.) ( Changes in the composition of the consortium shall be subject to written approval by the Commission in accordance with Article 26(4). )

SUBSECTION 4 CONSORTIA

Article 24 51, 52.

Consortium agreements

Save where otherwise provided in the call for proposals, all legal entities wishing to participate in an indirect action shall draw up an agreement, hereinafter ‘the consortium agreement’, to govern the following: (1.) Save where Unless otherwise provided for in the call for proposals, all legal entities wishing to participate in an indirect action shall conclude draw up an agreement, hereinafter ‘the consortium agreement’ , to govern the following:

It may establish additional rights and obligations of the participants in an indirect action, in accordance with the provisions established in the grant agreement, to govern the following:

(a) the internal organisation of the consortium; (a) the legal representation and the internal organisation of the consortium, confidentiality arrangements and the settlement of internal disputes, including provisions regarding the withdrawal, removal or exchange of any of the participants;

(b) the distribution of the Community financial contribution; (b) the distribution of the budget of estimated costs, the distribution of the Community financial contribution, the forms of grants used in accordance with Article 30(1) and provisions regarding the reporting and calculating of costs in accordance with Article 30(2);

(c) additional rules on dissemination and use including intellectual property rights arrangements, as appropriate; (c) additional rules on ownership of foregound generated by the indirect action, transfer of such ownership, access rights, dissemination and use including intellectual property rights arrangements, as appropriate;

(d) the settlement of internal disputes. (d) the settlement of internal disputes.

(2.) The consortium agreement shall be concluded by all participants wishing to participate in an indirect action before the signature of the grant agreement by the coordinator.

(3.) In accordance with this Regulation the Commission shall establish model consortium agreements specific to each of the funding schemes identified in part (a) of Annex III to Decision (…/…) establishing the Seventh Framework Programme.

Article 25 45, 46, 47, 48, 49, 50.

Coordinator

1. The legal entities wishing to participate in an indirect action shall appoint one of their number to act as coordinator to carry out the following tasks in accordance with this Regulation, the Financial Regulation, the Implementing Rules, and the grant agreement: 1. The legal entities wishing to participate in an indirect action shall appoint among themselves a one of their number to act as coordinator to carry out the following tasks in accordance with this Regulation, the Financial Regulation, the Implementing Rules, and the grant agreement:

(a) to ensure that the legal entities identified in the grant agreement complete the necessary formalities for accession to the grant agreement, as provided for therein; (a) to ensure that the legal entities participating in the indirect action comply with their obligations under the grant agreement and the consortium agreement identified in the grant agreement complete the necessary formalities for accession to the grant agreement, as provided for therein;

(b) to receive the Community financial contribution and to distribute it ; (b) to receive the Community financial contribution and to distribute it according to the provisions specified in the consortium agreement;

(c) to keep the financial accounts in order, to keep records and to inform the Commission of the distribution of the Community financial contribution in accordance with Article 36; (c) to keep the financial accounts in order, to keep records and to inform the Commission of the distribution of the Community financial contribution in accordance with Article 24(b) and Article 36;

(d) to ensure efficient and correct communication between the participants and the Commission. (d) to ensure efficient and correct reporting of the scientific and technical deliverables and progress of work communication between the participants and, in accordance with Article 19(4), to the Commission.

(e) to terminate the participation of legal entities should a participant not comply with its obligations under the grant agreement or the consortium agreement.

2. The coordinator shall be identified in the grant agreement. 2. The coordinator shall be identified in the grant agreement consortium agreement.

The appointment of a new coordinator shall require the written approval of the Commission. The appointment of a new coordinator shall require the written approval of the Commission.

(3.) Where provided for in the consortium agreement, the coordinator may subcontract its administrative and management activities in accordance with Article 33(4). 53.

Article 26 54, 55.

Changes in the consortium

1. The participants in an indirect action may propose the addition of a new participant or the removal of an existing participant. 1. The participants in an indirect action may agree to add propose the addition of a new participant or to remove the removal of an existing participant in accordance with the respective provisions established in the consortium agreement.

2. Any legal entity which joins an ongoing action shall accede to the grant agreement. 2. Any legal entity which joins an ongoing action shall accede to the grant agreement and the consortium agreement.

