Invitation to submit comments on draft Commission Regulations on the application of Articles 87 and 88 of the EC Treaty to State aid
Date: 2003-08-12
Institutions: European Commission
Subjects: State aid, aid system, drafting of EU law, exchange of information, research and development, small and medium-sized enterprises, vocational training

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INVITATION TO SUBMIT COMMENTS ON DRAFT COMMISSION REGULATIONS ON THE
APPLICATION OF ARTICLES 87 AND 88 OF THE EC TREATY TO STATE AID

(2003/C 190/02)

Interested parties may submit their comments within one month of the date of publication of this draft
Regulation to:

European Commission
Directorate-General for Competition
Unit SAC
Office J-70 5/7
B-1049 Brussels
Fax (32-2) 296 98 13
E-mail: COMP-SAC@cec.eu.int

Draft-Commission Regulation amending Regulation (EC) No 68/2001 on the application of Articles
87 and 88 of the EC Treaty to training aid

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulation (EC) No 994/98 of 7 May
1998 on the application of Articles 92 and 93 of the Treaty
establishing the European Community to certain categories of
horizontal State aid (1) and in particular point (a)(iv) of Article
1(1) thereof,

application of Articles 87 and 88 of the EC Treaty to State
aid to small and medium-sized enterprises (6).

(2) Experience has shown that it is desirable to have a unified
and simplified reporting system of annual reports pursuant
to Article 27 of Council Regulation (EC) No 659/1999 of
22 March 1999 (7). The specific reporting provisions as laid
down in Annex III should therefore only apply until such
time that a general reporting system has been adopted.

Having published a draft of this Regulation (2),

Having consulted the Advisory Committee on State Aid,

(3) It is necessary to lay down provisions for the assessment of
the compatibility with the common market of any training
aid granted without prior authorisation of the Commission
before the entry into force of Regulation (EC) No 68/2001.

Whereas:

(4) Regulation (EC) No 68/2001 should therefore be amended

accordingly,

(1) Regulation (EC) No 68/2001 (3) provides

for

special
conditions in respect of aid to be granted for small and
medium-sized enterprises. The definition of small and
medium-sized enterprises in Regulation (EC) No 68/2001
is that used in Commission Recommendation 96/280/EC of
3 April 1996 concerning the definition of small and
medium-sized enterprises (4). That Recommendation will
be replaced by Recommendation 2003/361/EC of 6 May
2003 (5) with effect from 1 January 2005. The definition of
small and medium-sized enterprises in Regulation (EC) No
68/2001 must therefore be amended. In the interests of
legal certainty, the definition used in Regulation (EC) No
68/2001 should be the same as that used in Commission
Regulation (EC) No 70/2001 of 12 January 2001 on the

HAS ADOPTED THIS REGULATION:

Article 1

Regulation (EC) No 68/2001 is amended as follows:

1.

in Article 2, point (b) is replaced by the following:

‘ “small and medium-sized enterprises” shall mean enter-
prises as defined in Annex I to Commission Regulation
(EC) No 70/2001 (*).

(1) OJ L 142, 14.5.1998, p. 1.
(2) OJ C . . .
(3) OJ L 10, 13.1.2001, p. 20.
(4) OJ L 107, 30.4.1996, p. 4.
(5) OJ L 124, 20.5.2003, p. 36.

___________
(*) OJ L 10, 13.1.2001, p. 33.’.

(6) OJ L 10, 13.1.2001, p. 33.
(7) OJ L 83, 27.3.1999, p. 1.

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2.

in Article 7, paragraph 3 is replaced by the following:

‘Member States shall compile an annual report on the
application of
this Regulation in accordance with any
implementing provisions concerning the form and content
of annual reports provisions which are laid down pursuant
to Article 27 of Council Regulation (EC) No 659/1999 of
22 March 1999 laying down detailed rules
the
implementation of Article 93 of the EC Treaty. Until such
provisions are adopted, Member States shall compile an
annual report on the application of
this Regulation in
respect of the whole or part of each calendar year during
which this Regulation applies,
in the form laid down in
Annex III, also in computerised form. Member States shall
provide the Commission with such report no later than
three months after the expiry of the period to which the
report relates.’;

for

and shall be exempt if they fulfil the conditions laid down
in Article 3(2)(a) and Article 3(3) of this Regulation.

