Decision No 1639/2006/EC of the European Parliament and of the Council of 24 October 2006 establishing a Competitiveness and Innovation Framework Programme (2007 to 2013)
Date: 2006-10-24
Institutions: Council of the European Union, European Parliament
Subjects: EU action, competitiveness, entrepreneurship, innovation, knowledge economy, small and medium-sized enterprises

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DECISION No 1639/2006/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

establishing a Competitiveness and Innovation Framework Programme (2007 to 2013)

of 24 October 2006

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE
EUROPEAN UNION,

Having regard to the Treaty establishing the European Commu-
nity, and in particular Article 156, Article 157(3) and Article 175
(1) thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Economic and
Social Committee (1),

Having regard to the opinion of
Regions (2),

the Committee of

the

Acting in accordance with the procedure laid down in Article 251
of the Treaty (3),

Whereas:

(1)

(2)

(3)

The Lisbon European Council of 23 and 24 March 2000 set
the objective of making the European Union the most
competitive and dynamic knowledge-based economy in the
world. It emphasised the importance of creating a climate
favourable to small and medium-sized enterprises (SMEs),
and considered it important to disseminate best practice
and ensure greater convergence between Member States.
The Gothenburg European Council of 15 and 16 June 2001
agreed the Union's Strategy for Sustainable Development to
ensure
inclusion and
environmental protection go hand in hand. Enterprises'
production patterns play an important role in sustainable
development.

economic growth,

social

that

In order to contribute to the enhancement of competitive-
ness and innovation capacity in the Community,
the
advancement of the knowledge society, and sustainable
development based on balanced economic growth, a
Competitiveness and Innovation Framework Programme
(hereinafter referred to as the Framework Programme)
should be established.

This is in line with the Commission Communication of
2 February 2005 to the Spring European Council entitled
‘Working together for growth and jobs — a new start for
the Lisbon Strategy’, which calls for action to deliver growth
and competitiveness and to make Europe a more attractive
place
recalling that
entrepreneurial initiative must be stimulated, sufficient risk
capital attracted to start up businesses, and a strong
innovation,
European industrial base sustained whilst

in which to invest and work,

(4)

(5)

(6)

notably eco-innovation, the uptake of
information and
communication technologies (ICT), and the sustainable use
of resources should be promoted. Whilst competitiveness is
to a large measure driven by vibrant businesses operating in
open and competitive markets and supported by the right
framework conditions, in particular by a regulatory frame-
work conducive to innovation, Community financing has a
role to play in leveraging support and providing comple-
mentary funding in order to tackle situations of market
failure.

The European Charter for Small Enterprises (hereinafter
referred to as the Charter), endorsed by the European
Council in Santa Maria de Feira of 19 and 20 June 2000,
describes small enterprises as the backbone of the European
economy. The specific nature, requirements and expecta-
tions of small and craft enterprises should be taken into
account more effectively in national and European policies.
Community measures to promote SMEs, such as the
Commission Communication of 10 November 2005
entitled ‘Implementing the Community Lisbon Programme
— Modern SME Policy for Growth and Employment’,
should take account of the objectives set out in the Charter,
and the Framework Programme should be used as a means
of progressing towards the objectives set by it.

The Framework Programme should particularly address
SMEs, as defined in Commission Recommendation 2003/
361/EC of 6 May 2003 concerning the definition of micro,
small and medium-sized enterprises (4).
It should pay
particular attention to the specific characteristics and
requirements of ‘gazelles’ as well as of micro and craft
including female
enterprises, and specific target groups,
entrepreneurs.

innovation,

industrial competitiveness,

The Framework Programme should bring together those
specific Community measures in the field of entrepreneur-
ship, SMEs,
ICT,
environmental
technologies and intelligent energy that,
until now, have been regulated by Council Decision 96/413/
EC of 25 June 1996 on the implementation of a
Community action programme to strengthen the competi-
tiveness of European industry (5), Decision No 1336/97/EC
of the European Parliament and of the Council of 17 June
1997 on a
trans-European
series of guidelines
networks (6),
telecommunications
(EC)
No 1655/2000 of the European Parliament and of the
Council of 17 July 2000 concerning the Financial
Instrument for the Environment (LIFE) (7), Council Decision

Regulation

for

(1) OJ C 65, 17.3.2006, p. 22.
(2) OJ C 115, 16.5.2006, p. 17.
(3) Opinion of

the European Parliament of 1 June 2006 (not yet
published in the Official Journal) and Council Decision of 12 October
2006.

(4) OJ L 124, 20.5.2003, p. 36.
(5) OJ L 167, 6.7.1996, p. 55.
(6) OJ L 183, 11.7.1997, p. 12. Decision as amended by Decision

No 1376/2002/EC (OJ L 200, 30.7.2002, p. 1).

(7) OJ L 192, 28.7.2000, p. 1. Regulation as last amended by Regulation

(EC) No 1682/2004 (OJ L 308, 5.10.2004, p. 1).

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2001/48/EC

2000/819/EC of 20 December 2000 on a multiannual
programme for enterprise and entrepreneurship, and in
particular for small- and medium-sized enterprises (SMEs)
(2001-2005) (1),
of
Council Decision
22 December 2000 adopting a multiannual Community
programme to stimulate the development and use of
European digital content on the global networks and to
promote linguistic diversity in the information society (2),
Decision No 1230/2003/EC of the European Parliament
and of the Council of 26 June 2003 adopting a multiannual
‘Intelligent
programme for action in the field of energy:
Energy — Europe’ (2003-2006) (3) to support sustainable
development in the energy context and Decision No 2256/
2003/EC of the European Parliament and of the Council of
17 November 2003 adopting a multiannual programme
(2003-2005) for the monitoring of
the eEurope 2005
action plan, dissemination of good practices and the
improvement of network and information security (Mod-
inis) (4).

the total

The Framework Programme should establish a set of
common objectives,
financial envelope for
pursuing those objectives, different types of implementing
for monitoring and
measures, and the arrangements
evaluation and for the protection of the Communities'
financial interests.

In line with the Commission Communication of 11 March
2003 entitled ‘Innovation policy: updating the Union's
approach in the context of the Lisbon strategy’ and in the
light of the OECD Oslo Manual, innovation is understood
as comprising the renewal and enlargement of a range of
products and services and their associated markets; the
establishment of new methods of design, production,
supply and distribution; the introduction of changes in
management, work organisation, and working conditions
and skills of the workforce; and covers technological, non-
technological and organisational innovation.

It

activities

the Treaty.

(2007-2013) (5)

The Framework Programme should exclude research and
technological development activities carried out in accord-
ance with Article 166 of
should be
complementary to the Community's Seventh Framework
Programme for research, technological development and
demonstration
(hereinafter
referred to as the Seventh Framework RTD Programme),
by dealing with innovation, which includes non-technolo-
gical as well as technological innovation, that has moved
beyond the final demonstration phase and is ready for
market replication (testing of innovations for application in
markets). It should be ensured that there is no financing gap
between research development and application (technol-
ogy-transfer activities including pre-seed phase). Therefore,
funding the transfer of research results to commercialisa-
tion is a task to be carried out in close coordination with

(7)

(8)

(9)

the Seventh Framework RTD Programme and other
relevant research programmes.

(10) The Framework Programme should also cover the market
replication of existing technologies that are to be utilised in
a new and innovative way. In certain circumstances, pilot
projects for technological demonstration will be covered by
both the Framework Programme and the Seventh Frame-
work RTD Programme. This will occur only when certain
technological solutions (for example technical standards in
the ICT field) have to be validated during the market
replication phase of an otherwise already demonstrated
technology.

(11) The Framework Programme should complement

the
Structural Funds and other
relevant Community pro-
grammes, whilst acknowledging that each instrument
should work according to its own specific procedures.
Thus, the same eligible costs should not receive double
funding.

(12) The common objectives of

the Framework Programme
should be pursued by specific programmes entitled ‘the
Entrepreneurship and Innovation Programme’,
‘the ICT
Policy Support Programme’ and ‘the Intelligent Energy —
Europe Programme’.

(13) The principles of transparency and equal gender opportu-
nity should be taken into account in all the programmes
and activities covered by the Framework Programme.

(14) This Decision lays down, for the entire duration of the
Framework Programme, a financial envelope constituting
the prime reference, within the meaning of point 37 of the
Interinstitutional Agreement of 17 May 2006 between the
European Parliament, the Council and the Commission on
budgetary discipline and sound financial management (6),
for the budgetary authority during the annual budgetary
procedure.

(15) A specific and indicative budget should be reserved for each

specific programme.

(16)

In order to ensure that financing be limited to tackling
failures, and with a view to avoiding market
market
distortions,
funding from the Framework Programme
should comply with the Community State aid rules and
the
and the Community
definition of SMEs in force.

accompanying instruments

(1) OJ L 333, 29.12.2000, p. 84. Decision as last amended by Decision
No 1776/2005/EC of the European Parliament and of the Council
(OJ L 289, 3.11.2005, p. 14).

(2) OJ L 14, 18.1.2001, p. 32.
(3) OJ L 176, 15.7.2003, p. 29. Decision as amended by Decision

No 787/2004/EC (OJ L 138, 30.4.2004, p. 12).

(4) OJ L 336, 23.12.2003, p. 1. Decision as last amended by Decision

No 2113/2005/EC (OJ L 344, 27.12.2005, p. 34).

(5) Not yet published in the Official Journal.

(17) The Agreement on the European Economic Area (herein-
after referred to as the EEA Agreement) and Protocols to
Association Agreements provide for the participation of the
countries concerned in Community programmes. Partici-
pation by other third countries should be possible when
Agreements and procedures so allow.

(6) OJ C 139, 14.6.2006, p. 1.

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(18) The Framework Programme and the specific programmes
should be regularly monitored and evaluated in order to
allow for readjustments. Where possible, evaluation reports
should examine gender mainstreaming in programme
activities.

