98/347/EC: Council Decision of 19 May 1998 on measures of financial assistance for innovative and job-creating small and medium-sized enterprises (SMEs) - the growth and employment initiative
Date: 1998-05-19
Institutions: Council of the European Union
Subjects: European Investment Bank, European Investment Fund, aid to undertakings, innovation, job creation, small and medium-sized enterprises

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II

(Acts whose publication is not obligatory)

COUNCIL

COUNCIL DECISION

of 19 May 1998

on measures of financial assistance for innovative and job-creating small and
medium-sized enterprises (SMEs) — the growth and employment initiative

(98/347/EC)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Article 130(3) thereof,

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

Having regard to the opinion of
liament (2),

the European Par-

Having regard to the opinion of the Economic and Social
Committee (3),

Having regard to the opinion of the Committee of the
Regions (4),

(1) Whereas

the European Council, meeting

in
Amsterdam on 16 and 17 June 1997, in the context
of measures for the alleviation of unemployment,
invited the European Investment Bank (EIB) and the
European Investment Fund (EIF),
to
develop a facility to provide venture capital for high-
technology projects of SMEs and by so doing,
acknowledged, not only the link between SMEs,
innovation and technology, and new jobs, but also
the role of risk-capital in underpinning job-creation;

inter alia,

(2) Whereas the European Special Council on Employ-
and

in Luxembourg

ment, meeting

on 20

(1) OJ C 108, 7. 4. 1998, p. 67.
(2) OJ C 138, 4. 5. 1998.
(3) Opinion delivered on 26 March 1998 (not yet published in

(4) Opinion delivered on 17 April 1998 (not yet published in the

the Official Journal).

Official Journal).

21 November 1997, welcomed the European Par-
liament’s Growth and Employment Initiative, pro-
viding for the strengthening of budgetary resources
earmarked for employment; whereas in its decision
on the 1998 budget, the European Parliament in
agreement with the Council created a new heading
B5-5 (Labour market and technological innovation)
for the financing with ECU 450 million over three
years (1998 to 2000) of SMEs and of
innovative
actions and projects in the labour market; whereas,
within this, ECU 30 million has been allocated in
1998 for innovative actions and projects in the labour
market; whereas the European Council invited the
Commission to make proposals, as soon as possible,
for new financial instruments to support innovative
and job-creating SMEs, as part of this initiative, so
that the Council can adopt them speedily; whereas
these new instruments must reinforce the European
Technology Facility,
financed by the European
Investment Bank and administered by the European
Investment Fund, by opening a ‘risk capital window’,
supporting
joint
ventures between SMEs within the European Union
and establishing within the European Investment
Fund a special guarantee fund to facilitate risk-taking
small and
by institutions providing finance for
medium-sized enterprises;

transnational

creation of

the

(3) Whereas the EIB and EIF have already responded by
creating the European Technology Facility (ETF),
which will provide venture-capital
for technology
oriented SMEs by using established venture-capital
funds as intermediaries;

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a

97/15/EC on

(4) Whereas, on 9 December 1996, the Council adopted
Decision
third multiannual
programme for small and medium enterprises (SMEs)
in the European Union (1997 to 2000) (1); whereas
this programme includes the objectives of improving
access to loan and risk capital financing, facilitating
the development of specific financial
instruments
and stimulating the development of capital markets
for fast-growing SMEs;

(5) Whereas, on 5 November 1997,

the Commission
adopted Decision 97/761/EC approving a support
mechanism for the creation of transnational
joint
ventures for SMEs in the Community (2), a financially
limited initiative launched under the third multi-
annual programme for SMEs;

(6) Whereas, on 15 December 1994,

the Council
adopted Decision 94/917/EC, adopting a specific
programme for the dissemination and optimisation
of the results of activities in the field of research and
technological development, including demonstration
(1994 to 1998) (3) which provides for activities to
improve the European environment for financing the
exploitation, adaptation and dissemination of tech-
nology by appropriate Community schemes; whereas
the Commission on 25 November 1996 adopted a
communication on the ‘First action plan for innova-
tion in Europe — innovation for growth and
employment’ providing for innovation financing to
be facilitated in Europe, especially by encouraging
investment in risk capital and equity, particularly in
and innovative, high-growth
start-up investment
firms which are a major source of new jobs, and by
reinforcing European Investment Fund action in
favour of innovation; whereas this Decision should
be implemented in appropriate coordination with
the abovementioned activities;

programme

(7) Whereas in the implementation on the financial
assistance
this
programme, particular attention should be given to
small enterprises with up to 100 employees, within
the objectives of the programme;

under

SMEs

for

(8) Whereas the lack of venture capital constitutes a
particular difficulty for new firms and SMEs looking
to expand, especially those exploiting new tech-
nology and innovative ideas; whereas this segment of
the venture-capital market
is underdeveloped in
Europe and entails the highest risks which poten-