Individual aid outside any scheme granted before the date of
in the absence of a
entry into force of this Regulation,
Commission authorisation and in breach of the notification
requirement of Article 88(3) of
shall be
compatible with the common market within the meaning
of Article 87(3) of the Treaty and shall be exempt if it fulfils
all the conditions of this Regulation, except the requirement
in Article 3(1) that express reference be made to this Regu-
lation.

the Treaty,

Any aid which does not fulfil those conditions shall be
assessed by the Commission in accordance with the
relevant
and
guidelines,
notices.’;

communications

frameworks,

3.

in Article 8, the following paragraph 1a is inserted:

4. Annex I is deleted.

‘1a.
Notifications pending at the time of entry into force
of this Regulation shall be assessed in accordance with its
provisions.

Aid schemes implemented before the date of entry into
this Regulation, and aid granted under
force of
these
schemes,
in the absence of a Commission authorisation
and in breach of the notification requirement of Article
88(3) of the Treaty, shall be compatible with the common
market within the meaning of Article 87(3) of the Treaty

Article 2

This Regulation shall enter into force on the twentieth day
following that of its publication in the Official Journal of the
European Union.

However, points 1 and 4 of Article 1 shall apply from 1
January 2005.

This Regulation shall be binding in its entirety and directly
applicable in all Member States.

Draft-Commission Regulation amending Regulation (EC) No 70/2001 as regards the extension of
its scope to include aid for research and development

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulation (EC) No 994/98 of 7 May
1998 on the application of Articles 92 and 93 of the Treaty
establishing the European Community to certain categories of
horizontal State aid (1) and in particular points (a)(i) and (b) of
Article 1(1) thereof,

Having published a draft of this Regulation (2),

Having consulted the Advisory Committee on State Aid,

Whereas:

(1) The definition of small and medium-sized enterprises
is that

(SMEs) used in Regulation (EC) No 70/2001 (3)

used in Commission Recommendation 96/280/EC of 3
April 1996 concerning the definition of
small and
medium-sized enterprises (4). That Recommendation will
be replaced by Recommendation 2003/361/EC of 6
May 2003 with effect from 1 January 2005 (5).The defi-
nition of small and medium-sized enterprises in Regu-
lation (EC) No 70/2001 must therefore be amended.

(2) The rules should be clarified in cases where an investment
takes place in an area eligible for regional aid, but in a
sector where regional aid is
forbidden. The higher
should only apply if both the
regional aid ceilings
region where the investment
is carried out and the
sector to which the beneficiary belongs are eligible for
regional aid.

(1) OJ L 142, 14.5.1998, p. 1.
(2) OJ C . . .
(3) OJ L 10, 13.1.2001, p. 33.

(4) OJ L 107, 30.4.1996, p. 4.
(5) OJ L 124, 20.5.2003, p. 36.

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(3) Experience has shown that it is desirable to have a unified
and simplified reporting system of
reports
pursuant to Article 27 of Council Regulation (EC) No
659/1999 of 22 March 1999 (1). The specific reporting
provisions as laid down in Annex III should therefore
only apply until such time that a general
reporting
system has been adopted.

annual

(4) It is necessary to lay down provisions for the assessment
of the compatibility with the common market of any aid
to small and medium-sized enterprises granted without
prior authorisation of the Commission before the entry
into force of Regulation (EC) No 70/2001.

