Shearman & Sterling LLP | Financial Regulatory Developments Focus | EU Extends the Scope of the Framework for Collective Investment in Unlisted SMEs
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  • EU Extends the Scope of the Framework for Collective Investment in Unlisted SMEs
    11/10/2017
    A Regulation amending the European Venture Capital Funds Regulation and European Social Entrepreneurship Fund Regulation has been published in the Official Journal of the European Union. This Amending Regulation makes amendments to the EuVECA Regulation and EuSEF Regulation in order to stimulate further venture capital and social investment. EuVECA and EuSEF funds have, since July 2013, provided a means for cross-border private investment in small and medium sized entities. Funds complying with these regulations receive a marketing passport which allows them to collect capital from investors across the EU, who are able to commit at least €100,000. EuVECA and EuSEF managers do not need to be authorized under the Alternative Investment Fund Managers Directive.

    The Amending Regulation, which takes effect from November 30, 2017, makes a number of changes to the EuVECA Regulation and EuSEF Regulation in order to: (i) extend the range of managers eligible to market and manage EuVECA and EuSEF funds to include larger fund managers, i.e. those with assets under management of more than €500 million; (ii) expand EuVECA eligible assets, to allow investment in small mid-caps, and SMEs listed on SME growth markets (a new type of trading platform to be introduced when the revised Markets in Financial Instruments Directive and Markets in Financial Instruments Regulation come into effect from January 3, 2018). This is expected to allow more companies to benefit from EuVECA investments and make investments more attractive through greater diversification of risk; and (iii) decrease the costs by explicitly prohibiting fees imposed by national regulators of host Member States, simplifying registration processes and determining the minimum capital required to become a manager. The Amending Regulation also gives the European Securities and Markets Authority an oversight role to ensure that the funds are consistently registered and supervised.

    View the Amending Regulation (EU) 2017/1991
    TOPIC: Funds