6.7.92 OfficialJournaloftheEuropeanCommunities NoC169/7
Opiniononthecommunication fromtheCommissionon'TheRoleofMutualGuarantee
Systems(MGSs)intheFinancingofsmallandmedium-sized enterprises (SMEs)inthe
EuropeanCommunity'
(92/C169/03)
TheCommissiondecidedon28October1991,inaccordancewithArticle198oftheEEC
Treaty,toasktheEconomicandSocialCommitteeforanOpinionontheabovementioned
communication .
TheSectionforIndustry,Commerce,CraftsandServices,whichwasresponsibleforthe
preparatorywork,adopteditsOpinionon1April1992.TheRapporteurwasMrE.Muller.
Atits296thPlenarySession(meetingof29April1992)theEconomicandSocialCommittee
adoptedunanimouslythefollowingOpinion.
accordingtocertaincategories (craftsectors,trad­
ing,hotels,etc.)asembodiedinappropriateadmin­
istrative,financialandtaxmeasures,forinstance.
1.4.TheCommissiondocumentmentionsaseriesof
stepstakenbytheCommunityinthefieldoffinancing,
suchasthe'SeedCapital','VentureConsort'and'Euro­
techCapital'projects.Thequestionremainsofwhether
theseprojectsaresufficientlyknowntoSMEs,whether
thechoiceofmultiplyingfactorshasbeenmadewith
propercareandwhethertheimpactofthesemeasures
isencouraging .1.Preliminaryremarks
1.1.Subjecttothecommentsmadebelow,theEcon­
omicandSocialCommitteesupportstheactionpro­
posedintheCommunication fromtheCommissionon
'TheRoleofMutualGuaranteeSystems(MGSs)in
theFinancingofsmallandmedium-sizedenterprises
(SMEs)intheEuropeanCommunity'.
1.2.InvariousOpinionsissuedsince1982infavour
ofapolicytoencourageSMEs,theEconomicandSocial
Committeehasstressedtheneedtoprovidesuchfirms
witheasieraccesstoadequatesourcesoffinanceand
thusimprovetheirchancesofattractinginvestmentand
adaptingtonewtechnological ,economicandsocial
conditions .
1.3.WhiletheessentialroleofSMEsintheEuropean
integrationprocessisgenerallyknownandrecognized,
particularattentionshouldbepaidtothequestionof
howtheyarefinanced.Withthisinmind,theEconomic
andSocialCommittee,whilerecognisingthatthepre­
sentCommunication dealswithanimportantaspect
ofSMEfinancing,recommendsthattheCommission
produce,assoonaspossible,topicsfordiscussionand
proposalsforactioninthefieldoffinancingaddressed
toallthepartiesconcerned .
t
1.3.1.Thismoregeneralapproachshouldtake
accountofsuchaspectsas:
—thevarietyoffirmsandoperationscoveredbythe
SMEbanner,asshownbytheirsize,typeofoper­
ation,marketimpactandlegalstatus,whichmay
rangefromthatofone-manorfamilybusinessto
thatofpartnership,companywithsharecapitalor
cooperative ,
—theconsultation ,informationandtrainingfacilities
availabletothedirectorsandstaffofsuchfirms,
—thepolicyofencouragingSMEsinthecontextof
thestructuralpolicyoftheMemberStatesand2.Somefeaturesofmutualguaranteeschemeoper­
ation
2.1.Themutualguaranteesystemisatypeof
guaranteewhichenablesSMEs,and/orparticipantsin
suchascheme,
—toobtaincreditmoreeasilybecauseofthebanking
confidenceinspiredbytheguarantee,and
—topayaminimumcommissionfortheguarantee,
sincethesystemisbasedontheideaofserviceand
notonthatofprofit.
2.1.1.However,thereducedcostofcreditisnotthe
directaimofthesystem,althoughitinevitablyplaysa
partbecauseoftheadvantageswhichtheformulaoffers
forbanks.