(5) Aid for research and development can contribute to
economic growth,
strengthening competitiveness and
boosting employment. Aid for research and development
for SMEs is of utmost importance, because one of the
structural disadvantages of SMEs lies in the difficulty
they may experience in gaining access to new tech-
nological developments and to technology transfer. At
the same time, the Commission has taken the view in
the current research and development framework (2) that
it may be assumed that State aid for research and devel-
opment will represent an incentive for SMEs to engage in
more research and development since SMEs in general
only spend a low percentage of
turnover on
research and development activities. On the basis of its
the Community
experience with the application of
framework for State aid for Research and Development
to SMEs, the Commission has therefore decided that it is
justified to exempt such aid from prior notification, taking
also into account that such aid only has very limited
potential to have a negative effect on competition. This
also applies to aid for feasibility studies and aid to cover
patenting costs as well as to individual aid which does not
exceed certain ceilings.

their

(6) The scope of Regulation (EC) 70/2001 should therefore
be extended to cover aid for research and development
granted to SMEs in the widest possible range of sectors.

In particular,

(7) Certain definitions in Regulation (EC) No 70/2001 should
be amended, in order to take account of the particularities
of State aid for research and development, and others
should be added.
the
stages of research and development contained in Annex
I to the Community framework for State aid for Research
and Development should be inserted. The list of eligible
costs corresponds
to the
framework, with certain clarifications necessary in order
to reflect the fact that a Regulation is directly applicable
in the Member States. Beneficiaries should not be able to

the definitions of

in Annex II

to the

list

from double subsidisation of

identical research

benefit
results.

(8) It should not be a precondition for exempting aid for
patenting costs that the activity which led to the patent
also received aid. It is sufficient that the activity would
have qualified for aid.

(9) Not all research and development aid for SMEs can be
exempted under Regulation (EC) No 70/2001. The ceiling
in the Community framework for State aid for Research
and Development which applies to individual notifications
should also apply in respect of individual aid which may
be exempted under this Regulation. Special rules should
also continue to apply for EUREKA projects falling within
the scope of the Declaration of the Ministerial Conference
in Hannover on 6 November 1985 (3) which are
considered to be of common European interest.

(10) This Regulation should not exempt any aid granted in the
form of an advance exceeding the aid intensity set therein
and repayable only in the event of a successful outcome
of the research activities as provided for in the Framework
for State aid for Research and Development, since the
Commission assesses reimbursable aid on a case by case
basis,
the proposed conditions of
reimbursement.

taking into account

(11) Regulation (EC) No 70/2001, as amended by this regu-
lation, applies only to State aid for Research and Devel-
opment granted to small and medium-sized enterprises.
The Community Framework for State aid for Research
the
and Development will continue to be used for
assessment of other aid for research and development,
including aid measures, which apply both to large
companies and to small and medium-sized enterprises.

(12) Regulation (EC) No 70/2001 should therefore be amended

accordingly,

HAS ADOPTED THIS REGULATION:

Article 1

Regulation (EC) No 70/2001 is amended as follows:

1.

in Article 1, paragraph (2)(a) is replaced by the following:

‘with regard to Articles 4 and 5, to activities linked to the
production, processing or marketing of products listed in
Annex I to the Treaty.’

(1) OJ L 83, 27.3.1999, p. 1.
(2) OJ C 45, 17.2.1996, p. 5.

(3) http://www.eureka.be/ifs/files/public/eureka/vademecum/

basicdocuments/hanoverDeclaration.pdf

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2. Article 2 is amended as follows:

(a)

In point (e) the following subparagraph is added:

research project, as calculated on the basis of
good accounting practice, are considered as
eligible;

‘For aid for research and development (R&D), the gross
aid intensity for an R&D-project being carried out in
collaboration between public research establishments
and enterprises shall be calculated on the basis of the
combined aid deriving from direct government support
for a specific
they
constitute aid, contributions from public non-profit-
making higher education or research establishments
to the project.’

research project and, where

(b) The following points (h) to (k) are added:

‘(h)

research”

shall mean an activity
“fundamental
designed to broaden scientific
and technical
knowledge not linked to industrial or commercial
objectives.

