Date: 2019-02-15Category: Not ApplicableState: Union GovernmentCountry: Europe
Commission Implementing Regulation (EU) 2019/263 of 14 February 2019 amending Implementing Regulation (EU) No 964/2014 as regards standard terms and conditions for financial instruments for the Co-Investment Facility and for the Urban Development Fund
Issued by European Commission
· Directorate-General for Regional and Urban Policy
Executive Summary:
Commission Implementing Regulation (EU) 2019/263 amends Implementing Regulation (EU) No 964/2014, modifying standard terms and conditions for financial instruments related to the Co-Investment Facility and the Urban Development Fund. The amendments reflect clarifications in Regulation (EU) No 1303/2013 regarding management verifications, audit arrangements, and differentiated treatment of investors. This regulation entered into force on the day following its publication in the Official Journal of the European Union.
Key Points / Main Content:
* **Funding Agreement (Annex I):**
* Requires inclusion of provisions on management verifications and audit arrangements when the EIB or other international financial institutions with Member State shareholders implement the financial instruments, in accordance with Article 40 of Regulation (EU) No 1303/2013.
* Specifies that provisions regarding the reuse of resources attributable to ESI Funds should comply with Article 44 of Regulation (EU) No 1303/2013 and include provisions for differentiated treatment as per Article 43a, where applicable.
* **Co-Investment Facility (Annex V):**
* Differentiated treatment of investors operating under the market economy principle, aimed solely at asymmetric profit-sharing, must align with Article 43a of Regulation (EU) No 1303/2013 and Article 21(13b) of Regulation (EU) No 651/2014.
* Selection of financial intermediaries must comply with Union law, be open, transparent, proportionate, and non-discriminatory, avoiding conflicts of interest, establishing appropriate risk-sharing arrangements in the case of differentiated treatment and determine possible carried interest.
* **Urban Development Fund (Annex VI):**
* Differentiated treatment and asymmetric conditions on risk-sharing for the fund of funds, financial intermediary, and co-investor contributions must align with Article 43a of Regulation (EU) No 1303/2013 and Article 168 of Regulation (EU) No 651/2014.
* The actual risk-sharing rate, program public contribution, differentiated treatment, and interest rates on loans should be based on ex-ante assessment findings, ensuring benefits to final recipients comply with Article 168b of Regulation (EU) No 651/2014.
* Risk-sharing with financial intermediaries and co-investors should be pro-rata to the program contribution unless the ex-ante assessment demonstrates that differentiated treatment is needed.
* Selection of financial intermediaries must comply with Union law, be open, transparent, proportionate, and non-discriminatory, avoiding conflicts of interest, establishing appropriate risk-sharing arrangements in the case of differentiated treatment.
Impact Analysis:
* **Managing Authorities:**
* Impact: Must ensure funding agreements with financial intermediaries, the Co-Investment Facility, and the Urban Development Fund comply with the amended regulations, particularly regarding management verifications, audit arrangements, and differentiated treatment of investors.
* Action Required: Review and update existing funding agreements and selection processes to align with the new provisions.
* **Financial Intermediaries (including EIB and other international financial institutions with Member State shareholders):**
* Impact: Subject to new requirements for management verifications, audit arrangements, and the implementation of differentiated treatment of investors.
* Action Required: Adapt internal procedures and documentation to comply with the new requirements, particularly concerning risk-sharing and profit-sharing arrangements.
* **Co-investors:**
* Impact: May be subject to differentiated treatment in risk and profit-sharing arrangements.
* Action Required: Understand the terms of any differentiated treatment and ensure compliance with relevant regulations.
* **Urban Development Projects/Final Recipients:**
* Impact: The risk-sharing rate, public contribution, differentiated treatment, and interest rate of loans must be based on ex-ante assessment findings to guarantee benefits to final recipients.
* Action Required: Ensure compliance with the terms of the agreements, including risk sharing.
Key Entities Referenced
European Union: A political and economic union of member states located primarily in Europe.