(1) OJ L 6, 10. 1. 1997, p. 25.
(2) OJ L 310, 13. 11. 1997, p. 28.
(3) OJ L 361, 31. 12. 1994, p. 101.

tially translate to high losses; whereas a determined
public sector involvment will assist private sector
operators to make onward investments to early stage
and emerging SMEs;

(9) Whereas SMEs frequently encounter difficulties in
obtaining bank financing for the development of
joint ventures because of the higher
transnational
risk for financial institutions; whereas the develop-
ment of joint ventures between Community SMEs
makes it possible to make better use of the oppor-
tunities of the internal market, to increase invest-
ment and trade and to have a positive effect on
employment
growth; whereas
economic
advances and subsidies constitute the most suitable
measure to overcome the financial obstacles for
SMEs to create transnational joint ventures;

and

(10) Whereas bank loans constitute an important source
of external funding for SMEs; whereas the raising of
debt finance is difficult for SMEs as banks are often
reluctant to lend to them; whereas loans are often
only available to SMEs against
tangible security;
whereas loan guarantees constitute a cost-effective
instrument to facilitate access to loans; whereas both
tangible
should be
eligible under the scheme; and whereas a significant
leverage effect can be achieved with a guarantee
instrument;

and intangible

investments

(11) Whereas this Decision constitutes the legal basis for
specific measures which are complementary with
other Community measures and which cannot be
better carried out at Member State level and therefore
respect
the principle of subsidiarity; whereas the
Decision is limited to the minimum necessary to
achieve its objectives and does not exceed what is
necessary to this end and therefore respects the prin-
ciple of proportionality;

(12) Whereas the Commission should adapt the alloca-
tion to the different schemes over the three-year
period to take account of their absorption and effici-
the prospects
ency in terms of
submitted, their impact on the access to financing by
SMEs and their immediate and long term impact on
creating sustainable jobs;

the quality of

(13) Whereas

the definition of SMEs as

in
Commission Recommendation 96/280/EC of 3 April
1996 concerning the definition of
and
medium-sized enterprises (4) should be applied in the
implementation of this Decision;

set out

small

(4) OJ L 107, 30. 4. 1996, p. 4.

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(14) Whereas the EIF was set up in June 1994 to con-
tribute to the pursuit of Community objectives by
stimulating investment in trans-European networks
and small and medium-sized enterprises; whereas the
Community has become a member of the EIF by
virtue of Council Decision 94/375/EC (1); whereas
the Fund is empowered to issue loan guarantees and
to make equity investments according to its Statute;

(15) Whereas the cooperation agreements between the
Commission and the EIF mentioned in Articles 3
and 5 should take account of the need to secure wide
dissemination
the
information
schemes;

concerning

of

(16) Whereas the EIF has indicated its willingness to
participate in the implementation of
the ETF
start-up and the SME guarantee facility schemes
under this Decision; whereas the EIF in the imple-
mentation of the ETF start-up facility should en-
deavour to ensure the maximum appropriate private
sector venture capital involvement;

(17) Whereas

the

institutions
should be selected in an open and transparent
manner;

intermediary

financial

(18) Whereas the Joint European Venture (JEV) scheme
will be administered by the Commission in ac-
cordance with its Decision 97/761/EC;

(19) Whereas the measures financed by the EIB and the
EIF do not fall under the provisions of the Treaty on
State aid; whereas
they have
effected on beneficiary SMEs comparable to those
arising from State aid, have to observe the limits and
conditions laid down for the compatibility of com-
parable State aid,

those measures,

if

HAS DECIDED AS FOLLOWS:

Article 1

Objective of the programme

A programme of financial assistance for innovatory and
job-creating small and medium-sized enterprises is hereby
set up with the aim of stimulating job-creation by facilit-
ating and strengthening the establishment and growth of
innovative SMEs (hereinafter ‘the programme’) as defined
in Commission Recommendation 96/280/EC, by sup-
porting their investment activity through increased avail-

(1) OJ L 173, 7. 7. 1994, p. 12.

ability of finance. The programme shall be targeted at
SMEs with growth and therefore employment creation
potential.