(i) “industrial research” shall mean planned research
or critical investigation aimed at the acquisition of
new knowledge be useful
in developing new
products, processes or services or in bringing
about
in existing
significant
products, processes or services.

improvement

a

(j) “precompetitive development”

shall mean the
shaping of the results of industrial research into
a plan, arrangement or design for new, altered or
improved products, processes or services, whether
they are intended to be sold or used, including the
creation of an initial prototype which could not
be used commercially. This may also include the
conceptual
formulation and design of other
products, processes or services and initial demon-
stration projects or pilot projects, provided that
such projects cannot be converted or used for
industrial applications or commercial exploitation.
It does not include the routine or periodic changes
made to products, production lines, manufac-
and other
turing processes,
operations
such changes
may represent improvements;

in progress, even if

existing services

to

regard

buildings,

(iii) costs for building and land, to the extent and
for the duration used for the research project.
With
the
depreciation costs corresponding to the life
of the research project, as calculated on the
basis of
are
land, costs of
considered as eligible. For
commercial
incurred
transfer or
capital costs are eligible;

good accounting practice,

actually

only

(iv) cost of consultancy and equivalent services
the research activity,
used exclusively for
technical knowledge
including the research,
and patents bought or licensed from outside
sources at market prices, where the trans-
action has been carried out at arm's length
and there
collusion
is no element of
involved. These costs are only considered
eligible up to a share of 50 % of
total
eligible project costs;

(v) additional overheads incurred directly as a

result of the research project;

(vi) other operating expenses,

including costs of
materials,
and similar products
incurred directly as a result of the research
activity, and patenting costs.’

supplies

3. Article 4 is amended as follows:

(a) Paragraph 2 is replaced by the following:

‘2.
In areas or in sectors which do not qualify for
regional aid pursuant to Article 87(3)(a) and (c) of the
Treaty at the moment the aid is granted, the gross aid
intensity shall not exceed:

(k) for

the purposes of Articles 5a, 5b and 5c,

(a) 15 % in the case of small enterprises;

“eligible costs” shall mean

(i) personnel costs (researchers, technicians and
extent

other
employed on the research project);

supporting

staff

the

to

(ii) costs of instruments and equipment to the
extent and for the duration used for the
research project.
such instruments and
equipment are not used for their full life for
the research project, only the depreciation
the
costs

corresponding

to the

life of

If

(b) 7,5 % in the case of medium-sized enterprises.’

(b) Paragraph 3 is replaced by the following:

‘3. Where the investment takes place in areas and in
sectors which qualify for regional aid, the aid intensity
shall not exceed the ceiling of regional investment aid
determined in the map approved by the Commission
for each Member State by more than:

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(a) 10 percentage points gross in areas covered by
the total net aid

Article 87(3)(c), provided that
intensity does not exceed 30 %; or

The ceilings in paragraph 3 may be increased as
4.
follows up to a maximum gross aid intensity of 75 %
for industrial research and 50 % for precompetitive devel-
opment:

(b) 15 percentage points gross in areas covered by
the total net aid

Article 87(3)(a), provided that
intensity does not exceed 75 %.

The higher regional aid ceilings shall only apply if the
aid is granted under the condition that the investment
is maintained in the recipient region for at least five
years and the beneficiary's contribution to its financing
is at least 25 %.’

4. The following Articles 5a, 5b and 5c are inserted:

‘Article 5a

Aid for research and development

for

Aid

and

research

development

be
1.
common market within the
compatible with the
meaning of Article 87(3)(c) of the Treaty and shall be
exempt
from the notification requirement of Article
88(3) of the Treaty if it fulfils the conditions set out in
paragraphs 2, 3 and 4.

shall

2.
The aided project must completely fall within the
stages of research and development defined in Article
2(h), (i) and (j).

The gross aid intensity, as calculated on the basis of

3.
the eligible costs of the project, shall not exceed:

(a) 100 % for fundamental research,

(b) 60 % for industrial research,

(c) 35 % for precompetitive development.