3. Where provided for in the grant agreement, the consortium shall publish a competitive call and advertise it widely using specific information support, particularly Internet sites on the seventh framework programme, the specialist press and brochures, and the national contact points set up by the Member States and Associated countries for information and support. 3. Where provided for in the grant agreement, the consortium shall publish a competitive call and advertise it widely using specific information support, particularly Internet sites on the seventh framework programme, the specialist press and brochures, and the national contact points set up by the Member States and Associated countries for information and support. 55.

The consortium shall evaluate offers in the light of the criteria which governed the initial action and with the assistance of independent experts appointed by the consortium, in accordance with the principles laid down in Articles 15, and Article 17, respectively. The consortium shall evaluate offers in the light of the criteria which governed the initial action and with the assistance of independent experts appointed by the consortium, in accordance with the principles laid down in Articles 15, and Article 17, respectively.

4. The consortium shall notify any change of its composition to the Commission, which may object within 45 days of the notification. 4. The consortium shall notify any change of its composition to the Commission, which may object within 45 days of the notification.

Changes in the composition of the consortium associated with proposals for other changes to the grant agreement which are not directly related to the change in composition shall be subject to written approval by the Commission. ( Changes in the composition of the consortium associated with proposals for other changes to the grant agreement which are not directly related to the change in composition shall be subject to written approval by the Commission. )

SUBSECTION 5 MONITORING OF PROGRAMMES AND INDIRECT ACTIONS AND COMMUNICATION OF INFORMATION

Article 27 Article 27 39, 56.

Monitoring Monitoring and review

The Commission shall monitor the implementation of indirect actions on the basis of the periodic progress reports submitted pursuant to Article 19(4). (1.) The Commission shall monitor the implementation of indirect actions on the basis of the periodic progress reports submitted pursuant to Article 19(4).

In particular, the Commission shall monitor the implementation of the plan for the use and dissemination of foreground, submitted pursuant to the second subparagraph of Article 20(1). …

(2.) The Commission may also carry out reviews of indirect actions on a periodic basis, or on their completion. Such reviews may also be carried out to determine whether the indirect action should be terminated in accordance with Article 18(5).

For those purposes, the Commission may be assisted by independent experts appointed in accordance with Article 17. For those purposes, the Commission may be assisted by independent experts appointed in accordance with Article 17.

The Commission shall monitor the seventh framework programme, its specific programmes and, where appropriate, previous framework programmes, with the assistance of independent experts appointed in accordance with Article 17. In addition, it may set up groups of independent experts appointed in accordance with Article 17, to advise on the implementation of Community research policy. (3.) The Commission shall monitor the S seventh F framework P programme, its specific programmes and, where appropriate, previous framework programmes, with the assistance of independent experts appointed in accordance with Article 17. In addition, it may seek advice set up groups of independent experts appointed in accordance with Article 17, to advise on the implementation of Community research policy.

(4. moved from above ) For those purposes, the Commission may be assisted by independent experts appointed in accordance with Article 17.

(5.) The Commission shall present to a committee composed of representatives of Member States, and chaired by the Commission, the results of its monitoring activities in accordance with paragraphs 1 to 3 of this Article. 57.

(6.) The responsibility for monitoring investigator-driven ‘frontier’ research funded within the framework of the ERC shall be with the ERC's ‘Scientific Council’, or its competent sub-committees. 56.

Article 28

Information to be made available

1. Upon request, the Commission shall make available to any Member State or Associated country any useful information in its possession on foreground arising from work carried out in the context of an indirect action, provided that the following conditions are met:

(a) the information concerned is relevant to public policy;

(b) the participants have not provided sound and sufficient reasons for withholding the information concerned.

2. Under no circumstances shall the provision of information pursuant to paragraph 1 be deemed to transfer to the recipient any rights or obligations of the Commission or of the participants.

However, the recipient shall treat any such information as confidential unless it becomes public or is made available publicly by the participants, or unless it was communicated to the Commission without restrictions on its confidentiality.