(19) Appropriate measures should also be taken to prevent
irregularities and fraud and the necessary steps should be
taken to recover funds lost, wrongly paid or incorrectly
used, in accordance with Council Regulations (EC, Euratom)
No 2988/95 of 18 December 1995 on the protection of the
European Communities financial interests (1) and (Euratom,
EC) No 2185/96 of 11 November 1996 concerning on-the-
spot checks and inspections carried out by the Commission
in order to protect the European Communities' financial
irregularities (2) and
interests against
Regulation (EC) No 1073/1999 of the European Parliament
and of the Council of 25 May 1999 concerning investiga-
tions conducted by the European Anti-Fraud Office
(OLAF) (3).

fraud and other

(20) The growth and competitiveness of enterprises in industrial
and service sectors depends on their ability to adjust quickly
to change, to exploit their innovative potential and to
develop high-quality products. This challenge concerns
enterprises of all sizes, but is particularly acute for smaller
enterprises.
is therefore appropriate to establish the
Entrepreneurship and Innovation Programme.

It

(21) The Community can be the catalyst and coordinator of
Member States' efforts. It can contribute to, and comple-
ment their achievements, in particular by promoting the
and
exchange of national
practices, by defining and disseminating best practices
and innovative ideas, and by contributing to the availability
of Europe-wide supply of services in support of business
and innovation, in particular for SMEs.

and regional

experiences

and standards based on early anticipation of needs. The
Commission should provide guidance on the issue of
innovation-friendly public procurement.

(24) With regard to technological innovation, SMEs should be
encouraged to become involved in high-technology sectors
such as space and security and to develop applications
offered by the Galileo satellite positioning system.

(25) Eco-innovation is any form of

innovation aiming at
significant and demonstrable progress towards the goal of
sustainable development, through reducing impacts on the
environment or achieving a more efficient and responsible
use of natural resources, including energy. Eco-innovation is
a progressive concept and the Framework Programme must
therefore remain responsive to changes. The promotion of
eco-innovation through the Framework Programme aims to
contribute to the implementation of the Environmental
Technologies Action Plan.

(26) Taking into account the activities of the Environment LIFE+
the Framework Programme should
Programme (LIFE+),
encourage the uptake of environmental
technologies
through pilot and market replication projects, bridging
the gap between the successful demonstration of innovative
technologies and the market uptake and by removing the
barriers
to market penetration, promoting voluntary
approaches in fields such as environmental management,
and networking relevant actors. It should support eco-
innovation by enterprises through projects and co-invest-
ment in risk capital funds, but should not double-fund costs
receiving funding under LIFE+.

(22) The Commission Communication of 28 January 2004
entitled ‘Stimulating Technologies for Sustainable Develop-
ment: An Environmental Technologies Action Plan for the
European Union’ calls for Community programmes to
support the development and uptake of environmental
technologies and calls for the mobilisation of financial
instruments to share the risks of investing in environmental
technologies.

(27) Market-based Community financial instruments for SMEs
complement and add leverage to financial schemes at the
national level. They can particularly foster private invest-
ment for the creation of new innovative companies and
support companies with a high growth potential in their
expansion phase to reduce a recognised equity gap. They
can improve access by existing SMEs to loan finances for
activities that support their competitiveness and growth
potential.

(23) To support

the creation of a European market

for
innovative products and services, it is necessary for Member
States and the Commission to create attractive conditions
for innovative products and services, including through a
proactive approach to public procurement in order to help
create lead markets, while improving access for SMEs and
the quality of public services, and through better regulation

(1) OJ L 312, 23.12.1995, p. 1.
(2) OJ L 292, 15.11.1996, p. 2.
(3) OJ L 136, 31.5.1999, p. 1.

as well

(28) The European Investment Fund (EIF) is the Community's
specialised vehicle for providing risk capital and guarantee
instruments for SMEs. It pays special attention to support-
in
ing microfinance
finance
It
accordance with market demand and best practice.
contributes
to the pursuit of Community objectives,
including a knowledge-based society, innovation, growth,
employment and the promotion of entrepreneurial spirit.
The EIF ensures the required continuity in the management
of Community programmes and has gathered extensive
experience therein. The operation by the EIF of Community

early-stage

as

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financial instruments for SMEs on behalf of the Commis-
sion has therefore been considered a good practice by
independent evaluations. The EIF also has the expertise to
support emerging actions based on public-private partner-
ships launched by Member States aiming at attracting high-
risk investment streams from the capital markets to the
benefit of innovative small businesses.

skills, corporate social responsibility and equal gender
inter alia, education
opportunity, and promote through,
and continuous training, and from school
to higher
education, the emergence of young entrepreneurs.

(29)

Impending changes in the financial environment and new
accounting standards make financial
institutions more
sensitive to risk, lead to a rating culture, and may tighten
the credit supply to SMEs, at least during a transitional
phase. The Entrepreneurship and Innovation Programme
should therefore respond to the changing financing needs
of SMEs, including the need for proximity financing and
their adaptation to the new financial environment whilst
avoiding market distortions. Furthermore, activities should
contribute to enhancing the capabilities of
financial
institutions to assess risk related to innovation, with a
view to developing technology-rating and to improving the
capabilities of SMEs to make better use of the financing
instruments provided by the markets.

(30) High-quality services in support of business and innovation
play an important
role in ensuring SMEs' access to
information relating to the functioning and opportunities
of the internal market for goods and services as well as in
the trans-national transfer of innovation, knowledge and
technology. They also have a crucial role to play in
facilitating SMEs' access to information on Community
legislation applying to them and on future legislation for
which they can prepare and to which they can adapt in a
cost-effective way. Considerable experience and skills have
been developed through existing European support net-
works for businesses, such as the Euro Info Centres and
evaluations have
Innovation Relay Centres. External
stressed that the horizontal role in the delivery of European
business support services should be strengthened, including
by optimising the cooperation between existing services
and help desks with a view to creating a ‘one-stop shop’ on
the basis of a ‘no wrong door’ commitment. This concerns
the dissemination of
information on Community pro-
grammes and the promotion of the participation of SMEs
in those programmes, in particular SMEs' participation in
the Seventh Framework RTD Programme. Evaluations have
also stressed the importance of
facilitating interaction
between the Commission and SMEs.

innovation and competitiveness

(31) The Community should equip itself with a sound analytical
basis to support policy making in the fields of SMEs,
in
entrepreneurship,
industrial sectors. Such a basis should add value to the
information available at the national level in those fields.
The Community should provide for the common develop-
ment of competitiveness strategies for industrial and service
sectors, and for the promotion of best practices in relation
to an entrepreneurial environment and culture, including

(32) The Brussels European Council of 20 and 21 March 2003
gave priority to innovation and entrepreneurship and
stressed the need for Europe to do more to turn ideas into
real added value. It called for further action in order to
create the conditions in which business innovates. The
linear model of innovation, that assumes that research leads
directly to innovation, has proved to be insufficient to
explain innovation performance and to design appropriate
innovation policy responses. Recognising that enterprises
are at the heart of the innovation process, funding to
stimulate innovation activities of enterprises and preparing
the market-take up of innovation as well as innovation
governance and culture should therefore be placed under
the Entrepreneurship and Innovation Programme. This
should help to ensure that innovation works to promote
competitiveness and is carried through into practical
application at a business level. The Brussels European
Council of 25 and 26 March 2004 added that clean
technologies are vital to fully exploit synergies between
enterprise and the environment. The promotion of eco-
innovation, which includes innovative clean technologies,
can help exploit their potential.

(33) The market

for knowledge transfer and absorption is
frequently opaque, and both lack of information and failure
to make connections create market barriers. Businesses also
find it difficult to incorporate technologies which are not
part of their traditional field of activity and to gain access to
new types of skills. Financial
risks can be high for
innovation, profitability may be delayed by development
hitches and tax may not be neutral between success and
failure. Skills needed to exploit opportunities may be in
short supply. Institutional or regulatory obstacles can delay
or undermine the emergence of new markets and access to
them. Bankruptcy laws may create strong disincentives to
assume entrepreneurial risk because of fear of failure. In
addition, economic circumstances can determine whether
innovation takes place or not. The development of a
to entrepreneurship,
business
conducive
the
competitiveness
improvement of enterprise- and innovation-related eco-
nomic and administrative reform, in particular for increased
competitiveness, reduction of administrative burdens for
SMEs and a better regulatory environment for entrepre-
neurship, business creation and business transfer, growth
and innovation.

and innovation should include

environment

(34) Those barriers to the market penetration of innovation
technologies are particularly relevant for environmental
technologies. Market prices too often do not completely
reflect the environmental costs of products and services.
The part of the costs not reflected in market prices is borne

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by society as a whole, rather than by the producers of
pollution. This market failure, together with the Commu-
nity interest in preserving resources, preventing pollution
and protecting the environment more cost-efficiently,
justifies reinforced support for eco-innovation.

demand driven approach for Community intervention to
projects supporting trans-European services in areas of
public interest.

(35) The Community's innovation actions aim to support the
development of innovation policy in the Member States and
their regions and to facilitate the exploitation of synergies
between national, regional and European innovation policy
and support activities. The Community is able to facilitate
trans-national exchanges, mutual learning and networking
and can drive cooperation on innovation policy. Network-
ing among stakeholders is the key to facilitating the flow of
knowledge and ideas that are necessary for innovation.

(36) The Council Resolution endorsed at

the Brussels Tele-
communications Council of 9 December 2004 provides the
basis for the proposal
for a new information society
initiative to reinforce the contribution of the information
In its aforementioned
society to Europe's performance.
Communication of 2 February 2005,
the Commission
proposes to focus efforts on ‘delivering stronger and lasting
growth and creating more and better jobs’. It highlights the
uptake of ICT by both the private and public sector as a key
element in improving Europe's innovation performance and
competitiveness. The ICT Policy Support Programme
should therefore be established.

(41) The eGovernment and eHealth Communications from the
Commission and related Council conclusions called for
increased effort in innovation, good practice exchange and
interoperability and identified the need for
increased
synergies between related Community programmes. Inter-
operability is of great importance to the development of the
information society.

