EU passport for venture capital sector gets backing
The European Parliament’s economic affairs committee has voted in favour of a law that creates the first pan-EU passport for venture capital funds, says a Reuters report. This would allow them to market themselves to potential investors across the EU.
The sector, which currently only raises about €4bn a year, has different placement rules for different countries. The passport is seen as a way to encourage investors to channel their assets into European businesses, and so promote growth.
The proposed rules, due to take force in July 2013, will apply to funds with less than €500m. Funds above this threshold will be regulated by the EU’s new alternative investments rules, which come into force at the same time.
Among the provisions in the draft law, investments will only be redeemable after a specific period to prevent short-term, speculative bets.
Another provision will require VC funds to use a depository, an independent body entrusted with keeping the fund’s assets safe and noting how the money is being invested and dividends being paid.
The European Private Equity and Venture Capital Association (EVCA), an industry body, said if this requirement makes it into the final law, it will increase costs significantly.
Erika Blanckaert, head of regulatory affairs at EVCA, said: “If there is a depository requirement in the final text, the law will become an empty box. There will be a regulation that nobody will use. The burden compared with the advantages will be just too high,” said.