European Commission: An executive branch of the European Union responsible for proposing legislation, implementing decisions, upholding the EU treaties and managing the day-to-day business of the EU.
European Parliament: A legislative body of the European Union.
Council Regulation EC No 1083/2006: A former regulation of the Council of the European Union, which was repealed.
Treaty on the Functioning of the European Union: One of the primary treaties of the European Union, outlining the scope of the EU's authority and the procedures for decision-making.
CoInvestment Facility: A financial instrument aimed at encouraging investment.
Urban Development Fund: A financial instrument focused on urban development projects.
European Regional Development Fund: A fund to strengthen economic and social cohesion in the European Union by correcting imbalances between its regions.
L 44/8 EN Official Journal of the European Union 15.2.2019
COMMISSION IMPLEMENTING REGULATION (EU) 2019/263
of 14 February 2019
amending Implementing Regulation (EU) No 964/2014 as regards standard terms and conditions
for financial instruments for the Co-Investment Facility and for the Urban Development Fund
THE EUROPEAN COMMISSION,
Having regard to the Treaty on the Functioning of the European Union,
Having regard to Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 17 December 2013
laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion
Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying
down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund
and the European Maritime and Fisheries Fund and repealing Council Regulation (EC) No 1083/2006 (1), and in
particular the second subparagraph of Article 38(3) thereof,
Whereas:
(1) Annexes I, V and VI to Commission Implementing Regulation (EU) No 964/2014 (2) set out the annotated table
of content of a funding agreement between a managing authority and a financial intermediary, the terms and
conditions for the Co-Investment Facility and the Urban Development Fund respectively.
(2) Article 40 of Regulation (EU) No 1303/2013 clarifies the management verifications and audit arrangements in
case of financial instruments implemented by the EIB and other international financial institutions in which
a Member State is a shareholder. These arrangements should be reflected in Annex I as part of the funding
agreement between a managing authority and the EIB or other international financial institutions in which
a Member State is a shareholder.
(3) Article 43a of Regulation (EU) No 1303/2013, as inserted by Regulation (EU, Euratom) 2018/1046 of the
European Parliament and of the Council (3) clarifies the rules governing financial instruments with regard to
differentiated treatment of investors operating under the market economy principle in case of profit and risk
sharing. The terminology used in Annexes I, V and VI to Implementing Regulation (EU) No 964/2014 should be
aligned with that in Article 43a of Regulation (EU) No 1303/2013.
(4) The measures provided for in this Regulation are in accordance with the opinion of the Coordination Committee
for the ESI Funds.
(5) In order to ensure legal certainty and to limit discrepancies between the amended provisions of Regulation (EU)
No 1303/2013, which apply from 2 August 2018 or earlier in accordance with Article 282 of Regulation (EU,
Euratom) 2018/1046 and the provisions of this Regulation to a minimum, this Regulation should enter into
force on the day following that of its publication in the Official Journal of the European Union.
(6) Implementing Regulation (EU) No 964/2014 should therefore be amended accordingly,
HAS ADOPTED THIS REGULATION:
Article 1
Annexes I, V and VI to Implementing Regulation (EU) No 964/2014 are amended in accordance with the Annex to this
Regulation.
(1) OJ L 347, 20.12.2013, p. 320.
(2) Commission Implementing Regulation (EU) No 964/2014 of 11 September 2014 laying down rules for the application of Regulation
(EU) No 1303/2013 of the European Parliament and of the Council as regards standard terms and conditions for financial instruments
(OJ L 271, 12.9.2014, p. 16).
(3) 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, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU)
No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and
repealing Regulation (EU, Euratom) No 966/2012 (OJ L 193, 30.7.2018, p. 1).15.2.2019 EN Official Journal of the European Union L 44/9
Article 2
This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European
Union.
This Regulation shall be binding in its entirety and directly applicable in all Member States.
Done at Brussels, 14 February 2019.