(42) A legislative framework has been defined by Directive 96/9/
EC of the European Parliament and of the Council of
11 March 1996 on the legal protection of databases (1),
Directive 2001/29/EC of the European Parliament and of
the Council of 22 May 2001 on the harmonisation of
certain aspects of copyright and related rights in the
information society (2) and Directive 2003/98/EC of the
European Parliament and of the Council of 17 November
2003 on the re-use of public sector information (3) to deal
with the challenges of digital content in the information
society.

(43) Different practices among Member States continue to create
technical barriers which impede wide access and re-use of
public sector information in the Union.

(37) Actions under the ICT Policy Support Programme should
also contribute to the objectives of the i2010 strategy, while
taking into consideration other Community programmes in
the field of ICT in order to avoid the duplication of efforts.

(44) Community actions concerning digital content should take
account of the Community's multilingual and multicultural
specificity.

(38)

ICT provide the backbone for the knowledge economy.
They account for around half of the productivity growth in
modern economies and provide unique solutions to address
key societal challenges. The improvement of public sector
and general interest services needs to be carried out in close
collaboration with the relevant Community policies, for
in the fields of public health, education and
example,
training, environment,
transport and internal market
development and competition.

(39) The deployment and best use of

innovative ICT-based
solutions should be stimulated, in particular for services in
areas of public interest, including the improvement of the
quality of life of disadvantaged groups, such as people with
disabilities or elderly people. Community support should
also facilitate the coordination and the implementation of
actions for developing the information society across the
Member States.

(45) Natural resources, the prudent and rational utilisation of
which is provided for in Article 174 of the Treaty, include,
apart from renewable energy sources, oil, natural gas and
solid fuels, which are essential energy sources but are also
the main sources of carbon dioxide emissions.

(46) The Commission's Green Paper

entitled ‘Towards

a
European strategy for the security of energy supply’ noted
that the Union is becoming increasingly dependent on
external energy sources and that its dependence could rise
to 70 % in 20 to 30 years' time. It therefore stressed the
need to balance supply policy against clear action for a
demand policy and called for better managed and more
environmentally friendly consumption, particularly in the
transport and building sectors. It also called for priority to
be given the development of new and renewable sources on
the energy supply side in order to respond to the challenge
of global warming and to achieve the target already
established by earlier action plans and resolutions of 12 %
energy from renewable energy sources in gross internal
consumption by 2010.

(40) The midterm evaluation of

the eTEN (Trans European
Network for Telecom) Programme recommends using a

(1) OJ L 77, 27.3.1996, p. 20.
(2) OJ L 167, 22.6.2001, p. 10.
(3) OJ L 345, 31.12.2003, p. 90.

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(47) Directive 2001/77/EC of the European Parliament and of
the Council of 27 September 2001 on the promotion of
electricity produced from renewable energy sources in the
internal electricity market (1) requires Member States to set
national indicative targets consistent with the Community
global indicative target of 12 % of gross national energy
consumption by 2010 and in particular with the 22,1 %
indicative share of electricity produced from renewable
energy sources in total Community electricity consumption
by 2010. The Commission Communication of 26 May
2004 entitled ‘The share of renewable energy in the EU’
warned that the target of a 12 % share of renewable energy
in overall energy consumption in the Community in 2010
will not be reached unless considerable additional action is
taken.

(48) Directive 2002/91/EC of the European Parliament and of
the Council of 16 December 2002 on the energy
performance of buildings (2) requires Member States to
apply minimum energy performance requirements for new
and existing buildings, to ensure the energy certification of
buildings and to require the regular inspection of boilers
and of air-conditioning systems in buildings.

(49) Directive 2003/30/EC of the European Parliament and of
the Council of 8 May 2003 on the promotion of the use of
biofuels or other renewable fuels for transport (3) requires
Member States to ensure that a minimum proportion of
biofuels and other renewable fuels is placed on their
market.

(50) Directive 2004/8/EC of the European Parliament and of the
Council of 11 February 2004 on the promotion of
cogeneration based on a useful heat demand in the internal
energy market and amending Directive 92/42/EEC (4)
requires Member States to carry out analyses of
their
potential for high-efficiency cogeneration and to set up
the national potential
reflect
support
identified.

schemes

that

(51)

the

to facilitate

implementation of

In order
those
Community measures, to achieve greater market penetra-
tion for renewable energy sources and to improve energy
efficiency, there is a need for specific promotion pro-
grammes at Community level to create the conditions for
moving towards sustainable energy systems, in particular to
support the standardisation of equipment which produces
or
to increase
technology deployment and to spread best practices in
to the
demand side management. The same applies
Community measures related to the labelling of energy
efficiency of electrical, electronic, office and communica-
tions equipment and the standardisation of
lighting,
heating and air-conditioning equipment. The Intelligent

energy sources,

renewable

consumes

(1) OJ L 283, 27.10.2001, p. 33. Directive as amended by the 2003 Act

of Accession.

(2) OJ L 1, 4.1.2003, p. 65.
(3) OJ L 123, 17.5.2003, p. 42.
(4) OJ L 52, 21.2.2004, p. 50.

Energy — Europe Programme
established.

should therefore be

(52) The Intelligent Energy — Europe Programme should
contribute to achieving the general objectives of improving
energy diversification and security of supply, and enhancing
the competitiveness of companies
in
particular SMEs, while protecting the environment and
meeting international commitments in this area. Energy
efficiency improvement measures in that specific pro-
gramme should also focus on technological improvements
in production processes and propose efficiency gains
through improved transport logistics.

in the Union,

(53) Achieving the full impact of the established strategy for
sustainable energy requires not only continuity with
Community support to policy development and imple-
mentation and removal of existing non-technological
barriers through enhanced promotion campaigns, but,
above all, support to accelerate investment and stimulate
the market uptake of innovative technologies across the
Community.

(54) Alongside environmental advantages, renewable energy
sources and energy efficiency are among the fastest growing
industries in the Community, creating new and innovative
jobs. The European renewable energy industry leads the
world in the development of technologies for renewable
energy electricity generation. Such technologies benefit
economic and social cohesion and avoid the dissipation of
resources.

(55) Decision No 1230/2003/EC will expire on 31 December

2006.

(56) Three of

the four

specific fields of

the programme
established by Decision No 1230/2003/EC should be
continued under this Framework Programme: (i) promoting
energy efficiency and the rational use of energy resources
(SAVE); (ii) promoting new and renewable energy sources
(Altener); and (iii) promoting energy efficiency and the use
of new and renewable energy sources in transport (STEER).

(57) The international dimension (Coopener) of the programme
established by Decision No 1230/2003/EC should be
continued in the framework of
the new Community
instruments for external assistance as part of a thematic
programme on environment and sustainable management
of natural resources,
there
should be a close relationship between the relevant part of
the thematic programme and the Intelligent Energy —
Europe Programme in order to help SMEs take advantage of
the potential markets for intelligent energy which exist
outside Europe.

including energy. However,

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(58)

regulation,

In accordance with the principles of good governance and
better
the Commission has commissioned
independent experts to carry out an ex ante evaluation of
a renewed multiannual Community programme in the field
of energy to succeed the ongoing Intelligent Energy —
In their
Europe Programme after 31 December 2006.
report, the experts concluded that there was a need to
ensure the continuity of the Intelligent Energy — Europe
Programme after 2006, and to renew it
in a more
comprehensive and ambitious instrument. That programme
should be established also with a view to further improving
European strength and excellence in the field of sustainable
energy technologies and their application.

simple and transparent

(59) Account should be taken of the need to achieve user-
friendliness and administrative simplification in implement-
ing the Framework Programme. The Commission should
publish and widely diffuse a user manual establishing a
clear,
framework of general
principles for participation of beneficiaries in the Frame-
work Programme. This should in particular facilitate the
participation of SMEs. The user manual should describe the
rights and obligations of beneficiaries; financial provisions
such as eligible costs and support
rates; principles
governing administrative rules and procedures, in particular
user-friendly applications procedures applying a two-stage
application process, where appropriate and on the condi-
tion that such a procedure does not extend the time period
between evaluation and signing of the contract; the rules
for use and dissemination of project results; and principles
for the evaluation, selection and award of proposals.

(60) The Commission may use, on the basis of a cost-benefit
analysis, a new or an existing executive agency for the
implementation of the Framework Programme, as provided
for in Council Regulation (EC) No 58/2003 of 19 December
2002 laying down the statute for executive agencies to be
entrusted with certain tasks
in the management of
Community programmes (1).

(61) The Framework Programme should also support reflection
on the future structures and needs for European innovation
policies.

(62) Since the objectives of

this Decision concerning the
enhancement of
the Community's competitiveness and
innovation cannot be sufficiently achieved by the Member
States because of the need for multilateral partnerships,
trans-national mobility and Community-wide exchanges of
information, and can therefore, by reason of the nature of
the actions and measures necessary, be better achieved at
Community level, the Community may adopt measures, in
accordance with the principle of subsidiarity as set out in
Article 5 of the Treaty. In accordance with the principle of
proportionality, as set out in that Article, this Decision does
not go beyond what is necessary in order to achieve those
objectives.

(1) OJ L 11, 16.1.2003, p. 1.

(63) The measures necessary for the implementation of this
Decision should be adopted in accordance with Council
Decision 1999/468/EC of 28 June 1999 laying down the
procedures
implementing powers
the exercise of
conferred on the Commission (2).

for

(64) Taking into account the nature of the issues to be dealt with
under the specific programmes, the Commission should be
assisted by different committees for the implementation of
each specific programme. Those committees will meet
simultaneously on a periodic basis to enable joint sessions
to discuss issues of horizontal or common relevance, as
identified by the EIP Management Committee together with
the Commission.

(65)

In the interest of improving coherence between elements of
the Framework Programme and its effectiveness, a Strategic
Advisory Board on Competitiveness and Innovation should
advise the Commission.

(66) Decision No 456/2005/EC of the European Parliament and
of the Council of 9 March 2005 establishing a multiannual
Community programme to make digital content in Europe
more accessible, usable and exploitable (3) establishes a
multiannual programme, known as the ‘eContentplus’. That
Decision will expire on 31 December 2008. Measures
foreseen to make digital content in Europe more accessible,
usable and exploitable should be continued after that date
under the ICT Policy Support Programme established by
this Decision.