Article 2

Description of the programme

The programme shall consist of
three complementary
facilities which shall be: a risk-capital scheme (ETF
Start-up) managed by the European Investment Fund
(EIF), a scheme for financial contributions supporting the
creation of transnational joint-ventures by SMEs within
the Community (Joint European Venture) managed by
the Commission and a guarantee scheme (SME Guarantee
Facility) managed by the EIF.

Article 3

The ETF start-up facility

1.
The Community shall provide risk-capital participa-
tion in SMEs primarily at their establishment and early
stages and/or innovative SMEs through investments in
relevant specialised venture-capital funds, where appro-
priate in cooperation with other participatory mechanisms
established in Member States, particularly in smaller or
newly established funds,
funds operating regionally or
funds focused on specific industries or technologies, or
venture-capital funds financing the exploitation of R&D
results, e.g. funds linked to research centres and science
parks, avoiding duplication of existing EIB and EIF inter-
ventions and reduction of the risk on these instruments.

2.
The EIF shall select, make and manage the invest-
ments into the venture-capital funds, where appropriate
working with national schemes. The detailed terms and
conditions for implementing the ETF start-up facility,
including its monitoring and control, shall be laid down
in a cooperation agreement between the Commission and
the EIF.

The cooperation agreement shall take account of the

3.
indicative outline set out in Annex I.

Article 4

Joint European Venture (JEV)

1.
The Community shall provide financial contribu-
tions to SMEs for the setting-up of new transnational joint
ventures within the European Union. The Community
contribution is intended to cover a part of the expenses
incurred in the conception and setting-up of transnational
joint ventures. The maximum contribution per project
shall be ECU 100 000 covering:

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(a) up to 50 % of the eligible expenses, with a maximum

of ECU 50 000;

(b) up to 10 % of the total amount of investment made
in fixed assets. particular attention shall be given to
small enterprises with up to 100 employees.

2.
Eligible expenses for the purposes of point (a) of
paragraph 1 shall be those essential expenses related to
joint
the conception and setting-up of a transnational
venture defined in point 6 of Annex II and created by
European SMEs.

3.
Applications for contributions shall be channelled to
the Commission through a network of finance intermed-
iaries. In the implementation of the JEV, the indicative
outline set out in Annex II shall be taken into account.

Article 5

The SME guarantee facility

1.
The Community shall provide budgetary allocations
for the purpose of covering the cost of guarantees and
counter-guarantees issued by the EIF in order to promote
an increase of loans to SMEs, by increasing the capacity of
guarantee schemes operating in the Member States in the
public or private sector,
including mutual guarantee
schemes; the scheme may also support any risk-sharing
SME instruments the EIB or any other appropriate fin-
ancial institutions may make available. Appropriate co-
operation with Member States will be ensured by contacts
between the EIF and national authorities before imple-
menting the facility.

2.
The budgetary allocation shall cover the full cost of
the facility, including EIF’s guarantee losses and any other
eligible costs or expenses of the facility. The cost of the
facility to the Community budget shall be capped so that
it does not under any circumstances exceed the budgetary
allocations made available to the EIF under this action;
there shall be no contingent liability on the Community
budget.

3.
Priority shall be given to small enterprises with up
to 100 employees. The guarantees issued by the EIF shall
be partial guarantees; there shall always be a risk-sharing
arrangement between the EIF and the financial
inter-
mediary. Whenever possible, in the implementation of
this instrument, the EIF will work guarantee schemes set
up primarily to help finance loans that
the banking
system would not readily provide without guarantee cover
and to ensure that part of the risk is borne by the lender.

4.
The detailed terms and conditions for implementing
the SME guarantee facility, including its monitoring and

control, shall be laid down in a cooperation agreement
between the Commission and the EIF.

The cooperation agreement shall take into account

5.
the indicative outline set out in Annex III.

Article 6

Management fees

The management fees paid to the EIF shall be deter-
mined in accordance with the accepted market practice
and may be debited to the appropriations devoted to the
initiative.