If a project includes different stages of research and devel-
opment, the permissible aid intensity shall be established
on the basis of the weighted average of the respective
permissible aid intensities, calculated on the basis of the
eligible costs involved.

In the case of collaborative projects, the maximum amount
of aid for each beneficiary shall not exceed the permitted
aid intensity calculated by reference to the eligible costs
incurred by the beneficiary concerned.

(a) where the project takes place in an area which, at the
time when the aid is granted, qualifies for regional aid,
the maximum aid intensity may be increased by ten
percentage points gross in areas covered by Article 87
(3)(a) of the Treaty and by five percentage points gross
in areas covered by Article 87(3)(c) of the Treaty;

tasks and technical

(b) where the project aims at carrying out research with
potential multi-sectoral application and focuses on a
multidisciplinary approach in accordance with the
targets of a specific
objective,
the
project or programme undertaken as part of
Community's
for
Programme
R&D (*) or any subsequent Framework Programme
for R&D or EUREKA,
the maximum aid intensity
may be increased by 15 percentage points gross;

Framework

Sixth

(c) where the conditions of point (b) are not fulfilled, the
maximum aid intensity may be increased by ten
percentage points if one of the following conditions
is satisfied:

at

two

least

between

(i) the project involves effective cross-border coop-
independent
eration
partners in two Member States, particularly in
the
national R&D
coordinating
policies;
in case of participation of only one
company in the Member State granting the aid,
not more than 70 % of the eligible costs may be
born by that company; or

context

of

and

public

research

company

(ii) the project involves effective co-operation between
a
body,
a
particularly in the context of coordination of
national R&D policies, where the public research
body bears at least 10 % of the eligible project
to publish the results
costs and has the right
insofar as they stem from research implemented
by that body; or

(iii) the results of the project are widely disseminated
through technical and scientific conferences or
published
and
peer-reviewed
technical journals.

scientific

in

For the purposes of points (i) and (ii) subcontracting is not
considered to be effective cooperation.

___________
(*) Decision No

European
1513/2002/EC of
Parliament and of the Council OJ L 232, 29.8.2002,
p. 1.

the

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Article 5b

Aid for technical feasibility studies

Aid for technical

1.
feasibility studies preparatory to
research and development activities shall be compatible
with the common market within the meaning of Article
87(3)(c) of the Treaty and shall be exempt from the notifi-
cation requirement of Article 88(3) of the Treaty if it fulfils
the conditions set out in paragraphs 2, 3 and 4.

The

2.
research activities or
activities eligible for exemption under this regulation.

studies must be preparatory to industrial
to precompetitive development

The gross aid intensity, as calculated on the basis of

3.
study costs, must not exceed:

(i) in areas which do not qualify for regional aid, the
gross aid intensity is at least 50 % of the ceilings
laid down in Article 4(2);

(ii) in areas which qualify for regional aid, the net aid
intensity is at least 50 % of the net aid ceiling as
determined in the regional aid map for the area
concerned; or

(b) the total gross aid amount is at least EUR 15 000 000.

2.
In the case of aid covered by Article 5a, 5b and 5c,
this Regulation shall not exempt an individual aid grant
where the following thresholds are met:

(a) the total eligible costs of the whole project incurred by
all companies participating in the project are at least
EUR 25 000 000; and

(a) 75 % for technical

feasibility studies preparatory to

industrial research activities;

(b) it

(b) 50 % for technical

feasibility studies preparatory to

precompetitive development activities.

Article 5c

Aid for patenting costs

Aid for the costs associated with preparing and filing
patent applications and with maintaining granted patents
shall be compatible with the common market within the
meaning of Article 87(3)(c) of the Treaty and shall be
exempt
from the notification requirement of Article
88(3) of the Treaty up to the same level of aid as would
have qualified for R&D aid in respect of
the research
activities, which first led to the patents concerned.’.

is proposed to provide aid with a gross grant
least EUR 5 000 000 to one or

equivalent of at
more of the individual companies.

the
In the case of aid granted to a EUREKA-project,
thresholds in the first subparagraph shall be replaced by
the following:

(a) the total eligible costs of the EUREKA project incurred
by all companies participating in the project are at
least EUR 40 000 000; and

(b) it

is proposed to provide aid with a gross grant
least EUR 10 000 000 to one or

equivalent of at
more of the individual companies.’.