(67) The measures provided for in Decision 96/413/EC should
be integrated into the Entrepreneurship and Innovation
Programme. Decision 96/413/EC should therefore be
repealed,

HAVE DECIDED AS FOLLOWS:

TITLE I

COMMON PROVISIONS

CHAPTER I

The Competitiveness and Innovation Framework Programme

Article 1

Establishment

1. A framework programme for Community action in the field
of competitiveness and innovation, paying particular attention to
the needs of SMEs and covering the period from 1 January 2007
to 31 December 2013 (hereinafter referred to as the Framework
Programme), is hereby established.

(2) OJ L 184, 17.7.1999, p. 23. Decision as amended by Decision 2006/

512/EC (OJ L 200, 22.7.2006, p. 11).

(3) OJ L 79, 24.3.2005, p. 1.

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shall

Framework Programme

to the
2. The
competitiveness and innovative capacity of the Community as
an advanced knowledge society, with sustainable development
based on robust economic growth and a highly competitive
social market economy with a high level of protection and
improvement of the quality of the environment.

contribute

Article 4

Participation of third countries

The Framework Programme shall be open to the participation of:

3. The Framework Programme shall not cover
research,
technological development and demonstration activities carried
It shall
out
contribute to closing the gap between research and innovation
and promote all forms of innovation.

in accordance with Article 166 of

the Treaty.

(a)

(b)

Article 2

Objectives

1. The Framework Programme shall have the following
objectives:

(c)

(a)

to foster the competitiveness of enterprises, in particular of
SMEs;

(b)

to promote all
innovation;

forms of

innovation including eco-

European Free Trade Association (EFTA) countries which
are members of the European Economic Area (EEA), in
accordance with the conditions laid down in the EEA
Agreement;

accession countries and candidate countries benefiting
from a pre-accession strategy,
in accordance with the
general principles and general terms and conditions for the
participation of
in Community pro-
grammes established in the respective Framework Agree-
ments and Association Council Decisions;

those countries

countries of the Western Balkans, in accordance with the
provisions to be determined with those countries following
the establishment of Framework Agreements concerning
their participation in Community programmes;

(d)

other third countries, when Agreements and procedures so
allow.

(c)

to accelerate the development of a sustainable, competitive,
innovative and inclusive information society;

Implementation of the Framework Programme

(d)

to promote energy efficiency and new and renewable
energy sources in all sectors, including transport.

Article 5

Annual work programmes

CHAPTER II

2. The objectives of
the Framework Programme shall be
pursued through the implementation of the following specific
programmes as established in Title II (hereinafter referred to as
the specific programmes):

1. The Commission shall adopt annual work programmes for
the specific programmes in accordance with the procedure
referred to in Article 46(2), taking into account the need to
adjust to future developments,
in particular after the interim
evaluation.

(a)

the Entrepreneurship and Innovation Programme;

(b)

the Information and Communications Technologies (ICT)
Policy Support Programme;

(c)

the Intelligent Energy-Europe Programme.

Article 3

Budget

The Commission shall ensure the implementation of annual
work programmes and inform the European Parliament of their
preparation and implementation comprehensively and without
delay.

2. Amendments to the annual work programmes concerning
budgetary allocations of more than EUR 1 million shall be
adopted in accordance with the procedure referred to in
Article 46(2).

Article 6

1. The financial envelope for the implementing the Framework
Programme shall be EUR 3 621 300 000.

Common implementing measures for the Framework
Programme

2. An indicative budgetary breakdown for
programmes is set out in Annex I.

the

specific

3. The budgetary authority shall authorise the available annual
appropriations within the limits of the financial framework.

1. The instruments outlined in Section 2 of Chapter I, Section 2
of Chapter II and Section 2 of Chapter III of Title II shall
constitute a common toolbox for the Framework Programme.
They may also be used to fulfil the objectives of each specific
programme as specified in the relevant annual work programme.
A comprehensive list of instruments shall be set out in detail in
the user manual referred to in Article 47.

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2. The funding granted shall fully comply with Community
State aid rules and accompanying instruments. Community rules
concerning public access
shall apply. The
principles of transparency and gender mainstreaming shall be
taken into account.

to documents

Article 7

Technical assistance

The financial envelope established under this Decision may also
cover necessary expenditure related to preparatory action,
monitoring, control, audit and evaluation directly necessary for
the effective and efficient implementation of this Decision and
for the achievement of its objectives.

in particular,

Such action may,
include studies, meetings,
information activities, publications, expenditure on informatics
tools, systems and networks for the exchange and processing of
information, and any other expenditure on technical, scientific
and administrative assistance and expertise to which the
Commission may need to have recourse for the purposes of
the implementation of this Decision.

Article 8

Monitoring and evaluation

1. The Commission shall regularly monitor the implementa-
tion of the Framework Programme and its specific programmes.
It shall also examine synergies within the Framework Programme
and with other complementary Community programmes and,
where possible, synergies with national programmes co-funded
by the Union. Where possible,
it shall examine the gender
dimension and the respect of the principle of non-discrimination
in programme activities.

The Commission shall draw up an annual implementation report
for the Framework Programme and for each specific programme
examining the supported activities
financial
implementation, results and, where possible, impact. The annual
report on the Entrepreneurship and Innovation Programme shall
clearly identify eco-innovation activities.

in terms of

2. The Framework Programme and its specific programmes
shall be subject to interim and final evaluations. Such evaluations
shall examine issues such as relevance, coherence and synergies,
effectiveness, efficiency, sustainability, utility and, where possible
and appropriate, distribution of funding with regard to sectors.
The final evaluation shall, in addition, examine the extent to
which the Framework Programme as a whole, and each of its
specific programmes, has achieved its objectives.

Both interim and final evaluations shall adopt appropriate
methodologies
the Framework
to measure the impact of
Programme, and each of the specific programmes, against its
objectives, including competitiveness, innovation, entrepreneur-
ship, productivity growth, employment and environment.

evaluations may also include ex post evaluation elements with
regard to previous programmes.

3. The interim and final evaluations of
the specific pro-
grammes and the necessary budgetary allocations shall be
included in the respective annual work programmes.

The annual work programmes shall define a set of measurable
objectives for each specific action and develop appropriate
evaluation criteria and a set of quantitative and qualitative
indicators to measure effectiveness in delivering outcomes that
will contribute to the achievement of
the
Framework Programme as a whole and the objectives of the
relevant specific programme.

the objectives of

The interim and final evaluation of the Framework Programme
and the necessary budgetary allocations shall be included in the
annual work programme for the Entrepreneurship and Innova-
tion Programme.

4. The interim evaluation of the Framework Programme shall
be completed by 31 December 2009 and the final evaluation by
31 December 2011.

The interim and final evaluations of the specific programmes
shall be arranged in such a way that their results can be taken
into account
the
Framework Programme.

in the interim and final evaluation of

5. The Commission shall communicate the annual implemen-
tation reports, the results of the interim and final evaluations of
the Framework Programme and of its specific programmes to the
European Parliament, the Council, the European Economic and
Social Committee and the Committee of the Regions.

Article 9

Protection of the Communities' financial interests

1. The Commission shall ensure that, when actions financed
under this Decision are implemented, the financial interests of
the Community are protected by the application of measures to
prevent fraud, corruption and any other illegal activities, by
effective checks and by the recovery of amounts unduly paid and,
if
irregularities are detected, by effective, proportional and
dissuasive penalties, in accordance with Regulation (EC, Euratom)
No 2988/95, Regulation (Euratom, EC) No 2185/96, and
Regulation (EC) No 1073/1999.

2.
For the Community actions financed under this Decision,
Regulation (EC, Euratom) No 2988/95 and Regulation (Euratom,
EC) No 2185/96 shall apply to any infringement of a provision of
Community law,
including infringements of a contractual
obligation stipulated on the basis of the Framework Programme,
resulting from an act or omission by an economic operator,
which has, or would have, the effect of prejudicing the general
budget of the European Union or budgets managed by it, by an
unjustified item of expenditure.

Such evaluations shall examine the quality of the services referred
to in Article 21(2) provided by the network partners. The interim

implementing measures resulting from this Decision
3. All
shall provide, in particular, for supervision and financial control

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9.11.2006

by the Commission or any representative authorised by it, and by
audits by the European Court of Auditors, if necessary on-the-
spot audits.

(c)

improving the financial environment for, and the invest-
ment readiness of, SMEs.

TITLE II

THE SPECIFIC PROGRAMMES

CHAPTER I

Article 12

SME cooperation

Action in relation to SME cooperation may include:

The Entrepreneurship and Innovation Programme

(a)

fostering services in support of SMEs;

S e c t i o n 1

O b j e c t i v e s a n d f i e l d s o f a c t i o n

Article 10

Establishment and objectives

(b)

(c)

1. The Entrepreneurship and Innovation Programme in sup-
port of enterprise, particularly SMEs, entrepreneurship, innova-
tion, including eco-innovation and industrial competitiveness is
hereby established.

contributing to measures helping and encouraging SMEs to
cooperate with other enterprises and other innovation
actors across borders, including SME involvement in the
field of European and international standardisation;

including at

promoting and facilitating international business cooper-
ation,
level and through SME
networks favouring the coordination and development of
their economic and industrial activities.

regional

Article 13

Innovation activities

2. The Entrepreneurship and Innovation Programme shall
provide for action to support, improve, encourage and promote:

Action in relation to innovation may include:

(a)

(b)

access to finance for the start-up and growth of SMEs and
investment in innovation activities;

(a)

the creation of an environment
favourable to SME
cooperation, particularly in the field of cross-border
cooperation;

innovation
fostering sector-specific innovation, clusters,
networks, public-private
and
cooperation with relevant international organisations, and
the use of innovation management;

innovation partnerships

(b)

supporting national and regional programmes for business
innovation;

(c)

all forms of innovation in enterprises;

(d)

eco-innovation;

(e)

entrepreneurship and innovation culture;

(c)

(d)

(f)

enterprise and innovation-related economic and adminis-
trative reform.