2.2.Mutualguaranteeschemescanofferbanksa
tripleguarantee :
a)Atechnicalguarantee:
TotheextentthatMGSsareawareoftheirmembers'
needs,theycanassessthetechnicalsideoftheinvest­
mentplanssubmittedtothem,monitortheuseof

NoC169/8 OfficialJournaloftheEuropeanCommunities 6.7.92
creditsand,intheeventofanyfailureonthepartof
theborrower,securethebesttermsgoverningpledges;2.5.Aspartoftheirnormalactivity,MGSsshould
advisefirmsseekingtheirservices,evenifintervention
isimpossible .Thisparticularlyappliestorecommen­
dationsforre-organisation andrationalisation ,assess­
mentofthetermsofcontractsortakeoveragreements
orfacilitatingbankingandcooperationrelationships .b)Amoralguarantee:
ThedirectorsofMGSsoftenknowmembersofthe
professionpersonallyandcangiveaninformedassess­
mentoftheirtechnicalcompetenceandtheirpro­
fessionalcapability; 2.5.1.Suchadditionalservicesmayturnouttobe
extremelyusefultoalltheenterprisesinvolved.
2.6.TheCommission Communication containsa
numberofpassagesonthepositionofMGSsinthe
financingofSMEs.Inviewoftheactionproposedby
theCommissionitseemsworthwhiletoconsidercertain
issuesfromthepointofviewofbothSMEsandMGSs.c)Afinancialguarantee:
ThefinancialguaranteeprovidedbytheMGSisthe
resultof:
—theformationofaguaranteefundtocoverunpaid
debtsandotherproblems,and
—theprovisionofageneralperformanceguarantee
pledgingitsentirecapitalasguarantee.
2.6.1.Fromthepointofviewoftheusers,i.e.SMEs,
severalpointsmaybeemphasized .
2.6.1.1.Oneofthemaincomplaintsthatfirmshave
aboutMGSsisthatprocedureislongandcumbersome
andinvolvesdealingwithseveralbodies,whichoften
leadstoapile-upofdelaysandrestrictions .
2.6.1.2.SomecreditseekersdonotapplytoMGSs,
oraresometimesputofffromthem,notforfinancial
reasons,butbecausetheydonotbelongtoapro­
fessionalbody.2.2.1.Thevalueofthefinancialguaranteeprovided
byaMGSliesbasicallyinthesizeofitsguaranteefund.
Inanycase,anyMGSmustbeable,ifnecessary,to
topupitsguaranteefundbymeansofappropriate
measures .
2.3.TherecanbenoquestionofMGSstakingthe
placeofbanksandcreditinstitutions ;theirroleisa
complementary one,whentheusualguaranteesrequest­
edbybanksetc.cannolongerbeprovidedorwhen
theceilingoncurrentloansisreached.
2.4.Intheinterestsofoperationalefficiency,the
maintermsandconditionsgoverningthegrantingofa
guaranteeshouldbeadoptedbytheinternalbodiesof
theMGS.Amongotherthings,andbearinginmind
specificdataonthesectororregionconcerned,they
maycoverthefollowingpoints:
—thefirmmustbeinatransparentfinancialsituation
anditsoperatingaccountsshouldbepositivewithin
appropriateperiods,
—thefirmmustnotbeinaprecariousfinancialsitu­
ationanditsprovisionaloperatingaccountsmust
bepositiveoratleastshowthattheenterpriseis
profitable,
—thedirector(s)ofthefirmmustpossessanappropri­
atequalificationandrecognizedpersonalqualities
(character,goodstanding,etc.),
—theprevioushistoryofthefirmanditsdirector(s)
mustbefavourable (nolitigationforeconomicor
financialmisdemeanours ,noattackableorcriminal
bankruptcy,etc.).
2.4.1.Someoftheabovecriteriaalsoapplytothe
taking-overandsetting-upoffirms.2.6.1.3.Insomemutualguaranteesystemstheappli­
cantfirmmayhavetopayinmoneyinordertoreceive
aguarantee(e.g.contributionstotheMGS'scapitalor
guaranteefund,handlingcharges,lifeassurancepolicy
premiumsorconclusionofapolicytocoveroutstanding
repayments);thismayleadtocashflowproblems.
2.6.1.4.However,thesecomplaints,nomatterhow
justifiabletheymaybe,mustnotleadonetolosesight
oftheundoubtedbenefitsofMGSs,whoseactivities
enablebankstomobilisecreditsandprovideasecurity
whichismuchappreciated .
2.6.1.5.Asalreadystated,anMGS'sacceptanceof
aguaranteeapplicationisbasedprimarilyonitsconfi­
denceintheapplicant'sprofessionalandpersonalcapa­
bilities.

