CELEX: 51983PC0241(02)
Language: en
Date: 1983-06-07
Title: PROPOSAL FOR A COUNCIL DECISION EMPOWERING THE COMMISSION TO HELP FINANCE INNOVATION WITHIN THE COMMUNITY

No C 178/4                             Official Journal of the European Communities                              5.7.83
                                                            II
                                                    (Preparatory Acts)
                                               COMMISSION
             Proposal for a Council Decision empowering the Commission to help finance innovation
                                                  within the Community
                              (Submitted by the Commission to the Council on 7 June 1983)
THE COUNCIL OF THE EUROPEAN                                     deriving both from their restricted access to capital
COMMUNITIES,                                                    markets, their under-capitalization and the absence or
                                                                inadequacy of security they can offer, and from the
Having regard to the Treaty establishing the                    inherent characteristics of innovative investment;
European Economic Community, and in particular
Article 235 thereof,                                            Whereas a Community measure to promote the
                                                                financing of innovative small and medium-sized
                                                                businesses, which would supplement existing national
Having regard to Council Decision 83/200/EEC of
                                                                schemes or spur national measures, would add
19 April 1983 empowering the Commission to
                                                                momentum to the overall volume of resources
contract loans under the New Community Instrument
                                                                allocated to the financing of innovation within the
for the purpose of promoting investment within the
                                                                Community;
Community ('), and in particular Article 2 thereof,
                                                                Whereas a Community measure should also
Having regard to the proposal from the Commission,              encourage the supply of own funds to innovative
                                                                small and medium-sized businesses; whereas financial
Having regard to the opinion of the              European       intermediaries should be encouraged to participate,
Parliament,                                                     by sharing the risk which they take in financing
                                                                innovation;
Having regard to the opinion of the Economic and
Social Committee,                                               Whereas a Community measure should finance, in
                                                                priority, projects of a Community character resulting
Whereas the introduction and propagation of                     from     Community       research   and    development
innovation is a stage in the adaptation of production           programmes or from cross-border cooperation within
structures, which the European Council has                      the Community;
acknowledged by calling for the development and
strengthening of a Community-wide policy on                     Whereas, by taking the form of a combination of a
technology and innovation;                                      loan from borrowed resources with a grant from
                                                                budgetary resources, a Community measure would be
Whereas innovation involves an abnormally high risk,            adapted to the introduction on the market of a new
deferred profitability, and the need for a very large           product, process or technology, while being the most
market;                                                         effective method in view of the volume of the
                                                                budgetary resources committed;
Whereas small and medium-sized businesses are
a source and vehicle of innovation, particularly in             Whereas it is necessary to authorize a specific tranche
fields such as new information technologies,                    of the borrowings;
biotechnologies, energy technologies, food-processing
technologies, flexible manufacturing systems and new            Whereas it is necessary to adopt specific provisions in
materials;                                                      order to take account of the specific characteristics of
                                                                innovative projects and of innovative small and
Whereas     innovative small and             medium-sized       medium-sized businesses;
businesses encounter specific financing difficulties
                                                                Whereas borrowings under the New Community
                                                                Instrument are guaranteed by the budget;
                                                                Whereas, to take due account of the characteristics of
(») OJ No L 112, 28. 4. 1983, p. 26.                            this kind of project, relevant appropriations should be
 ---pagebreak--- 5. 7. 83                          Official Journal of the European Communities                             N o C 178/5
entered in the general budget of the Communities              provide capital for a small or medium-sized
following budgetary procedures;                               innovatory enterprise. In this case, the intermediary
                                                              shall service the European Innovation Loan and bear
Whereas the European Investment Bank (hereinafter
                                                              the underlying risk and shall provide the same
called 'the Bank') has expressed its readiness to par-
                                                              amount in the form of a shareholding or in equivalent
ticipate in implementing this action,
                                                              form.
HAS DECIDED AS FOLLOWS:
                                                                                       Article 5
                          Article 1                           The cost of the interest moratorium offered during
A tranche of borrowings is hereby authorized, the             the initial years of the European Innovation Loans
amount not to exceed the equivalent of 100 million            shall be entered in the general budget of the
ECU of principal.                                             European Communities and the equivalent amount
                                                              transferred to the Bank, concomitantly with the
                          Article 2                           payment of loans.
The borrowings contracted pursuant to Article 1
hereof shall be used exclusively to fund, under the                                    Article 6
name of 'European Innovation Loans', innovative
                                                              Pursuant to this Decision the Bank shall be
projects in sectors which introduce new products,
                                                              empowered to grant and administer European
devise     new     processes     or     apply    innovatory
                                                              Innovation Loans as well as the interest moratorium.
technologies. These loans shall benefit small and
                                                              This shall be covered by a cooperation agreement
medium-sized        enterprises     established    in    the
                                                              between the Commission and the Bank. The Bank
Community, and shall be granted via appropriate
                                                              shall carry out all operations deriving from the
financial intermediaries.
                                                              powers received in the name, on behalf and at the
Notwithstanding Article 3 (2) and Article 5 of                risk of the Community.
Decision 83/200/EEC, the European Innovation
Loans shall be granted in accordance with the                 The Commission shall decide upon the eligibility of
following provisions.                                         the financing requests. For requests approved by the
                                                              Commission, the Bank shall grant the European
                          Article 3                           Innovation Loans in conformity with this Decision,
                                                              and according to the criteria laid down in the
The European Innovation Loan shall be finance:
                                                              cooperation agreement.
— normally for a period of 10 years;
— for which no security is required from                 the  In order to implement this Decision:
     beneficiary business,
— of which the interest service during the first years        — financial      intermediaries'    requests   shall be
     is borne by the general budget of the European                submitted simultaneously to the Commission and
     Communities; the discounted cost of this interest             to the Bank. The Bank shall obtain a favourable
     moratorium may not exceed 20 % of the                         opinion from the Member State concerned,
     principal,
                                                              — the Commission and the Bank shall jointly
— which can only be granted to a business if the                   conclude the financing contracts with the inter-
     financial intermediary also grants to the business,           mediaries,
     at the same time and at the intermediary's risk, an
     equivalent amount either as own funds or as              — the financial intermediary shall render account to
     finance with characteristics close to those of the            the Bank, which shall inform the Commission, on
     European Innovation Loan.                                     the use of the funds transferred to him.
In case of default by the innovatory enterprise,
 neither    the    Commission        nor     the    financial
 intermediary shall press their claims for the                                         Article 7
 repayment of their debts before those of ordinary
                                                              Two years at the latest after adoption of this
 creditors have been settled.
                                                               Decision, and in any case when loans granted total 80
                                                               million ECU, the Council shall examine, on the basis
                          Article 4
                                                               of a report by the Commission, whether the principles
The European Innovation Loan may also be granted               and conditions of the scheme are still adapted to the
 to the financial intermediary if it is to be used to          needs which led to their creation.