Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulation (EU) No 345/2013 on European venture capital funds and Regulation (EU) No 346/2013 on European social entrepreneurship funds
Date: 2016-07-14
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: action programme, capital market, economic growth, entrepreneurship, fund (EU), investment aid, investment company, investment policy, small and medium-sized enterprises, venture capital

EUROPEAN 
COMMISSION 

Brussels, 14.7.2016  
COM(2016) 461 final 

2016/0221 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Regulation (EU) No 345/2013 on European venture capital funds and 
Regulation (EU) No 346/2013 on European social entrepreneurship funds 

(Text with EEA relevance) 

{SWD(2016) 228 final} 
{SWD(2016) 229 final} 

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EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

This proposal aims to amend Regulation (EU) No 345/2013 of the European Parliament and 
of  the  Council  of  17  April  2013  on  European  venture  capital  funds1  ("Regulation  (EU)  No 
345/2013") and Regulation (EU) 346/2013 of the European Parliament and of the Council of 
17 April 2013 on European social entrepreneurship funds ("Regulation (EU) No 346/2013").2   

This proposal should be seen in the broader context of work to unlock investment in growing 
and entrepreneurial businesses. The Investment Plan for Europe3 provides a comprehensive 
strategy to promote jobs, growth and investment. A key strand of the Investment Plan is the 
Capital Markets Union ("CMU") Action Plan,4 which aims to reduce fragmentation in the 
capital markets, remove regulatory barriers to the financing of the economy and increase the 
supply  of  capital  to  businesses  through  establishing  a  genuine  single  capital  market.  The 
Investment  Plan  for  Europe  aims  to  further  mobilise  additional  private  investment  using 
public  funds  through  the  European  Fund  for  Strategic  Investment  ("EFSI")5.  In  this 
framework,  to  catalyse  private  investment  into  venture  capital  markets  in  Europe,  a  Pan-
European fund-of-funds investing in European venture capital is also being established. This 
will  combine  private  sector  capital  with  support  from  the  EU  to  attract  capital  from  major 
institutional investors to the European venture capital asset class and boost the impact of EU 
support for the European venture capital industry.  

funds 

capital 

("EuVECA") 

The  European  venture 
social 
entrepreneurship funds ("EuSEF") fund structures were created to offer new opportunities 
for  market  participants  to  raise  and  invest  capital  in  innovative  small  and  medium-sized 
enterprises  ("SMEs")  and  social  undertakings  throughout  Europe.  SMEs  are  of  great 
importance to the EU economy as a sector that can generate real growth and returns. While 
EuVECA funds support young and innovative companies, EuSEF funds focus on enterprises 
whose aim is to achieve positive social impact. 

and  European 

The  source  and  the  availability  of  financing  for  an  SME  are  important  factors  behind  its 
development, growth and success. In order to promote new areas of growth and move towards 
an innovation-led economy, there is a need to strengthen new avenues of financing to support 
start-ups,  innovative  SMEs  and  social  enterprises.  Since  banks  are  typically  in  a  less  strong 
position  to  provide  these  types  of  financing,  access  to  venture  capital  and  social 
entrepreneurship capital is key to financing the growth of this segment of the EU economy. 

1 

2 

3 

4 

5 

Regulation  (EU)  No  345/2013  of  the  European  Parliament  and  of  the  Council  of  17  April  2013  on 
European venture capital funds (OJ L 115, 25.4.2013, p. 1). 
Regulation  (EU)  No  346/2013  of  the  European  Parliament  and  of  the  Council  of  17  April  2013  on 
European social entrepreneurship funds (OJ L 115, 25.4.2013, p. 18). 
Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European 
Economic and Social Committee, the Committee of the Regions and the European Investment bank: An 
Investment Plan for Europe (COM(2014)0903 final). 
Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European 
Economic and Social Committee and the Committee of the Regions: Action Plan on Building a Capital 
Markets Union  (COM(2015)468 final). 
Regulation  (EU)  2015/1017  of  the  European  Parliament  and  of  the  Council  of  25  June  2015  on  the 
European  Fund  for  Strategic  Investments,  the  European  Investment  Advisory  Hub  and  the  European 
Investment Project Portal and amending Regulations (EU) No 1291/2013 and (EU) No 1316/2013 — 
the European Fund for Strategic Investments (OJ L 169, 1.7.2015, p. 1). 

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The gap in such funding has been cited repeatedly as an obstacle that needs to be addressed in 
order to promote EU economic growth. The EU is also falling further behind the US in terms 
of the venture capital market, rather than catching up. Despite a similar size of economy, the 
United States provide more risk capital to companies, including SMEs. The CMU Action Plan 
reported  that  if  the  EU  venture  capital  markets  were  as  deep  as  in  the  US,  as  much  as  €90 
billion of funds would have been available to finance companies between 2009 and 2014.In 
2014 around 90% of all EU venture capital investments were concentrated in eight Member 
States:  UK,  Germany,  Sweden,  Denmark,  Finland,  the  Netherlands,  France  and  Spain.  But 
even in these more developed markets, venture capital represents less than 0.1% of GDP. 

In order  to further  support the development of these markets,  the Commission is seeking to 
ensure  that  the  EuVECA  and  EuSEF  frameworks  work  as  well  as  possible  in  supporting 
venture  capital  and  social  investment.  The  Commission  therefore  decided  to  anticipate 
reviews required under both Regulations in 2017 by starting a legislative review as part of the 
2016 Regulatory  Fitness and Performance programme ("REFIT")6 initiative. The aim of the 
review  was  to  assess  how  the  two  frameworks  have  performed  so  far,  in  particular  whether 
they  have  been  effective,  efficient,  coherent,  relevant,  and  have  brought  added  value  to  the 
EU. The review identified a number of factors holding back the development of these funds, 
in particular the rules that govern the way the funds invest in assets, the way the managers run 
the  funds,  how  both  Regulations  interact  with  other  existing  investment  fund  laws  and  the 
requirements funds comply with to benefit from the passport across borders. 

This Proposal recognises that there are still other factors outside its scope which are holding 
back  the  development  of  venture  capital  sector  in  the  EU,  such  as  approach  to  non-bank 
finance  or  tax  regimes  which  should  be  addressed  through  other  dedicated  initiatives  by 
Member  States.  Moreover,  these  factors  will  also  be  addressed  in  the  CMU  Action  Plan's 
comprehensive package of measures to support venture capital financing in the EU. 

• 

Consistency with existing policy provisions in the policy area 

This proposal is a part of the CMU Action Plan. The CMU Action Plan is a key priority for 
the  Commission  and  contains  a  range  of  measures  to  remove  capital  market  barriers  and 
facilitate the financing of SMEs. These include, in particular, actions to strengthen feedback 
given by banks declining SME credit applications, to reinforce credit information on SMEs, to 
review  the  fiscal  incentives  and  tax  reliefs  Member  States  offer  to  SMEs  and  investors  in 
SMEs.  

This proposal is a key part of the CMU Action Plan, helping to diversify funding sources and 
unlock capital by making it easier for investors, fund managers and portfolio undertakings to 
benefit  from  EuVECA  and  EuSEF  funds.  Capital  markets  offer  access  to  a  wide  range  of 
funding  providers  and  provide  an  exit  opportunity  for  venture  capital  and  social  impact 
investors, private equity or business angels, which invest in companies at an earlier stage of 
their development. 

• 

Consistency with other Union policies 

This proposal complements the other two pillars of the Investment Plan for Europe: 

– 

6 

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Mobilising  additional  private  investment  using  public  funds.  The  EFSI  has  been 
created  with  the  aim  to  mobilise  at  least  €315  billion  of  additional  investment  by 

Communication from the Commission to the European Parliament, the Council, the European Central 
Bank,  the  European  Economic  and  Social  Committee  and  the  Committee  of  the  Regions:  Regulatory 
Fitness and Performance Programme (REFIT): State of Play and Outlook (COM(2014) 368 final). 

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2018. EFSI invests in a broad range of sectors, and provides direct financial support 
to SMEs, mostly through the European Investment Fund. 

– 

Ensuring  that  investment  finance  reaches  the  real  economy.  The  European 
investment  project  portal  and  a  European  investment  advisory  hub  have  been 
established to help investment finance reach the real economy. 