Article 11

Access to finance for the start-up and growth of SMEs

Action in relation to access to finance for the start-up and
growth of SMEs and for investment in innovation activities,
including eco-innovation, may include:

supporting the take-up of
concepts and the
technologies and concepts;

innovative technologies and
existing

innovative application of

trans-national knowledge and
supporting services
technology transfer and for the protection and manage-
ment of intellectual and industrial property;

for

(e)

developing and exploring new types of innovation services;

(f)

fostering technology and knowledge through data archiving
and transfer.

Article 14

Eco-innovation activities

(a)

increasing the investment volumes of risk capital funds and
investment vehicles promoted by business angels;

Action in relation to eco-innovation may include:

(b)

providing leverage to SME debt financing instruments;

(a)

supporting the take-up of environmental technologies and
eco-innovative activities;

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(b)

(c)

(d)

co-investment in risk capital funds that provide equity, inter
alia, for companies investing in eco-innovation in accord-
ance with the procedure laid down in Annex II;

fostering eco-innovation networks and clusters and public-
private partnerships in eco-innovation, developing innova-
tive business services, and facilitating or promoting eco-
innovation;

promoting new and integrated approaches to eco-innova-
tion in fields such as environmental management and the
environmentally friendly design of products, processes and
services, taking into account their whole life cycle.

S e c t i o n 2

I m p l e m e n t a t i o n

Article 17

Community financial instruments for SMEs

1. Community financial instruments shall be operated with the
aim of facilitating access to finance for SMEs in certain phases of
their life cycle: seed, start-up, expansion and business transfer.
Investments made by SMEs in activities such as technological
development,
including eco-innovation, and tech-
nology transfer and the cross-border expansion of their business
the relevant
activities
instruments.

shall be included in the scope of

innovation,

Article 15

2. The instruments referred to in paragraph 1 shall be the
following:

Entrepreneurship and innovation culture

(a)

the High Growth and Innovative SME Facility (GIF);

Action in relation to entrepreneurship and innovation culture
may include:

(b)

the SME Guarantee (SMEG) Facility;

(a)

encouraging entrepreneurial mindsets, skills and culture,
and the balancing of entrepreneurial risk and reward, in
particular for women and young people;

(c)

the Capacity Building Scheme (CBS).

Implementation arrangements concerning the different

3.
instruments are laid down in Annex II.

(b)

encouraging a business environment favourable to innova-
tion, enterprise development and growth;

Article 18

The GIF

(c)

supporting policy development and cooperation between
actors, including trans-national cooperation of national and
regional programme managers, in particular with a view to
fostering the SME-friendliness of programmes and mea-
sures;

1. The GIF shall be operated by the European Investment Fund
(EIF) on behalf of the Commission.

The GIF shall carry out the following tasks:

(d)

encouraging the creation and transfer of enterprises.

Article 16

(a)

contributing to the establishment and financing of SMEs
and the reduction of the equity and risk capital market gap,
which prevents SMEs
from exploiting their growth
potential, with a view to improving the European venture
capital market;

Enterprise and innovation-related economic and
administrative reform

(b)

supporting innovative SMEs with high growth potential, in
particular those undertaking research, development and
other innovation activities.

Action in relation to enterprise and innovation-related economic
and administrative reform may include:

2. The GIF shall consist of two windows, as follows:

(a)

collecting data, analysing and monitoring performance, and
developing and coordinating policy;

(b)

contributing to the definition and promotion of competi-
tiveness strategies related to industry and service sectors;

— the first window,

‘GIF1’, shall cover early stage (seed and
start-up) investments. It shall invest in specialised venture
capital funds such as early stage funds, funds operating
regionally, funds focused on specific sectors, technologies
or
research and technological development and funds
linked to incubators, which shall in turn provide capital to
SMEs.
in funds and investment
It may also co-invest
vehicles promoted by business angels,

(c)

supporting mutual
regional and local administrations.

learning for excellence in national,

— the second window,

‘GIF2’, shall cover expansion stage
investments and shall invest in specialised risk capital funds,

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which in turn shall provide quasi-equity or equity for
innovative SMEs with high growth potential
in their
expansion phase. GIF2 investments shall avoid buy-out or
replacement capital intended for asset stripping.

GIF may invest in intermediaries by working, where appropriate,
with national or regional schemes aimed at developing small
business investment companies.

In addition to the funding provided by GIF, the majority of the
invested in any fund shall be provided by investors
capital
operating in circumstances
corresponding to the market
economy investor principle, irrespective of the legal nature and
ownership structure of those investors.

under appropriate risk-sharing arrangements with the
targeted institutions. Support for those transactions shall
be conditional upon an undertaking by the originating
institutions to grant a significant part of
the resulting
liquidity of the mobilised capital for new SME lending in a
reasonable period of time. The amount of this new debt
financing shall be calculated in relation to the amount of
the guaranteed portfolio risk and shall be negotiated,
together with the period of time, individually with each
originating institution.

Article 20

The CBS

Article 19

The SMEG Facility

1. The CBS shall be operated with international
financial
institutions, including the European Bank for Reconstruction and
Development (EBRD), the European Investment Bank (EIB), the
EIF and the Council of Europe Development Bank (CEB).

1. The SMEG Facility shall be operated by the EIF on behalf of
the Commission.

The CBS shall carry out the following tasks:

The SMEG Facility shall carry out the following tasks:

(a)

providing counter-guarantees or, where appropriate, co-
guarantees for guarantee schemes operating in the eligible
countries;

(b)

providing direct guarantees for any other appropriate
financial intermediary.

2. The SMEG Facility shall consist of four windows, as follows:

(a)

improving the investment and technology expertise of
funds and other
investing in
financial
innovative SMEs or SMEs with growth potential;

intermediaries

(b)

stimulating the supply of credit to SMEs by enhancing the
credit appraisal procedures for SME lending.

2. The CBS shall consist of the Seed Capital Action and the
Partnership Action.

— the first window, (a) debt financing via loans or leasing,
shall reduce the particular difficulties SMEs face in accessing
finance either due to the perceived higher risk associated
with investments in certain knowledge-related activities
such as technological development, innovation and tech-
nology transfer or due to the lack of sufficient collateral,

The Seed Capital Action shall provide grants to stimulate the
supply of venture capital for innovative SMEs and other SMEs
with growth potential,
including those in the traditional
economy, through support for seed and start-up funds or similar
organisations. Support may also be provided for the long-term
recruitment of additional staff with specific investment or
technology expertise.

— the second window,

financing,

(b) microcredit

shall
encourage financial institutions to play a greater role in
the provision of loans of a smaller amount which would
normally involve proportionately higher unit handling
costs for borrowers with insufficient collateral. In addition
intermedi-
to guarantees or counter-guarantees, financial
aries may receive grants to partially offset
the high
administrative costs inherent in microcredit financing,

— the third window, (c) guarantees for equity or quasi-equity
investments in SMEs, shall
include investments which
provide seed capital and/or capital in the start-up phase, as
well as mezzanine financing,
to reduce the
particular difficulties which SMEs face because of their
weak financial structure and those arising from business
transfers,

in order

— the fourth window, (d) securitisation of SME debt finance
portfolios, shall mobilise additional debt financing for SMEs

to financial
The Partnership Action shall provide grants
intermediaries to cover
technical assistance to
the cost of
improve their credit appraisal procedures for SME debt financing,
in order to stimulate the supply of finance to SMEs in countries
with low banking intermediation.

For the purpose of the Partnership Action ‘low intermediation’
shall relate to banking in countries where domestic credit as a
percentage of Gross Domestic Product is significantly below the
Community average according to relevant data established by the
European Central Bank or the International Monetary Fund.

The Partnership Action shall accompany the credit lines or the
risk-sharing provided by international financial institutions to
from the eligible
partner banks or
relate to
countries. A significant part of
institutions' capacity to
improving banks' and other financial

the action shall

institutions

financial

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assess the commercial viability of projects with a significant eco-
innovation component.

Article 22

Article 21

Services in support of business and innovation

Services in support of business and innovation, in particular

1.
for SMEs, shall be encouraged.

2. Taking into account the established experience and skills of
existing European business support networks, financial support
may be granted to network partners to provide, in particular:

(a)

information, feedback, business cooperation and interna-
tionalisation services;

(b)

services for
technology and knowledge;

innovation and for

the transfer of both

(c)

services encouraging the participation of SMEs in the
Seventh Framework RTD Programme.

Innovation and eco-innovation pilot and market replication
projects

The Community shall provide support to projects concerned
with the first applications or market replication of innovative or
eco-innovative techniques, products or practices of Community
relevance, which have already been technically demonstrated
with success but which, owing to residual risk, have not yet
significantly penetrated the market. These shall be designed to
promote broader utilisation of such techniques, products or
practices within the participating countries and facilitate their
market uptake.

Article 23

Policy analyses, development, coordination and twinning

The following may be undertaken in support of policy analyses,
development and coordination with participating countries:

(a)

(b)

studies, data collection, surveys and publications, based
where possible on official statistics;

twinnings and meetings of experts, including experts from
public institutions, experts
sent by SMEs and other
interested parties, conferences and other events;

Details concerning such services are laid down in Annex III.

(c)

awareness raising, networking and other relevant activities;

3. The Commission shall select network partners through calls
for proposals in relation to the various services referred to in
paragraph 2. Following those calls for proposals the Commission
may establish a framework partnership agreement with selected
network partners specifying the type of activities to be offered,
the procedure for awarding grants to them and the general rights
and obligations of each party. The framework partnership may
cover the duration of the programme.

4.
In addition to the services referred to in paragraph 2, the
Commission may provide financial support for the implementa-
tion of other activities within the scope of
the Framework
Programme following calls for proposals which may be restricted
to the network partners. Such services shall ensure that interested
parties and potential applicants may obtain comprehensive
assistance relating to the possibilities for support under the
Framework Programme.

5. The Commission shall support the network partners by
making available the appropriate coordination and operational
support. Organisations established in countries which are not
participating in the Framework Programme may be permitted to
benefit from that coordination and operational support.

6. The Commission shall ensure that network partners
cooperate with each other and,
in the event that a network
partner is unable to address an enquiry directly, it shall refer the
enquiry to a competent network partner.

