Commission Implementing Regulation (EU) No 964/2014 of 11 September 2014 laying down rules for the application of Regulation (EU) No 1303/2013 of the European Parliament and of the Council as regards standard terms and conditions for financial instruments

Article 1

Subject matter

This Regulation lays down rules concerning the standard terms and conditions for the following financial instruments:

(a) a portfolio risk sharing loan (‘RS Loan’);

(b) a capped portfolio guarantee;

(c) a renovation loan;

(d) a co-investment facility;

(e) an Urban Development Fund.

Article 2

Additional terms and conditions

Managing authorities may include other terms and conditions in addition to those to be included in the funding agreement in accordance with the terms and conditions for the selected financial instrument set out in this Regulation.

Article 3

Grants under the standard terms and conditions

Article 4

Governance under the standard terms and conditions

Article 5

Funding agreement under the standard terms and conditions

The funding agreement shall contain as annexes:

(a) the ex-ante assessment required under Article 37 of Regulation (EU) No 1303/2013 justifying the financial instrument;

(b) the business plan of the financial instrument including the investment strategy and a description of the investment, guarantee or lending policy;

(c) the description of the instrument which must be aligned with the detailed standard terms and conditions of the instrument and which must fix the financial parameters of the financial instruments;

(d) the monitoring and reporting templates.

Article 6

RS Loan

Article 7

Capped Portfolio Guarantee

Article 8

Renovation Loan

Article 8a

Co-investment Facility

Article 8b

Urban Development Fund

Article 9

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

ANNEX I

1. PREAMBLE

Name of the Country/Region

Identification of the Management Authority

Common Code for Identification (CCI) No of programme

Title of the related programme

Relevant section of the programme referring to the financial instrument

Name of the ESIF

Identification of the priority axis

Regions where the financial instrument shall be implemented (NUTS level or other)

Amount allocated to the financial instrument by the managing authority

Amount from ESIF

Amount from national public (programme public contribution)

Amount from national private (programme private contribution)

Amount from national public and private outside programme contribution

Expected starting date of the financial instrument

Completion date of the financial instrument

Contact information for communications between the parties

Purpose of the agreement

2. DEFINITIONS

3. SCOPE AND OBJECTIVE

The description of the financial instrument, including its investment strategy or policy, the type of support to be provided.

4. POLICY OBJECTIVES AND EX-ANTE ASSESSMENT

The criteria for eligibility for financial intermediaries if applicable as well as additional operational requirements transposing the policy objectives of the instrument, financial products to be offered, final recipients targeted, and envisaged combination with grants.

5. FINAL RECIPIENTS

Identification and eligibility of the final recipients (target group) of the financial instrument.

6. FINANCIAL ADVANTAGE AND STATE AID

Evaluation of the financial advantage by the programme public contribution and alignment with the State aid rules.

7. INVESTMENT, GUARANTEE OR LENDING POLICY

Provisions regarding investment, guarantee or lending policy especially regarding portfolio diversification (risk, sector, geographical zones, size) and existing portfolio of the financial intermediary.

8. ACTIVITIES AND OPERATIONS

Business plan or equivalent documents for the financial instrument to be implemented, including the expected leverage effect referred to in Article 37(2)(c) of Regulation (EU) No 1303/2013.

Definition of eligible activities

A clear definition of the activities assigned and the limits thereof, concerning in particular the modification of activities and the portfolio management (losses and default and recovery process).

9. TARGET RESULTS

Definition of the activities, results and impact indicators associated with base line measurements and expected targets.

The target results the financial instrument is expected to achieve as contribution to the specific objectives and results of the relevant priority or measure. List of indicators in accordance with the operational programme and Article 46 of Regulation (EU) No 1303/2013.

10. ROLE AND LIABILITY OF THE FINANCIAL INTERMEDIARY: RISK AND REVENUE SHARING

Identifications and Provisions on the liability of the financial intermediary and of other entities involved in the implementation of the financial instrument.

Explanation of risk valuation and risk and profit sharing of the different parties.

Provisions in line with Article 6 of Commission Delegated Regulation (EU) No 480/2014 (¹) concerning role, liabilities and responsibility of bodies implementing financial instruments.

11. MANAGEMENT AND AUDIT OF THE FINANCIAL INSTRUMENT

Relevant provisions in line with Article 9 of Delegated Regulation (EU) No 480/2014 concerning management and control of financial instruments.

Provisions on the audit requirements, such as minimum requirements for documentation to be kept at the level of the financial intermediary (and at the level of the fund of funds), and requirements in relation to the maintenance of separate records for the different forms of support in compliance with Article 37(7) and (8) of Regulation (EU) No 1303/2013 (where applicable), including provisions and requirements regarding access to documents by audit authorities of the Member State, Commission auditors and the European Court of Auditors in order to ensure a clear audit trail in accordance with Article 40 of Regulation (EU) No 1303/2013.

Provisions in order for the audit authority to comply with guidance in relation with audit methodology, check list and availability of documents.

Provisions on management verifications and audit arrangements in line with paragraphs 1 and 2 of Article 40 of Regulation (EU) No 1303/2013 in cases where the bodies implementing the financial instruments are the EIB or other international financial institutions in which a Member State is a shareholder.

