A New Regime For European Venture Capital Funds

INTRODUCTION

The regulation on European venture capital funds ("EuVECA Regulation" or the "Regulation")1 was published in the Official Journal of the European Union on April 17th 20132 , entered into force on May 7th 2013 and applies in all EU Member States from July 22nd 2013.

''The EuVECA Regulation aims to facilitate fund raising for venture capital throughout the European Union by creating a common framework for venture capital funds investing in small businesses. ''

Such framework will allow investors to compare different fund offerings and will also indicate to them the quality of the offering involved. The Regulation is complementary to Directive no. 2011/61 on alternative investment fund managers ("AIFMD").

The Regulation applies to EU managers only who meet the conditions set out below. Once registered pursuant to the EuVECA Regulation such managers may freely market qualifying venture capital funds under the designation "EuVECA" throughout the EU 3.

Unlike the AIFMD which is mandatory for managers fulfilling certain criteria, the Regulation provides only for an optional regime. In other words, managers of qualifying venture capital funds can discretionarily decide whether or not they wish to use the designation "EuVECA". On the other hand it is only available to those managers that do not require authorisation under AIFMD4.

OBLIGATIONS SET FORTH IN THE REGULATION

In order to benefit from the EuVECA designation there are certain requirements to be met by both the manager and the fund itself. In addition, there are marketing restrictions applicable to the use of the EuVECA label.

1. Conditions to be fulfilled by the manager

   1.1. Registration

   The EuVECA Regulation only applies to managers of Alternative Investment Funds5 that fulfill the following conditions6 :

   established in the European Union; amount of assets under management does not exceed EUR 500 million; subject to the light regime of AIFMD, i.e. subject to registration requirements with its supervisory authority pursuant to AIFMD but not subject to the full scope of AIFMD; manages portfolios of qualifying venture capital funds. Managers intending to use the EuVECA designation shall inform the competent authority of their home Member State of their intention and shall provide them with certain information including information allowing the competent authority to assess whether the persons who effectively manage the funds are of good repute and sufficiently experienced and a list of Member States where the manager intends to establish or has established EuVECAs and where it intends to market the EuVECAs it intends to manage7.

   The competent authority will only register the manager if the persons who effectively conduct the business of the fund are of good repute and sufficently experienced.

   Managers of EuVECAs shall inform the competent authority of their home Member State where they intend to market a new qualifying venture capital fund or an existing qualifying venture capital fund in a Member State not already notified to such competent authority8.

   After registration of an EuVECA manager, the supervisory authority of the home Member State shall notify the Member States where such manager intends to market and the European Securities and Markets Authority ("ESMA"). Similar notifications are made on the addition of (i) a new EuVECA, (ii) a new domicile for the establishment of a EuVECA, and...