(d)

benchmarking of national and regional performances, and
work on good practices, including their dissemination and
implementation.

Article 24

Entrepreneurship and Innovation Programme support
measures

The Commission shall regularly undertake the following:

(a)

(b)

analysis and monitoring of competitiveness and sectoral
issues, including for the Commission's annual report on the
competitiveness of European industry;

preparation of impact assessments of Community measures
of particular relevance for the competitiveness of enter-
prises and their publication with a view to identifying areas
of existing legislation requiring simplification or the need
for new legislative measures to make innovation more
attractive in the Community;

(c)

evaluation of specific aspects or specific implementation
measures in relation to the Entrepreneurship and Innova-
tion Programme;

(d)

dissemination of appropriate information in relation to the
Entrepreneurship and Innovation Programme.

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S e c t i o n 3

A n n u a l w o r k p r o g r a m m e

Article 25

Annual work programme

The annual work programme shall set out in detail, and in line
with the objectives set out in Article 10:

(c)

development of an inclusive information society and more
efficient and effective services in areas of public interest,
and improvement of quality of life.

3. The actions referred to in paragraph 2 shall be carried out
with a particular emphasis on the promotion and awareness-
raising of the opportunities and benefits of ICT for citizens,
public authorities and businesses, in particular SMEs.

(a) measures needed for its implementation;

Article 27

(b)

priorities;

The single European information space

(c)

qualitative and quantitative objectives;

Action in relation to the single European information space shall
aim to:

(d)

appropriate evaluation criteria and qualitative and quanti-
tative indicators for analysing effectiveness in delivering
outcomes that will contribute to the achievement of the
objectives of the specific programmes and the Framework
Programme as a whole;

(e)

operational timetables;

(f)

the rules for participation;

(g)

the criteria for the selection and evaluation of the measures.

The annual work programme shall clearly identify measures
promoting eco-innovation.

Activities under Article 24 shall not be covered by the annual
work programme.

CHAPTER II

The ICT Policy Support Programme

S e c t i o n 1

O b j e c t i v e s a n d f i e l d s o f a c t i o n

Article 26

Establishment and objectives

(a)

ensure seamless access to ICT-based services and establish
appropriate framework conditions for the rapid, appro-
priate and effective convergence of digital communications
and services, incorporating, inter alia, interoperability, the
use of open standards, and security and trust aspects;

(b)

improve the conditions for the development of digital
content, taking into account multilingualism and cultural
diversity;

(c) monitor the European information society, through data
collection and analysis of the development, availability and
use of digital communication services, including the growth
of internet, access to and take-up of broadband as well as
developments of content and services.

Article 28

Innovation through the wider adoption of and investment
in ICT

Action in relation to innovation through the wider adoption of
and investment in ICT shall aim to:

1. The ICT Policy Support Programme in support of ICT policy
is hereby established.

(a)

promote innovation in processes, services and products
enabled by ICT, in particular in SMEs and public services,
taking into account the necessary skills requirements;

2. The ICT Policy Support Programme shall provide for the
following actions:

(a)

development of the Single European information space and
strengthening of the internal market for ICT products and
services and ICT-based products and services;

(b)

stimulation of innovation through the wider adoption of
and investment in ICT;

(b)

facilitate public and private interaction as well as partner-
ships for accelerating innovation and investments in ICT;

(c)

promote and raise awareness of
the opportunities and
benefits of ICT and its new applications for citizens and
businesses, including enhancing confidence in and open-
ness to new ICT, and stimulating debate at the European
level on emerging ICT trends and developments.

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Article 29

An inclusive information society, more efficient and
effective services in areas of public interest and improved
quality of life

Actions
in relation to the development of an inclusive
information society and more efficient and effective services in
areas of public interest, and the improvement of quality of life
shall aim to:

(a) widen ICT, including digital content, accessibility and digital

literacy;

(b)

(c)

reinforce trust and confidence as well as support of ICT use,
addressing, in particular, privacy concerns;

improve the quality, efficiency, availability and accessibility
of electronic services in areas of public interest and for ICT-
enabled participation, including, where appropriate, inter-
operable pan-European or cross-border public services as
well as the development of common interest building
blocks and the sharing of good practices.

S e c t i o n 2

I m p l e m e n t a t i o n

S u b s e c t i o n 1

I m p l e m e n t a t i o n o f p r o j e c t s , b e s t p r a c t i c e a c t i o n s
a n d t h e m a t i c n e t w o r k s

Article 30

General

2. The projects shall aim to promote innovation, technology
transfer and the dissemination of new technologies that are ready
for market uptake.

The Community may award a grant to contribute to the budget
of the projects referred to in paragraph 1(a).

3. The best practice actions shall be conducted in clusters
addressing specific themes and linked through thematic net-
works.

The Community contribution for the actions referred to in
paragraph 1(b) shall be limited to the direct costs deemed
necessary or appropriate for achieving the specific objectives of
the action.

4. The thematic networks may be linked to best practice
actions.

Support for thematic activities shall be granted towards the
additional eligible costs of coordinating and implementing the
network. The Community contribution may cover the additional
eligible costs of those measures.

S u b s e c t i o n 2

O t h e r p r o v i s i o n s

Article 32

Applications

The ICT Policy Support Programme may be implemented by
projects, best practice actions and thematic networks, including
actions for wide-scale testing and demonstration of innovative
public services with a pan-European dimension.

Projects, best practice actions and thematic networks shall aim to
stimulate the deployment and best use of innovative ICT-based
solutions, in particular for services in areas of public interest and
for SMEs. Community support shall also facilitate the coordina-
tion and the implementation of actions for developing the
information society across the Member States.

Applications for Community support for projects, best practice
actions and thematic networks referred to in Article 31 shall
include a financial plan listing all the components of the funding
of the projects, including the financial support requested from
the Community, and any other requests for support from other
sources. Applicants making applications for other forms of
Community support such as services or studies may also be
required to provide information concerning the financial plan
where appropriate.

Article 33

Article 31

Policy analyses, development and coordination with
participating countries

Projects, best practice actions and thematic networks

1. The following shall be supported:

The following shall be undertaken in support of policy analyses,
development and coordination with participating countries:

(a)

(b)

(c)

projects
replication projects;

including implementation, pilot and market

(a)

studies, data collection, surveys, and publications, based,
where possible, on official statistics;

best practice actions to spread knowledge and share
experience across the Community;

thematic networks bringing together a variety of stake-
to facilitate
holders around a given objective so as
coordination activities and the transfer of knowledge.

(b) meetings of

experts,

from public
institutions, experts sent by SMEs and other interested
parties, conferences and other events;

including experts

(c)

awareness-raising, networking and other relevant activities;

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(d)

benchmarking of national performances and work on good
practices, including their dissemination and implementa-
tion.

Article 34

(d)

appropriate evaluation criteria and qualitative and quanti-
tative indicators for analysing effectiveness in delivering
outcomes that will contribute to the achievement of the
objectives of the specific programmes and the Framework
Programme as a whole;

Promotion, communication, information sharing and
dissemination

(e)

operational timetables;

the
1. The following shall be undertaken in support of
implementation of the ICT Policy Support Programme or the
preparation of future activities:

(f)

the rules for participation;

(g)

the criteria for the selection and evaluation of the measures.

promotion, dissemination,
tion activities;

information and communica-

CHAPTER III

(a)

(b)

exchange of information, knowledge and experience, the
staging of conferences, seminars, workshops or other
meetings and the management of clustered activities.

2. Measures devoted to the commercialisation of products,
processes or services, marketing activities and sales promotion
shall not be eligible for support.

Article 35

Projects of common interest: procurement based on
technical specifications determined in coordination with
Member States

Where it is necessary in order to achieve the objectives of the ICT
Policy Support Programme, and where there is a clear common
interest of Member States as concerns European-level deploy-
ment of products, services, core service components or building
blocks, the Commission may establish projects of common
interest comprising necessary technical and organisational tasks.
Existing initiatives shall be taken into consideration in order to
avoid the duplication of efforts.

The Commission shall, in coordination with the Member States,
agree on common technical specifications and implementation
schedules for such projects. On the basis of those common
technical
the
Commission shall issue calls for tender for implementation of
the projects concerned. Such calls for tender shall be carried out
solely by the Commission in accordance with Community
procurement rules.

specifications and implementation schedules,

S e c t i o n 3

A n n u a l w o r k p r o g r a m m e

Article 36

Annual work programme

The annual work programme shall set out in detail, and in line
with the objectives set out in Article 26:

(a) measures needed for its implementation;

(b)

priorities;

(c)

qualitative and quantitative objectives;

The Intelligent Energy-Europe Programme

S e c t i o n 1

O b j e c t i v e s a n d f i e l d s o f a c t i o n

Article 37

Establishment and objectives

1. The Intelligent Energy — Europe Programme in support of
energy efficiency, renewable energy sources and energy diversi-
fication is hereby established. The programme shall contribute to
ensuring secure, sustainable energy for Europe, while enhancing
European competitiveness.

2. The Intelligent Energy — Europe Programme shall provide
for action, in particular:

(a)

(b)

(c)

to foster energy efficiency and the rational use of energy
resources;

to promote new and renewable energy sources and to
support energy diversification;

to promote energy efficiency and the use of new and
renewable energy sources in transport.

Article 38

Operational objectives

In operational
gramme shall aim to:

terms the Intelligent Energy — Europe Pro-

(a)

(b)

provide the elements necessary for the improvement of
sustainability, the development of the potential of cities and
regions, as well as for the preparation of the legislative
measures needed to attain the related strategic objectives;
develop the means and instruments to follow up, monitor
and evaluate the impact of the measures adopted by the
Community and its Member States in the fields addressed
by that programme;

boost investment across Member States in new and best
performing technologies in the fields of energy efficiency,
renewable energy sources and energy diversification,
including in transport, by bridging the gap between the
successful demonstration of innovative technologies and

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their effective, broad market uptake in order to attain
leverage of public and private sector investment, promote
key strategic technologies, bring down costs,
increase
market experience and contribute to reducing the financial
risks and other perceived risks and barriers that hinder this
type of investment;

(c)

remove the non-technological barriers to efficient and
intelligent patterns of energy production and consumption
by promoting institutional capacity building at, inter alia,
local and regional
level, by raising awareness, notably
through the educational system, by encouraging exchanges
of experience and know-how among the main players
concerned, business and citizens
in general and by
stimulating the spread of best practices and best available
technologies, notably by means of
their promotion at
Community level.

