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Social Entrepreneurship Funds

Social businesses combine a social, ethical or environmental mission with the entrepreneurial flair and innovation of a business perspective. They can face some specific challenges in getting investments. The Commission announced in the Single Market Act work to explore how private investment funds might help, so that investors and social businesses better reap the benefits of the single market. This includes ensuring there are no unintended barriers within EU fund rules to the efficient channeling of investments to social businesses.

This work forms part of the Social Business Initiative.

Proposal for a Regulation amending Regulation (EU) No 345/2013 on European venture capital funds (EuVECA) and Regulation (EU) No 346/2013 on European social entrepreneurship funds (EuSEF) - 14.07.2016

The Proposal is designed to improve existing legislation that governs European Venture Capital Funds, EuVECA, and European Social Entrepreneurship Funds, EuSEF. These are funds supporting young and innovative companies, or enterprises with the intention of generating positive social impact. The Proposal will amend the regulations in three main ways: extending the range of managers eligible to market and manage EuVECA and EuSEF funds; increasing the range of companies that can be invested in by EuVECA funds; and making the registration and cross border marketing of these funds easier and cheaper. This Proposal is part of the Capital Markets Union (CMU) Action Plan and very well fits with its aim to unlock market-based investments to SMEs and long-term projects.

Public consultation on the review of the European Venture Capital Funds (EuVECA) and European Social Entrepreneurship Funds (EuSEF) regulations – 30.09.2015

The objective of this consultation is to collect further information on the performance of the current legislation and identify measures the Commission could propose to increase take-up of the of EuVECA and EuSEF fundraising passports for venture capital and social entrepreneurship funds.

This consultation takes up the replies received in the CMU consultation and requests more details as to where and how the regulations could be changed to increase the take up of these funds without reducing the existing levels of investor protection.

Regulation on European Social Entrepreneurship Funds

The regulation sets out a new ”European Social Entrepreneurship Fund“ label, so investors can easily identify funds that focus on investing in European social businesses. The approach is simple: once the uniform requirements defined in the proposal are met, managers of social entrepreneurship funds will be able to use the new label and market their funds across the whole of Europe. Every fund using the label will have to prove that a high percentage of investments (70% of the capital received from investors) are spent in supporting social businesses. Uniform rules on disclosure will ensure that investors get clear and effective information on these investments.

Text of the regulation as adopted by the European Parliament and the Council (17.04.2013)

Implementing acts

Implementing regulation (EU) No 594/2014 – 03.06.2014

On 3 June 2014 the Commission adopted implementing technical standards for Regulation (EU) No 346/2013 on European social entrepreneurship funds (EuSEF). The implementing regulation deals with the format of the notification according to Article 17(1) concerning events related to the passport of the managers of qualifying social entrepreneurship funds and to article 22(3) concerning removal of a manager of a EuSEF from the register.

Background documents

Regulation on European Social Entrepreneurship Funds: original proposal by the Commission (07.12.2011)

Consultation – 13.07.2011