Annexes to COM(2005)121 - Competitiveness and Innovation Framework Programme (2007-2013)

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dossier COM(2005)121 - Competitiveness and Innovation Framework Programme (2007-2013).
document COM(2005)121 EN
date October 24, 2006
ANNEX I

Indicative budgetary breakdown

The indicative budgetary allocations for the specific programmes shall be the following:

(a)60 % of the overall budget for the pursuance of the Entrepreneurship and Innovation Programme, of which approximately one fifth shall be allocated to promoting eco-innovation;

(b)20 % of the overall budget for the pursuance of the ICT Policy Support Programme;

(c)20 % of the overall budget for the pursuance of the Intelligent Energy — Europe Programme.


ANNEX II

Implementation arrangements for the Community financial instruments for SMEs referred to in Article 17

1. ARRANGEMENTS COMMON TO ALL COMMUNITY FINANCIAL INSTRUMENTS FOR SMES

A. Budget

The budgetary allocation shall cover the full cost of each instrument, including payment obligations towards financial intermediaries such as losses from guarantees, management fees for the EIF and the international financial institutions managing the Union's resources, as well as any other eligible costs or expenses.

The transfer of resources between instruments shall be kept flexible in order to respond to new developments and changing market conditions during the Framework Programme.

B. Trust accounts

Separate Trust accounts shall be set up by the EIF and the relevant international financial institutions to hold the budgetary funds relating to each instrument. Such accounts may be interest-bearing. Interest received on or before 31 December 2013 may be added to the resources and can be used for the purpose of the respective instrument.

Payments made by the trustee to honour payment obligations towards financial intermediaries shall be debited from the corresponding Trust account. Amounts to be paid back by the trustee to the general budget of the European Union, the trustee's management fees and other eligible costs and expenses shall be debited from the Trust account in accordance with the terms set out in the agreements between the Commission and the trustee. The Trust account shall be credited with receipts originating from the Commission, interest and, depending on the instrument, with the proceeds of realised investments (GIF) or with commitment and guarantee fees as well as other receivables (SMEG Facility).

After 31 December 2013, any balances on the Trust accounts, other than funds committed and not yet debited and funds reasonably required to cover eligible costs and expenses, shall be returned to the general budget of the European Union.

C. Fees

An appropriate fee policy shall apply to the operation of the instruments. The fees shall be established by the Commission in line with market practices and shall take into account:

—the overall duration of the respective instrument and the corresponding monitoring requirements which extend beyond the budgetary commitment period,

—the eligible countries,

—the degree of novelty and complexity of the instrument,

—the associated number of activities such as market research, identification of and negotiations with intermediaries, structuring of deals, closing, monitoring and reporting.

D. Visibility and awareness-raising

Each intermediary shall provide an appropriate level of visibility and transparency to the support given by the Community, including adequate information on the financial opportunities made available by the Framework Programme.

It shall be ensured that the final beneficiaries are adequately informed of the available financing opportunities.

2. IMPLEMENTATION OF THE GIF

A. Introduction

Fiduciary, management and monitoring aspects shall be agreed between the Commission and the EIF. The Commission shall apply specific guidelines on treasury management.

B. Intermediaries

GIF1 and GIF2 shall target commercially oriented intermediaries managed by independent teams combining the appropriate mix of skills and experience. The intermediaries shall be selected in conformity with best business and market practices in a transparent and non-discriminatory manner, avoiding any conflict of interest with the aim of working through a wide range of specialised funds or similar structures.

C. Eligibility criteria

GIF shall be complementary to the own-resource based activities of the EIB Group including the EIF by adopting an investment policy involving a higher risk profile, both as regards intermediary funds and their investment policies.

GIF1

GIF1 shall invest in intermediary venture capital funds and other investment vehicles investing in SMEs up to 10 years old, typically starting from pre-A (seed) and A (early stage) rounds and providing follow-on investment where appropriate. The usual maximum aggregate investment in an intermediary venture capital fund shall be 25 % of the total capital held by the relevant fund, or up to 50 % for new funds likely to have a particularly strong catalytic role in the development of venture capital markets for a specific technology or in a specific region as well as business angels' investment vehicles. The maximum aggregate investment in an intermediary venture capital fund shall be 50 % in those cases where the fund's investment focus is on SMEs active in eco-innovation. At least 50 % of the capital invested in any fund shall be provided by investors operating in circumstances corresponding to normal market conditions (under the ‘market economy investor principle’), irrespective of the legal nature and ownership structure of the investors providing that part of the capital. No commitment in a single fund shall exceed EUR 30 million. GIF1 may co-invest with EIF own resources or resources under the EIB mandate or other resources managed by the EIF.