SECTION 3 COMMUNITY FINANCIAL CONTRIBUTION

SUBSECTION 1 ELIGIBILITY FOR FUNDING AND FORMS OF GRANTS

Article 29

Eligibility for funding

1. Where any of the following legal entities participates in an indirect action, it may receive a Community financial contribution:

(a) any legal entity established in a Member State or an Associated country, or created under Community law,

(b) any international European interest organisation,

(c) any legal entity established in an international cooperation partner country.

2. In the case of a participating international organisation, other than an international European interest organisation, or a legal entity established in a third country other than an international cooperation partner country, a Community financial contribution may be granted provided that at least one of the following conditions is satisfied:

(a) provision is made to that effect in the specific programmes or in the relevant work programme,

(b) it is essential for carrying out the indirect action,

(c) such funding is provided for in a bilateral scientific and technological agreement or any other arrangement between the Community and the country in which the legal entity is established.

Article 30

Forms of grants 3, 58, 59, 60, 61.

1. The Community financial contribution for grants identified in part a) of Annex III to the Seventh Framework Programme shall be based on the reimbursement of eligible costs. 1. The Community financial contribution for grants identified in part a) of Annex III to the Seventh Framework Programme shall consist of be based on the reimbursement, in part or in whole, of eligible costs.

However, the Community financial contribution may take the form of flat rate financing, including scale of unit costs, or lump sum financing, or it may combine the reimbursement of eligible costs with flat rates and lump sums. However, the Community financial contribution may take the form of flat rate financing, including scale of unit costs, or lump sum financing, or it may combine the reimbursement of eligible costs with flat rates and lump sums.

Lump sums for whole indirect actions may be used only for coordination and support actions and actions for training and career development of researchers. 60.

The Community financial contribution may also take the form of scholarships or prizes. The Community financial contribution may also take the form of scholarships or prizes.

2. While the Community financial contribution shall be calculated by reference to the cost of the indirect action as a whole, it shall be based on the reported costs of each participant. 2. While t The maximum Community financial contribution for the indirect action shall be defined calculated by reference to the cost of the indirect action as a whole, it shall be according to the activities carried out by and based on the budget of estimated reported costs for of each participant. 61.

Article 31

Reimbursement of eligible costs

1. Grants shall be co-financed by the participants. 1. Indirect actions awarded a G grants from the Community budget shall be co-financed by the participants.

The Community financial contribution to reimburse eligible costs shall not give rise to a profit. The Community financial contribution to reimburse eligible costs shall not give rise to a profit. Whether or not there is a profit shall be determined at the level of each participant. 62.

2. Receipts shall be taken into consideration for the payment of the grant at the end of the implementation of the action. 2. Receipts shall be taken into consideration for the payment of the grant at the end of the implementation of the action in accordance with Article 33(5).

3. In order to be considered eligible, costs incurred for the implementation of an indirect action shall meet the following conditions: 3. In order to be considered eligible, costs incurred by each participant for the implementation of an indirect action shall meet the following conditions:

(a) they must be actual;

(b) they must have been incurred during the duration of the action, with the exception of final reports when provided for in the grant agreement;

(c) they must have been determined in accordance with the usual accounting and management principles and practices of the participant and used for the sole purpose of achieving the objectives of the indirect action and its expected results, in a manner consistent with the principles of economy, efficiency and effectiveness; (c) they must have been determined and have been used according to the usual accounting and management principles of the country where the legal entity is established and cost accounting practices of the participant and incurred for the sole purpose of achieving the objectives of the indirect action and its expected results, in a manner consistent with the principles of economy, efficiency and effectiveness; 63, 65.

(d) they must be recorded in the accounts of the participant and paid and, in the case of any contribution from third parties, they must be recorded in the accounts of the third parties; (d) they must be recorded in the accounts of the participant and paid and, in the case of any contribution from third parties, they must be recorded in the accounts of the third parties;

(e) they must be exclusive of non-eligible costs, in particular identifiable indirect taxes including value added tax, duties, interest owed, provisions for possible future losses or charges, exchange losses, cost related to return on capital, costs declared or incurred, or reimbursed in respect of another Community project, debt and debt service charges, excessive or reckless expenditure, and any other cost that does not meet the conditions referred to in points (a) to (d). (e) they must be exclusive of non-eligible costs, in particular recoverable identifiable indirect taxes, including value added tax, duties, interest owed, provisions for possible future losses or charges, exchange losses, costs related to return on capital, costs declared or incurred, or reimbursed in respect of another Community project, debt and debt service charges, excessive or reckless expenditure, and any other cost that does not meet the conditions referred to in points (a) to (d). 64.