For the Commission
The President
Jean-Claude JUNCKERL 44/10 EN Official Journal of the European Union 15.2.2019
ANNEX
Annexes I, V and VI to Implementing Regulation (EU) No 964/2014 are amended as follows:
1. In Annex I, the annotated table of content of a funding agreement between a managing authority and a financial
intermediary is amended as follows:
(a) In point 11 a new paragraph is introduced:
‘Provisions on management verifications and audit arrangements in line with paragraphs 1 and 2 of Article 40 of
Regulation (EU) No 1303/2013 in cases where the bodies implementing the financial instruments are the EIB or
other international financial institutions in which a Member State is a shareholder.’;
(b) In point 17, the third paragraph is replaced by the following:
‘Provisions regarding the re-use of resources attributable to the support of the ESI Funds until the end of the
eligibility period in compliance with Article 44 of Regulation (EU) No 1303/2013 and, where applicable,
provisions regarding differentiated treatment as referred to in Article 43a.’;
2. In Annex V, the terms and conditions for the Co-Investment Facility are amended as follows:
(a) in the section ‘Fund Contribution to financial instrument: amount and rate (product details)’, the fourth
paragraph is replaced by the following:
‘Differentiated treatment of investors operating under the market economy principle, aimed solely at asymmetric
profit-sharing, shall be set in line with Article 43a of Regulation (EU) No 1303/2013 and Article 21(13)(b) of
Regulation (EU) No 651/2014.’;
(b) in the section ‘Eligible Financial Intermediary and Co-investors’, the third paragraph is replaced by the following:
‘The managing authority and fund of funds shall comply with Union law when selecting financial interme
diaries. The selection of financial intermediaries shall be open, transparent, proportionate and non-discriminatory,
avoiding conflict of interests. The selection of the financial intermediaries shall establish appropriate risk-sharing
arrangements in the case of differentiated treatment and determine possible carried interest.’;
3. In Annex VI, the terms and conditions for the Urban Development Fund are amended as follows:
(a) in the section ‘State aid implication’, the fifth paragraph is replaced by the following:
‘Differentiated treatment (asymmetric conditions on risk-sharing arrangements) for the fund of funds, financial
intermediary contribution and co-investors contributions at fund level and project level in form of loans, if any,
shall be set in accordance with Article 43a of Regulation (EU) No 1303/2013, points (b) and (c) of Article 16(8)
of Regulation (EU) No 651/2014, as further specified under the pricing policy.’;
(b) in the section ‘Programme contribution to financial instrument: amount and rate (product details)’, the first para
graph is replaced by the following:
‘The actual risk sharing rate, programme public contribution, differentiated treatment and interest rate on loans
shall be based on the ex ante assessment findings and shall ensure that the benefit to the final recipients complies
with Article 16(8)(b) of Regulation (EU) No 651/2014.’;
(c) in the section ‘Lending and risk-sharing at financial intermediary level (alignment of interest)’, the sixth indent is
replaced by the following:
‘the risk-sharing with the financial intermediary and with co-investors (at fund level or at urban development
project level) shall be made pro-rata as for the programme contribution except if the ex ante assessment as
referred in Article 37(2)(c) of Regulation (EU) No 1303/2013 demonstrates that differentiated treatment is needed
in the form of an asymmetric risk-sharing set between co-investors. Such arrangements shall be in line with
Article 16(8)(b) and (c) of Regulation (EU) No 651/2014 and included in the co-investment agreement between
the parties. Such arrangements do not apply to the 1 % invested by the financial intermediary from its own
resources as required here above for the purpose of alignment of interest.’;15.2.2019 EN Official Journal of the European Union L 44/11
(d) in the section ‘Eligible Financial Intermediaries’, the sixth paragraph is replaced by the following:
‘The managing authority and the fund of funds shall comply with Union law when selecting financial interme
diaries. The selection of financial intermediaries shall be open, transparent, proportionate and non-discriminatory,
avoiding conflict of interests. The selection of the financial intermediaries shall aim at establishing appropriate
risk-sharing arrangements in case of differentiated treatment.’