GIF2

GIF2 shall invest in intermediary risk capital funds investing in SMEs, typically in B and C (expansion) rounds. The usual maximum aggregate investment in an intermediary risk capital fund shall be 15 % of the total capital held by the relevant fund, or up to 25 % for:

—new funds likely to have a particularly strong catalytic role in the development of risk capital markets for a specific technology or in a specific region,

—funds the main investment focus of which is on SMEs active in eco-innovation,

—funds set up by first time management teams.

In the case of co-investment of GIF2 resources with EIF own resources or resources under the EIB mandate or other resources managed by the EIF, the maximum GIF2 contribution shall be 15 %. At least 50 % of the capital invested in any fund shall be provided by investors operating in circumstances corresponding to normal market conditions (under the market economy investor principle), irrespective of the legal nature and ownership structure of the investors providing that part of the capital. No commitment in a single fund shall exceed EUR 30 million.

D. Investment pari passu

The investment made under the GIF in an intermediary fund shall rank pari passu with the private investors.

E. Cornerstone role

For new funds likely to have a particularly strong catalytic role in the development of venture capital markets for a specific technology or in a specific region, EIF may play the role of a cornerstone investor.

F. Transparency of conditions

EIF shall ensure that terms and conditions of financing under GIF1 and GIF2 are transparent and comprehensible.

G. Life of the GIF

The GIF shall be a long-term facility which will usually take five- to 12-year positions in intermediary funds. In any case, life of investments under the GIF shall not exceed 19 years from the time of signature of the delegation agreement between the Commission and the EIF. Suitable exit strategies shall need to be defined in the agreements between the EIF and the intermediaries.

H. Realisation of investments

As most of the investments to be made under the GIF shall be in unquoted, illiquid entities, the realisation of those investments shall be based on the distribution of the proceeds received by the intermediary from the sale of their investments in SMEs.

I. Reinvestment of proceeds from realised investments

Proceeds, including dividends and reimbursements received by the EIF before 31 December 2013, shall be added to the resources of the GIF and used for the purpose of the GIF.

3. IMPLEMENTATION OF THE SMEG FACILITY

A. Introduction

Fiduciary, management and monitoring aspects shall be agreed between the Commission and the EIF and shall be in line with normal commercial practices. The Commission shall apply specific guidelines on treasury management.

B. Intermediaries

Intermediaries shall be chosen from among the guarantee schemes already operating or which may be established in the eligible countries, including mutual guarantee organisations, and any other appropriate financial institution. Selection procedures shall be transparent and non-discriminatory, avoiding any conflict of interest.

Intermediaries shall be selected in conformity with best market practice with regard to the effect on:

—the volume of financing (debt, equity or quasi equity) made available to SMEs, and/or

—SMEs' access to finance, and/or

—risk-taking in SME financing by the intermediary concerned.

C. Eligibility

The financial criteria governing the eligibility under the SMEG Facility shall be determined for each intermediary on the basis of their activities, with the aim of reaching as many SMEs as possible. These rules shall reflect market conditions and practices in the relevant territory.

Financing for the acquisition of tangible and intangible assets, including innovation activities, technological development and the acquisition of licenses shall be eligible.

Criteria relating to the fourth SMEG window, (d) securitisation of SME debt financing portfolios, shall include individual and multi-seller transactions as well as multi-country transactions. Eligibility shall be based on best market practices, in particular regarding the credit quality and risk diversification of the securitised portfolio.

D. Terms of the guarantees

The guarantees issued by the EIF on behalf of the Commission under the (a) debt financing, (b) microcredit, and (c) equity or quasi-equity windows of the SMEG Facility shall cover a part of the risk taken by the financial intermediary in a financing portfolio of individual transactions. The fourth window of the SMEG Facility, (d) securitisation, shall involve sharing the risk of certain securitised tranches which are senior to the first loss piece or leaving the risk of a significant part of the first loss piece to the originator and sharing the risk of the remaining part.

The guarantees given by the EIF relating to the (a) debt financing, (b) microcredit, (c) equity or quasi equity windows of the SMEG Facility shall usually rank pari passu with the guarantees or, where appropriate, with the financing given by the intermediary.

The EIF may charge to a financial intermediary a fee calculated on amounts committed but not used according to an agreed schedule (commitment fees) as well as guarantee fees. It may also charge fees related to individual securitisation transactions.

