The EU Parliament and EU Council have recently adopted amendments to the European Venture Capital Funds Regulations 2013 (“EuVECA Regulations”) and the European Social Entrepreneurship Funds Regulations 2013 (“EuSEF Regulations”).

Background

The EuVECA Regulations and the EuSEF Regulations allow EU fund managers of EuVECAs and EuSEFs to market their funds in the EU through an EU-wide passport. The passport is designed to encourage and facilitate investment in venture capital and social entrepreneurship projects via investment funds branded with the EuVECA and EuSEF labels.

The amendments to the EuVECA Regulations and the EuSEF Regulations will apply from 1 March 2018.

Key amendments

In order to set up a EuVECA or EuSEF, it was previously the case that the AUM of a EuVECA’s or EuSEF’s fund manager could not exceed €500m. As a result of the amendments to the EuVECA Regulations and the EuSEF Regulations, it is now possible for the fund manager of an EuVECA or EuSEF to set up a EuVECA or EuSEF even where its AUM exceeds €500m.

The amendments to the EuVECA Regulations and the EuSEF Regulations also extend the range of firms/enterprises in which EuVECAs and EuSEFs can invest.

W&B Comment

While the changes are welcome, it should be noted that fund managers of EuVECAs and EuSEFs will still be obliged to obtain full authorisation under the Alternative Investment Fund Managers Directive if their AUM exceeds the relevant threshold in Article 3 of the Alternative Investment Fund Managers Directive. This will not be desirable for fund managers seeking to take advantage of the Alternative Investment Fund Managers Directive’s lighter touch registration regime.

Further reading

EuVECAs and EuSEFs are alternative investment funds for the purposes of the Alternative Investment Fund Managers Directive. For an overview of the Alternative Investment Fund Managers Directive, please click here.