This proposal also complements Horizon 2020 Framework Programme for Research and 
Innovation7  which  plays  a  significant  role  as  driver  of  SME  financing  through  InnovFin  – 
EU  Finance  for  Innovators,  a  series  of  integrated  and  complementary  financing  tools  and 
advisory  services  offered  by  the  European  Investment  Bank  Group  which  covers  the  entire 
value chain of research and innovation. The Commission also manages a programme for the 
Competitiveness  of  enterprises  and  SMEs  (COSME)8  which  provides  SMEs  with  better 
access to finance, it delivers business support services and promotes entrepreneurship. 

In  the  context  of  the  Single  Market  Strategy9  the  Commission  is  seeking  to  reduce 
administrative  burdens  and  make  Europe  a  more  attractive  destination  for  innovators  from 
both  inside  and  outside  the  EU.  In  particular,  the  Commission  will  also  launch  a  Start-up 
initiative, to initiate a broad assessment of requirements for start-ups and ways to reduce such 
requirements and, where this is not possible, to facilitate compliance. 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The  legal  basis  for  this  proposal  is  Article  114  TFEU,  which  was  the  legal  basis  for 
Regulation (EU) 345/2013 and Regulation (EU) 346/2013. The analysis carried out as part of 
the  Impact  Assessment  report  identifies  that  elements  of  Regulation  (EU)  345/2013  and 
Regulation  (EU)  346/2013  need  to  be  amended  to  improve  and  streamline  the  use  of 
EuVECA  and  EuSEF  funds.  Only  the  EU  co-legislators  have  the  competence  to  make  the 
necessary amendments. 

• 

Subsidiarity 

Action at the EU level should be taken only when the objectives of the proposed action cannot 
be  sufficiently  achieved  by  Member  States  in  the  framework  of  their  national  constitutional 
systems.  

The  internal  market  for  venture  capital  and  social  impact  funds  as  laid  down  in  Regulation 
(EU)  345/2013  and  Regulation  (EU)  346/2013  remains  fragmented  and  further  action  is 
needed  to reinforce the European framework for the cross-border fundraising of such funds. 
This  proposal  would  further  lead  to  convergence  and  a  strengthened  internal  market  for 
venture capital and social entrepreneurship funds. Therefore, the objectives of this Regulation 
can only be achieved by action at the Union level.  

7 

8 

9 

Regulation (EU) No 1291/2013 of the European Parliament and of the Council of 11 December 2013 
establishing Horizon 2020 - the Framework Programme for Research and Innovation (2014-2020) and 
repealing Decision No 1982/2006/EC (OJ L 347, 20.12.2013, p. 104). 
Regulation (EU) No 1287/2013 of the European Parliament and of the Council of 11 December 2013 
establishing  a  Programme  for  the  Competitiveness  of  Enterprises  and  small  and  medium-sized 
enterprises  (COSME)  (2014  to  2020)  and  repealing  Decision  No  1639/2006/EC  (OJ  L  347/33, 
20.12.2013). 
Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European 
Economic  and  Social  Committee  and  the  Committee  of  the  Regions:  Upgrading  the  Single  Market: 
more opportunities for people and business (COM(2015)0550 final). 

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The identified problems concern limitations and divergences in the application of Regulation 
(EU)  345/2013  and  Regulation  (EU)  346/2013  across  Member  States.  Leaving  such 
limitations  and  divergences  risks  generating  more  fragmentation  and  will  lead  to  missed 
opportunities.  Only  co-ordinated  EU  intervention  through  this  proposal  can  resolve  these 
issues.  Therefore,  the  EU  level  is  the  only  appropriate  level  at  which  to  address  these 
problems in order to ensure uniform rules are applied consistently across all Member States.  

• 

Proportionality 

This  proposal  strengthens  the  use  of  EuVECA  and  EuSEF  labels.  Neither  Regulation  (EU) 
345/2013  and  Regulation  (EU)  346/2013  nor  this  proposal  confers  exclusivity  on  the 
EuVECA  and  EuSEF  funds  in  the  sector  of  venture  capital  and  social  impact  funds.  This 
Regulation  maintains  the  exclusive  use  of  EuVECA  and  EuSEF  labels  by  EuVECA  and 
EuSEF  funds  respectively.  The  Member  States  under  Directive  2011/61/EU  on  Alternative 
Investment  Fund  Managers  ("AIFMD")10  remain  free  to  determine  national  regimes  for 
venture capital and social impact funds. 

This  proposal  strikes  a  balance  between  public  interest,  protection  of  investors,  safety  and 
trust considerations as well as related costs. Unnecessary burdens are avoided: it is proposed 
that  management  and  marketing  of  funds  covered  by  Regulation  (EU)  345/2013  and 
Regulation (EU) 346/2013 be opened up to a new group of managers subject to AIFMD and 
only those requirements of Regulation (EU) 345/2013 and Regulation (EU) 346/2013 which 
are sector specific and not required under AIFMD, registration of funds is streamlined and it 
is clarified that fees and similar charges may not be imposed by competent authorities of host 
Member States.  

• 

Choice of the instrument 

The proposed instrument is a Regulation of the European Parliament and the Council. 

3. 

• 

RESULTS  OF  EX-POST  REVIEW,  STAKEHOLDER  CONSULTATIONS 
AND IMPACT ASSESSMENT 

Review of existing legislation 

Regulation  (EU)  345/2013  and  Regulation  (EU)  346/2013  were  included  in  the  European 
Commission's  REFIT  programme.  Further  details  about  this  review  can  be  found  in  the 
section "Regulatory fitness and simplification" below. 

• 

Ex-post evaluation/fitness check 

The Commission decided to accelerate the planned review of Regulation (EU) 345/2013 and 
Regulation (EU) 346/2013 scheduled for 2017 and to start a legislative review as part of the 
2016 REFIT work programme.11

Given  that  Regulation  (EU)  345/2013  and  Regulation  (EU)  346/2013  have  only  been 
applicable since mid-2013, a full evaluation could have not been possible as it is too early to 
firmly conclude on long-term impacts. Instead, the evaluation provides an assessment of the 

10 

11 

Directive  2011/61/EU  of  the  European  Parliament  and  of  the  Council  of  8  June  2011  on  Alternative 
Investment  Fund  Managers  and  amending  Directives  2003/41/EC  and  2009/65/EC  and  Regulations 
(EC) No 1060/2009 and (EU) No 1095/2010 (OJ L 174, 1.7.2011, p. 1). 
Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European 
Economic  and  Social  Committee  and  the  Committee  of  the  Regions:  Commission  Work  Programme 
2016, No time for business as usual (COM(2015) 610 final). 

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initial impact of the Regulations, focusing on the potential factors that may have prevented the 
wider take-up of the funds, in comparison to initial expectations. The review is annexed to the 
Commission's Impact Assessment report and its conclusions are as follows: 

the 

limited 

improved, 

take-up  under  Regulation  (EU)  346/2013 

Regarding  the  effectiveness  of  Regulation  (EU)  345/2013  and  Regulation  (EU)  346/2013, 
while the take-up of the opportunities offered by the Regulation (EU) 345/2013 could still be 
further 
is  clearly 
unsatisfactory. Both Regulation (EU) 345/2013 and Regulation (EU) 346/2013 are limited by 
a range of barriers, in particular limitations on large managers whose portfolios exceed €500 
million  that  may  not  use  the  "EuVECA"  and  "EuSEF"  labels,  a  €100,000  minimum  entry 
ticket for non-professional investors and specific limitations on eligible investments (i.e. the 
definition  of  qualifying  portfolio  undertakings).  For  smaller  funds  the  minimum  €100,000 
investment has been mentioned as a potential barrier, however smaller investments for non-
professional  investors  are  already  available  in  SME  assets,  through  a  number  of  alternative 
tools (e.g. crowdfunding, IPOs etc). EuSEF and EuVECA funds are different instruments for 
the longer term (e.g. these funds have a minimum lock-up period of five years) which requires 
higher thresholds and more investor protection. 

As  of  the  beginning  of  April  2016  there  were  70  EuVECA  funds  registered  in  the  ESMA 
database. For EuSEF funds, there are four funds registered in only two Member States: one 
EuSEF fund registered in France and three EuSEF funds in Germany, with total assets under 
management of € 32 million. 