Article 7

Reporting and evaluation

1.
The Commission shall report annually to the Euro-
pean Parliament and the Council on the implementation
of
this Decision and the different schemes under it,
notably on this Decision’s inpact on the access to fin-
ancing by SMEs, its immediate effects on the creation of
employment, the prospects for the creation of employ-
ment in the long term and coherence between the fin-
ancial allocation to the different schemes and the objec-
tives of the programme.

The Commission shall within 48 months at most
2.
from the date of its adoption, provide an evaluation of the
programme, notably as regards its overall utilisation, its
immediate effects on the creation of employment and the
prospects for the creation of employment in the long
term.

Article 8

Final provision

Without prejudice to what is indicated in Annex I, point
5, Annex II, point 4 and Annex III, point 10,
this
programme shall come to an end on 31 December 2000.

Article 9

This Decision shall be published in the Official Journal
of the European Communities. It shall take effect on the
day of its publication.

Done at Brussels, 19 May 1998.

For the Council

The President

G. BROWN

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ANNEX I

INDICATIVE OUTLINE OF THE IMPLEMENTATION OF THE ETF START-UP SCHEME

1. Introduction

The ETF start-up will be operated by the EIF on a trust basis. The EIF will invest the Community funds
allocated for the scheme in relevant specialized venture-capital funds and/or where appropriate in co-
operation with other participatory mechanisms established in Member States, particularly in smaller or
newly established funds, funds operating regionally or funds focused on specific industries or technol-
ogies, or venture capital funds financing the exploitation of R&D results, e.g. funds linked to research
centres and science parks which in turn provide risk capital for SMEs. The ETF start-up scheme will rein-
force the European Technology Facility established by the EIB in cooperation with the EIF by adopting
an investment policy involving a higher risk-profile, both as regards intermediary funds and their invest-
ment policies.

2. Intermediaries

The EIF will use its best efforts to target investments, throughout the Community, particularly in smaller
or newly established funds, funds covering specific regions, whether assisted or not, or focusing on
specific industries or technologies, or venture-capital funds linked to research centres and science parks.
The intermediaries will be selected in conformity with best business and market practice in a fair and
transparent manner in order to avoid any distortion of competition, having regard to the aim of working
through a wide range of specialised funds.

3. Maximum investment

The maximum ETF start-up aggregate investment in an intermediary venture-capital fund will be 25 %
of the total equity capital held by the relevant fund, or up to a maximum of 50 % in exceptional cases
such as new funds which are likely to have a particularly strong catalytic role in the development of
venture-capital markets for a specific technology or in a specific region. The Commission will explain in
its annual report all individual cases where the EIF made any investment greater than 25 % of the total
equity capital. No commitment in a single venture-capital fund will exceed ECU 10 million. The inter-
mediary venture-capital funds will comply with established market practices with regard to portfolio
diversification. The EIF will endeavour to ensure the maximum appropriate private sector venture capital
involvement.

4. Investment pari passu

The investment made by the ETF start-up in the intermediary funds will rank pari passu with other
equity investors.

5. Life of the facility

The ETF start-up scheme is established as a long-term facility that will usually take five to 12-year posi-
tions in venture-capital funds. The EIF will use its best efforts fully to commit the funds allocated to the
facility not later than during the calendar year following the year in which the relevant budgetary
payments are made. In any case, investments will not exceed 16 years from the time of signature of the
cooperation agreement.

6. Realisation of investments

As most of the investments to be made under the ETF start-up scheme will be in unquoted, illiquid ven-
ture-capital funds, the realisation of those investments will be based on the distribution of the proceeds
received by the intermediary funds from the sale of their investments in SMEs.

7. Reinvestment of proceeds from realised investments

Proceeds from realised investments may be reinvested during the first four years of operation of the
scheme. The reinvestment period can be extended by up to three years, subject to a satisfactory evaluation
of the facility 48 months after its adoption.

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8. Trust account

A separate trust account will be set up within the EIF to hold budgetary funds underpinning the scheme.
This account will be interest bearing; interest earned will be added to the resources of the facility. The
investments made by the EIF under the ETF start-up scheme and EIF’s management fees and other
eligible expenses will be debited from, and the proceeds from realised investments will be credited to the
trust account. After the fourth anniversary of the scheme or, where the reinvestment period of the scheme
is extended, after the end of the extended reinvestment period, any balances on the trust account, other
than funds committed and not yet drawn down/invested and funds reasonably required to cover eligible
costs and expenses, such as EIF’s management fee, will be returned to the Community budget.