Article 39

Energy efficiency and rational use of resources (SAVE)

Action to foster energy efficiency and the rational use of energy
resources may include:

(a)

improvement of energy efficiency and the rational use of
energy, in particular in the building and industry sectors,
with the exception of actions covered by Article 41;

(b)

supporting the preparation of legislative measures and their
application.

Article 40

New and renewable resources (Altener)

Action to promote new and renewable energy resources may
include:

(a)

(b)

(c)

promoting new and renewable energy sources for centra-
lised and decentralised production of electricity, heat and
cooling, and thus supporting the diversification of energy
sources, with the exception of actions covered by Article 41;

integrating new and renewable energy sources into the local
environment and the energy systems;

supporting the preparation of legislative measures and their
application.

Article 41

Energy in transport (STEER)

Action to promote energy efficiency and the use of new and
renewable energy sources in transport may include:

(a)

(b)

supporting initiatives relating to all energy aspects of
transport, and the diversification of fuels;

promoting renewable fuels and energy efficiency in
transport;

(c)

supporting the preparation of legislative measures and their
application.

Article 42

Integrated initiatives

Action to combine several of the specific fields referred to in
Articles 39, 40 and 41, or relating to certain Community
priorities, may include:

(a)

integrating energy efficiency and renewable energy sources
in several sectors of the economy;

(b)

combining various instruments, tools and actors within the
same action or project.

S e c t i o n 2

I m p l e m e n t a t i o n

Article 43

Promotion and dissemination projects

The following shall be supported:

(a)

(b)

(c)

(d)

the

internal

strategic studies on the basis of shared analysis and regular
monitoring of market developments and energy trends for
the preparation of future legislative measures or for the
review of existing legislation, including with regard to the
functioning of
the
implementation of the medium and long-term strategy in
the energy field to promote sustainable development, as
well as
long-term voluntary
commitments with industry and other stake-holders and
for the development of standards, labelling and certification
systems, where appropriate also in cooperation with third
countries and international organisations;

the preparation of

energy market,

for

for

creation, enlargement or reorganisation of structures and
instruments for sustainable energy development, including
local and regional energy management, and the develop-
ment of adequate financial products and market instru-
ments, building on experience from past and present
networks;

promotion of sustainable energy systems and equipment in
order to further accelerate their penetration of the market
and stimulate investment to facilitate the transition from
the demonstration to the marketing of more efficient
technologies, awareness campaigns and the creation of
institutional capabilities;

information,

development of
education and training
structures, the utilisation of results, the promotion and
dissemination of know-how and best practices involving all
consumers, dissemination of results of the actions and
projects and cooperation with the Member States through
operational networks;

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(e) monitoring of

the implementation and the impact of

Community legislative and support measures.

Article 44

Market replication projects

The Community shall provide support to projects concerned
with the market replication of innovative techniques, processes,
products or practices of Community relevance, which have
already been technically demonstrated with success. These shall
be designed to promote broader utilisation of such techniques,
processes, products or practices within the participating
countries and facilitate their market uptake.

S e c t i o n 3

A n n u a l w o r k p r o g r a m m e

Article 45

Annual work programme

The annual work programme shall set out in detail, and in line
with the objectives set out in Article 37:

(a) measures needed for its implementation;

(b)

priorities;

(c)

qualitative and quantitative objectives;

(d)

appropriate evaluation criteria and qualitative and quanti-
tative indicators to analyse effectiveness in delivering
outcomes that will contribute to the achievement of the
objectives of the specific programmes and the Framework
Programme as a whole;

(e)

operational timetables;

(f)

the rules for participation;

(g)

the criteria for the selection and evaluation of the measures.

TITLE III

GENERAL AND FINAL PROVISIONS

Article 46

Committees

1. The Commission shall be assisted by the
Committees:

following

Full coordination and cooperation across the whole Framework
Programme,
including strategic management, and coherent
overall implementation, shall be ensured by the Commission,
assisted by the EIPC, in close collaboration with the ICTC and the
IEEC.

2.
For the committees referred to in paragraph 1, Articles 4 and
7 of Decision 1999/468/EC shall apply, having regard to the
provisions of Article 8 thereof.

The period laid down in Article 4(3) of Decision 1999/468/EC
shall be set at three months.

3. The Committees referred to in paragraph 1 shall adopt their
rules of procedure.

Article 47

User manual

1. After the entry into force of the Framework Programme, the
Commission shall publish a readable and user-friendly user
manual establishing a clear, simple and transparent framework of
general principles for the participation of beneficiaries in the
Framework Programme. The user manual shall,
in particular,
facilitate the participation of SMEs.

2. The Commission shall ensure that the time between the
submission of applications and the notification of evaluation
results is as short as possible. The evaluation result shall be sent
out within a reasonable time.

Article 48

Strategic Advisory Board on Competitiveness and
Innovation

The Commission shall be advised by a Strategic Advisory Board
on Competitiveness and Innovation composed of representatives
of industry and business associations, including those represent-
ing SMEs, and other experts. Their expertise should be related to
the sectors and issues addressed by the Framework Programme,
including financing, ICT, energy and eco-innovation.

Article 49

Repeal

Decision 96/413/EC is hereby repealed.

Article 50

Transitional measures

(a)

(b)

(c)

the Committee for the Entrepreneurship and Innovation
Programme, called the EIP Management Committee (EIPC);

the Committee for the ICT Policy Support Programme,
called the ICT Management Committee (ICTC);

The implementation measures in pursuance of the objective set
out in Article 27(b) shall be carried out under Decision No 456/
2005/EC until 31 December 2008.

the Committee for the Intelligent Energy Europe Pro-
gramme, called the IEE Management Committee (IEEC).

Thereafter, the actions initiated under Decision No 456/2005/EC
on or before that date shall be administered in accordance with
that Decision, except that the Committee established by that

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Decision shall be replaced by the ICTC established by Article 46
(1)(b) of this Decision.

Article 51

Entry into force

This Decision shall enter into force on the 20th day following its
publication in the Official Journal of the European Union.

For services referred to in Article 21(2)(a), the Commission may,
until 31 December 2007, continue operating the Euro Info
Centre Network and concluding annual specific grant agreements
with its members, funded under this Framework Programme,
and maintain the operational arrangements of the multiannual
programme for enterprise and entrepreneurship established by
Decision 2000/819/EC.

Done at Strasbourg, 24 October 2006.

For the European Parliament
The President
J. BORRELL FONTELLES

For the Council
The President
P. LEHTOMÄKI

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ANNEX I

Indicative budgetary breakdown

The indicative budgetary allocations for the specific programmes shall be the following:

(a)

60 % of the overall budget for the pursuance of the Entrepreneurship and Innovation Programme, of which
approximately one fifth shall be allocated to promoting eco-innovation;

(b)

20 % of the overall budget for the pursuance of the ICT Policy Support Programme;

(c)

20 % of the overall budget for the pursuance of the Intelligent Energy — Europe Programme.

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Implementation arrangements for the Community financial instruments for SMEs referred to in Article 17

ANNEX II

1.

ARRANGEMENTS COMMON TO ALL COMMUNITY FINANCIAL INSTRUMENTS FOR SMES

A.

Budget

The budgetary allocation shall cover the full cost of each instrument, including payment obligations towards
financial intermediaries such as losses from guarantees, management fees for the EIF and the international
financial institutions managing the Union's resources, as well as any other eligible costs or expenses.

The transfer of resources between instruments shall be kept flexible in order to respond to new developments
and changing market conditions during the Framework Programme.

B.

Trust accounts

Separate Trust accounts shall be set up by the EIF and the relevant international financial institutions to hold the
budgetary funds relating to each instrument. Such accounts may be interest-bearing. Interest received on or
before 31 December 2013 may be added to the resources and can be used for the purpose of the respective
instrument.

Payments made by the trustee to honour payment obligations towards financial intermediaries shall be debited
from the corresponding Trust account. Amounts to be paid back by the trustee to the general budget of the
European Union, the trustee's management fees and other eligible costs and expenses shall be debited from the
Trust account in accordance with the terms set out in the agreements between the Commission and the trustee.
The Trust account shall be credited with receipts originating from the Commission, interest and, depending on
the instrument, with the proceeds of realised investments (GIF) or with commitment and guarantee fees as well
as other receivables (SMEG Facility).

After 31 December 2013, any balances on the Trust accounts, other than funds committed and not yet debited
and funds reasonably required to cover eligible costs and expenses, shall be returned to the general budget of the
European Union.

C.

Fees

An appropriate fee policy shall apply to the operation of the instruments. The fees shall be established by the
Commission in line with market practices and shall take into account:

— the overall duration of the respective instrument and the corresponding monitoring requirements which

extend beyond the budgetary commitment period,

— the eligible countries,

— the degree of novelty and complexity of the instrument,

— the associated number of activities such as market research, identification of and negotiations with

intermediaries, structuring of deals, closing, monitoring and reporting.

D.

Visibility and awareness-raising

Each intermediary shall provide an appropriate level of visibility and transparency to the support given by the
Community, including adequate information on the financial opportunities made available by the Framework
Programme.

It shall be ensured that the final beneficiaries are adequately informed of the available financing opportunities.

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2.

IMPLEMENTATION OF THE GIF

A.

Introduction

Fiduciary, management and monitoring aspects shall be agreed between the Commission and the EIF. The
Commission shall apply specific guidelines on treasury management.

B.

Intermediaries

GIF1 and GIF2 shall target commercially oriented intermediaries managed by independent teams combining the
appropriate mix of skills and experience. The intermediaries shall be selected in conformity with best business
and market practices in a transparent and non-discriminatory manner, avoiding any conflict of interest with the
aim of working through a wide range of specialised funds or similar structures.

C.