For the purposes of point (a), average personnel costs may be used if they are consistent with the management principles and accounting practices of the participant and do not differ significantly from actual costs. For the purposes of point (a), average personnel costs may be used if they are consistent with the management principles and accounting practices of the participant and do not differ significantly from actual costs.

Article 32 Article 32 66, 67, 68, 69, 70.

Direct eligible costs and indirect eligible costs Direct eligible costs and indirect eligible costs

1. Eligible costs shall be composed of costs attributable directly to the action, hereinafter ‘direct eligible costs’ and, where applicable, of costs which are not attributable directly to the action, but which have been incurred in direct relationship with the direct eligible costs attributed to the action, hereinafter ‘indirect eligible costs’.

(1a.) Direct costs can be composed of personnel, travel and subsistence, and other specific costs. 67.

(1b.) Personnel costs shall include remuneration and related charges for personnel directly employed by a participant. They shall be charged on the basis of the participant's records of time actually spent by personnel on the indirect action. A participant may charge average costs or unit scales for specific categories of staff, provided that they are established in accordance with its usual cost accounting practices.

(1c.) Travel and subsistence costs for personnel participating in the indirect action shall be charged as actual costs incurred or based on unit scales, provided that they are established in accordance with the participant's usual cost accounting practices, or based on unit scales established by the Commission.

(1d.) Other specific costs, including durable equipment, user fees, consumables, subcontracting, shall be eligible only if defined in the grant agreement.

2. For the coverage of indirect eligible costs, a participant may opt for a flat-rate of its total direct eligible costs, excluding its direct eligible costs for subcontracting. 2. For the coverage of indirect eligible costs, a participant may charge actual costs or may opt for a flat-rate for of its total direct eligible personnel costs, excluding its direct eligible costs for subcontracting , provided that it is established in accordance with its usual cost accounting practices. 68, 69, 70.

3. The grant agreement may provide that the reimbursement of indirect eligible costs is to be limited to a maximum percentage of the direct eligible costs, excluding the direct eligible costs for subcontracting, in particular in the case of coordination and support actions, and, where appropriate, actions for training and career development of researchers. 3. The grant agreement may provide that the reimbursement of indirect eligible costs is to be limited to a maximum percentage of the direct eligible personnel costs, excluding the direct eligible costs for subcontracting, in particular in the case of coordination and support actions, and, where appropriate, actions for training and career development of researchers. 68.

Article 33 3, 71, 72, 73.

Upper funding limits

1. For research and technological development activities, the Community financial contribution may reach a maximum of 50 % of the total eligible costs.

However, in the case of public bodies, secondary and higher education establishments, research organisations and SMEs, it may reach a maximum of 75 % of the total eligible costs. 71, 72.

2. For demonstration activities, the Community financial contribution may reach a maximum of 50 % of the total eligible costs.

3. For activities supported by frontier research actions, coordination and support actions, and actions for the training and career development of researchers, the Community financial contribution may reach a maximum of 100 % of the total eligible costs.

4. For management and audit certificates, and other activities not covered by paragraphs 1, 2 and 3, the Community financial contribution may reach a maximum of 100 % of the total eligible costs. 4. For management activities (including and audit certificates) and training activities in actions that do not fall under the funding scheme for training and career development of researchers, coordination, networking, and dissemination and other activities not covered by paragraphs 1, 2 and 3, the Community financial contribution may be up to reach a maximum of 100 % of the total eligible costs. 73.

The other activities referred to in the first subparagraph include, inter alia, training in actions that do not fall under the funding scheme for training and career development of researchers, coordination, networking, and dissemination. The other activities referred to in the first subparagraph include, inter alia, training in actions that do not fall under the funding scheme for training and career development of researchers, coordination, networking, and dissemination.

