Legal provisions of COM(2020)404 - Amendment of Regulation (EU) 2015/1017 as regards creation of a Solvency Support Instrument - Main contents
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| dossier | COM(2020)404 - Amendment of Regulation (EU) 2015/1017 as regards creation of a Solvency Support Instrument. |
|---|---|
| document | COM(2020)404  |
| date | May 29, 2020 |
Article 1
(1)In Article 2, the following point (9) is added:
‘(9) ‘companies’ means for the purposes of the solvency support window companies, project companies, public-private partnerships and other legal structures.’
(2)In Article 3, the following point (c) is added:
‘(c) the solvency of companies established in a Member State and operating in the Union.’
(3)In Article 4, point (iv) of point (a) of paragraph 2 is amended as follows:
‘the pricing of operations under the EU guarantee which is to be in line with the EIB’s pricing policy; for the solvency support window, other arrangements may be agreed;’
(4)In Article 5, an indented subparagraph is added to the last subparagraph of paragraph 1 as follows:
‘— support to funds, special purpose vehicles, investment platforms or other arrangements under the solvency support window.’
(5)In paragraph 1 of Article 6, the following subparagraph is added in point (a):
‘However, support under the solvency support window shall only be granted if it is to the benefit of companies that were not in difficulty in State aid terms 8 already at the end of 2019 but since then face significant solvency risks due to the crisis caused by the Covid-19 pandemic;’
(6)In Article 6, paragraph 3 is added as follows:
‘3. Notwithstanding paragraph 2, the sub-operations by the financial intermediaries may be limited to a minimum size in financing and investment operations under the solvency support window.’
(7)A new point (e) in paragraph 2 of Article 7 is added:
‘the guidance referred to in Section 6 point d of Annex II.’
(8)In Article 8, a third paragraph is added as follows:
‘Notwithstanding the first paragraph, only companies established in a Member State and operating in the Union can be supported by the financing and investment operations under the solvency support window.’
(9)In Article 9, a second sentence is added to the first subparagraph of paragraph 2 as follows:
‘The EU guarantee shall also be granted for financing and investment operations conducted by the EIF under the solvency support window.’
(10)In Article 9, the introductory sentence of the third subparagraph of paragraph 2 is amended as follows:
‘The operations concerned shall be consistent with Union policies, including the European Green Deal 9 and the Strategy on shaping Europe’s digital future 10 , as well as supporting an inclusive and symmetric recovery in the aftermath of the COVID-19 pandemic, and support any of the following general objectives:’
(11)In Article 9, point (j) is added to the third subparagraph of paragraph 2 as follows:
‘(j) solvency support under the solvency support window to companies referred to in Article 3(c) supporting any of the objectives referred to in this paragraph.’
(12)In Article 9, the final subparagraph of paragraph 2 is deleted and a new paragraph 2a introduced as follows:
‘While recognising the demand-driven nature of the EFSI, the EIB shall:
(a)target that at least 40 % of EFSI financing under the infrastructure and innovation window support project components that contribute to climate action, in line with the commitments made at the 21st Conference of the Parties to the United Nations Framework Convention on Climate Change (COP21). EFSI financing for SMEs and small mid- cap companies shall not be included in that computation. The EIB shall use its internationally agreed methodology to identify those climate action project components or cost shares;
(b)ensure that the majority of EFSI financing under the solvency support window is utilised to support eligible companies in Member States and sectors economically most hit by the Covid-19 pandemic;
(c)ensure that the majority of EFSI financing under the solvency support window is utilised to support eligible companies in Member States where the availability of State solvency support is more limited.
The Steering Board shall, where necessary, provide detailed guidance concerning points (a) to (c).
(13)In Article 9, points (a) and (b) of paragraph 3 are amended as follows:
‘(a) 31 December 2020, for EIB operations under the infrastructure and innovation window for which a contract between the EIB and the beneficiary or financial intermediary has been signed by 31 December 2022;
(b) 31 December 2020, for EIF operations under the SME window for which a contract between the EIB and the beneficiary or financial intermediary has been signed by 31 December 2022;’
(14)In Article 9, point (c) is added to paragraph 3 as follows:
‘(c) 31 December 2024, for EIB or EIF operations under the EU guarantee for solvency support window referred to in the third subparagraph of Article 11(1). Contracts between the EIB or EIF and the beneficiary or financial intermediary for those operations shall be by 31 December 2026 subject to the approval by the EIB or EIF governing bodies in accordance with Article 4(6) of Regulation [EURI].’