With  regards  to  efficiency,  the  review  identifies  differing  requirements  in  different 
jurisdictions, in particular set-up fees, additional costs charged by host Member States and the 
required  levels  of  sufficient  own  funds.  In  some  instances,  such  practices  amount  to  gold-
plating  going  beyond  the  requirements  of  the  Regulations  which  in  turn  constitute  an 
impediment to the setting up and cross-border marketing of both EuVECA and EuSEF funds. 
In  terms  of  relevance,  Regulation  (EU)  345/2013  and  Regulation  (EU)  346/2013  are 
recognised as integral to the work on CMU. Regulation (EU) 345/2013 and Regulation (EU) 
346/2013  form  part  of  the  Commission's  initiative  to  increase  non-bank  finance  for  the 
economy, and are aligned with the objectives of the Investment Plan for Europe to increase 
competitiveness and stimulate investments for the purpose of job creation.  

Coherence is achieved due to Regulation (EU) 345/2013 and Regulation (EU) 346/2013 being 
complementary  to  AIFMD,  as  they  cover  small  managers  whose  portfolios  are  below  €500 
million with a view to give them the opportunity to market both EuVECA and EuSEF funds 
across borders. 

In terms of their EU added value, Regulation (EU) 345/2013 and Regulation (EU) 346/2013 
address  a  gap  that  existed  in  legislation  before  their  adoption,  which  aimed  to  create  the 
ability for small managers to market funds across borders and to increase the amount of non-
bank  capital  available  for  investment  in  start-ups  and  social  enterprises.  Further  EU  added 
value derives from the Regulations, being "single rule books" aiming to ensure that investors 
have the best possible and most comparable information for investing in both EuVECA and 
EuSEF funds across Europe. 

• 

Stakeholder consultations 

This  proposal  builds  on  a  number  of  public  consultations,  namely  a  public  consultation 
launched by the Building a Capital Markets Union Green Paper (18 February 2015 to 13 May 
2015), a public consultation on the review of Regulation (EU) 345/2013 and Regulation (EU) 
346/2013 (30 September 2015 to 6 January 2016), a public consultation launched by the Call 

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for  evidence:  EU  regulatory  framework  for  financial  services  (30  September  2015  to  31 
January 2016) and a targeted technical workshop (27 January 2016). 

Results of the consultations suggest that there is widespread support for broadening the range 
of managers permitted to manage and market funds using the "EuVECA" and "EuSEF" labels 
by  including  managers  authorised  under  Article  6  of  Directive  2011/61/EU.  This  proposal 
opens up the market for EuVECA and EuSEF funds to AIFMD-authorised managers so that 
they  can  offer  a  full  range  of  products  to  clients  from  their  home  and  other  Member  States 
which in turn would increase the overall penetration of such funds. Those managers will have 
to  continue  complying  with  the  AIFMD  requirements  and  also  be  compliant  with  selected 
rules of Regulation (EU) 345/2013 and Regulation (EU) 346/2013 respectively.  

Stakeholders  expressed  mixed  views  over  reducing  the  minimum  €100,000  investment 
required  to  invest  in  EuVECA  and  EuSEF  funds  by  non-professional  investors.  Some 
respondents were in favour of reducing this minimum entry ticket. They suggested broadening 
the  range  of  potential  investors  in  order  to  increase  choice  for  non-professional  investors. 
Other  respondents  considered  the  risk  profile,  contractual  obligations  and  illiquid  nature  of 
investing  in  venture  capital  and  social  enterprises  to  not  necessarily  be  suitable  for  retail 
investors  with  less  capital.  Others  noted  that  additional  tailored  investor  protection  rules 
would  be  necessary  to  support  this  group  of  investors,  the  cost  of  which  would  not  offset 
potential  increases  in  investor  base.  A  portfolio  approach  for  individual  investors  similar  to 
that of Regulation (EU) 2015/760 on European long-term investment funds12 was cited as an 
example  of  the  level  of  protection  that  might  be  required.  With  consideration  of  the  above 
arguments, this proposal maintains the entry ticket of €100,000 for th e following reasons: the 
reduced minimum investment would introduce significant investor protection risks and might, 
in turn, hamper investor confidence in EuVECA and EuSEF funds. Lowering the investment 
threshold  would  inevitably  need  to  be  coupled  by  additional  retail  investor  protection 
measures  which  would  both  introduce  costs  and  detract  from  the  ultimate  benefit  of  more 
flexible EuVECA and EuSEF fund regimes. 

The indirect costs on managers for registering EuVECA and EuSEF funds include own funds 
requirements.  Respondents  stressed  that  competent  authorities  vary  in  their  interpretation  of 
"sufficient  own  funds",  with  some  competent  authorities  applying  the  full  requirements  for 
authorised  managers  under  AIFMD.  Respondents  also  questioned  the  compatibility  of 
additional  fees  charged  by  some  host  Member  States  with  Regulation  (EU)  345/2013  and 
Regulation  (EU)  346/2013.  This  proposal  tackles  the  goldplating  issue  by  requesting  the 
European  Securities  and  Markets  Authority  ("ESMA")  to  develop  regulatory  technical 
standards  on  methodologies  for  determining  the  amounts  of  sufficient  own  funds.  It  also 
clarifies that host Member States may not charge fees on cross-border EuVECA and EuSEF 
funds. 

Regulation  (EU)  345/2013  and  Regulation  (EU)  346/2013  prohibit  the  imposition  of  any 
requirements or administrative procedures in relation to the marketing of qualifying venture 
capital funds in host Member States. To ensure that the prohibition is consistently observed in 
all  Member  States,  this  Regulation  explicitly  provides  that  host  Member  States  may  not 
impose fees and other charges.  

The  majority  of  responses  supported  an  expansion  of  the  range  of  assets  eligible  for 
investment  by  EuVECA  funds,  with  the  argument  made  that  the  definition  of  qualifying 
portfolio  undertakings  under  Regulation  (EU)  345/2013  is  too  restrictive.  Reasons  for  this 

12 

Regulation  (EU)  2015/760  of  the  European  Parliament  and  of  the  Council  of  29  April  2013  on 
European long-term investment funds (OJ L 123, 19.5.2015, p. 98). 

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included the difficulty for managers in identifying sufficient investments within the definition 
and the attractiveness of making follow-on investments. Responses also suggested increasing 
the  limit  on  employee  numbers  and  removing  the  turnover  and  balance  sheet  limits.  This 
proposal  permits  investments  in  undertakings  with  up  to  499  employees  (small  mid-caps). 
This  modification  aligns  the  scope  of  eligible  investments  under  Regulation  (EU)  345/2013 
with venture capital programmes managed by the European Investment Fund and supported 
by  EU  financial  programmes  such  as  the  InnovFin  facility.  In  addition,  this  proposal  also 
permits investment in small and medium-sized enterprises listed on a SME growth market as 
defined in Directive 2014/65/EU on markets in financial instruments,13 to allow growth stage 
entities  that  have  already  access  to  other  sources  of  financing  to  also  receive  capital  from 
EuVECA  funds.  This  proposal  also  permits  follow-on  investments  in  a  given  undertaking 
which  after  the  first  investment  does  not  meet  the  definition  of  the  qualifying  portfolio 
undertaking any more. 

• 

Collection and use of expertise 

The  Commission  has  relied  on  information  provided  by  ESMA.  The  Commission  also 
technical  workshop  on  27  January  2016,  bilateral  meetings, 
organised  a 
teleconferences with stakeholders and used statistics provided by industry associations. 

targeted 

• 

Impact assessment 

This proposal is accompanied by an Impact Assessment report that considers a range of policy 
options,  namely  whether  to  allow  AIFMD-authorised  managers  to  use  the  "EuVECA"  and 
"EuSEF"  labels,  whether  to  expand  the  definition  of  qualifying  portfolio  undertakings  in 
Regulation  (EU)  345/2013,  whether  to  maintain  the  minimum  entry  ticket,  and  whether  to 
specify administrative processes and additional measures imposed by host Member States.  