5. For the purposes of paragraphs 1 to 4, eligible costs minus receipts shall be taken into consideration in order to determine the Community financial contribution. 5. For the purposes of paragraphs 1 to 4, eligible costs and minus receipts shall be taken into consideration in order to determine the Community financial contribution.

6. Paragraphs 1 to 5 shall apply, as appropriate, in the case of indirect actions where flat rate financing or lump sum financing is used for the whole indirect action. 6. Paragraphs 1 to 5 shall apply, as appropriate, in the case of indirect actions where flat rate financing or lump sum financing is used for the whole indirect action.

Article 34 Article 34 74.

Reporting and audit of eligible costs Reporting and audit of eligible costs

1. Periodic reports shall be submitted to the Commission regarding eligible costs, financial interest yielded by pre-financing, and receipts in relation with the indirect action concerned and, where appropriate, certified by an audit certificate, in accordance with the Financial Regulation and the Implementing Rules. 1. All Periodic reports shall be submitted to the Commission regarding eligible costs, financial interest yielded by pre-financing, and receipts relating to in relation with the indirect action concerned shall be periodically reported to the Commission and, where appropriate, certified by an audit certificate, in accordance with the Financial Regulation and the Implementing Rules.

The existence of co-financing in relation with the concerned action shall be reported and, where appropriate, certified at the end of the action. The existence of co-financing in relation with the concerned action shall be reported and, where appropriate, certified at the end of the action.

2. In the case of public bodies, research organisations, and higher and secondary education establishments, an audit certificate as required under paragraph 1 may be established by a competent public officer. 2. In the case of public bodies, research organisations, and higher and secondary education establishments, an audit certificate as required under paragraph 1 may be established by a competent public officer.

Article 34a 69, 75, 76, 77.

Audit certificates

(1.) Reported costs shall be certified in accordance with the Financial Regulation and the Implementing Rules.

(2.) In accordance with this Regulation and the provisions of the grant agreement, audit certificates shall provide assurance that: 75.

(a) the costs claimed by the participant are eligible;

(b) the costs, interest on pre-financing and receipts have been correctly determined and are substantiated by adequate supporting documents.

(3.) Audit certificates shall be provided by an external auditor or, in the case of public bodies, a competent public officer. The external auditor must comply with the requirements established in accordance with the 8th Council Directive 84/253/EEC of 10 April 1984. The competence of the public officer shall be determined by the national legislation and the relevant authorities. The external auditor or, in the case of public bodies, the competent public officer providing the audit certificate, must be independent of the participant in charge of the selection of the auditor. 76.

(4.) The Commission shall have access to the supporting documents for these audit certificates. 77.

Article 35 Article 35 59, 78, 79.

Networks of Excellence Networks of Excellence

1. Unless otherwise provided for in the work programme, the Community financial contribution to Networks of Excellence shall be in the form of a lump-sum calculated according to the number of researchers to be integrated in the Network of Excellence and the duration of the action. 1. Unless otherwise provided for in the work programme, the Community financial contribution to Networks of Excellence shall be in the form of a lump-sum calculated according to the number of researchers to be integrated in the Network of Excellence and the duration of the action.

2. The unit value for lump sums paid under paragraph 1 shall be EUR 23 500 per year and per researcher. 2. The unit value for lump sums paid under paragraph 1 shall be EUR 23 500 per year and per researcher.

That amount shall be adjusted by the Commission in accordance with the Financial Regulation and the Implementing Rules. That amount shall be adjusted by the Commission in accordance with the Financial Regulation and the Implementing Rules.

3. The work programme shall establish the maximum number of participants and, where appropriate, the maximum number of researchers that may be used as the basis for the calculation of the maximum lump sum pursuant to paragraph 1. However, participants over and above the maxima for the establishment of the financial contribution may participate as appropriate. 3. The work programme shall establish the maximum number of participants and, where appropriate, the maximum number of researchers that may be used as the basis for the calculation of the maximum lump sum pursuant to paragraph 1. However, participants over and above the maxima for the establishment of the financial contribution may participate as appropriate.

