European Social Entrepreneurship Funds

ESMA 2018 Regulatory Work Program

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On February 8, the European Securities and Markets Authority (“ESMA”) published its 2018 regulatory work program, which provides a detailed breakdown of the individual work streams outlined in the 2018 work program. The areas covered in the regulatory work program include the following initiatives: European Social Entrepreneurship Funds (EuSEF) Regulation, European Venture Capital Funds (EuVECA) Regulation, EMIR, MiFID II, Market Abuse Regulation (MAR), Securities Financing Transactions Regulation (SFTR) and Proposed Regulation establishing a framework for the recovery and resolution of central counterparties (CCPs).

The 2018 regulatory work program can be found here.

New Rules on Venture Capital Funds Adopted by the European Parliament

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New rules to facilitate innovative and socially beneficial companies accessing capital in the European Union were adopted by the European Parliament on September 14, 2017.

The European Parliament approved changes to Regulation (EU) no. 345/2013 on European venture capital funds (“EuVECA“) and Regulation (EU) no. 346/2013 European social entrepreneurship funds (“EuSEF“), aimed at attracting more investors for start-ups.

The changes are intended to reduce costs and barriers to entry for funds that lend to entrepreneurs and small to mid-sized enterprises. They include widening the range of managers eligible to create and manage EuVECA and EuSEF funds to those with assets under management of more than €500 million. Venture capital funds will also be able to invest in unlisted companies with up to 499 employees, allowing managers to diversify their funds. It is hoped that widening the range of eligible undertakings in which qualifying venture capital funds can invest will make them more appealing for investors and increase the flow of capital for businesses. The European Securities and Markets Authority has been charged with ensuring that funds are consistently registered and supervised across the EU.

The changes to the legislation are designed to make the cross-border marketing of both types of funds easier and less expensive as part of the EU’s efforts to create an integrated capital market, namely the Capital Markets Union.

The revised rules will enter into force 20 days after being published in the Official Journal of the European Union.

ESMA Publishes Q&A Paper on Regulation of European Venture Capital Funds and European Social Entrepreneurship Funds

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On March 26, the European Securities and Markets Authority (ESMA) published a Questions and Answers paper on the application of the European Social Entrepreneurship Funds (EuSEF) Regulation (Regulation 346/2013) and the European Venture Capital Funds Regulation (EuVECA) (Regulation 345/2013).

These regulations provide a common EU framework for managers of EuSEF and EuVECA that are registered with the competent authorities.

The paper seeks to answer questions relating to the practical application of the regulations, in order to encourage the adoption of common supervisory approaches among competent authorities.  Q&A Paper.