9. Court of Auditors

Appropriate arrangements will be made to allow the Court of Auditors of the European Community to
exercise its mission in order to verify the regularity of payments made.

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ANNEX II

INDICATIVE OUTLINE OF THE IMPLEMENTATION OF THE JOINT EUROPEAN
VENTURE SCHEMEe

1. Introduction

The Joint European Venture scheme will provide financial contributions to support the establishment of
transnational joint ventures between SMEs within the European Union. It is based on the limited initi-
ative launched under the third multiannual programme for SMEs, adopted by Commission Decision
97/761/EC of 5 November 1997 approving a support mechanism for the creation of transitional joint
ventures for SMEs in the Community.

2. Intermediaries

institutions. The network of financial

The scheme will be accessible to SMEs through intermediaries, which may be banks or other appropriate
intermediaries
financial
selected in conformity with the abovementioned initiative of 5 November 1997, following a new call for
expression of interest published in the Official Journal of the European Communities. The Commission
will check the eligibility of the applications in the light of the programme objectives.

intermediaries will comprise financial

3. Application procedure

Applications for financial contributions under this scheme will be submitted by SMEs to one of the inter-
mediaries. The intermediary will be entrusted with the evaluation of the application, and, in the event of a
favourable opinion, passing it on to the Commission. The Commission will check the eligibility of the
applications in the light of the objectives of the scheme, in particular the effect on employment.

4. Payment of financial contributions

The contributions, the total of which will not exceed ECU 100 000 will be paid to the SME, through the
financial intermediary which will pass on all payments without delay and deductions.

Payments under the first tranche, up to ECU 50 000, to cover 50 % of eligible expenditure for the
conception and preparation of the joint venture, will be made in two instalments. A reimbursable advance
of 50 % (maximum ECU 25 000) will be paid as soon as the application has been accepted by the
Commission. A second payment of 50 % (maximum ECU 25 000) will be made on presentation of
supporting documents for all the expenditure incurred and on the basis of a detailed project evaluation
report which permits an assessment of the feasibility of the joint venture as well as the investment en-
visaged. After acceptance of the documents by the Commission, the reimbursable advance will be
converted into a grant.

Payment under the second tranche, covering up to 10 % of the investment, will be made after receipt by
the Commission of satisfactory evidence of completion of the investment and commencement of the new
activity.

Any SME benefiting from a payment under the second tranche (10 % of the investment) must undertake
to submit to the Commission, for a period of five years, information on the activities of the joint venture
set up and, in particular, on the number of jobs created.

5. External management cost

In the management of the programme, recourse will be made to external assistance specialized in monit-
oring projects. This assistance will be provided by external contractors selected following a call for expres-
sion of interest. A maximum of 5 % of the budgetary allocation will be reserved to cover the external
management cost of the initiative.

6. Definition of a joint venture

The concept of a ‘joint venture’ will be interpreted broadly, that is including any form of consortium,
partnership or joint venture in the strict sense, which should lead to a new legal entity, of an industrial,
service, commercial or craft nature, subject to the following conditions being met:

— the project will create new economic activities, involving investment and employment creation within
the Community. Transfers of existing economic activities are not eligible. Similarly, purchases of
existing enterprises are not eligible,

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— the partners will play an active part in the joint venture and assume an adequate measure of respons-
ibility. Any joint venture in which one of the partners owns more than 75 % will be ineligible. Any
change in the holdings in the joint venture within three years following the signing of the contract
with the Commission must be submitted to the Commission for a review of its financial participation,

— the joint venture must be newly created by at least two SMEs from two different Member States.

7. Eligible expenses

Eligible expenses are those relating to the conception and setting-up of a joint venture: expenses incurred
as part of the preparatory action (market surveys, preparation of the legal framework, environmental
impact assessment, technical standards, business plan, etc.); expenses for external experts (lawyers, advisers,
accountants): fees based on actual costs, transport costs, accomodation and subsistence expenses (in ac-
cordance with the provisions laid down within the framework of the Commission’s contracts for the
provision of services); expenses for internal experts (relating to travel abroad): daily allowance, transport
costs and accommodation and subsistence expenses (in accordance with the provisions laid down within
the framework of the Commission’s contracts for the provision of services).

For the grant, covering up to 10 % of the investment made, an investment is considered to be any
purchase or production of tangible or intangible assets which are accounted for as fixed assets in the
balance sheet of the joint venture and valued in accordance with generally accepted accounting standards.