4. The payment of lump sums under paragraph 1 shall be effected by means of periodic releases. 4. The payment of lump sums under paragraph 1 shall be effected by means of periodic releases.

Those periodic releases shall be made according to the assessment of the progressive implementation of the Joint Programme of Activities through the measurement of integration of research resources and capacities based on performance indicators negotiated with the consortium and specified in the grant agreement. Those periodic releases shall be made according to the assessment of the progressive implementation of the Joint Programme of Activities through the measurement of integration of research resources and capacities based on performance indicators negotiated with the consortium and specified in the grant agreement.

SUBSECTION 2 PAYMENT, DISTRIBUTION, RECOVERY AND GUARANTEES

Article 36

Payment and distribution

1. The Community financial contribution shall be paid to the participants via the coordinator.

2. The coordinator shall keep records making it possible to determine at any time what portion of the Community funds has been distributed to each participant.

The coordinator shall communicate that information to the Commission upon request.

Article 37

Recovery

The Commission may adopt a recovery decision in accordance with the Financial Regulation.

Article 38 Article 38 3, 80, 81.

Retained amounts for risk avoidance Retained amounts for risk avoidance

1. Depending on the level of risk associated with non-recovery of sums due to the Community, the Commission may retain a small percentage of the Community financial contribution to each participant in an indirect action in order to cover any amounts due and not reimbursed by defaulting participants in indirect actions. 1. Depending on the level of risk associated with non-recovery of sums due to the Community, the Commission may retain a small percentage of the Community financial contribution to each participant in an indirect action in order to cover any amounts due and not reimbursed by defaulting participants in indirect actions.

2. Paragraph 1 shall not apply to the following: 2. Paragraph 1 shall not apply to the following:

(a) public bodies, legal entities whose participation in the indirect action is guaranteed by a Member State or an Associated country, and higher and secondary education establishments; (a) public bodies, legal entities whose participation in the indirect action is guaranteed by a Member State or an Associated country, and higher and secondary education establishments;

(b) participants in actions to support training and career development of researchers, frontier research actions, and actions for the benefit of specific groups with the exception actions for the benefit of SMEs. (b) participants in actions to support training and career development of researchers, frontier research actions, and actions for the benefit of specific groups with the exception actions for the benefit of SMEs.

The types of participant referred to in points (a) and (b) shall each be responsible for their own debts. The types of participant referred to in points (a) and (b) shall each be responsible for their own debts.

3. The amounts retained shall constitute revenue assigned to the Seventh Framework Programme within the meaning of Article 18(2) of the Financial Regulation. 3. The amounts retained shall constitute revenue assigned to the Seventh Framework Programme within the meaning of Article 18(2) of the Financial Regulation.

4. At the end of the framework programme an assessment shall be made of the amounts required to cover outstanding risks. Any sums in excess of these amounts shall be reimbursed to the framework programme and constitute earmarked revenue. 4. At the end of the framework programme an assessment shall be made of the amounts required to cover outstanding risks. Any sums in excess of these amounts shall be reimbursed to the framework programme and constitute earmarked revenue.

CHAPTER III Dissemination and use, and access rights

SECTION 1 FOREGROUND

SUBSECTION 1 OWNERSHIP

Article 39

Ownership of foreground

1. Foreground shall be the property of the Community in the following cases:

(a) coordination and support actions consisting in a purchase or service subject to the rules on public procurement set out in the Financial Regulation; (a) coordination and support actions consisting in a purchase of goods or services subject to the rules on public procurement set out in the Financial Regulation and its Implementing Rules;

(b) coordination and support actions relating to independent experts.

2. Foreground arising from work carried out under indirect actions other than those referred to in paragraph 1 shall be the property of the participants carrying out the work generating that foreground.

3. If employees or other personnel working for a participant are entitled to claim rights to foreground, the participant shall ensure that it is possible to exercise those rights in a manner compatible with its obligations under the grant agreement.

Article 40 83.

Joint ownership of foreground

1. Where several participants have jointly carried out work generating foreground and where their respective share of the work cannot be ascertained, they shall have joint ownership of such foreground. 1. Where several participants have jointly carried out work generating foreground and where their respective share of the work cannot be ascertained, they shall have joint ownership of such foreground. In such cases, the participants concerned shall conclude a joint ownership agreement governing the allocation and terms of exercising that joint ownership.