12. PROGRAMME CONTRIBUTION

Provisions in line with Article 38(10) of Regulation (EU) No 1303/2013 concerning the modalities of transfer and management of programme contributions.

Where appropriate, provisions on a framework of conditions for the contributions from the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural development and the Future Maritime and Fisheries Fund.

13. PAYMENTS

Requirements and procedures for managing payments in tranches, respecting the ceilings of Article 41 of Regulation (EU) No 1303/2013 and for the forecast of deal flows.

Conditions for a possible withdrawal of the programme public contribution to the financial instrument.

Rules concerning which supporting documents are required to justify the payments from the managing authority to the financial intermediary.

Conditions under which payments from the managing authority to the financial intermediary must be suspended or interrupted.

14. ACCOUNT MANAGEMENT

Details of the accounts. including if applicable requirements for fiduciary/separate accounting as set out in Article 38(6) of Regulation (EU) No 1303/2013.

Provisions explaining how the account of the financial instrument is managed. Including conditions governing the use of bank accounts: counterparty risks (if applicable), acceptable treasury operations, responsibilities of parties concerned, remedial actions in the event of excessive balances on fiduciary accounts, record keeping and reporting.

15. ADMINISTRATIVE COSTS

Provisions on the remuneration of the financial intermediary on the calculation and payment of management costs and fees to the financial intermediary and in accordance with Articles 12 and 13 of Delegated Regulation (EU) No 480/2014.

The provision must include the maximum rate applicable and the reference amounts for the calculation.

16. DURATION AND ELIGIBILITY OF EXPENDITURE AT CLOSURE

The date for the entry into force of the agreement.

The dates defining the implementing period of the financial instrument and the eligibility period.

Provisions on the possibility of extension, and termination of the programme public contribution to the financial intermediary for the financial instrument, including the conditions for early termination or withdrawal of programme contributions, exit strategies and the winding-up of financial instruments (including the fund of funds where applicable).

Provisions regarding the eligible expenditure at closure of the programme in accordance with Article 42 of Regulation (EU) No 1303/2013.

17. RE-UTILISATION OF RESOURCES PAID BY THE MANAGING AUTHORITY (INCLUDING INTEREST YIELDED)

Provisions on the re-utilisation of resources paid by the managing authority.

Requirements and procedures for managing interest and other gains attributable to support from ESIF in accordance with Article 43 of Regulation (EU) No 1303/2013.

Provisions regarding the re-use of resources attributable to the support of the ESI Funds until the end of the eligibility period in compliance with Article 44 of Regulation (EU) No 1303/2013 and, where applicable, provisions regarding differentiated treatment as referred to in Article 43a.

Provisions regarding the use of resources attributable to the support of the ESI Funds following the end of the eligibility period in compliance with Article 45 of Regulation (EU) No 1303/2013.

18. CAPITALISATION OF INTEREST RATE SUBSIDIES, GUARANTEE FEE SUBSIDIES (IF APPLICABLE)

Provisions in line with Article 11 of the Delegated Regulation (EU) No 480/2014 referred to in Article 42(1) of Regulation (EU) No 1303/2013 concerning capitalisation of annual instalments for interest rate subsidies and guarantee fee subsidies.

19. GOVERNANCE OF THE FINANCIAL INSTRUMENT

Provisions describing an appropriate governance structure of the financial instrument to ensure that decisions concerning loans/guarantees/investments, divestments and risk diversification are implemented in accordance with the applicable legal requirements and market standards.

Provisions on the investment board of the financial instrument (role, independence, criteria).

20. CONFLICTS OF INTEREST

Clear procedures need to be established to deal with conflicts of interest.

21. REPORTING AND MONITORING

Provisions for monitoring of the implementation of investments and of deal flows including reporting by the financial intermediary to the fund of funds and/or the managing authority to ensure compliance with Article 46 of Regulation (EU) No 1303/2013 and State aid rules.

Rules on reporting to the managing authority on how the tasks are performed, reporting on results and irregularities and corrective measures taken.

22. EVALUATION

Conditions and arrangements for the evaluation of the financial instrument.

23. VISIBILITY AND TRANSPARENCY

Provisions on visibility of the funding provided by the union in line with the Annex XII to Regulation (EU) No 1303/2013.

Provisions guaranteeing access to information for final recipients.

24. EXCLUSIVITY

Provisions establishing under which conditions the fund of funds manager or the financial intermediary is allowed to start a new investment vehicle.

25. SETTLEMENT OF DISPUTES

Provisions on the settlement of disputes.

26. CONFIDENTIALITY

Provisions defining what elements of the financial instrument are covered by confidentiality clauses. Otherwise all other information is considered public.

Confidentiality obligations entered into as part of this agreement shall not prevent proper reporting to the investors, including those providing public funds.

27. AMENDMENT OF THE AGREEMENT AND TRANSFER OF RIGHTS AND OBLIGATIONS

Provisions defining the scope and conditions for possible amendment and termination of the agreement.

Provisions forbidding the financial intermediary to transfer any right or obligation without the prior authorisation of the managing authority.

ANNEX II

Schematic representation of the RS loan principle