[ESMA34-36-253] Q&A on the Application of the EuSEF and EuVECA Regulations

ESMA published a new version of the Questions and Answers on the Application of the EuSEF and EuVECA Regulations.
This event contains a summary of the full Q&A although only question 5 was added to the document. This is because we have not reported on these questions and answers in the past, as the document was originally published in 2014. New updates will be recorded separately in the future when they are published.
The purpose of this document is to promote common supervisory approaches and practices in the application of the EuSEF and EuVECA Regulations. It does this by providing responses to questions posed by the general public and competent authorities in relation to the practical application of these Regulations.
The content of this document is aimed at competent authorities under EuSEF and EuVECA Regulations to ensure that in their supervisory activities their actions are converging along the lines of the responses adopted by ESMA. However, the answers are also intended to help EuSEF and EuVECA managers by providing clarity as to the content of the rules of the Regulations, rather than creating an extra layer of requirements.
The Q&A contains following questions:
Question 1: Management of EuSEF and EuVECA by AIFMs // page 4
Question 1a: Can EuSEF and EuVECA managers that subsequently exceed the threshold of Article 3(2)(b) of the AIFMD set up new EuSEF and EuVECA funds once the threshold is exceeded?
Answer 1a: Yes.
Question 1b: Can AIFMs above the threshold of Article 3(2)(b) of the AIFMD manage and market EuSEF and EuVECA?
Answer 1b: Yes.
Question 1c: Which provisions should apply to AIFMs above the threshold of Article 3(2)(b) of the AIFMD that manage and market EuSEF and EuVECA?
Answer 1c: In accordance with Article 2(2) of the EuVECA and EuSEF Regulations, where the total assets under management of managers of qualifying social entrepreneurship funds/qualifying venture capital funds registered in accordance with Article 15/Article 14 respectively subsequently exceed the threshold referred to in point (b) of Article 3(2) of Directive 2011/61/EU, and where those managers are therefore subject to authorisation in accordance with Article 6 of that Directive, they have to comply with the requirements of the AIFMD and the following provisions:
– Articles 3 (definitions), 5 (rules on non-qualifying assets, leverage and borrowing) and points (c) and (i) of Article 13 (information to investors) of the EuVECA Regulation; and
– Articles 3 (definitions), 5 (rules on non-qualifying assets, leverage and borrowing), 10 (measurement of social impact), 13(2) and points (d), (e) and (f) of Article 14(1) (information to investors) of the EuSEF Regulation
The same provisions of each Regulation, in addition to the AIFMD, should therefore apply to AIFMs above the threshold of Article 3(2)(b) of the AIFMD that manage and market EuSEF and EuVECA (i.e. to those AIFMs who have continuously been above the threshold of Article 3(2)(b) rather than subsequently exceeding that threshold).
Question 2: Registration of EuSEF and EuVECA managers // page 6
Should EuSEF and EuVECA managers register with their national competent authorities twice i.e. once under the AIFMD and once under the EuSEF and EuVECA Regulations?
Answer 2: EuSEF and EuVECA managers have to register with the competent authority of their home Member State twice, once in accordance with the AIFMD, and once in accordance with the EuSEF and EuVECA Regulations.
Question 3: Management and marketing of AIFs by EuSEF and EuVECA managers // page 7
Can EuSEF and EuVECA managers manage and market AIFs?
Answer 3: Yes. EuSEF and EuVECA managers can manage and market AIFs, since this is not prohibited by the Regulations. However, these managers will not benefit from the passport set out in Chapter III of EuVECA Regulation and of EuSEF Regulation regarding those AIFs which are not EuSEF or EuVECA.
Question 4: Use of EuSEF and EuVECA designations // page 7
Are EuSEF and EuVECA funds allowed to use the designations “EuSEF” or “EuVECA”, respectively, even if they are only marketed in their home Member State?
Answer 4: Yes. The conditions for the use of the designations “EuSEF” and “EuVECA” are linked to the compliance of their managers with qualitative requirements (cf. chapter II of the respective Regulations), and not subject to any requirement to market the respective fund in more than one Member State.
Question 5 – New (in this Version) : Investment in another qualifying venture capital fund/qualifying social entrepreneurship fund // page 7
1. According to Article 3(b) and (e)(iv) of Regulation (EU) No 345/2013 (“EuVECA Regulation”), can a EuVECA fund invest in another qualifying venture capital fund (“Fund”) which has not been registered as EuVECA as long as that Fund materially complies with the criteria of the definition of qualifying venture capital funds?
2. According to Article 3(b) and (e)(iii) of Regulation (EU) No 346/2013 (“EuSEF Regulation”), can a EuSEF fund invest in another qualifying social entrepreneurship fund (“Fund”) which has not been registered as EuSEF as long as that Fund materially complies with the criteria of the definition of qualifying social entrepreneurship fund?
Answer 5: Yes to (1) and (2) provided that those qualifying venture capital (respectively social entrepreneurship) funds have not themselves invested more than 10% of their aggregate capital contributions and uncalled committed capital in other qualifying venture capital (respectively social entrepreneurship) funds as per Article 3(e)(iv) of Regulation (EU) 345/2013 (respectively Article 3(e)(iii) of the Regulation (EU) 346/2013).