Regulation (EU) No 345/2013 of the European Parliament and of the Council of 17 April 2013 on European venture capital funds Text with EEA relevance

CHAPTER I

SUBJECT MATTER, SCOPE AND DEFINITIONS

Article 1

This Regulation lays down uniform requirements and conditions for managers of collective investment undertakings that wish to use the designation ‘EuVECA’ in relation to the marketing of qualifying venture capital funds in the Union, thereby contributing to the smooth functioning of the internal market.

It also lays down uniform rules for the marketing of qualifying venture capital funds to eligible investors across the Union, for the portfolio composition of qualifying venture capital funds, for the eligible investment instruments and techniques to be used by qualifying venture capital funds as well as for the organisation, conduct and transparency of managers that market qualifying venture capital funds across the Union.

Article 2

This Regulation applies to managers of collective investment undertakings as defined in point (a) of Article 3 that meet the following conditions:

(a) their assets under management in total do not exceed the threshold referred to in point (b) of Article 3(2) of Directive 2011/61/EU;

(b) they are established in the Union;

(c) they are subject to registration with the competent authorities of their home Member State in accordance with point (a) of Article 3(3) of Directive 2011/61/EU; and

(d) they manage portfolios of qualifying venture capital funds.

Article 3

For the purposes of this Regulation, the following definitions apply:

(a) ‘collective investment undertaking’ means an AIF as defined in point (a) of Article 4(1) of Directive 2011/61/EU;

(b) ‘qualifying venture capital fund’ means a collective investment undertaking that: (i) intends to invest at least 70 % of its aggregate capital contributions and uncalled committed capital in assets that are qualifying investments, calculated on the basis of amounts investible after deduction of all relevant costs and holdings in cash and cash equivalents, within a time frame laid down in its rules or instruments of incorporation; (ii) does not use more than 30 % of its aggregate capital contributions and uncalled committed capital for the acquisition of assets other than qualifying investments, calculated on the basis of amounts investible after deduction of all relevant costs and holdings in cash and cash equivalents; (iii) is established within the territory of a Member State;

(c) ‘manager of a qualifying venture capital fund’ means a legal person the regular business of which is managing at least one qualifying venture capital fund;

(d) ‘qualifying portfolio undertaking’ means an undertaking that: (i) at the time of the first investment by the qualifying venture capital fund in that undertaking complies with one of the following conditions: — the undertaking is not admitted to trading on a regulated market or on a multilateral trading facility, as defined in points (21) and (22) of Article 4(1) of Directive 2014/65/EU of the European Parliament and the Council (¹), and employs up to 499 persons; — the undertaking is a small and medium-sized enterprise, as defined in point (13) of Article 4(1) of Directive 2014/65/EU, which is listed on an SME growth market as defined in point (12) of Article 4(1) of that Directive; (ii) is not itself a collective investment undertaking; (iii) is not one or more of the following: — a credit institution as defined in point (1) of Article 4 of Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (²), — an investment firm as defined in point (1) of Article 4(1) of Directive 2004/39/EC, — an insurance undertaking as defined in point (1) of Article 13 of Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (³), — a financial holding company as defined in point (19) of Article 4 of Directive 2006/48/EC, or — a mixed-activity holding company as defined in point (20) of Article 4 of Directive 2006/48/EC; (iv) is established within the territory of a Member State, or in a third country provided that the third country: — is not listed as a Non-Cooperative Country and Territory by the Financial Action Task Force on Anti-Money Laundering and Terrorist Financing, — has signed an agreement with the home Member State of the manager of a qualifying venture capital fund and with each other Member State in which the units or shares of the qualifying venture capital fund are intended to be marketed to ensure that the third country fully complies with the standards laid down in Article 26 of the OECD Model Tax Convention on Income and on Capital and ensures an effective exchange of information in tax matters, including any multilateral tax agreements;

(e) ‘qualifying investments’ means any of the following instruments: (i) equity or quasi-equity instruments that are issued by: — a qualifying portfolio undertaking and acquired directly by the qualifying venture capital fund from the qualifying portfolio undertaking, — a qualifying portfolio undertaking in exchange for an equity security issued by the qualifying portfolio undertaking, or — an undertaking of which the qualifying portfolio undertaking is a majority-owned subsidiary and which is acquired by the qualifying venture capital fund in exchange for an equity instrument issued by the qualifying portfolio undertaking; (ii) secured or unsecured loans granted by the qualifying venture capital fund to a qualifying portfolio undertaking in which the qualifying venture capital fund already holds qualifying investments, provided that no more than 30 % of the aggregate capital contributions and uncalled committed capital in the qualifying venture capital fund is used for such loans; (iii) shares of a qualifying portfolio undertaking acquired from existing shareholders of that undertaking; (iv) units or shares of one or several other qualifying venture capital funds, provided that those qualifying venture capital funds have not themselves invested more than 10 % of their aggregate capital contributions and uncalled committed capital in qualifying venture capital funds;