2. Where no joint ownership agreement has been concluded regarding the allocation and terms of exercising that joint ownership, each of the joint owners shall be entitled to grant non-exclusive licenses to third parties, without any right to sub-licence subject to the following conditions: 2. Where no such joint ownership agreement has been concluded by the participants in an indirect action regarding the allocation and terms of exercising that joint ownership, each of the joint owners shall be entitled to grant non-exclusive licenses to third parties, without any right to sub-licence, subject to the following conditions:

(a) prior notice must be given to the other joint owners; (a) giving prior notice must be given to the other joint owners;.

(b) fair and reasonable compensation must be provided to the other joint owners. (b) fair and reasonable compensation must be provided to the other joint owners.

(3.) The Commission shall establish model joint ownership agreements in accordance with this Regulation.

Article 41

Ownership of foreground by specific groups

1. In the case of actions for the benefit of specific groups, Article 39(2) and Article 40(1) shall not apply. In such cases, foreground shall be jointly owned by the participants which are members of the specific group benefiting from the action, unless otherwise agreed by those participants. In the case of actions for the benefit of specific groups identified in part (a), section 6. of Annex III to Decision (…/…) establishing the Seventh Framework Programme, Article 39(2) and Article 40(1) shall not apply. In such cases, foreground shall be jointly owned by the participants which are members of the specific group benefiting from the action, unless otherwise agreed by those participants.

Where the owners of the foreground are not members of that group, they shall ensure that the group is provided with all the rights to foreground that are required for the purposes of using and disseminating that foreground in accordance with the technical annex to the grant agreement. Where the owners of the foreground are not members of that group, they shall ensure that the group is provided with all the exclusive rights to foreground that are required for the purposes of using and disseminating that foreground in accordance with the technical annex to the grant agreement.

Article 42 Article 42 82, 84.

Transfer of foreground Transfer of ownership and access rights regarding foreground

1. Where a participant transfers ownership of foreground, it shall pass on its obligations to the assignee, in particular those relating to the granting of access rights, and dissemination and use, in accordance with the grant agreement. 1. Where a participant transfers ownership of foreground, it shall pass on its obligations to the assignee, in particular those relating to the granting of access rights, and dissemination and use in accordance with this Regulation, the grant agreement and the consortium agreement.

(1a.) Foreground shall also be accessible to affiliated entities of the participants carrying out the work generating that foreground if the affiliated company is: (a) established in a Member State or an Associated Country; (b) granting reciprocal access rights in respect of any background which it holds and which is needed to use the foreground; (c) complying with the obligations concerning confidentiality in accordance with Article 3.

2. Subject to its obligations concerning confidentiality, where the participant is required to pass on access rights, it shall give prior notice to the other participants in the same action, together with sufficient information concerning the new owner of the foreground to permit them to exercise their access rights under the grant agreement. 2. Subject to its obligations concerning confidentiality, w Where a the participant intends is required to pass on access rights, it shall give prior notice to the other participants in the same action, together with sufficient information concerning the new assignee owner of the foreground to permit the other participants them to exercise their access rights under the grant agreement.

However, the other participants may, by written agreement, waive their right to individual prior notice in the case of transfers of ownership from one participant to a specifically identified third party. However, the other participants may, by written agreement, waive their right to individual prior notice in the case of transfers of ownership from one participant to a specifically identified third party.

(2a.) No prior notice to the other participants in the same action needs to be given (one) year after (a) the completion of the indirect action, or (b) the termination of participation by the owner of the foreground concerned.

3. Following notification in accordance with the first subparagraph of paragraph 2, the other participants may object to any transfer of ownership on the ground that it would adversely affect their access rights. 3. Following notification in accordance with the first subparagraph of paragraph 2 of this Article, any the other participants may object to any transfer of ownership on the ground that it would adversely affect their access rights.

