No C 163/4 Official Journal of the European Communities 3.7.85 
II 
(Preparatory Acts) 
COMMISSION 
Proposal for a Council Decision empowering the Commission to borrow under the New 
Community Instrument for the purpose of promoting investment within the Community 
COM(85) 250 final 
(Submitted by the Commission to the Council on 7 June 1985) 
(85/C 163/06) 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European 
Economic Community, and in particular Article 235 
thereof, 
Having regard to the proposal from the Commission, 
Having regard to the proposal of the European Parl­
iament, 
Having regard to the opinion of the Economic and 
Social Committee, 
Whereas the Community's investment financing facilities 
should continue to operate and be intensified, with a 
view to correcting structural shortcomings in the 
productive apparatus and increasing the pace of 
economic growth so as to deflect the disturbing trend of 
unemployment; 
Whereas loan applications already approved by the 
Commission account for over two-thirds of the 
borrowing authorized by the Council in Decision 
83/200/EEC of 19 April 1983 (*); 
Whereas action in favour of small and medium-sized 
enterprises under the new Community instrument, as last 
defined by Decision 83/200/EEC, should be continued 
and reinforced; 
Whereas it is vital in order to strengthen the 
Community's technological base and industrial 
competitiveness to encourage the capacity of under­
takings for industrial innovation and commercial 
enterprise; 
Whereas investment by small and medium-sized under­
takings involving the application of new technologies and 
innovation, has features which raise special financing 
problems; 
0) OJ No L 112, 28. 4. 1983, p. 26. Whereas special financing arrangments should 
consequently be provided for a deal with such problems, 
in particular by extending the financing base and by 
encouraging the supply of equity funding from financial 
intermediaries; 
Whereas the New Community Instrument must make a 
contribution to the implementation of the Integrated 
Mediterranean Programmes; 
Whereas the Commission should therefore be 
empowered to borrow amounts enabling it to grant loans 
equivalent to 1 500 million ECU in principal; 
Whereas the European Investment Bank has stated that it 
is willing to contribute to the implementation of the 
facility, 
HAS DECIDED AS FOLLOWS: 
Article 1 
The Commission shall be empowered to borrow on 
behalf of the European Economic Community under the 
new Community instrument for an amount enabling it to 
grant loans of up to the equivalent of 1 500 million ECU 
in principal. 
Article 2 
The proceeds of the borrowings referred to in Article 1 
shall be on-lent to finance investment projects that 
contribute to the industrial adjustment and the 
competitiveness of the Community, in particular by 
means of the application of new technologies and 
innovation. 
These projects, to be carried out on Community 
territory, shall be such that they serve the Community's 
priority objectives relating to the financing of investment 
by small and medium-sized undertakings in industry and 
other productive sectors taking into account inter alia 
their regional impact and the need to combat 
unemployment. 
3.7.85 Official Journal of the European Communities No C 163/5 
Article 3 
The Commission shall decide whether or not projects are 
eligible in accordance with the following priorities and 
guidelines for eligibility: 
— the investment projects of small and medium-sized 
enterprises in industry and other productive sectors, 
in particular with a view to the application of new 
technologies and innovation and to improving the 
rational use of energy shall be eligible; the projects of 
small enterprises shall have priority; 
— projects shall comply, in terms both of their nature 
and of their application, with the provisions of the 
treaty and of secondary law, in particular provisions 
relating to competition, and with the rules and 
requirements of the relevant Community policies. 
Article 4 
Leans may be granted through the agency of financial 
intermediaires. Capital and interest payments may be 
deferred. Loans may be used to finance intangible assets 
such as patents, licences, know-how, research and 
development expenditure directly linked to the 
investment concerned. The intermediary may pass the 
loan on to undertakings either in the form of a loan or 
in the form of capital. In both cases, the intermediary 
shall be responsible for the service and associated risk. 
Article 5 
Connected borrowing and lending transactions shall be 
expressed in the same monetary units. 
Lending terms as regards the reimbursement of the 
principal and the rate and payment of interest shall be 
fixed in such a way that, overall, they cover the costs 
and expenses incurred in concluding and performing 
both the borrowing and the lending side of the 
transactions. 
Article 6 
The terms of borrowings shall be negotiated by the 
Commission in the best interests of the Community, 
having regard to the conditions on capital markets and in 
accordance with the constraints imposed by the duration 
and other financial aspects of the loans to be granted. 
Funds borrowed shall be deposited with the European 
Investment Bank, to be invested on a temporary basis if 
necessary. Where borrowings are expressed, payable or 
reimbursable in the currency of a Member State, they 
may be concluded only with the agreement of the 
competent authorities of that State. 
Article 7 
A mandate shall be given to the Bank to grant and 
administer loans pursuant to this Decision. To this end, a 
cooperation agreement shall be drawn up between the 
Bank and the Commission. The Bank shall carry out 
transactions under this mandate on behalf of, for and at 
the risk of the Community. 
The Commission shall decide, in accordance with Article 
3, whether projects are eligible. Where the Commission 
gives favourable decision, the Bank shall decide whether 
and on what terms to grant the loans, in accordance with 
its usual criteria and with the procedures laid down in its 
statute. 
Loan procedure as provided for in this Decision shall be 
as follows: 
— loan applications shall be transmitted simultaneously 
to the Commission and to the Bank either directly or 
through a Member State, 
— the Commission and the Bank shall sign the loan 
contracts, 
— the Bank shall report to the Commission on the use 
made of the funds. 
Article 8 
The Commission shall inform the European Parliament 
and the Council every six months of the rate of 
utilization of the loans. No later than the date on which 
total loans signed amount to two-thirds of the total, it 
shall notify them of a new proposal. 
Article 9 
The Commission shall annually inform the European 
Parliament and the Council of reciepts and expenses 
resulting from borrowing and lending transactions and 
present at the same time an assessment of the functioning 
of the new Community instrument in all these respects. 
Article 10 
The financial control and audit of the Commission's 
accounts shall be carried out in accordance with the 
Financial Regulations applicable to the general budget of 
the European Communities.