(15)In Article 10, points (b) and (c) of paragraph 2 are amended as follows:
‘(b) EIB funding or guarantees to the EIF enabling it to undertake loans, guarantees, counter-guarantees, any other form of credit enhancement instrument, capital market instruments and equity or quasi-equity participations, including in favour of national promotional banks or institutions, investment platforms, funds or special purpose vehicles;
(c) EIB guarantees to national promotional banks or institutions, investments platforms, funds or special purpose vehicles under a counter-guarantee of the EU guarantee.’
(16)In Article 10, a third subparagraph is added to paragraph 2 as follows:
‘The eligible instruments under the solvency support window shall result in providing equity or quasi-equity to companies referred to in Article 3(c). Hybrid instruments may be used in line with Annex II if such instruments fulfil the purpose of the window.’
(17)In Article 10, a second sentence is added to paragraph 4 as follows:
‘Under the solvency support window, the EIF may grant a guarantee to funds and special purpose vehicles.’
(18)In Article 10, paragraph 5 is added as follows:
‘The intermediaries under the solvency support window shall be established in a Member State and operate in the Union. The Steering Board shall set any necessary requirements relating to the control of intermediaries (funds, special purpose vehicles and others) in the light of any applicable public order or security considerations.’
(19)Article 11(1) is amended as follows:
‘1. The EU guarantee shall not, at any time, exceed EUR 92 436 320 000, of which a part may be allocated for EIB funding or guarantees to the EIF in accordance with paragraph 3 or under the solvency support window.
An amount of up to EUR 66 436 320 000 of the EU guarantee shall be allocated for operations under the solvency support window.
An amount of up to EUR 56 476 320 000 out of the amount referred to in the second subparagraph shall be allocated for implementing measures referred to in Article 2 of Regulation [EURI] and shall only be available as of the date referred to in Article 4(3) of that Regulation.
Aggregate net payments from the general budget of the Union under the EU guarantee shall not exceed EUR 92 436 320 000 and not exceed EUR 26 000 000 000 before [the date of entry into force of this Regulation].’
(20)In Article 11(3), the first sentence shall be amended as follows:
‘3. Where the EIB provides funding or guarantees under the SME window to the EIF in order to conduct EIB financing and investment operations, the EU guarantee shall provide for a full guarantee on such funding or guarantees up to an initial amount of EUR 6 500 000 0000, provided that an amount of at least EUR 4 000 000 000 of funding or guarantees is gradually provided by the EIB without coverage by the EU guarantee.’
(21)In Article 11, the second subparagraph of paragraph 6 is amended as follows:
‘The EU guarantee shall also cover the amounts referred to in the second, third and fourth subparagraphs of Article 9(6).’
(22)Article 12 is amended as follows:
(a)In paragraph 2, a new point (e) is added:
‘(e) an amount of EUR 28 238 160 000 out of the amount referred to in point (ii) of Article 3(2)(c) of Regulation [EURI].’
(b)In paragraph, 3 a second subparagraph is inserted:
‘Endowment to the guarantee fund provided for in point (e) of paragraph 2 of this Article shall constitute an external assigned revenue in accordance with Article 21(5) of the Financial Regulation.’
(c) Paragraph 5 is amended as follows:
‘5. Endowments to the guarantee fund referred to in points (a) to (d) of paragraph 2 and endowment referred to in point (e) of paragraph 2 shall be used to reach an appropriate level (target amount) to reflect the total EU guarantee obligations. The target amount shall be set at 45,8 % of the total EU guarantee obligations.’
(d)Paragraph 7 is amended as follows:
‘7. From 1 January 2028, if as a result of calls on the EU guarantee, the level of the guarantee fund falls below 50 % of the target amount, or it could fall below that level within a year according to a risk assessment by the Commission, the Commission shall submit a report on any exceptional measures that could be required.’
(e)Paragraph 10 is amended as follows:
’10. In the event that the EU guarantee is fully restored to an amount of EUR 92 436 320 000, any amount in the guarantee fund in excess of the target amount shall be paid to the general budget of the Union.’
(23)In Article 13, the second paragraph is amended as follows:
‘If necessary, payment appropriations may be entered in the general budget of the Union beyond 2020 and up to and including the financial year 2027 to fulfil the obligations stemming from Article 12(5).’