6.7.92 OfficialJournaloftheEuropeanCommunities NoC169/9
2.6.2.4.Thefundswhichmakeupcapitalcovercan­
notbeinvestedfreely;theyshouldbeplacedinsafe,
non-speculative investmentsordepositedwithbanks.2.6.1.6.However,MGSshavetoprotectthemselves
againsttherisksinherentinthegrantingofguarantees
[e.g.chronicinsolvency,deathofthedirector(s)].The
formsofadditionalcollateralonwhichtheMGSmay
callifnecessaryshouldbelaiddownbyitsmanagement
bodies.
2.6.2.5.MGSsmusttakestepstofindasatisfactory
solutiontothethreeproblemsfacedbybankers(secur­
ity,financing,profitability )andthusmakeSMEsinto
customerswhichareasinterestingaslargefirms. 2.6.2.FromtheMGSs'pointofview,itseemsworth­
whiletomentionthefollowingproblems :
2.6.2.5.1.Inaddition,tofacilitatethegrantingof
creditbybanks,MGSsshouldtakeoncertainadminis­
trativework(e.g.monitoringandfollow-upofcase
files,managementofdisputes)aswellasprovidinga
guarantee .2.6.2.1.Theownfundsservingasback-upcapital
foranMGSvis-a-visprovidersoffundsarebasically
madeupofcapitalpaidinbyMGSmembers,thelegal
reserve,freeorvoluntaryreserves,capitalprovidedby
thestateorotherpublicorsemi-publicbodiesplus
compoundinterest,endowmentfundsprovidedby
organizedprofessionalgroupings,paymentsintothe
guaranteefundandprovisionsagainstrisks.2.6.2.6.Asregardsthegrantingofguarantees,the
proceduresinvolvedmusttakeaccountofthedualneed
forsimplicityandspeed.Innocaseshouldeitherthe
applicantorthebankbeputoffbyapile-upofdocu­
mentsandforms,whichdifferfromoneMGStoanoth­
erandtendtoslowdowndecisions.
2.6.2.7.MGSsshouldnotlimittheiroperationsto
thelongandmediumterm;theyshouldalsoinclude
theshorttermintheirrangeofeligibleoperations (e.g.
financingofworkingcapitalingeneralandseasonal
creditsforcertainsectorsinparticular).
3.Waysofpromotingandstrengthening mutual
guaranteeschemes2.6.2.2.Thepublicauthoritiesmayinterveneinvari­
ousways,dependingonthescheme:
a)Externalmonitoring,laiddownbylaw,maybe
carriedoutintwoways:
—either,assumingthatMGSsaretreatedinthe
samewayasbanks,bytheauthorityresponsible
formonitoringbanks,
—orbyanauditorappointedbythegovernment
followingaproposalbytheinternalbodiesof
theMGS;
b)Financialinterventionbythepublicauthoritiesmay
takeseveralforms:
—start-upaidforanewMGSintheformof
operatingsubsidiesand/orcapitaldonatedfor
thepurposeofbuildingupadequatecapital
cover,
—annualbudgetaryresourcestodevelopthe
MGS'srangeofactivities,
—Stateguaranteestopromoteastructuralpolicy
inagivensectororregionwiththeinvolvement
ofeconomicandsocialinterestgroups.3.1.InmostcasesMGSsrepresenttheconcrete
expressionofthedesireofcompaniestocooperatein
ajointattempttofindpropersolutionstotheproblems
ofguaranteeinginvestmentloans.Itisthereforenecess­
arythatthebestuseshouldalsobemadeofthemasa
toolformanagingsuchcompanies .Inadditiontothe
servicestraditionallyandcurrentlyprovidedbyMGSs,
whicharerightlymentionedintheCommissiondocu­
ment,itseemsthatthereisaneedforamoresystematic
explorationofthenewpossibilitiesforactioninthearea
ofcompanymanagementandsectorsupport,bearingin
mindthenewneedswhichareemerginginthefields
ofaccounting,administrative management ,human
resourcesmanagement ,technicalandeconomiccooper­
ation,theimprovementofquality,etc.