(f) ‘relevant costs’ means all fees, charges and expenses which are directly or indirectly borne by investors and which are agreed between the manager of a qualifying venture capital fund and the investors therein;

(g) ‘equity’ means ownership interest in an undertaking, represented by the shares or other forms of participation in the capital of the qualifying portfolio undertaking, issued to its investors;

(h) ‘quasi-equity’ means any type of financing instrument which is a combination of equity and debt, where the return on the instrument is linked to the profit or loss of the qualifying portfolio undertaking and where the repayment of the instrument in the event of default is not fully secured;

(i) ‘marketing’ means a direct or indirect offering or placement at the initiative of the manager of a qualifying venture capital fund, or on its behalf, of units or shares of a venture capital fund it manages to or with investors domiciled or with a registered office in the Union;

(j) ‘committed capital’ means any commitment pursuant to which an investor is obliged, within the time frame laid down in the rules or instruments of incorporation of the qualifying venture capital fund, to acquire an interest in, or to make capital contributions to, that fund;

(k) ‘home Member State’ means the Member State in which the manager of a qualifying venture capital fund has its registered office;

(l) ‘host Member State’ means the Member State, other than the home Member State, where the manager of a qualifying venture capital fund markets qualifying venture capital funds in accordance with this Regulation;

(m) ‘competent authority’ means: (i) for managers as referred to in Article 2(1) of this Regulation, the competent authority referred to in point (a) of Article 3(3) of Directive 2011/61/EU; (ii) for managers as referred to in Article 2(2) of this Regulation, the competent authority referred to in Article 7(1) of Directive 2011/61/EU; (iii) for qualifying venture capital funds, the competent authority of the Member State in which the qualifying venture capital fund is established;

(n) ‘competent authority of the host Member State’ means the authority of a Member State other than the home Member State in which the qualifying venture capital fund is marketed;

(o) ‘pre-marketing’ means provision of information or communication, direct or indirect, on investment strategies or investment ideas by a manager of a qualifying venture capital fund, or on its behalf, to potential investors domiciled or with a registered office in the Union in order to test their interest in a qualifying venture capital fund which is not yet established, or in a qualifying venture capital fund which is established, but not yet notified for marketing in accordance with Article 15, in that Member State where the potential investors are domiciled or have their registered office, and which in each case does not amount to an offer or placement to the potential investor to invest in the units or shares of that qualifying venture capital fund.

In regard to point (c) of the first subparagraph, where the legal form of a qualifying venture capital fund permits internal management and where the governing body of the fund does not appoint an external manager, the qualifying venture capital fund itself shall be registered as the manager of a qualifying venture capital fund in accordance with Article 14. A qualifying venture capital fund that is registered as an internal manager of a qualifying venture capital fund shall not be registered as an external manager of a qualifying venture capital fund of other collective investment undertakings.

CHAPTER II

CONDITIONS FOR THE USE OF THE DESIGNATION ‘EuVECA’

Article 4

Managers of qualifying venture capital funds that comply with the requirements set out in this Chapter shall be entitled to use the designation ‘EuVECA’ in relation to the marketing of qualifying venture capital funds in the Union.

Article 4a

A manager of a qualifying venture capital fund may engage in pre-marketing in the Union, except where the information presented to potential investors:

(a) is sufficient to allow investors to commit to acquiring units or shares of a particular qualifying venture capital fund;

(b) amounts to subscription forms or similar documents whether in a draft or a final form; or

(c) amounts to constitutional documents, a prospectus or offering documents of a not-yet-established qualifying venture capital fund in a final form.

Where a draft prospectus or offering documents are provided, they shall not contain information sufficient to allow investors to take an investment decision and shall clearly state that:

(a) they do not constitute an offer or an invitation to subscribe to units or shares of a qualifying venture capital fund; and

(b) the information presented therein should not be relied upon because it is incomplete and may be subject to change.

Any subscription by professional investors, within 18 months of the manager of a qualifying venture capital fund having begun pre-marketing, to units or shares of a qualifying venture capital fund referred to in the information provided in the context of pre-marketing, or of a qualifying venture capital fund established as a result of the pre-marketing, shall be considered to be the result of marketing and shall be subject to the applicable notification procedures referred to in Article 15.

Article 5

Article 6

Managers of qualifying venture capital funds shall market the units and shares of qualifying venture capital funds exclusively to investors which are considered to be professional clients in accordance with Section I of Annex II to Directive 2004/39/EC or which may, on request, be treated as professional clients in accordance with Section II of Annex II to Directive 2004/39/EC, or to other investors that:

(a) commit to investing a minimum of EUR 100 000 ; and

(b) state in writing, in a separate document from the contract to be concluded for the commitment to invest, that they are aware of the risks associated with the envisaged commitment or investment.

