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 and the obligation to appoint a depositary.

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

As part of its drive to improve the functioning of Europe’s capital markets and to develop alternative sources of finance for SMEs, including venture capital, in July 2016 the European Commission announced amendments to the EuVECA Regulation to encourage more fund managers to establish funds under this regime.

Following the political agreement between co-legislators reached on 30 May 2017, the European Parliament gave its approval on the revised text on 14 September 2017, followed by the Council on 9 October 2017. The new EuVECA Regulation is expected to be published in the Official Journal in the next month.

EuVECA II contains several helpful changes that address issues raised by Invest Europe members. These include greater flexibility on eligible investments, a reduction in cost by limiting the impact of host fees and charges and an enlarged scope for the regime.

Invest Europe position

Invest Europe acted as a constructive interlocutor throughout the legislative process of the EuVECA review. Important areas of focus for the industry included the EuVECA investment restrictions and an appropriate and proportionate level of own fund requirements.

Going forward, Invest Europe will monitor the implementation of the revised 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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