5. Article 6 is replaced by the following:

6. The following Article 6a is inserted:

‘Article 6

‘Article 6a

Large individual aid grants

1.
In the case of aid covered by Articles 4 and 5, this
Regulation shall not exempt an individual aid grant where
one of the following thresholds is met:

(a) the total eligible costs of the whole project are at least

EUR 25 000 000; and

Aid remaining subject to prior notification to the
Commission

1.
This Regulation shall not exempt any aid, whether
individual aid or aid granted under an aid scheme, in the
form of one or more advances that are repayable only in
the event of a successful outcome of research activities,
where the total amount of
the advances exceeds the
intensities provided for in Articles 5a, 5b or 5c or the
limit fixed in Article 6(2).

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This Regulation is without prejudice to any obli-
2.
gation on a Member State to notify individual grants of
aid under obligations entered into in the context of other
State aid instruments, and in particular the obligation to
to inform the Commission of, aid to an
notify, or
enterprise receiving restructuring aid within the meaning
of the Community guidelines on State aid for rescuing and
restructuring firms in difficulty (*) and the obligation to
notify regional aid for large investment projects under
the applicable multisectoral Framework.

___________
(*) OJ C 288, 9.10.1999, p. 2.’

7. In Article 8, paragraph 1 is replaced by the following:

‘The aid ceilings fixed in Articles 4 to 6 shall apply
regardless of whether the support for the aided project is
financed entirely from State resources or is partly financed
by the Community.’

8. In Article 9, paragraph 3 is replaced by the following:

the

concerning

‘Member States shall compile an annual report on the
this Regulation in accordance with any
application of
form and
implementing provisions
content of annual
reports provisions which are laid
down pursuant to Article 27 of Council Regulation (EC)
No 659/1999 of 22 March 1999 laying down detailed
rules for the implementation of Article 93 of
the EC
Treaty. Until such provisions are adopted, Member States
shall compile an annual report on the application of this
Regulation in respect of the whole or part of each calendar
year during which this Regulation applies, in the form laid
down in Annex III, also in computerised form. Member
States shall provide the Commission with such report no
later than three months after the expiry of the period to
which the report relates.’

Notifications pending at the time of entry into force
‘1a.
of this Regulation shall be assessed in accordance with its
provisions.

Aid schemes implemented before the date of entry into
force of
this Regulation, and aid granted under those
schemes in the absence of a Commission authorisation
and in breach of the notification requirement of Article
88(3) of the Treaty, shall be compatible with the common
market within the meaning of Article 87(3) of the Treaty
and shall be exempt if they fulfil the conditions laid down
in Article 3(2)(a) and Article 3(3) of this Regulation.

Individual aid outside any scheme granted before the date
of entry into force of this Regulation in the absence of a
Commission authorisation and in breach of
the notifi-
cation requirement of Article 88(3) of the Treaty, shall
be compatible with the common market within the
the Treaty and shall be
meaning of Article 87(3) of
exempt if it fulfils all the conditions of this Regulation,
except
that express
reference be made to this Regulation.

the requirement

in Article 3(1)

Any aid which does not fulfil these conditions shall be
assessed by the Commission in accordance with the
relevant
and
notices.’

frameworks, guidelines,

communications

10. Annex I is amended as set out in the Annex to this Regu-

lation.

Article 2

This Regulation shall enter into force on the twentieth day
following that of its publication in the Official Journal of the
European Union.

However, point 10 of Article 1 shall apply from 1 January
2005.

9. In Article 10, the following paragraph 1a is inserted:

This Regulation shall be binding in its entirety and directly
applicable in all Member States.