E. EIF's capped maximum cumulative losses

The cost of the SMEG Facility to the general budget of the European Union shall be capped so that it does not, under any circumstances, exceed the budgetary allocation made available to the EIF under this SMEG Facility. There shall be no contingent liability on the budget.

The EIF's obligation to pay its share of the intermediary's losses shall continue until the cumulative amount of payments made to cover losses from a specific financing portfolio, reduced where appropriate by the cumulative amount of corresponding loss recoveries, reaches a pre-agreed amount, after which the EIF's guarantee shall be automatically cancelled.

F. Loss recoveries and other revenue payable to the Trust account

Any loss recoveries received from a given intermediary shall be credited to the Trust account and shall be taken into account in the calculation of the EIF's capped maximum cumulative losses towards the intermediary. Any other revenues, such as commitment fees and guarantee fees, shall be credited to the Trust account and, if received before 31 December 2013, shall be added to the resources of the SMEG Facility.

G. Duration of the SMEG Facility

Individual SME guarantees may have a maturity of up to 10 years.

4. IMPLEMENTATION OF THE CBS

A. Introduction

Implementation details for the Seed Capital action and the Partnership Action, including fiduciary, management and monitoring aspects, shall be subject to an agreement between the Commission and the EIF or the relevant international financial institutions.

Intermediaries shall be selected in conformity with best market practices.

Selection procedures for the provision of technical assistance shall be transparent and non-discriminatory, avoiding any conflict of interest.

B. Seed Capital Action

The Seed Capital Action shall be operated on a trust basis. The budgetary allocation shall cover the full cost of the action, including its management fees and any other eligible costs or expenses. The grants provided shall support investment funds which include seed capital in their global investment programme, by covering part of the resulting management costs.

C. Partnership Action

The Partnership Action shall be operated through the EIF or relevant international financial institutions. It shall cover technical assistance, management fees and other eligible costs supporting capacity building.

5. EVALUATION

The external evaluations shall be carried out by independent experts, taking account of the impact of the Growth and Employment Initiative established under Council Decision 98/347/EC of 19 May 1998 on measures of financial assistance for innovative and job-creating small and medium-sized enterprises (SMEs) — the growth and employment initiative (1) and of the multiannual programme for enterprise and entrepreneurship, and in particular for SMEs. The external evaluations shall assess the impact of the Community financial instruments for SMEs and provide a qualitative and quantitative analysis of achieved results, in particular, by assessing the leverage effect and cost-benefit of each instrument. The evaluation reports shall present statistical data for the Union as a whole and for the individual Member States and the other participating countries including:

—for the GIF, the number of SMEs reached and the number of jobs created,

—the rate of return to investors,

—for the SMEG Facility, the number and value of loans provided by the financial intermediaries to SMEs, the number of SMEs reached and the number and value of loans defaulted,

—for the Seed Capital Action, the number of organisations supported and the volume of seed capital investments,

—for the Partnership Action, the number of intermediaries supported and SMEs reached,

—any specific outputs relating to eco-innovation.

Appropriate visibility shall be given to the results and lessons learned from the reports of the external evaluators and to the sharing of best practices among stakeholders.


(1) OJ L 155, 29.5.1998, p. 43.


ANNEX III

Details of the services in support of business and innovation referred to in Article 21

(a)Information, feedback, business cooperation and internationalisation services

—disseminating information relating to the functioning and opportunities of the internal market for goods and services, including signposting to tender opportunities,

—promoting pro-actively Community initiatives, policies and programmes that are relevant for SMEs and providing information to SMEs on the application procedures for such programmes,

—operating tools to measure the impact of existing legislation on SMEs,

—contributing to the carrying-out of impact assessment studies of the Commission,

—operating other appropriate means to engage SMEs in the European policy-making process,

—assisting SMEs to develop cross-border activities and international networks,

—supporting SMEs to find relevant partners from the private or public sectors through appropriate tools.

(b)Services for innovation and for the transfer of both technology and knowledge

—disseminating information and raising awareness regarding innovation-related policies, legislation, and support programmes,

—engaging in the dissemination and exploitation of research results,

—providing brokerage services for technology and knowledge transfer, and for partnership building between all kinds of innovation actors,

—stimulating the capacity of firms, especially SMEs to innovate,

—facilitating linkage to other innovation services including intellectual property-related services.

(c)Services encouraging the participation of SMEs in the Seventh Framework RTD Programme

—raising awareness among SMEs regarding the Seventh Framework RTD Programme,

—helping SMEs to identify their research and technological development needs and to find relevant partners,

—assisting SMEs in the preparation and coordination of project proposals for participation in the Seventh Framework RTD Programme.