Eligibility criteria

GIF shall be complementary to the own-resource based activities of the EIB Group including the EIF by adopting
an investment policy involving a higher risk profile, both as regards intermediary funds and their investment
policies.

GIF1

GIF1 shall invest in intermediary venture capital funds and other investment vehicles investing in SMEs up to 10
years old, typically starting from pre-A (seed) and A (early stage) rounds and providing follow-on investment
where appropriate. The usual maximum aggregate investment in an intermediary venture capital fund shall be
25 % of the total capital held by the relevant fund, or up to 50 % for new funds likely to have a particularly
strong catalytic role in the development of venture capital markets for a specific technology or in a specific
region as well as business angels' investment vehicles. The maximum aggregate investment in an intermediary
venture capital fund shall be 50 % in those cases where the fund's investment focus is on SMEs active in eco-
innovation. At least 50 % of the capital invested in any fund shall be provided by investors operating in
circumstances corresponding to normal market conditions (under the ‘market economy investor principle’),
irrespective of the legal nature and ownership structure of the investors providing that part of the capital. No
commitment in a single fund shall exceed EUR 30 million. GIF1 may co-invest with EIF own resources or
resources under the EIB mandate or other resources managed by the EIF.

GIF2

GIF2 shall invest in intermediary risk capital funds investing in SMEs, typically in B and C (expansion) rounds.
The usual maximum aggregate investment in an intermediary risk capital fund shall be 15 % of the total capital
held by the relevant fund, or up to 25 % for:

— new funds likely to have a particularly strong catalytic role in the development of risk capital markets for a

specific technology or in a specific region,

— funds the main investment focus of which is on SMEs active in eco-innovation,

— funds set up by first time management teams.

In the case of co-investment of GIF2 resources with EIF own resources or resources under the EIB mandate or
other resources managed by the EIF, the maximum GIF2 contribution shall be 15 %. At least 50 % of the capital
invested in any fund shall be provided by investors operating in circumstances corresponding to normal market
conditions (under the market economy investor principle), irrespective of the legal nature and ownership
structure of the investors providing that part of the capital. No commitment in a single fund shall exceed
EUR 30 million.

D.

Investment pari passu

The investment made under the GIF in an intermediary fund shall rank pari passu with the private investors.

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E.

Cornerstone role

For new funds likely to have a particularly strong catalytic role in the development of venture capital markets for
a specific technology or in a specific region, EIF may play the role of a cornerstone investor.

F.

Transparency of conditions

EIF shall ensure that
comprehensible.

terms and conditions of

financing under GIF1 and GIF2 are transparent and

G.

Life of the GIF

The GIF shall be a long-term facility which will usually take five- to 12-year positions in intermediary funds. In
any case, life of investments under the GIF shall not exceed 19 years from the time of signature of the delegation
agreement between the Commission and the EIF. Suitable exit strategies shall need to be defined in the
agreements between the EIF and the intermediaries.

H.

Realisation of investments

As most of the investments to be made under the GIF shall be in unquoted, illiquid entities, the realisation of
those investments shall be based on the distribution of the proceeds received by the intermediary from the sale
of their investments in SMEs.

I.

Reinvestment of proceeds from realised investments

Proceeds, including dividends and reimbursements received by the EIF before 31 December 2013, shall be added
to the resources of the GIF and used for the purpose of the GIF.

3.

IMPLEMENTATION OF THE SMEG FACILITY

A.

Introduction

Fiduciary, management and monitoring aspects shall be agreed between the Commission and the EIF and shall
be in line with normal commercial practices. The Commission shall apply specific guidelines on treasury
management.

B.

Intermediaries

Intermediaries shall be chosen from among the guarantee schemes already operating or which may be
established in the eligible countries, including mutual guarantee organisations, and any other appropriate
financial institution. Selection procedures shall be transparent and non-discriminatory, avoiding any conflict of
interest.

Intermediaries shall be selected in conformity with best market practice with regard to the effect on:

— the volume of financing (debt, equity or quasi equity) made available to SMEs, and/or

— SMEs' access to finance, and/or

— risk-taking in SME financing by the intermediary concerned.

C.

Eligibility

The financial criteria governing the eligibility under the SMEG Facility shall be determined for each intermediary
on the basis of their activities, with the aim of reaching as many SMEs as possible. These rules shall reflect
market conditions and practices in the relevant territory.

Financing for the acquisition of tangible and intangible assets, including innovation activities, technological
development and the acquisition of licenses shall be eligible.

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Criteria relating to the fourth SMEG window, (d) securitisation of SME debt financing portfolios, shall include
individual and multi-seller transactions as well as multi-country transactions. Eligibility shall be based on best
market practices, in particular regarding the credit quality and risk diversification of the securitised portfolio.

D.

Terms of the guarantees

The guarantees issued by the EIF on behalf of the Commission under the (a) debt financing, (b) microcredit, and
(c) equity or quasi-equity windows of the SMEG Facility shall cover a part of the risk taken by the financial
intermediary in a financing portfolio of individual transactions. The fourth window of the SMEG Facility, (d)
securitisation, shall involve sharing the risk of certain securitised tranches which are senior to the first loss piece
or leaving the risk of a significant part of the first loss piece to the originator and sharing the risk of the
remaining part.

The guarantees given by the EIF relating to the (a) debt financing, (b) microcredit, (c) equity or quasi equity
windows of the SMEG Facility shall usually rank pari passu with the guarantees or, where appropriate, with the
financing given by the intermediary.

The EIF may charge to a financial intermediary a fee calculated on amounts committed but not used according
to an agreed schedule (commitment fees) as well as guarantee fees. It may also charge fees related to individual
securitisation transactions.

E.

EIF's capped maximum cumulative losses

The cost of the SMEG Facility to the general budget of the European Union shall be capped so that it does not,
under any circumstances, exceed the budgetary allocation made available to the EIF under this SMEG Facility.
There shall be no contingent liability on the budget.

The EIF's obligation to pay its share of the intermediary's losses shall continue until the cumulative amount of
payments made to cover losses from a specific financing portfolio, reduced where appropriate by the cumulative
amount of corresponding loss recoveries, reaches a pre-agreed amount, after which the EIF's guarantee shall be
automatically cancelled.

F.

Loss recoveries and other revenue payable to the Trust account

Any loss recoveries received from a given intermediary shall be credited to the Trust account and shall be taken
into account in the calculation of the EIF's capped maximum cumulative losses towards the intermediary. Any
other revenues, such as commitment fees and guarantee fees, shall be credited to the Trust account and, if
received before 31 December 2013, shall be added to the resources of the SMEG Facility.

G. Duration of the SMEG Facility

Individual SME guarantees may have a maturity of up to 10 years.

4.

IMPLEMENTATION OF THE CBS

A.

Introduction

Implementation details for the Seed Capital action and the Partnership Action, including fiduciary, management
and monitoring aspects, shall be subject to an agreement between the Commission and the EIF or the relevant
international financial institutions.

Intermediaries shall be selected in conformity with best market practices.

Selection procedures for the provision of technical assistance shall be transparent and non-discriminatory,
avoiding any conflict of interest.

B.

Seed Capital Action

The Seed Capital Action shall be operated on a trust basis. The budgetary allocation shall cover the full cost of
the action, including its management fees and any other eligible costs or expenses. The grants provided shall

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support investment funds which include seed capital in their global investment programme, by covering part of
the resulting management costs.

C.

Partnership Action

The Partnership Action shall be operated through the EIF or relevant international financial institutions. It shall
cover technical assistance, management fees and other eligible costs supporting capacity building.

5.

EVALUATION

The external evaluations shall be carried out by independent experts, taking account of the impact of the Growth and
Employment Initiative established under Council Decision 98/347/EC 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 (1) and of the multiannual programme for enterprise and entrepreneurship, and in particular for SMEs. The
external evaluations shall assess the impact of the Community financial instruments for SMEs and provide a qualitative
and quantitative analysis of achieved results, in particular, by assessing the leverage effect and cost-benefit of each
instrument. The evaluation reports shall present statistical data for the Union as a whole and for the individual
Member States and the other participating countries including:

— for the GIF, the number of SMEs reached and the number of jobs created,

— the rate of return to investors,

— for the SMEG Facility, the number and value of loans provided by the financial intermediaries to SMEs, the

number of SMEs reached and the number and value of loans defaulted,

— for the Seed Capital Action, the number of organisations supported and the volume of seed capital investments,

— for the Partnership Action, the number of intermediaries supported and SMEs reached,

— any specific outputs relating to eco-innovation.

Appropriate visibility shall be given to the results and lessons learned from the reports of the external evaluators and
to the sharing of best practices among stakeholders.

(1) OJ L 155, 29.5.1998, p. 43.

L 310/40

EN

Official Journal of the European Union

9.11.2006

Details of the services in support of business and innovation referred to in Article 21

ANNEX III

(a)

Information, feedback, business cooperation and internationalisation services

— disseminating information relating to the functioning and opportunities of the internal market for goods and

services, including signposting to tender opportunities,

— promoting pro-actively Community initiatives, policies and programmes that are relevant for SMEs and

providing information to SMEs on the application procedures for such programmes,

— operating tools to measure the impact of existing legislation on SMEs,

— contributing to the carrying-out of impact assessment studies of the Commission,

— operating other appropriate means to engage SMEs in the European policy-making process,

— assisting SMEs to develop cross-border activities and international networks,

— supporting SMEs to find relevant partners from the private or public sectors through appropriate tools.

(b)

Services for innovation and for the transfer of both technology and knowledge

— disseminating information and raising awareness regarding innovation-related policies, legislation, and support

programmes,

— engaging in the dissemination and exploitation of research results,

— providing brokerage services for technology and knowledge transfer, and for partnership building between all

kinds of innovation actors,

— stimulating the capacity of firms, especially SMEs to innovate,

— facilitating linkage to other innovation services including intellectual property-related services.

(c)

Services encouraging the participation of SMEs in the Seventh Framework RTD Programme

— raising awareness among SMEs regarding the Seventh Framework RTD Programme,

— helping SMEs to identify their research and technological development needs and to find relevant partners,

— assisting SMEs in the preparation and coordination of project proposals for participation in the Seventh

Framework RTD Programme.