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Annex I to Regulation (EC) No 70/2001 is replaced by the following:

ANNEX

‘ANNEX I

DEFINITION OF SMALL AND MEDIUM-SIZED ENTERPRISES

(Extract from Commission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of small and
medium-sized enterprises, OJ L 124, 20.5.2003, p. 36)

DEFINITION OF MICRO, SMALL AND MEDIUM-SIZED ENTERPRISES ADOPTED BY THE COMMISSION

Article 1

Enterprise

An enterprise is considered to be any entity engaged in an economic activity, irrespective of its legal form. This includes,
in particular, self-employed persons and family businesses engaged in craft or other activities, and partnerships or
associations regularly engaged in an economic activity.

Staff headcount and financial ceilings determining enterprise categories

Article 2

1.
The category of micro, small and medium-sized enterprises (SMEs) is made up of enterprises which employ fewer
than 250 persons and which have an annual turnover not exceeding EUR 50 million, and/or an annual balance sheet
total not exceeding EUR 43 million.

2. Within the SME category, a small enterprise is defined as an enterprise which employ fewer than 50 persons and
whose annual turnover and/or annual balance sheet total does not exceed EUR 10 million.

3. Within the SME category, a micro-enterprise is defined as an enterprise which employs fewer than 10 persons and
whose annual turnover and/or annual balance sheet total does not exceed EUR 2 million.

Article 3

Types of enterprise taken into consideration in calculating staff numbers and financial amounts

An “autonomous enterprise” is any enterprise which is not classified as a partner enterprise within the meaning of

1.
paragraph 2 or as a linked enterprise within the meaning of paragraph 3.

2.
“Partner enterprises” are all enterprises which are not classified as linked enterprises within the meaning of
paragraph 3 and between which there is the following relationship: an enterprise (upstream enterprise) holds, either
solely or jointly with one or more linked enterprises within the meaning of paragraph 3, 25 % or more of the capital or
voting rights of another enterprise (downstream enterprise).

However, an enterprise may be ranked as autonomous, and thus as not having any partner enterprises, even if this 25 %
threshold is reached or exceeded by the following investors, provided that those investors are not linked, within the
meaning of paragraph 3, either individually or jointly to the enterprise in question:

(a) public investment corporations, venture capital companies,

venture capital
the total investment of those business angels in the same enterprise is less than EUR 1 250 000;

investment activity who invest equity capital

individuals or groups of individuals with a regular
in unquoted businesses (business angels), provided

(b) universities or non-profit research centres;

(c)

institutional investors, including regional development funds;

(d) autonomous local authorities with an annual budget of less than EUR 10 million and less than 5 000 inhabitants.

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3.

“Linked enterprises” are enterprises which have any of the following relationships with each other:

(a) an enterprise has a majority of the shareholders' or members' voting rights in another enterprise;

(b) an enterprise has the right to appoint or remove a majority of the members of the administrative, management or

supervisory body of another enterprise;

(c) an enterprise has the right to exercise a dominant influence over another enterprise pursuant to a contract entered

into with that enterprise or to a provision in its memorandum or articles of association;

(d) an enterprise, which is a shareholder in or member of another enterprise, controls alone, pursuant to an agreement
with other shareholders in or members of that enterprise, a majority of shareholders' or members' voting rights in
that enterprise.

There is a presumption that no dominant influence exists if the investors listed in the second subparagraph of paragraph
2 are not involving themselves directly or indirectly in the management of the enterprise in question, without prejudice
to their rights as stakeholders.

Enterprises having any of the relationships described in the first subparagraph through one or more other enterprises, or
any one of the investors mentioned in paragraph 2, are also considered to be linked.

Enterprises which have one or other of such relationships through a natural person or group of natural persons acting
jointly are also considered linked enterprises if they engage in their activity or in part of their activity in the same
relevant market or in adjacent markets.

An “adjacent market” is considered to be the market for a product or service situated directly upstream or downstream
of the relevant market.

