On 1 February 2019, the European Commission adopted a Delegated Regulation supplementing the Regulation on European social entrepreneurship funds (the EuSEF Regulation).

The Delegated Regulation:

  • provides for a list of types of conflicts of interest in the context of qualifying social entrepreneurship funds. It covers situations that involve a manager of the qualifying social entrepreneurship fund, an employee of the management company, another qualifying social entrepreneurship fund, a collective investment undertaking or UCITS managed by the same manager or the investor therein (Article 1);
  • sets out the rules pertaining to the obligation by the managers of qualifying social entrepreneurship funds to establish, implement and maintain an effective conflicts of interest policy, and specifies the conflicts of interest policy related requirements (Article 2);
  • sets out a list of steps required as part of the procedures and measures aimed at preventing, managing and monitoring conflicts of interest (Article 3);
  • enumerates the required steps where the measures and procedures set out in the conflicts of interest policy are insufficient to prevent the risks to the interests of the qualifying social entrepreneurship funds and their investors (Article 4);
  • sets out the requirements pertaining to the strategies for the exercise of voting rights to prevent conflicts of interest (Article 5);
  • specifies the requirements, the format and certain conditions pertaining to the disclosure of conflicts of interest (Article 6); and
  • specify the content of certain information referred to in Article 14(1) points (c) to (f) and (l) of the EuSEF Regulation to be provided to investors (Articles 7 to 12). However, the Delegated Regulation does not provide for rules on a uniform way of presentation of information referred to in Article 14(1) point (f) of the EuSEF Regulation.

Article 13 defers the application of the Delegated Regulation to six months following the date of its entry into force. This is to provide managers of the qualifying social entrepreneurship funds time to adapt to the new requirements.

The Delegated Regulation will next be considered by the European Parliament and Council, and will enter into force 20 days after its publication in the Official Journal of the EU.