Article 7

Managers of qualifying venture capital funds shall, in relation to the qualifying venture capital funds they manage:

(a) act honestly, fairly and with due skill, care and diligence in conducting their activities;

(b) apply appropriate policies and procedures for preventing malpractices that can reasonably be expected to affect the interests of the investors and the qualifying portfolio undertakings;

(c) conduct their business activities in such a way as to promote the best interests of the qualifying venture capital funds they manage, the investors therein and the integrity of the market;

(d) apply a high level of diligence in the selection and ongoing monitoring of investments in qualifying portfolio undertakings;

(e) possess adequate knowledge and understanding of the qualifying portfolio undertakings in which they invest;

(f) treat their investors fairly. This shall not preclude more favourable treatment of private investors than of a public investor, provided that such treatment is compatible with State aid rules, in particular Article 21 of Commission Regulation (EU) No 651/2014 (⁶), and is disclosed in the fund’s rules or instruments of incorporation;

(g) ensure that no investor obtains preferential treatment, unless such preferential treatment is disclosed in the rules or instruments of incorporation of the qualifying venture capital fund.

Article 8

Article 9

Managers of qualifying venture capital funds shall identify in particular those conflicts of interest that may arise between:

(a) managers of qualifying venture capital funds, persons who effectively conduct the business of those managers, employees of, or any person who directly or indirectly controls or is controlled by, those managers, and the qualifying venture capital fund managed by those managers, or the investors therein;

(b) the qualifying venture capital fund or the investors therein, and another qualifying venture capital fund managed by the same manager, or the investors therein;

(c) the qualifying venture capital fund or the investors therein, and a collective investment undertaking or UCITS managed by the same manager, or the investors therein.

The Commission shall be empowered to adopt delegated acts in accordance with Article 25 specifying:

(a) the types of conflicts of interest referred to in paragraph 2 of this Article;

(b) the steps that managers of qualifying venture capital funds must take, in terms of structures and organisational and administrative procedures in order to identify, prevent, manage, monitor and disclose conflicts of interest.

Article 10

Article 11

Article 12

The annual report shall be produced in accordance with existing reporting standards and the terms agreed between the managers of qualifying venture capital funds and the investors. Managers of qualifying venture capital funds shall provide the report to investors on request. Managers of qualifying venture capital funds and investors may agree to make additional disclosures to each other.

Article 13

Managers of qualifying venture capital funds shall, in relation to the qualifying venture capital funds that they manage, inform their investors, prior to the investment decision of the latter, in a clear and understandable manner, of the following:

(a) the identity of that manager and any other service providers contracted by that manager in relation to their management of the qualifying venture capital funds, and a description of their duties;

(b) the amount of own funds available to that manager for maintaining the adequate human and technical resources necessary for the proper management of its qualifying venture capital funds;

(c) a description of the investment strategy and objectives of the qualifying venture capital fund, including: (i) the types of the qualifying portfolio undertakings in which it intends to invest; (ii) any other qualifying venture capital funds in which it intends to invest; (iii) the types of qualifying portfolio undertakings in which any other qualifying venture capital fund, as referred to in point (ii), intends to invest; (iv) the non-qualifying investments which it intends to make; (v) the techniques that it intends to employ; and (vi) any applicable investment restrictions;

(d) a description of the risk profile of the qualifying venture capital fund and any risks associated with the assets in which the fund may invest or investment techniques that may be employed;

(e) a description of the qualifying venture capital fund’s valuation procedure and of the pricing methodology for the valuation of assets, including the methods used for the valuation of qualifying portfolio undertakings;

(f) a description of how the remuneration of the manager of a qualifying venture capital fund is calculated;

(g) a description of all relevant costs and of the maximum amounts thereof;

(h) where available, the historical financial performance of the qualifying venture capital fund;

(i) the business support services and the other support activities provided by the manager of a qualifying venture capital fund or arranged through third parties in order to facilitate the development, growth or in some other respect the ongoing operations of the qualifying portfolio undertakings in which the qualifying venture capital fund invests, or, where these services or activities are not provided, an explanation of that fact;

(j) a description of the procedures by which the qualifying venture capital fund may change its investment strategy or investment policy, or both.

CHAPTER III

SUPERVISION AND ADMINISTRATIVE COOPERATION

Article 14

Managers of qualifying venture capital funds that intend to use designation ‘EuVECA’ for the marketing of their qualifying venture capital funds shall inform the competent authority of their home Member State of their intention and shall provide the following information:

(a) the identity of the persons who effectively conduct the business of managing qualifying venture capital funds;

(b) the identity of the qualifying venture capital funds, the units or shares of which are to be marketed and their investment strategies;

(c) information on the arrangements made for complying with the requirements of Chapter II;

(d) a list of Member States where the manager of a qualifying venture capital fund intends to market each qualifying venture capital fund.

The competent authority of the home Member State shall only register the manager of a qualifying venture capital fund if the following conditions are met:

(a) the persons who effectively conduct the business of managing qualifying venture capital funds are of sufficiently good repute and are sufficiently experienced also in relation to the investment strategies pursued by the manager of a qualifying venture capital fund;

(b) the information required under paragraph 1 is complete;