The Regulatory Scrutiny Board delivered a positive opinion with recommendations to further 
improve  the  draft  Impact  Assessment  report  on  13  May  2016.  The  draft  report  has 
subsequently  been  modified  to  take  into  account  comments  from  the  Board.14  The  main 
changes  related  to  the  context  and  timing  of  the  legislative  revision,  the  presentation  of  the 
preferred  options  and  simplification  elements  and  administrative  cost  savings.  The  revised 
Impact  Assessment  report  and  an  Executive  summary  of  the  Impact  Assessment  report  are 
published with this proposal.15 

The  table  below  provides  a  summary  of  the  different  measures  chosen,  together  with  an 
assessment of their impact on relevant stakeholders, benefits and proportionality. 

Preferred policy options 

Cost impacts 

Benefits for  managers 
managing EuVECA and 
EuSEF funds, investors and 
portfolio undertakings 

Proportionality 

Allow 
AIFMD-authorised 
managers to use the "EuVECA" 
and "EuSEF" labels 

the 

of 
Expand 
qualifying 
portfolio 
undertakings in Regulation (EU) 

definition 

As  the  main  features  of  the 
regime  have  been  preserved, 
there will be no additional costs 
for asset managers. 

The main features of the regime 
have  been  preserved  for  small 
asset  managers  and  will  be 
further reinforced. 

The  costs  are  likely  to  be  lower 
than  currently  as  the  adapted 

The  balanced  approach  between 
investor  protection  and  lower 

The  preferred  options 
take 
the  principle  of 
account  of 
proportionality,  as  enshrined  in 
Article 
being 
5(4)  TEU, 
adequate  to  reach the  objectives 
and  not  going  beyond  what  is 

13 

14 
15 

Directive 2014/65/EU  of  the European Parliament  and of  the  Council  of 15  May 2014 on  markets  in 
financial  instruments  and  amending  Directive  2002/92/EC  and  Directive  2011/61/EU  (OJ  L  173, 
12.6.2014, p. 349). 
The opinion of the Regulatory Scrutiny Board is available at: […] 
The Impact Assessment report and the Executive summary are available at: […] 

EN 

   EN 

 
                                                 
345/2013 

Maintain 
minimum investment 

the 

€100,000 

provisions 

Explicit 
in 
Regulation  (EU)  345/2013  and 
Regulation  (EU)  346/2013  to 
burdensome 
avoid 
administrative  processes  and 
additional  measures  (including 
fees  imposed  by  host  Member 
States)  and  non-proportionate 
requirements  imposed  by  home 
Member States. 

rules will explicitly specify how 
proportionality is to be achieved 
in the requirements. 

Allowing  AIFMD-authorised 
managers to use the "EuVECA" 
and  "EuSEF"  labels  is  likely  to 
have  a  positive  impact  on  fees 
paid  by  investors  to  managers, 
as  AIFMD-authorised  managers 
rely  on  more  economies  of 
scale. 

the 

Maintaining 
€100,000 
threshold  also  ensures  new 
consumer 
protection 
requirements, such as depositary 
or  diversification  rules,  are  not 
required. These would otherwise 
the  asset 
increase  costs  for 
managers and indirectly increase 
the fees paid by investors.  

No impact on the EU budget. 

necessary in doing so.  

The selected policy options seek 
the 
right  balance 
to  strike 
between 
interest, 
public 
protection  of  investors,  safety 
and  trust  considerations  as  well 
as  related  costs.  Unnecessary 
burdens are avoided.  

a 

common 

The  proposed  rules  do  not  go 
beyond  what  is  necessary  to 
achieve 
legal 
framework  for  EuVECA  and 
EuSEF  funds.  They  have  been 
carefully considered and tailored 
to  support  the  specific  features, 
growth 
and 
innovativeness  of  the  EuVECA 
and EuSEF sectors. 

potential 

cost and flexibility of the regime 
is preserved. 

There are no additional risks for 
investors. 

AIFMD-authorised  managers 
will  benefit  from  the  EuVECA 
and  EuSEF  funds  frameworks 
and  will  be  able  to  market 
EuVECA  and  EUSEF  funds  to 
non-retail  investors  and  other 
investors 
commit 
€100.000.  They  may  also  target  
institutional  investors  such  as 
insurance  companies  that  are 
already  incentivised  to  invest  in 
this 
framework  under 
Solvency II Delegated Acts. 

fund 

able 

to 

As  more asset  managers will be 
able to use EuVECA and EuSEF 
labels,  this  in  turn  will  have  a 
positive impact on investment in 
SMEs, 
small  mid-caps  and 
social undertakings. 

Broadening 
the  definition  of 
qualifying  portfolio  undertaking 
to  include  larger  entities  will 
permit  portfolios  of  EuVECA 
funds to be diversified and allow 
small  mid-cap  entities  to  have 
access to EuVECA financing. 

Expanding 
the  definition  of 
qualifying  portfolio  undertaking 
in Regulation (EU) 345/2013 by 
allowing 
in  SME 
investment 
growth  markets  will  foster  the 
development of these markets. 

Investors  will  have  access  to 
EuVECA portfolios with greater 
diversification,  and  potentially 
lower risk. 

The  administrative  burden  on 
EuVECA  and  EuSEF  managers 
will be reduced. 

options 

preferred 

initiatives, 

The 
are 
coherent  with  other  legislation 
and 
in  particular 
AIFMD,  SME  growth  markets 
under  Directive  2014/65/EU, 
reinforce  EU 
CMU, 
financing 
programmes, 
including  Competitiveness  of 
SMEs 
enterprises 
(COSME),  Horizon  2020  and 
European  Fund  for  Strategic 
Investments.  

and 

and 

• 

Regulatory fitness and simplification 

Regulation (EU) No 345/2013 or Regulation (EU) 346/2013 are voluntary fund frameworks 
so  their  take  up  depends  on  stakeholder  interest  in  setting  up  such  fund  vehicles.  This 
proposal reduces unnecessary burdens and costs for managers willing to set-up EuVECA and 
EuSEF funds.  

Managers of EuVECA and EuSEF funds are currently subject to registration processes under 
Regulation (EU) No 345/2013 or Regulation (EU) 346/2013 and Directive 2011/61/EU. This 
proposal avoids such duplicative requirements. The review of Regulation (EU) 345/2013 and 
Regulation  (EU)  346/2013  reveals  that  for  the  same  size  of  fund,  sufficient  own  funds  can 

EN 

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range across Member States from €6,500 to  €125,000, the upper threshold  being in line with 
the full capital requirements on AIFMD-authorised managers. To avoid such goldplating, this 
proposal  lays  down  that  the  methodologies  for  determining  the  amount  of  sufficient  own 
funds should be developed in regulatory technical standards by ESMA. In addition, the review 
also  reveals  that  some  competent  authorities  charge  fees  for  marketing  of  cross-border 
EuVECA and EuSEF funds on their territories. The annual fees range from €300 to €3,000, 
being the same levels as for cross-border alternative investment funds marketed by AIFMD-
authorised managers. In addition, some host Member States also charge one-off fees ranging 
from  €300  to  €3,000  when  cross-border  marketing  commences.  This  proposal  prohibits  this 
practice.  

In this respect, the IA Report suggests around €40,500 of cost savings per year per EuVECA 
and EuSEF fund marketed in 27 Member States and total of €32 million in five years in cost 
savings for all new EuVECA funds. 

• 

Fundamental rights 

This  Regulation  respects  fundamental  rights  and  observes  the  principles  recognised  by  the 
Charter of Fundamental Rights of the European Union. It is in line with Article 16 on freedom 
to conduct a business as it opens up marketing of funds under EuVECA and EuSEF labels to 
other regulated managers. It also promotes Article 47 on the right to remedy and to a fair trial 
as it ensures the right of appeal before courts, including situations where no decision is taken 
by competent authorities. 

This Regulation has to be applied in accordance with those rights and principles. 

4. 

BUDGETARY IMPLICATIONS 

This proposal has no implications for the budget of the European Union. 

5. 

• 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

The  amended  Regulation  (EU)  345/2013  and  Regulation  (EU)  346/2013  will  be  evaluated 
four years after they enter into force.  