2.6.2.3.Asfarastaxationisconcerned,theforma­
tionofreservesshouldnotbehamperedbytaxrules
whicharebadlyadaptedtotheeconomicandsocial
roleofMGSs.However,thisapproachshouldnot
leadtodiscrimination ortodistortionsofcompetition
betweenbusinesseswithdifferentlegalforms.3.2.TheproposalsforactioninthepresentCom­
munication,whichdeservethesupportoftheEconomic
andSocialCommittee,shouldincludeasystematic
searchforconcreteandeffectivewaysofgivinganew
impetustohealthyMGSswhicharewellintegratedinto
economicandsocialstructures .

NoC169/10 OfficialJournaloftheEuropeanCommunities 6.7.92
—TheroleoftheMGSasanintermediaryinstitution
between,ontheonehand,SMEs,thebanksand
creditinstitutionsand,ontheother,theintervening
publicauthoritiesshould,inprinciple,becon­
firmed.3.3.Cross-bordercooperationbetweenMGSsor
withcompatibleinstitutionscould,logically,beencour­
agedinthemediumterm.Itisworthrecallingherethe
stepscurrentlybeingtakenatCommunityleveltogive
enterpriseslikeMGSsastatutesimilartothatfora
EuropeanCompany(SE).Thoughtshouldalsobegiven
totheconsiderableinputofexperiencesandideaswhich
couldcomefromcertaincountriesoftheEuropeanFree
TradeAssociation (EFTA)whicharecontemplating
joiningtheECinthenearfuture.—Toavoidunrealisticinitiatives,theroleoftheCom­
missionandthepublicauthoritiesintheMember
Statesshouldinitiallybetoinformandencourage
acorrectawarenessandthen,lateron,topromote
tangiblemeasuressupportedattherootsbyfirms,
SMEorganisationsand,whereappropriate,other
economicagentspreparedtocooperateonthismat­
ter.Asregardsthemutualexchangeofinformation ,
theCommissioncouldusefullyavailitselfofthe
CommunityEuro-Info-Centres network.
—ToencourageMGSs,itmightbeusefultoconsider
providingthemwithanappropriatelegalstatusand
minimumconditionsforthemtomeet.3.4.Creatingasufficientlyattractiveenvironment
forthoseinallECregions,populationcategoriesand
sectorswhowishtosetupabusiness,irrespectiveof
theirqualifications ,mustalsobeseenfromtheangle
ofstrengthening economicandsocialcohesionwithin
theCommunity .Notonlyshouldbusinesscreationbe
encouraged ;firmsshouldbegiventheopportunityto
equipthemselveswiththehumanandmaterial
resourcestheyneedtodevelopandachieveahigh
degreeofstability.Thepresenceandefficientoperation
ofMGSsisavalidelementwhichshouldincreasingly
formanintegralpartofvariousareasofECpolicy,
especiallythoseofregionaldevelopment ,cross-border
cooperationandstructuralconsolidation ,asinthenew
German'Lander',whereMGSsmayplayanimportant
andsalutaryrolefortheCommunityasawhole.3.5.2.TheEconomicandSocialCommitteedoesnot
intendtoanalyzethevariouschaptersoftheCommuni­
cationindetail.Certainmajoraspectswillemergein
thenormalcourseofeventsduringconsultationsand
exchangesofexperiences .Onsuchoccasionsitwill
doubtlessbepossibletoestablishacomparativetable
showingthefeaturesandthestrongandweakpoints
ofmutualguaranteesystemsoperatingintheMember
States.3.5.TheEconomicandSocialCommitteesupports
thereasonsandargumentssetoutintheCommission
Communication .
3.5.3.TheEconomicandSocialCommitteehasnot­
edthataEuropeancongressofMGSswasorganized
withtheCommission'ssupportinMadridattheend
ofNovember1991.3.5.1.Itwoulddrawattentiontofivepointswhich
shouldbeborneinmindinmeasuresplannedforthe
future:
—TheCommission'sinitiativewillonlyhavealasting
positiveimpactatCommunitylevelifthesystems
tobeadaptedorcreatedintheMemberStates
respecttherulesofthemarketandtheprincipleof
optimalresourceallocationwhentheyare
operating,anddonotcreatedistortionsofcompe­
tition;however,anattemptshouldbemadeto
improvethemechanismsofthemarket,which
sometimesprovetobeseriousobstaclesforSMEs.3.5.3.1.Itregretsthatitwasunabletotakepartin
thismeeting.Itsuggeststhatitshouldbeconsideredas
aprimenegotiatingpartnerinviewofthenumberof
itsmemberswhorepresentvariouseconomicandsocial
sectorswhicharedirectlyconcernedbythiswhole
question.