4.
Except in the cases set out in paragraph 2, second subparagraph an enterprise cannot be considered an SME if
25 % or more of the capital or voting rights are directly or indirectly controlled, jointly or individually, by one or more
public bodies.

5.
Enterprises may make a declaration of status as an autonomous enterprise, partner enterprise or linked enterprise,
including the data regarding the ceilings set out in Article 2. The declaration may be made even if the capital is spread
in such a way that it is not possible to determine exactly by whom it is held, in which case the enterprise may declare in
good faith that it can legitimately presume that it is not owned as to 25 % or more by one enterprise or jointly by
enterprises linked to one another. Such declarations are made without prejudice to the checks and investigations
provided for by national or Community rules.

Article 4

Data used for the staff headcount and the financial amounts and reference period

1.
The data to apply to the headcount of staff and the financial amounts are those relating to the latest approved
accounting period and calculated on an annual basis. They are taken into account from the date of closure of the
accounts. The amount selected for the turnover is calculated excluding value added tax (VAT) and other indirect taxes.

2. Where, at the date of closure of the accounts, an enterprise finds that, on an annual basis, it has exceeded or fallen
below the headcount or financial ceilings stated in Article 2, this will not result in the loss or acquisition of the status of
medium-sized, small or micro-enterprise unless those ceilings are exceeded over two consecutive accounting periods.

In the case of newly-established enterprises whose accounts have not yet been approved, the data to apply is to be

3.
derived from a bona fide estimate made in the course of the financial year.

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Article 5

Staff head count

The head count corresponds to the number of annual work units (AWU), i.e. the number of persons who worked
full-time within the enterprise in question or on its behalf during the entire reference year under consideration. The
work of persons who have not worked the full year, the work of those who have worked part-time, regardless of
duration, and the work of seasonal workers are counted as fractions of AWU. The staff consists of:

(a) employees;

(b) persons working for the enterprise being subordinated to it and deemed to be employees under national

law;

(c) owner-managers;

(d) partners engaging in a regular activity in the enterprise and benefiting from financial advantages from the enterprise.

Apprentices or students engaged in vocational training with an apprenticeship or vocational training contract are not
included as staff. The duration of maternity or parental leaves is not counted.

Article 6

Establishing the data of an enterprise

In the case of an autonomous enterprise, the data, including the number of staff, are determined exclusively on the

1.
basis of the accounts of that enterprise.

2.
The data, including the headcount, of an enterprise having partner enterprises or linked enterprises are determined
on the basis of the accounts and other data of the enterprise or, where they exist, the consolidated accounts of the
enterprise, or the consolidated accounts in which the enterprise is included through consolidation.

To the data referred to in the first subparagraph are added the data of any partner enterprise of the enterprise in
question situated immediately upstream or downstream from it. Aggregation is proportional to the percentage interest
in the capital or voting rights (whichever is greater). In the case of cross-holdings, the greater percentage applies.

To the data referred to in the first and second subparagraph are added 100 % of the data of any enterprise, which is
linked directly or indirectly to the enterprise in question, where the data were not already included through consoli-
dation in the accounts.

3.
For the application of paragraph 2, the data of the partner enterprises of the enterprise in question are derived
from their accounts and their other data, consolidated if they exist. To these are added 100 % of the data of enterprises
which are linked to these partner enterprises, unless their accounts data are already included through consolidation.

For the application of the same paragraph 2, the data of the enterprises which are linked to the enterprise in question
are to be derived from their accounts and their other data, consolidated if they exist. To these are added, pro rata, the
data of any possible partner enterprise of that linked enterprise, situated immediately upstream or downstream from it,
unless it has already been included in the consolidated accounts with a percentage at least proportional to the
percentage identified under the second subparagraph of paragraph 2.

4. Where in the consolidated accounts no staff data appear for a given enterprise, staff figures are calculated by
aggregating proportionally the data from its partner enterprises and by adding the data from the enterprises to which
the enterprise in question is linked.’