Monitoring and evaluation will focus on four issues: (i) whether the modified frameworks are 
attractive for AIFMD-authorised managers to market EuVECA and EuSEF funds, (ii) whether 
the frameworks have contributed to an increase in assets under management in EuVECA and 
EuSEF  funds,  and  more  broadly  to  assets  invested  in  venture  capital  and  social  impact 
companies, (iii) whether the  modified  qualifying portfolio undertaking criteria increased  the 
capital  raised,  and  investments  undertaken,  by  EuVECA  funds,  and  (iv)  whether  explicit 
provisions on the prohibition for host Member States to impose fees and  sufficient own funds 
have decreased administration and marketing costs for EuVECA and EuSEF funds.  

Indicators for this monitoring would include (i) overall data on EU venture and social impact 
capital sectors, including venture and social impact capital funds which are neither EuVECA 
nor EuSEF funds, (ii) the number of EuVECA and EuSEF funds and the number of AIFMD-
authorised  managers  managing  and  marketing  EuVECA  and  EuSEF  funds  as  well  as  the 
number  of  EuVECA  and  EuSEF  managers  registered  under  Regulation  (EU)  345/2013  and 
Regulation  (EU)  346/2013,  (iii)  value  of  assets  under  management  in  EuVECA  and  EuSEF 
funds and average size of such funds, (iv) the cost of marketing of cross-border EuVECA and 
EuSEF funds, (v) consistency of level of own funds held by EuVECA and EuSEF managers 
and (vi) cost of setting up funds. Monitoring will be conducted in co-operation with ESMA, 

EN 

   EN 

 
tasked with keeping a register of EuVECA  and  EuSEF  managers  and  EuVECA  and  EuSEF 
funds  and,  where  available,  based  on  the  reporting  under  AIFMD.  Commercial  data  and 
reports concerning the EuVECA and EuSEF funds and EU venture capital and social impact 
companies  will  also  be  reviewed  to  capture  the  impacts  of  EuVECA  and  EuSEF  funds  in  a 
broader perspective. 

• 

Detailed explanation of the specific provisions of the proposal 

Point  (1)  of  Article  1  and  Point  (1)  of  Article  2  allow  managers  of  collective  investment 
undertakings  authorised  under  Article  6  of  Directive  2011/61/EU  that  manage  portfolios  of 
qualifying venture capital and qualifying social entrepreneurship funds to use the ‘EuVECA’ 
and  ‘EuSEF’  designations  respectively  in  relation  to  the  marketing  of  those  funds  in  the 
Union. Such managers will have to register their EuVECA and EuSEF funds and comply with 
specific  provisions  under  Regulation  (EU)  No  345/2013  or  Regulation  (EU)  346/2013 
respectively,  in  particular  30%  threshold  for  non-qualifying  investments,  rules  on  eligible 
investors, specific disclosures to investors and notifications. Such managers managing EuSEF 
funds will also have to comply with provisions setting out procedures to measure the extent to 
which the qualifying portfolio undertakings in which those funds invest achieve measurable 
positive social impacts.  

Point (2) of Article 1 redefines the qualifying portfolio undertaking's definition in Regulation 
(EU) No 345/2013 and includes either unlisted undertakings which employ up to 499 persons 
or small and medium-sized enterprises listed on a SME growth market which are defined in 
points  (12)  and  (13)  of  Article  4(1)  of  Directive  2014/65/EU.  It  also  permits  follow-on 
investments  in  qualifying  portfolio  undertakings,  namely  undertakings  that  do  not  meet  the 
definition criteria but met them at the time of the first investment by the qualifying venture 
capital fund in those undertakings. Point (2) of Article 1 and Point (2) of Article 2 modify the 
definition of the competent authority and the definition of the home Member State.  

Point (3) of Article 1 and Point (3) of Article 2 entrust ESMA with the development of draft 
regulatory  technical  standards  specifying  the  methodologies  for  the  determination  of 
sufficient  own  funds.  The  methodologies  have  to  distinguish  between  internally  and 
externally  managed  EuVECA  and  EuSEF  funds,  take  into  account  the  size  and  internal 
organisation  of  the  managers  registered  under  Regulation  (EU)  No  345/2013  or  Regulation 
(EU) 346/2013 and managers authorised under Article 6 of Directive 2011/61/EU and ensure 
that  the  amounts  constituting  sufficient  own  funds  do  not  exceed  the  amounts  laid  down  in 
Article 9 of Directive 2011/61/EU. 

Point  (4)  of  Article  1  and  Point  (4)  of  Article  2  aim  to  streamline  the  registration  process. 
Firstly,  the  provisions  establish  that  the  competent  authority  of  the  home  Member  State 
informs managers on whether they have been registered no later than two months after they 
have provided all the required information. Secondly, the provisions aim to avoid duplicative 
registration processes under Regulation (EU) No 345/2013 or Regulation (EU) 346/2013 and 
Directive 2011/61/EU. 

Point  (5)  of  Article  1  and  Point  (5)  of  Article  2  lay  down  the  conditions  for  registration  of 
EuVECA and EuSEF funds by managers authorised under Article 6 of Directive 2011/61/EU. 
This Regulation permits the registration of EuVECA and EuSEF funds by those managers in 
Member States other than the Member States in which those managers are authorised. Points 
(5) ensure that any refusal to, or failure to act, register the managers or EuVECA and EuSEF 
funds must be substantiated, notified and subject to a right of appeal before the courts.  

EN 

   EN 

 
Point (6) of Article 1 and Point (6) of Article 2 explicitly provide that fees and other charges 
may  not  be  imposed  by  competent  authorities  of  host  Member  States  in  relation  to  cross-
border  marketing  of  EuVECA  and  EuSEF  funds.  They  also  extend  the  cross-border 
notifications  between  national  supervisory  bodies  as  regards  EuVECA  and  EuSEF  funds 
registered  and  marketed  by  managers  authorised  in  accordance  with  Article  6  of  Directive 
2011/61/EU. 

Point  (7)  of  Article  1  and  Point  (7)  of  Article  2  ensure  that  ESMA  database  includes 
information concerning all managers of EuVECA and EuSEF funds and the funds that they 
market. 

Point (8) of Article 1 and Point (8) of Article 2 modify a date by which Member States should 
notify  rules  applicable  to  breaches  of  Regulation  (EU)  No  345/2013  and  Regulation  (EU) 
346/2013,  including  breaches  by  managers  authorised  under  Article  6  of  Directive 
2011/61/EU that use the ‘EuVECA’ and ‘EuSEF’ designations in relation to the marketing of 
EuVECA and EuSEF funds. 

Point (9) of Article 1 and Point (9) of Article 2 ensure the enforcement of Regulation (EU) No 
345/2013  or  Regulation  (EU)  346/2013  vis-à-vis  managers  authorised  under  Article  6  of 
Directive  2011/61/EU  that  manage  qualifying  venture  capital  and  qualifying  social 
entrepreneurship  funds  and  use  the  ‘EuVECA’  and  ‘EuSEF’  designations  respectively  in 
relation to the marketing of those funds. 

Point (10) of Article 1 and Point (10) of Article 2 lay down the review of Regulation (EU) No 
345/2013  and  Regulation  (EU)  346/2013  would  take  place  four  years  after  the  Regulations' 
entry into application. 

EN 

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2016/0221 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Regulation (EU) No 345/2013 on European venture capital funds and 
Regulation (EU) No 346/2013 on European social entrepreneurship funds 

(Text with EEA relevance) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 114 thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national parliaments, 
Having regard to the opinion of the European Central Bank,16 
Having regard to the opinion of the European Economic and Social Committee17, 
Acting in accordance with the ordinary legislative procedure18, 

Whereas: 

(1) 

Regulation  (EU)  No 345/2013  of  the  European  Parliament  and  of  the  Council19  and 
Regulation  (EU)  No 346/2013  of  the  European  Parliament  and  of  the  Council20  lay 
down  uniform  requirements  and  conditions  for  managers  of  collective  investment 
undertakings that wish to use in the Union the ‘EuVECA’ or ‘EuSEF’ designations for 
funds  and  qualifying  social 
the  marketing  of  qualifying  venture  capital 
entrepreneurship  funds.  Regulation  (EU)  No 345/2013  and  Regulation  (EU) 
No 346/2013 contain rules governing, in particular, qualifying investment, qualifying 
portfolio undertaking and eligible investors. Under Regulation (EU) No 345/2013 and 
Regulation  (EU)  No 346/2013,  only  managers  with  assets  under  management  that  in 
total  do  not  exceed  the  threshold  referred  to  in  point  (b)  of  Article  3(2)  of  Directive 
2011/61/EU of the European Parliament and of the Council21 qualify for the use of the 
‘EuVECA’ and ‘EuSEF’ labels respectively. 