Where the other participants demonstrate that their rights would be adversely affected, the intended transfer shall not take place until agreement has been reached between the participants concerned. Where any of the other participants demonstrate that their rights would be adversely affected, the intended transfer shall not take place until agreement has been reached between the participants concerned.

4. Where appropriate, the grant agreement may provide, by way of an additional requirement, that the Commission is to be notified in advance of any intended transfer of ownership to a third party. 4. Where appropriate, the grant agreement, may provide, by way of an additional requirement, that t The Commission is to be notified in advance of any intended transfer of ownership or access rights regarding foreground to a third party which is not established in a Member State or an Associated country.

Article 43 84.

Preservation of European competitiveness and ethical principles

The Commission may object to the transfer of ownership of foreground, or to the granting of an exclusive licence regarding foreground, to a legal entity which is established in a third country not associated to the Seventh Framework Programme, if it considers that this is not in accordance with the interests of developing the competitiveness of the European economy or is inconsistent with ethical principles. In accordance with Article 42(4) of this Regulation, t The Commission may object to the transfer of ownership of foreground, or to the granting of an exclusive licence regarding foreground, to third parties not a legal entity which is established in a Member State or an Associated country third country not associated to the Seventh Framework Programme, if it considers that this is not in accordance with the interests of developing the competitiveness of the European economy or is inconsistent with ethical principles.

In such cases, the transfer of ownership or grant of exclusive licence shall not take place unless the Commission is satisfied that appropriate safeguards will be put in place.

SUBSECTION 2 PROTECTION, PUBLICATION, DISSEMINATION AND USE

Article 44

Protection of foreground

1. Where foreground is capable of industrial or commercial application, its owner shall provide for its adequate and effective protection in conformity with relevant legislation, and having due regard to the legitimate interests, particularly the commercial interests, of the participants in the indirect action concerned.

Where a participant invokes legitimate interest, it must, in any given instance, show that it would suffer disproportionately great harm. Where a participant invokes legitimate interest, it must, in any given instance, show that it would suffer disproportionately great harm.

2. Where the owner of foreground does not protect foreground that it owns, and does not transfer it to another participant in accordance with Article 42(1) and (2), no dissemination activities may take place before the Commission has been informed.

In such cases, the Commission may, with the consent of the participant concerned, assume ownership of that foreground and adopt measures for its adequate and effective protection. The participant concerned may refuse consent only if it can demonstrate that its legitimate interests would suffer disproportionately great harm. In such cases, the Commission may, with the consent of the participant concerned, assume ownership of that foreground and adopt measures for its adequate and effective protection. The participant concerned may refuse consent only if it can demonstrate that its legitimate interests would suffer disproportionately great harm.

Article 45

Statement relating to Community financial support

All publications, patent applications filed by or on behalf of a participant, or any other dissemination relating to foreground, shall include a statement that the foreground concerned was generated with the assistance of financial support from the Community.

The terms of that statement shall be established in the grant agreement.

Article 46

Use and dissemination

1. The participants shall use the foreground which they own, or ensure that it is used. 82.

2. Each participant shall ensure that the foreground of which it has ownership is disseminated as swiftly as possible. If it fails to do so, the Commission may disseminate that foreground. 2. Each participant shall ensure that the foreground of which it has ownership is disseminated as swiftly as possible. If it fails to do so, the Commission may disseminate that foreground.

3. Dissemination activities shall be compatible with intellectual property rights, confidentiality, and the legitimate interests of the owner of the foreground. 3. Dissemination activities shall be compatible with intellectual property rights, confidentiality obligations, and the legitimate interests of the owner of the foreground as to the protection or potential protection of foreground.

4. Prior notice of any dissemination activity shall be given to the other participants concerned.

Following notification, any of those participants may object if it considers that its legitimate interests in relation to its foreground could suffer disproportionately great harm. In such cases, the dissemination activity may not take place unless appropriate steps are taken to safeguard these legitimate interests. Following notification, any of those participants may object within a period to be agreed between the participants in their consortium agreement or by any other written agreement if it considers that its legitimate interests in relation to its foreground or background could suffer disproportionately great harm. In such cases, the dissemination activity may not take place unless appropriate steps are taken to safeguard these legitimate interests.

Article 47 Article 47

Dissemination