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, amendments to the EuVECA Regulation to encourage more fund managers to establish funds under this regime were proposed by the Commission and approved by the Council and European Parliament. 

EuVECA II, of application since 1st March 2018, 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 2018

6 June 2018, Invest Europe

An introduction to the voluntary passport regime offered by the revised European Venture Capital Fund Regulation.

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