16 
17 
18 
19 

20 

21 

OJ C […], […], p. […]. 
OJ C , , p. . 
Position of the European Parliament of .................... (............) and decision of the Council of ................. 
Regulation  (EU)  No  345/2013  of  the  European  Parliament  and  of  the  Council  of  17  April  2013  on 
European venture capital funds (OJ L 115, 25.4.2013, p. 1). 
Regulation  (EU)  No  346/2013  of  the  European  Parliament  and  of  the  Council  of  17  April  2013  on 
European social entrepreneurship funds (OJ L 115, 25.4.2013, p. 18). 
Directive  2011/61/EU  of  the  European  Parliament  and  of  the  Council  of  8  June  2011  on  Alternative 
Investment  Fund  Managers  and  amending  Directives  2003/41/EC  and  2009/65/EC  and  Regulations 
(EC) No 1060/2009 and (EU) No 1095/2010 (OJ L 174, 1.7.2011, p. 1). 

EN 

13 

   EN 

                                                 
(2) 

(3) 

(4) 

(5) 

(6) 

(7) 

The  Communication  on  the  Investment  Plan  for  Europe  of  16  November  201422 
provides a comprehensive strategy to tackle the lack of finance which is holding back 
Europe's  potential  to  grow  and  to  provide  jobs  for  its  citizens.  It  aims  at  unlocking 
private investment by using public funding and by improving the legal framework for 
the investment environment. 
The  Communication  on  the  Capital  Markets  Union  of  30 September  201523  is  an 
important  element  of  the  Investment  Plan.  It  aims  at  reducing  fragmentation  in  the 
financial  markets  and  increasing  supply  of  capital  to  businesses  through  the 
establishment  of  a  genuine  single  capital  market.  The  Communication  specifies  that 
Regulation (EU) No 345/2013 and Regulation (EU) No 346/2013 need to be amended 
to ensure that the frameworks are best able to support investment in SMEs. 

The market of qualifying venture capital funds and qualifying social entrepreneurship 
funds should be opened to increase scale effects, to reduce transaction and operational 
costs, to improve competition and to strengthen investor choice. Enlarging the base of 
prospective  managers  contributes  to  opening  up  that  market.  It  should  benefit 
undertakings  seeking  investment  by  giving  them  access  to  financing  from  a  greater 
and  more  varied  range  of  risk  investment  sources.  The  scope  of  Regulation  (EU) 
No 345/2013  and  Regulation  (EU)  No 346/2013  should  therefore  be  extended  by 
opening  up  the  use  of  the  ‘EuVECA’  and  ‘EuSEF’  labels  to  managers  of  collective 
investment undertakings authorised under Article 6 of Directive 2011/61/EU.  

In order to keep a high level of investor protection, those managers should continue to 
be subject to the requirements of Directive 2011/61/EU while complying with certain 
provisions of Regulation (EU) No 345/2013 or Regulation (EU) No 346/2013, namely 
the  provisions  concerning  eligible  investments,  targeted  investors  and  information 
requirements. 

In  order  to  ensure  that  competent  authorities  know  about  every  new  use  of  the 
‘EuVECA’  and  ‘EuSEF’  labels,  managers  of  collective  investment  undertakings 
authorised  under  Article 6  of  Directive  2011/61/EU  should  register  each  qualifying 
venture capital fund or qualifying social entrepreneurship fund they intend to manage 
and  market.  This  should  ensure  that  those  managers  may  maintain  their  business 
models  by  being  able  to  manage  collective  investment  undertakings  established  in 
other Member States while further widening the range of products they offer. 

The range of eligible undertakings in which qualifying venture capital funds can invest 
should be expanded to further increase supply of capital to businesses. The definition 
of  qualifying  portfolio  undertakings  should  therefore  include  companies  with  up  to 
499  employees  (small  mid-caps)  and  small  and  medium  enterprises  listed  on  SME 
growth markets. The new investment options should also allow growth stage entities 
that have already access to other sources of financing, such as SME growth markets, to 
receive capital from qualifying venture capital funds which in turn should contribute to 
the development of the SME growth markets. 

(8) 

Qualifying venture capital funds should be allowed to participate on the longer term in 
the  funding  ladder  for  unlisted  SMEs,  unlisted  small-midcaps  and  SMEs  listed  on 

22 

23 

Communication from the Commission to the European Parliament, the Council, the European Central 
Bank, the European Economic and Social Committee, the Committee of the Regions and the European 
Investment bank: An Investment Plan for Europe (COM(2014)903 final). 
Communication from the Commission to the European Parliament, the Council, the European Central 
Bank, the European Economic and Social Committee and the Committee of the Regions: Action Plan 
on Building a Capital Markets Union (COM(2015)468 final). 

EN 

14 

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SME growth markets, to further enhance their potential for making returns from high-
the  first 
growth  companies.  Therefore,  follow-on 
investment should be allowed. 

investments  subsequent 

to 

(9) 

(10) 

Registration  procedures  should  be  cost-effective.  Therefore,  a  registration  of  a 
manager  in  accordance  with  Regulation  (EU)  No  345/2013  and  Regulation  (EU)  No 
346/2013  should  also  serve  the  purpose  of  the  registration  referred  to  in  Directive 
2011/61/EU. Registration decisions and failures to register under Regulation (EU) No 
345/2013  or  Regulation  (EU)  No 346/2013  should,  where  appropriate,  be  subject  to 
judicial review. 

It  is  necessary  to  clarify  that  the  prohibition  for  the  host  Member  State  to  impose 
requirements  or  administrative  procedures  in  relation  to  the  marketing  of  qualifying 
venture  capital  funds  and  qualifying  social  entrepreneurship  funds  in  its  territory 
includes  the  prohibition  to  impose  fees  and  other  charges  on  the  managers  of  those 
funds. 

(11)  Regulation  (EU)  No  345/2013  and  Regulation  (EU)  No 346/2013  now  require  that 
managers  of  qualifying  venture  capital  funds  and  qualifying  social  entrepreneurship 
funds  have  sufficient  own  funds  at  all  times.  To  ensure  a  consistent  understanding 
across  the  Union  of  what  constitutes  sufficient  own  funds  for  those  managers,  the 
European  Supervisory  Authority  (‘ESMA’)  should  be  required  to  draw  up  draft 
regulatory  technical  standards  which  prescribe  the  methodologies  to  determine  what 
constitutes sufficient own funds.  

(12)  Since  this  Regulation  opens  up  the  use  of  the  ‘EuVECA’  and  ‘EuSEF’  labels  to 
managers  of  collective  investment  undertakings  authorised  under  Article  6  of 
Directive 2011/61/EU, the central database, maintained by ESMA in accordance with 
Regulation (EU) No 345/2013 and Regulation (EU) No 346/2013, should also include 
information  concerning  the  qualifying  venture  capital  funds  and  qualifying  social 
entrepreneurship funds that are managed and marketed by those managers. 

(13)  Since the objectives of this Regulation, namely to further strengthen an internal market 
for  qualifying  venture  capital  funds  and  qualifying  social  entrepreneurship  funds  by 
strengthening  the  use  of  ‘EuVECA’  and  ‘EuSEF’  labels,  cannot  be  sufficiently 
achieved by the Member States and can therefore, by reason of its scale and effects, be 
better achieved at Union level, the Union may adopt measures in accordance with the 
principle  of  subsidiarity  as  set  out  in  Article  5  of  the  Treaty  on  European  Union.  In 
accordance with the principle of proportionality, this Regulation does not go beyond 
what  is  necessary  in  order  to  achieve  the  objectives  pursued,  in  accordance  with 
Article 5(4) of the Treaty on European Union. 

(14)  Regulation (EU) No 345/2013 and Regulation (EU) No 346/2013 should be amended 

accordingly, 

HAVE ADOPTED THIS REGULATION: 

Regulation (EU) No 345/2013 is amended as follows: 

(1) 

In Article 2, paragraph 2 is replaced by the following: 

Article 1 

“2.  Articles  5  and  6,  points  (c)  and  (i)  of  Article  13(1)  and  Article  14a  of  this 
Regulation shall apply to managers of collective investment undertakings authorised 
under Article 6 of Directive 2011/61/EU that manage portfolios of qualifying venture 

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15 

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capital  funds  and  intend  to  use  the  designation  ‘EuVECA’  in  relation  to  the 
marketing of those funds in the Union.” 

