European Parliament approves new rules for social investments
European parliament voted overwhelmingly in favour of a bill enabling the creation of a new label identifying social entrepreneurship investment funds (EuSEF) this month, as well as introducing Europe-wide regulation of venture capital.
The new rules create a special ‘EU passport’ for fund manager that invest in start-up SMEs and social businesses. The latter represent 10% of all European businesses and have over 11m paid employees.
Commissioner Michel Barnier has welcomed the vote, saying “These new EU initiatives will increase opportunities for innovative start-ups or social businesses to find capital.”
Under the new rules, fund managers register with the competent authority in their home member state but can then market their venture capital and social entrepreneurship funds throughout the whole of the EU. They can target either institutional investors or retail investors who are willing and able to invest more than €100,000. The fund managers will not need to register and obtain marketing approval in each member state. The rules make sure that the funds focus at least 70% of the capital they raise on equity investments in unlisted SMEs or on equity or debt support for social enterprises.
Sven Giegold, German Green MEP and vice-president of the Intergroup for Social Economy, has hailed the decision as a great success: “The EuSEF legislation has for the first time created a fund that lays the foundations for the strengthening of the social economy. A social economy is the right response to one of the key problems that has pushed us into the current crisis: the short-term pursuit of profit.”
The new rules should come in to force before the summer.