In July 2016, the European Commission published proposals to amend the European Venture Capital and Social Entrepreneurship Funds Regulations; and submitted them to the Parliament and Council for possible adoption under the co-decision procedure.
The aim of the proposals was to boost investment in small and medium sized innovative companies by (a) making it easier and cheaper for European fund managers to establish and market qualifying VC and social entrepreneurship funds; and (b) expanding the range of companies in which these funds can invest. (There’s more detail in our contemporary post.)
On 3 August 2016, the European Central Bank (ECB) received a request from the European Council for an Opinion on the Commission’s proposals. The ECB published its Opinion on 12 September 2016. The ECB supports the Commission’s aims, describes them as a “key part” of the Capital Markets Union Action Plan, and believes they “should make it easier for investors, fund managers and [qualifying] portfolio undertakings … to benefit from European venture capital … funds and European social entrepreneurship … funds” in the future. Long story short, the ECB has 2 main suggestions: (a) when a fund manager registers a qualifying VC or social entrepreneurship fund under the amended regulations, it should include the LEI for the fund and its authorised manager, and the ISIN for the units of, or shares in, that fund; and (b) the same information should be included in the proposed European Securities & Markets Authority database of funds and fund managers. These proposals seem uncontroversial, but it’s not clear whether they will be adopted.
In the meantime, the Presidency of the Council has just published the first Presidency compromise version of the Commission’s proposed regulation.
The compromise doesn’t reflect the ECB’s suggestions (yet). Instead, it makes it clear (or clearer) that the manager of a qualifying / registered European Venture Capital Fund or a European Social Entrepreneurship Fund will be (a) obliged to comply with the Alternative Investment Fund Managers Directive at all times; (b) liable, in accordance with that Directive, for any infringements of the amended VC or Social Entrepreneurship Funds Regulations; and liable for losses or damages resulting from non-compliance with the amended Regulations.
No doubt further compromise texts are on their way. We’ll see.