The House of Commons’ European Scrutiny Committee has published its eleventh report of the 2016-17 Parliamentary session.
The report includes a discussion of the European Commission’s (Commission) legislative proposal for a Regulation to amend the European Venture Capital Funds Regulation (EuVECA) and the European Social Entrepreneurship Funds Regulation (EuSEF). The Regulations were introduced in 2013 to bring together EU-wide investors with unlisted SMEs and social undertakings and to increase non-bank finance within the economy. EuVECA and EuSEF allow fund managers to market these funds across the EU to investors able to commit a minimum of €100,000.
As part of the Capital Markets Union project, the Commission proposes amendment to the EuVECA and EuSEF Regulations to support investment in SMEs and entrepreneurial businesses. The main proposed amendments are designed to increase the uptake of these fund structures being: expanding the number of managers who are able to offer these funds, expanding EuVECA eligible assets beyond the existing definition, and making some changes to fee structures and registration processes to decrease costs for managers.
The report notes that the Economic Secretary to the Treasury has stated on 2 September 2016 that:
- the UK Government supports the changes to the definition of eligible companies for EuVECA investment – the introduction of larger unlisted undertakings and SMEs in growth markets would both ensure that a wider range of businesses can benefit from venture capital funding across the EU and provide investors with a wider range of options when selecting their investment portfolio; and
- the UK Government supports changes to the Regulations to streamline registration processes which otherwise create unnecessary financial burden on firms, and which would focus on ensuring simplicity and proportionality of approach for firms.