(2) 

Article 3 is amended as follows: 

(a)  Point (k) is replaced by the following: 

‘home Member State’ means the Member State where the manager of a 

“(k) 
qualifying venture capital fund has its registered office;” 

(b) 

In point (d), point (i) is replaced by the following: 

at the time of the first investment by the qualifying venture capital fund 

“(i) 
in that undertaking complies with one of the following conditions: 

the undertaking is not admitted to trading on a regulated market or on a 
— 
multilateral trading facility (MTF) as defined in points (21) and (22) of Article 
4(1)  of  Directive  2014/65/EU  of  the  European  Parliament  and  the  Council*, 
and employs up to 499 persons; 

the  undertaking  is  a  small  and  medium-sized  enterprise  as  defined  in 
— 
point  (12)  of  Article  4(1)  of  Directive  2014/65/EU  which  is  listed  on  a  SME 
growth market as defined in point (13) of Article 4(1) of that Directive.” 

(c)  Point (m) is replaced by the following: 

“‘(m)  competent authority’ means: 

for  managers  referred  to  in  Article 2(1)  of  this  Regulation,  the 

(i) 
competent authority referred to in Article 3(3)(a) of Directive 2011/61/EU; 

for  managers  referred  to  in  Article 2(2)  of  this  Regulation,  the 

(ii) 
competent authority referred to in Article 7(1) of Directive 2011/61/EU; 

(iii) 
for  qualifying  venture  capital  funds,  the  competent  authority  of  the 
Member  State  in  which  the  qualifying  venture  capital  fund  has  its  registered 
office or head office;” 

_______________________________________________________________ 

* 
Directive  2014/65/EU  of  the  European  Parliament  and  of  the  Council 
of  15  May  2014  on  markets  in  financial  instruments  and  amending  Directive 
2002/92/EC and Directive 2011/61/EU (OJ L 173, 12.6.2014, p. 349). 

(3) 

In Article 10, the following paragraph 3 is inserted: 

“3.  ESMA  shall  develop  draft  regulatory  technical  standards  specifying  the 
methodologies 
to  determine  what  constitutes  sufficient  own  funds.  Those 
methodologies shall: 

(a) 
distinguish between what constitutes sufficient own funds for internally 
managed  qualifying  venture  capital  funds  and  sufficient  own  funds  for 
managers of qualifying venture capital funds which are external managers; 

(b) 
take  into  account  the  size  and  internal  organisation  of  the  managers 
referred to in paragraph 1 of Article 2 in order to ensure neutral conditions of 
competition between those managers and managers referred to in paragraph 2 
of that Article; 

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(c) 
ensure  that  the  amounts  resulting  from  the  application  of  those 
methodologies do not exceed the amounts laid down in Article 9 of Directive 
2011/61/EU. 

ESMA shall submit those draft regulatory technical standards to the Commission by 
[18 months after the date of entry into application of this Regulation]. 

Power  is  delegated  to  the  Commission  to  adopt  the  regulatory  technical  standards 
referred to in the first subparagraph of this paragraph in accordance with Articles 10 
to 14 of Regulation (EU) No 1095/2010.”; 

(4) 

In Article 14 the following paragraphs 3a and 3b are inserted: 

“3a.  The  managers  referred  to  in  paragraph  1  shall  be  informed  by  the  competent 
authority  of  their  home  Member  State  on  whether  they  have  been  registered  as  a 
manager of a qualifying venture capital fund no later than two months after they have 
provided all the information referred to in paragraph 1. 

3b.  A registration in accordance with this Article shall constitute a registration for 
the purposes of Article 3(3) of Directive 2011/61/EU.”; 

(5) 

The following Articles 14a and 14b are inserted: 

“Article 14a 

1.  Managers of collective investment undertakings authorised under Article 6 of 
Directive  2011/61/EU  shall  apply  for  registration  of  the  qualifying  venture  capital 
funds for which they intend to use the designation ‘EuVECA’. 

2. 
The application for registration referred to in paragraph 1 shall be made to the 
competent  authority  of  the  qualifying  venture  capital  fund  and  shall  include  the 
following: 

the fund rules or instruments of incorporation of the qualifying venture 

(a) 
capital fund; 

(b) 

(c) 

the information on the identity of the depositary; 

the information referred to in Article 14(1). 

For  the  purposes  of  point  (c)  of  the  first  subparagraph,  the  information  on  the 
arrangements  made  for  complying  with  the  requirements  of  Chapter  II  of  this 
Regulation shall refer to the arrangements made for complying with Articles 5 and 6 
and points (c) and (i) of Article 13(1). 

The  competent  authority  of  the  qualifying  venture  capital  fund  shall  register 
3. 
every fund as a qualifying venture capital fund if the manager of the fund meets the 
conditions laid down in Article 14(2). 

The  managers  referred  to  in  paragraph  1  shall  be  informed  by  the  competent 
4. 
authority  of  the  qualifying  venture  capital  fund  on  whether  that  fund  has  been 
registered as a qualifying venture capital fund no later than two  months after those 
managers have provided all the information referred to in paragraph 2. 

Registration  of  qualifying  venture  capital  funds  under  paragraphs  1,  2  and  3 
5. 
shall be valid in the entire territory of the Union and shall allow marketing of those 
funds under the designation ‘EuVECA’ throughout the Union. 

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Article 14b 

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Any refusal to register the managers referred to in Article 14 and the funds referred 
to in Article 14a shall be substantiated, notified to the managers referred to in those 
Articles and subject to a right of appeal before the courts. This right of appeal shall 
also exist where no decision on a registration has been taken two months after it has 
been applied for.”; 

(6) 

In Article 16, paragraphs 1 and 2 are replaced by the following: 

“1.  The  competent  authorities  of  the  home  Member  States  shall  notify  the 
competent  authorities  of  the  host  Member  States  and  ESMA  immediately  of  any 
registration of a manager of a qualifying venture capital fund, any addition of a new 
qualifying venture capital fund, any addition of a new domicile for the establishment 
of  a  qualifying  venture  capital  fund  or  of  any  addition  of  a  new  Member  State  in 
which a manager of a qualifying venture capital fund intends to market those funds. 

For  the  purposes  of  the  first  subparagraph,  the  competent  authority  of  a  qualifying 
venture  capital  fund  that  has  been  registered  in  accordance  with  Article 14a  shall 
immediately notify that registration to the competent authority of the home Member 
State of the manager of that qualifying venture capital fund. 

2. 
The competent authorities of the host Member States shall not impose on the 
managers  of  qualifying  venture  capital  funds  any  requirements  or  administrative 
procedures in relation to the marketing of their qualifying venture capital funds, nor 
shall they require any approval of that marketing prior to its commencement. 

The  requirements  or  administrative  procedures  referred  to  in  the  first  subparagraph 
shall include fees and other charges.” 

(7)  Article 17 is replaced by the following: 

“Article 17 

ESMA  shall  maintain  a  central  database,  publicly  accessible  on  the  internet,  listing 
all managers of qualifying venture capital fund using the designation 'EuVECA' and 
the qualifying venture capital funds for which they use it, as well as the countries in 
which those funds are marketed.”; 

(8) 

In Article 20(2), the date of “16 May 2015” is replaced by that of “[24 months after the 
date of entry into application of this Regulation]”; 

(9)  Article 21 is amended as follows: 

(a)  Point (c) of paragraph 1 is replaced by the following: 

uses the designation ‘EuVECA’ but is not registered in accordance with 
“(c) 
Article 14, or the qualifying venture capital fund is not registered in accordance 
with Article 14a;” 

(b)  Point (e) of paragraph 1 is replaced by the following: 

has obtained registration through false statements or any other irregular 

“(e) 
means, in breach of Article 14 or Article 14a;” 

(c)  Point (a) of paragraph 2 is replaced by the following: 

“(a) 
take measures to ensure that the manager of a qualifying venture capital 
fund concerned complies with Articles 5 and 6, points (a) and (b) of Article 7 
and Articles 12 to14a;” 

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(10)  In Article 26(2)(a), the date of “22 July 2017” is replaced by that of “[48 months after 

the date of entry into application of this Regulation]”. 

