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EuVECA - VC fund regulation

Background

Following the adoption of the AIFMD, European legislators recognised the need to protect venture capital from certain AIFMD rules that are unsuitable for the sector, such as high capital requirements or the requirement to appoint a depositary.

To address this problem, European legislators adopted the European Venture Capital Fund Regulation (EuVECA), which aims to allow venture capitalists to market their funds to investors across the EU through a voluntary EU-wide passport (so-called “European Venture Capital Fund” label) without having to meet all of the demands of the AIFM Directive. The EuVECA Regulation entered into force in 2013. 

While the Regulation was not due for general review until July 2017, the European Commission decided to bring the review forward in line with the objectives of the Capital Markets Union Action Plan to develop alternative sources of finance for SMEs, including venture capital. Against this background, on 14 July 2016, the European Commission published a proposal to review the EUVECA regime, broadening the types of companies an EuVECA is allowed to invest in, allowing AIFMD fund managers to market EuVECA labelled funds and ensuring that member states' fees and charges are prohibited. 

Invest Europe position

Invest Europe responded to the recent consultation and will continue to act as a constructive interlocutor throughout the legislative process of EuVECA II. Important areas of focus for the industry include: relaxation of the EuVECA investment restrictions and the potential extension of the EuVECA regime to third countries.

In the meantime, Invest Europe will also continue to monitor the implementation of the Regulation across member states, to ensure that no additional undue burdens and obligations are imposed on managers using the EuVECA label.

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EuVECA Essentials

6 March 2014, EVCA

An introduction to the European Venture Capital Fund Regulation.

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