(24)Chapter IIIa is inserted as follows:
‘Article 13a
Participation in a capital increase of the European Investment Fund
The Union shall subscribe shares in forthcoming capital increases of the European Investment Fund so that its relative share in the capital remains at current level. The subscription of the shares and the payment of up to EUR 500 000 000 of the paid-in part of the shares shall be carried out in accordance with the terms and conditions that shall be approved by the General Meeting of the Fund.’
(25)Article 14 is amended as follows:
a) In paragraph 2, point (i) is inserted as follows:
‘(i) providing support to financing and investment operations under the solvency support window.’
b) Paragraph 3 is amended as follows:
‘EIAH services shall be available for public and private project promoters, including national promotional banks or institutions, investment platforms, funds, special purpose vehicles and regional and local public entities.’
(26)Article 14a is inserted as follows;
‘Article 14a
Financing of advisory services and technical assistance
An amount of up to EUR 100 000 000 shall be made available for covering costs, advisory services and technical and administrative assistance to set-up and manage funds, special purpose vehicles, investment platforms and other vehicles for the purposes of the solvency support window including for support referred to in point (i) of Article 14(2) and having a special focus on Member States with less developed equity markets. The technical assistance shall also be available to support the green and digital transformation of companies financed under this window.
The Commission shall implement this amount under direct or indirect management as referred to in points (a) and (c) of Article 62(1) of the Financial Regulation.
An amount of EUR 80 000 000 out of the amount referred to in the first subparagraph shall constitute an external assigned revenue in accordance with Article 21(5) of the Financial Regulation and shall be subject to Article 4(4) and (8) of the [EURI] Regulation.
(27)In Article 16, a second subparagraph is added to paragraph 2 as follows:
‘Operations under the solvency support window shall be reported on separately, as appropriate and as set out in the guarantee agreement.’
(28)In Article 16, a second subparagraph is added to paragraph 3 as follows:
‘Annual financial statements of the EU guarantee, prepared in compliance with the accounting rules as adopted by the Accounting Officer of the Commission as referred to in Article 80 of the Financial Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union. The unaudited financial statements and any information necessary to produce the Union accounts shall be provided by the EIB group by 15 February of the following financial year and audited financial statements by 31 March of the following financial year.’
(29)In Article 18(3), the introductory sentence is amended as follows:
‘3. By 30 June 2018, by 30 December 2021 and every three years thereafter:’
(30)In Article 24, paragraphs 3 and 4 are added as follows:
‘3. The EIB may submit to the Investment Committee after the entry into force of this Regulation financing and investment operations approved by its governing bodies during the period from the adoption of the Commission proposal to amend Regulation (EU) 2015/2017 until the signature of the amended guarantee agreement resulting from the amended Regulation if such operations fulfil the requirements for support under the solvency support instrument. Operations to be submitted to the Investment Committee must not have benefited from the support of the EU guarantee previously.
4. Once the Investment Committee foreseen in the InvestEU Regulation has taken up its functions, it will also become responsible for granting the EU guarantee under this Regulation.’
(31)Annex II to Regulation (EU) 2015/1017 is amended as follows:
(1) In Section 1, the third paragraph is replaced by the following:
‘The investment guidelines only apply to EFSI operations relating to the debt and equity instruments referred to in Article 10(2)(a) of this Regulation and to EFSI operations under the Solvency Support Window referred to in Articles 10(2)(b) and 10(2)(c). The guidelines are thus not applicable to EFSI operations relating to the instruments referred to in Article 10(2)(b) other than those supported under the Solvency Support Window.’
(2) Section 2 is amended as follows:
(a)In point (b), the first paragraph is replaced by the following:
‘(b) The EU guarantee shall be granted to support, directly or indirectly, the financing of new operations. In the infrastructure field, greenfield investments (asset creation) should be encouraged. Brownfield investments (extension and modernisation of existing assets) may also be supported. Under the Solvency Support Window, financing shall aim at improving the equity base of companies and their solvency. The terms of the financing should avoid distorting competition between companies. As a rule, the EU guarantee shall not be granted for supporting refinancing operations (such as replacing existing loan agreements or other forms of financial support for projects which have already partially or fully materialised), except under the Solvency Support Window or in exceptional and well-justified circumstances where it is demonstrated that such a transaction will enable a new investment of an amount at least equivalent to the amount of the transaction and that would fulfil the eligibility criteria and general objectives laid down in Article 6 and Article 9(2) respectively.’