—TheCommissionCommunication hasnobinding
conditionseitheronoperatingMGSsoronthe
guaranteeschemesdevelopedincertainMember
States.However,itshouldtriggeroffaprocessof
reflectionwhichcouldleadtoeffectiveimprove­
mentsortofundamentalchangesinpresentsystems.
Italsoconstitutesanofferofinformationandposs­
ibleactionforMemberStateswhichhavenoexperi­
enceinsuchmatters.3.5.4.TheCommission Communication makesno
mentionofanypossibilitiesofinterventionbytheEuro­
peanInvestmentBank(EIB)infinancingprogrammes
specificallyslantedtowardsSMEs.Thisquestion
should,ofcourse,beexaminedagainstthemoregeneral
backgroundofECpolicyonfinancing,butalsointhe
lightofthespecificfunctionsofMGSsasmentionedin
theCommissiondocument .

6.7.92 OfficialJournaloftheEuropeanCommunities NoC169/11
4.Finalobservations
4.1.TheEconomicandSocialCommitteeapproves
theCommission'sactionaslaunchedbythepresent
Communication .
4.2.Thehighlysatisfactoryresultsobtainedby
MGSsinvariouscountriesshouldencouragetheMem­
berStatesandtheCommunitytocontinueandsuccess­
fullycompletethisspecificattempttoimprovetheway
inwhichMGSsoperate,whileatthesametimebearing
inmindthesizeofthegeneralproblemofSMEfinan­
cingandfacilitatingadiversification ofsystemsandinstrumentswithaviewtoachievingoptimalperform­
anceintheSMEsectorsconcerned .
4.3.SuchsupportbytheCommunityisallthemore
justifiedbecauseMGSsareaidinstrumentswhich
enableSMEstohelpthemselvesbetter,aprinciple
whichseemsnecessarytothesoundoperationofMGSs.
4.4.Finally,theEconomicandSocialCommittee
wouldstresstherolewhichwell-designedMGSscan
playintheeconomicandsocialspheresandconcludes
thattheremustbeintensiveconsultationwiththeCom­
mittee,whichistheveryforumwherealltheeconomic
andsocialinterestsdirectlyconcernedbyMGSsare
represented .
DoneatBrussels,29April1992.
TheChairman
oftheEconomicandSocialCommittee
MichaelGEUENICH
OpinionontheproposalforaCouncilDirectiverelatingtofertilizers
(92/C169/04)
On14January1992theCouncildecidedtoconsulttheEconomicandSocialCommittee,
underArticle198oftheTreatyestablishingtheEuropeanEconomicCommunity,onthe
abovementioned proposal.
TheSectionforIndustry,Commerce,CraftsandServices,whichwasresponsibleforpreparing
theCommittee'sworkonthesubject,adopteditsOpinionon1April1992.TheRapporteur
wasMrProumens .
Atits296thPlenarySession(meetingof29April1992),theEconomicandSocialCommittee
adoptedthefollowingOpinionunanimously .
—tothefourth:79/138/EEC,87/566/EECand89/
516/EEC.TheCommitteeapprovestheproposedDirectiveunre­
servedly.
1.Generalcomments
1.1.ThepurposeofthisDirectiveistoconsolidate
fourearlierDirectives (76/116/EEC,80/876/EEC,87/
94/EECand77/535/EEC).Therehavealsobeenamend­
mentstotheseDirectives,viz:
—tothefirst:88/183/EEC,89/284/EECand89/530/
EEC,
—tothethird:88/126/EEC,1.2.Byitsdecisionof1April1987theCommission
gaveinstructionsthatDirectiveswhichhadbeen
amendedseveraltimesshouldbeconsolidatednolater
thanaftertheir10thamendment,whichisthecasehere.
1.3.Thenewtextdoesnotchangethesubstanceof
theexistingDirectives,buthastheadvantageofbeing
easiertoconsultbothforofficialsoftheMemberStates
andforthoseworkinginthesector.