Regulation (EU) No 346/2013 is amended as follows: 

(1) 

In Article 2, paragraph 2 is replaced by the following: 

Article 2 

“2.  Articles 5 and 6, 10, 13(2), points (d), (e) and (f) of Article 14(1) and Article 
15a of this Regulation shall apply to managers of collective investment undertakings 
authorised  under  Article  6  of  Directive  2011/61/EU  that  manage  portfolios  of 
qualifying  social entrepreneurship funds and intend  to use the designation ‘EuSEF’ 
in relation to the marketing of those funds in the Union.” 

(2) 

Article 3 is amended as follows: 

(a)  Point (k) is replaced by the following: 

“‘home  Member  State’  means  the  Member  State  where  the  manager  of  a 
qualifying social entrepreneurship fund has its registered office;” 

(b)  Point (m) is replaced by the following: 

“‘(m)  competent authority’ means: 

for  managers  referred  to  in  Article 2(1)  of  this  Regulation,  the 

(i) 
competent authority referred to in Article 3(3)(a) of Directive 2011/61/EU; 

for  managers  referred  to  in  Article 2(2)  of  this  Regulation,  the 

(ii) 
competent authority referred to in Article 7(1) of Directive 2011/61/EU; 

for qualifying social entrepreneurship funds, the competent authority of 
(iii) 
the Member State in which the qualifying social entrepreneurship fund has its 
registered office or head office;” 

(3) 

In Article 11, the following paragraph 3 is added: 

“3.  ESMA  shall  develop  draft  regulatory  technical  standards  specifying  the 
methodologies 
to  determine  what  constitutes  sufficient  own  funds.  Those 
methodologies shall: 

(a) 

(b) 

distinguish  between  what  constitutes  sufficient  own  funds  for  internally 
managed qualifying social entrepreneurship funds and sufficient own funds for 
managers  of  qualifying  social  entrepreneurship  funds  which  are  external 
managers; 

take into account the size and internal organisation of the managers referred to 
in paragraph 1 of Article 2 in order to ensure neutral conditions of competition 
between  those  managers  and  managers  referred  to  in  paragraph 2  of  that 
Article; 

(c) 

ensure that the amounts resulting from the application of those methodologies 
do not exceed the amounts laid down in Article 9 of Directive 2011/61/EU. 

ESMA shall submit those draft regulatory technical standards to the Commission by 
[18 months after the date of entry into application of this Regulation]. 

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Power  is  delegated  to  the  Commission  to  adopt  the  regulatory  technical  standards 
referred to in the first subparagraph of this paragraph in accordance with Articles 10 
to 14 of Regulation (EU) No 1095/2010.”; 

(4) 

In Article 15 the following paragraphs 3a and 3b are inserted: 

“3a.  The  managers  referred  to  in  paragraph  1  shall  be  informed  by  the  competent 
authority  of  their  home  Member  State  on  whether  they  have  been  registered  as  a 
manager of a qualifying social entrepreneurship fund no later than two months after 
they have provided all the information referred to in paragraph 1. 

3b.  A registration in accordance with this Article shall constitute a registration for 
the purposes of Article 3(3) of Directive 2011/61/EU.”; 

(5) 

The following Articles 15a and 15b are inserted: 

“Article 15a 

1.  Managers of collective investment undertakings authorised under Article 6 of 
the  qualifying  social 
Directive  2011/61/EU  shall  apply  for  registration  of 
entrepreneurship funds for which they intend to use the designation ‘EuSEF’. 

2. 
The application for registration referred to in paragraph 1 shall be made to the 
competent authority of the qualifying social entrepreneurship fund and shall include 
the following: 

the  fund  rules  or  instruments  of  incorporation  of  the  qualifying  social 

(a) 
entrepreneurship fund; 

(b) 

(c) 

the information on the identity of the depositary; 

the information referred to in Article 15(1). 

For  the  purposes  of  point  (c)  of  the  first  subparagraph,  the  information  on  the 
arrangements  made  for  complying  with  the  requirements  of  Chapter  II  of  this 
Regulation shall refer to the arrangements made for complying with Articles 5, 6 and 
10, Article 13(2) and points (d), (e) and (f) of Article 14(1). 

3. 
The  competent  authority  of  the  qualifying  social  entrepreneurship  fund  shall 
register every fund as a qualifying social entrepreneurship fund if the manager of the 
fund meets the conditions laid down in Article 15(2). 

4. 
The  managers  referred  to  in  paragraph  1  shall  be  informed  by  the  competent 
authority  of  the  qualifying  social  entrepreneurship  fund  on  whether  that  fund  has 
been registered as a qualifying social entrepreneurship fund no later than two months 
after those managers have provided all the information referred to in paragraph 2. 

5. 
Registration of qualifying social entrepreneurship funds under paragraphs 1, 2 
and 3 shall be valid in the entire territory of the Union and shall allow marketing of 
those funds under the designation ‘EuSEF’ throughout the Union. 

Article 15b 

Any refusal to register the managers referred to in Article 15 and the funds referred 
to in Article 15a shall be substantiated, notified to the managers referred to in those 
Articles and subject to a right of appeal before the courts. This right of appeal shall 
also exist where no decision on a registration has been taken two months after it has 
been applied for.”; 

(6) 

In Article 17, paragraphs 1 and 2 are replaced by the following: 

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“1.  The  competent  authorities  of  the  home  Member  States  shall  notify  the 
competent  authorities  of  the  host  Member  States  and  ESMA  immediately  of  any 
registration of a manager of a qualifying social entrepreneurship fund, any addition 
of a new qualifying social entrepreneurship fund, any addition of a new domicile for 
the establishment of a qualifying social entrepreneurship fund or of any addition of a 
new Member State in which a manager of a qualifying social entrepreneurship fund 
intends to market those funds. 

For  the  purposes  of  the  first  subparagraph,  the  competent  authority  of  a  qualifying 
social entrepreneurship fund that has been registered in accordance with Article 15a 
shall  immediately  notify  that  registration  to  the  competent  authority  of  the  home 
Member State of the manager of that qualifying social entrepreneurship fund. 

The competent authorities of the host Member States shall not impose on the 
2. 
managers  of  qualifying  social  entrepreneurship  funds  any  requirements  or 
administrative  procedures  in  relation  to  the  marketing  of  their  qualifying  social 
entrepreneurship funds, nor shall they require any approval of that marketing prior to 
its commencement. 

The  requirements  or  administrative  procedures  referred  to  in  the  first  subparagraph 
shall include fees and other charges.”; 

(7)  Article 18 is replaced by the following: 

“Article 18 

ESMA  shall  maintain  a  central  database,  publicly  accessible  on  the  internet,  listing 
all managers of qualifying venture capital fund using the designation 'EuSEF' and the 
qualifying  social  entrepreneurship  funds  for  which  they  use  it,  as  well  as  the 
countries in which those funds are marketed.”; 

(8) 

 In Article 21(2), the date of “16 May 2015” is replaced by that of “[24 months after the 
date of entry into application of this Regulation]”; 

(9)  Article 22 is amended as follows: 

(a)  Point (c) of paragraph 1 is replaced by the following: 

“(c) 
uses  the  designation  ‘EuSEF’  but  is  not  registered  in  accordance  with 
Article 15,  or  the  qualifying  social  entrepreneurship  fund  is  not  registered  in 
accordance with Article 15a;” 

(b)  Point (e) of paragraph 1 is replaced by the following: 

has obtained registration through false statements or any other irregular 

“(e) 
means, in breach of Article 15 or Article 15a;” 

(c)  Point (a) of paragraph 2 is replaced by the following: 

take  measures  to  ensure  that  the  manager  of  a  qualifying  social 
“(a) 
entrepreneurship fund concerned complies with Articles 5 and 6, points (a) and 
(b) of Article 7 and Articles 13 to 15a;” 

(10)  In Article 27(2)(a), the date of “22 July 2017” is replaced by that of “[48 months after 

the date of entry into application of this Regulation]”. 

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

Article 3 

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

Done at Brussels, 

For the European Parliament 
The President 

For the Council 
The President 

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