EU Publishes Regulation on European Venture Capital Funds

On March 25, the EU’s Official Journal published the regulation on European venture capital funds (VCFs), which will become applicable throughout the EU on July 22, 2013.

The purpose of the regulation is to make it easier for venture capitalists to raise funds across Europe.  Supplementing the AIFMD regime, it creates a special “European VCF” designation for qualifying VCF funds, which will enable them to be marketed under that label across the EU, sidestepping member states’ national offering and marketing rules.  It is hoped the designation will also act as a quality brandmark.

To be a “qualifying VCF,” a fund must invest a minimum of 70% of its aggregate capital contributions and uncalled committed capital in SME equity or quasi-equity instruments and fulfill various conditions and obligations relating to its structure, investor base and management.  Regulation.