Financing costs and expenses relating to partner search are excluded.

Expenses under Article 4(1)(b) may only be granted if expenses under Article 4(1)(a) have been granted for
substantive preparatory work towards a transnational
joint venture, thereby ensuring that grants are
awarded only to projects with a genuine business prospect. Approval of the investment subsidy will be
conditional on satisfactory evidence of the completion of the investment and the commencement of the
new activities.

8. Obligations of the beneficiaries

Appropriate arrangements will be made to allow the Court of Auditors of the European Community or
the Commission to exercise their mission in order to verify the regularity of declarations made by benefi-
ciaries in support of payment claims submitted by them as well as the corresponding payments made.

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INDICATIVE OUTLINE OF IMPLEMENTATION OF THE SME GUARANTEE FACILITY

ANNEX III

1. Introduction

The SME guarantee facility will be operated by the EIF on a trust basis. Whilst the EIF will provide
counter-guarantees or, where appropriate, co-guarantees for guarantee schemes operating in Member
States, and direct guarantees in the case of the EIB or any other appropriate financial intermediary, its
losses from the relevant guarantees will be converted by Community funds. This will permit the tar-
geting of the scheme to SMEs with growth potential experiencing particular difficulty in raising finance
because of the perceived high risk inherent in lending to them, such as small or newly established
companies.

2. Intermediaries

Guarantee schemes operating in the Member States within the public or private sector, including mutual
guarantee schemes, the EIB or any other appropriate financial institution in connection with any risk-
taking SME facilities they may make available. Intermediaries will be selected in conformity with best
business and market practice in a fair and transparent manner, having regard to: (a) the effect on the
volume of debt finance made available to SMEs, and/or (b) the effect on access to debt finance by SMEs,
and/or (c) the effect on risk-taking in SME lending by the intermediary concerned.

3. Eligible SME lending

The financial criteria governing the eligibility of SME lending for guarantees under the SME guarantee
facility will be determined individually for each intermediary in the framework of the guarantee schemes
they are already operating, with the aim of reaching as many SMEs as possible. These rules will reflect
market conditions and practices in the relevant territory. The guarantees and counter-guarantees will
mainly be available to cover lending to SMEs with less than 100 employees. Particular attention will be
given to lending to finance intangible assets.

4. EIF-guarantees

The guarantees given by the EIF will relate to individual loans in a specific loan portfolio, which may be
an existing loan portfolio, where that leads to the expansion of lending to SMEs, or a loan portfolio to be
created within a specific period of time. The guarantees issued by the EIF will cover a part of the credit
risk inherent in the underlying loan portfolio with the risk shared with the relevant financial inter-
mediary.

5. EIF’s capped maximum cumulative losses

The EIF’s obligation to pay its share of loan losses to the intermediary will continue until the cumulative
amount of payments made to cover losses from a specific loan portfolio, reduced by the cumulative
amount of corresponding loss recoveries, reaches a pre-agreed amount, after which EIF’s guarantee is
automatically cancelled.

6. EIF pari passu with intermediary

The guarantees given by the EIF will usually rank pari passu with the guarantees or, where appropriate,
with the loans given by the intermediary.

7. Trust account

A trust account will be set up within the EIF to hold the budgetary funds underpinning the scheme.
This account will be interest bearing; interest earned will be added to the resources of the facility.

8. EIF’s right to withdraw funds from the trust account

The EIF will have the right to debit the trust account for payments to meet its obligations for the
maximum cumulative losses under the guarantee facility, and, subject to agreement by the Commission,
any other eligible costs, for example its management fees, eligible legal fees and promotional expenses of
the scheme.

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9. Loss recoveries payable to the trust account

Any moneys recovered from loan losses for which payment has been made under guarantees called will
be credited to the trust account.

10. Duration of the scheme

It is envisaged that the individual SME guarantees will have a maturity of five to 10 years. Provided that
adequate funds are held in the trust account, the EIF will enter into new guarantee commitments up to
the fourth anniversary of the adoption of the facility. Any amount outstanding on the trust account at
the time of expiry on the outstanding guarantees will be repaid to the Community budget.

11. Court of Auditors

Appropriate arrangements will be made to allow the Court of Auditors of the European Community to
exercise its mission in order to verify the regularity of payments made.