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State aid: Commission consults on draft Guidelines for supporting risk finance investments
The European Commission is consulting the public on draft guidelines on how Member States can support the provision of risk finance to small and medium sized enterprises (SMEs). Based on the results of a first consultation in July 2012 (see IP/12/789), the draft proposes more flexibility in defining eligible companies and forms of financing. It is aimed at further enhancing the ability of SMEs to access finance, in line with the objectives of the Europe 2020 Strategy. Comments can be submitted until 17 September 2013. In light of the submissions, the Commission will then adopt new guidelines at the end of 2013.
The new risk finance regime is designed to strengthen legal certainty, increase flexibility and reduce red tape. In order to provide for effective guidance, the draft Risk Finance Guidelines describes compatibility criteria for three groups of measures:
measures targeted at companies that do not fulfill all criteria to qualify for an exemption under the General Block Exemption Regulation (GBER, see IP/08/1110 and MEMO/08/482), such as companies that after the first investment round exceed the thresholds for qualifying as an SME under the EU definition and hence become mid-caps; innovative mid-caps carrying out research and development and innovation activities; or companies requiring more than €10 million investment;
measures which divert from the risk financing parameters set out in the GBER, such as measures with private investor participation below the ratios required in the GBER; measures with financial design parameters above the ceilings provided for in the GBER; or measures providing for fiscal incentives to corporate investors;
aid schemes to which the GBER does not apply in view of their large budget and high potential of distorting competition.
The text of the draft Risk Finance Guidelines is available at:
In 2006, the Commission adopted the current Risk Capital Guidelines (see IP/06/1015 and MEMO/06/295). They were amended on 1 December 2010 (see IP/10/1636). The current guidelines, which are due to expire at the end of 2013, will be extended until 30 June 2014.
In the context of its state aid modernisation initiative (SAM) (see IP/12/458), the European Commission has launched a review of the Risk Capital Guidelines, which outline the criteria for assessing the compatibility of public support measures in support of risk capital investments in SMEs. The review started with a (see IP/12/789), seeking stakeholders' views on the functioning of the guidelines since their adoption in 2006 and in particular on market developments concerning the supply of equity and debt finance to SMEs. The outcome of the public consultation revealed that the basic principles enshrined in those Guidelines provided a sound basis for channelling Member States' resources to the intended target SMEs while limiting risks of crowding out private initiatives. However, the replies also pointed out that the Risk Capital Guidelines were considered to be too restrictive both in terms of eligible SMEs, forms of financing, aid instruments and funding structures. In light of the comments received, the Commission published an Issues Paper setting out the directions of the reform and held a workshop in December 2012 to discuss the reform proposals with the Member States and other stakeholders.
The Risk Finance Guidelines are meant to be complementary to the new risk finance provisions proposed in the draft General Block Exemption Regulation, which was published for public consultation on 8 May 2013. Comments received in the public consultation on the revision of the risk capital state aid rules and following the workshop in December 2012, have already been taken into account for the draft General Block Exemption Regulation. The draft General Block Exemption Regulation proposes to exempt additional measures from the notification obligation by extending the scope of its risk finance provisions in terms of eligible SMEs, forms of finance and aid instruments, compared to the rules in the current General Block Exemption Regulation. This needs to be accompanied by clear and operational rules in the new Risk Finance Guidelines.