(b)Point (c) is amended as follows:
‘(c) The EU guarantee shall support a wide range of products to allow the EFSI to adapt to market needs while encouraging private investment in projects, without crowding out private market finance. In this context, it is expected that the EIB will provide financing under the EFSI with a view to reach an overall target of at least EUR 500 000 000 000 of public or private investment under the Infrastructure and Innovation Window and under the SME Window together, which includes financing mobilised through the EIF under EFSI operations relating to the instruments referred to in Article 10(2)(b), national promotional banks or institutions and through increased access to financing for entities having up to 3 000 employees. The eligible products shall include inter alia 11 loans, guarantees/counter-guarantees, mezzanine and subordinated finance, capital market instruments including credit enhancement, and equity or quasi-equity participations, including through national promotional banks or institutions, investment platforms funds or special purpose vehicles. In this context, in order to allow a broad range of investors to invest in EFSI projects, the EIB shall be allowed to structure appropriate portfolios. Under the Solvency Support Window the eligible products shall consist of those that result in providing investments, intermediated equity or quasi-equity to companies and projects, but excluding entities targeting buy-out (or replacement capital) intended for asset stripping. It is expected that EIB and EIF will provide financing with a view to reach a target of up to EUR 300 000 000 000 of investment under the Solvency Support Window.
(c)In point (d), the first sentence is amended as follows:
‘(d) National promotional banks or institutions, investment platforms, funds and special purpose vehicles shall be eligible for coverage by the EIB guarantee under the counter-guarantee of the EU guarantee in accordance with Article 10(2)(c).’
(3) In Section 6, point (d) is added as follows:
‘(d) Solvency Support Window
–The EU guarantee may be used to support EIB or EIF financing, or guarantees to, or investments in funds, special purpose vehicles or other investment platforms, including through national promotional banks or institutions or other relevant arrangements, that provide equity and equity-type investments in companies.
–Funds, special purpose vehicles or investment platforms that target companies engaging in cross-border activities within the Union and/or companies which have high potential for green or digital transformation shall be particularly targeted under the Solvency Support Window.
–The funds, special purpose vehicles or investment platforms shall provide financing on commercial terms or on terms consistent with the State aid Temporary Framework 12 , while paying due regard to the European nature of the Solvency Support Instrument and to the funds’ and other vehicles’ independent management.
–The funds, special purpose vehicles or investment platforms shall have commercial management that take investment decisions or independent management that is at arm’s length from any investors.
–Companies targeted by funds, special purpose vehicles or investment platforms shall be encouraged to comply, to the extent possible, with minimum high-level social and environmental safeguards in line with guidance provided by the Steering Board. Such guidance should include adequate provisions for avoiding undue administrative burdens, taking into account the size of companies and including lighter provisions for SMEs. Companies with a certain level of exposure to a pre-defined list of environmentally harmful activities, in particular the sectors covered by the EU Emissions Trading System (EU ETS), shall be encouraged to put in place, in the future, green transition plans. Companies shall also be encouraged to advance in their digital transformation. Technical assistance shall be available to assist companies for the purpose of these transitions.
–The operations under this window shall be carried out in accordance with the EIB’s or the EIF’s internal rules and procedures. All relevant information for the assessment of the operation shall be made available to the members of the Steering Board and of the Investment Committee.
–EIB or EIF guarantees or investments shall be priced in line with Article 4(2)(a)(iv) or Article 4(2)(a)(v).’
(4) In Section 8, point (b) is amended as follows:
‘(b) Geographical Concentration
EFSI-supported operations shall not be concentrated in any specific territory at the end of the investment period concerned. To this end the Steering Board shall adopt indicative geographical diversification and concentration guidelines. The Steering Board may decide to modify these indicative limits, after consulting the Investment Committee.
The Steering Board shall set specific diversification and concentration limits under the Solvency Support Window to ensure that the respective requirements of Article 9(2a)(b) and (c) are fulfilled, whilst avoiding excessive concentration in a limited number of Member States. The Steering Board shall regularly take stock of the economic impact of the Covid-19 pandemic on Member States and sectors. On this basis, the Steering Board may decide to modify these limits, after consulting the Investment Committee.
The Steering Board shall explain its decisions relating to the indicative and Solvency Support Window specific limits to the European Parliament and the Council in writing. The EFSI should aim to cover all Member States.’
Article 2
This Regulation shall be binding in its entirety and directly applicable in all Member States.