The European Venture Capital Fund Regulations

Author:Mr Trevor Dolan, Donnacha O'Conner, Brian Dillon and Brian Higgins
Profession:Dillon Eustace
 
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Introduction

Amidst all of the discussions, publications and anxieties regarding EU Directive 2011/61/EU on Alternative Investment Fund Managers ("AIFMD") and its implications for both EU and Non-EU AIFMs, it can sometimes be overlooked that, on the same date that AIFMD goes live, July 22, 2013, a somewhat related EU regime for EU venture capital funds also comes into force under EU Regulation 345/2013 on European Venture Capital Funds (the "EuVECA Regulation").

The EU Commission wants to strengthen venture capital financing in order to fully realise the commercial potential of European Small and Medium Enterprises ("SMEs"). The introduction of a uniform EU framework for European Venture Capital Funds ("EuVECAs") is designed to provide an additional financing tool for SMEs, a sector that is key to Europe‟s future economic success.

This regime is of note because it allows EU registered AIFMs manage certain types of qualifying venture capital funds domiciled in the EU, known as EuVECAs, and to market those EuVECAs to professional (and certain other) investors throughout the European Union.

This represents, in effect, a relaxation of the AIFMD rule that a registered AIFM cannot benefit from any of the rights under AIFMD (e.g. right to manage or market cross-border).

As a result a registered AIFM can manage an EuVECA domiciled anywhere in the EU and can market it anywhere in the EU to professional (and certain other) investors. The Regulation does not extend to Non-EU AIFMs nor to Non-EU funds.

The EuVECA Regulation will be directly applicable from July 22, 2013.

Asset Management and Investment Funds Group Dillon Eustace July, 2013

Who does the EuVECA Regulation apply to?

In summary, they apply to sub-threshold (i.e. registered) AIFM who meet the following criteria:

manage portfolios of EuVECAs; are established in the EU; whose assets under management in total do not exceed the threshold referred to in point (b) of Article 3(2) of AIFMD (i.e. a total AUM of less than EUR 500million comprised of closed ended and unleveraged funds); and are registered with the competent authorities of their home Member State in accordance with point (a) of Article 3(3) of AIFMD.; For more information AIFMD, please refer to Dillon Eustace‟s "Guide to AIFMD", which can be found here.

When does the EuVECA Regulation apply?

The Regulations come into force on July 22, 2013.

Key Concepts

What is an EuVECA?

An EuVECA is a fund that:

is a collective investment...

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