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Finance for innovation and enterprise (European Investment Fund)

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Finance for innovation and enterprise (European Investment Fund)

 

SUMMARY

The European Investment Fund (EIF) provides risk finance to support small and medium-sized enterprises (SMEs). Its shareholders are the European Investment Bank (EIB), the European Union (EU), represented by the European Commission, and public and private financial institutions, currently from 15 EU countries and Turkey.

WHAT DO THESE STATUTES DO?

They set out:

the EIF’s tasks and activities,

the framework for the functioning and decision-making authority of the governing bodies,

EIF’s authorised capital,

the framework concerning the EIF’s members and shares.

KEY POINTS

EIF may conduct its activities in the territory of the EU countries, in candidate and potential candidate countries for EU membership, and in the European Free Trade Association (EFTA) countries. The General Meeting may decide that EIF may conduct mandate-specific activities beyond the above-mentioned geographical scope.

The EIF has legal personality and financial autonomy.

It supports the EU objectives of entrepreneurship, growth, innovation, research and employment by:

guarantees as well as other comparable instruments for loans and other financial obligations in whatever form is legally permissible;

acquiring, holding, managing and disposal of holdings in businesses subject to conditions decided on at the General Meeting;

other activities connected with its tasks, including borrowing operations.

The EIF's authorised capital is €4,5 billion divided into 4,500 shares, each with a nominal value of €1 million, open to subscription by its members. This may be increased by decision of the General Meeting.

EIF members are liable for its obligations only up to the amount of their share of the capital subscribed and not paid in.

Governing bodies

The EIF is managed and administered by the General Meeting, the Board of Directors and the Chief Executive.

1.

General Meeting comprises EIF shareholders. It generally decides by a majority of votes cast and meets at least annually. Proposals may also be submitted for decision by written procedure. The powers of the General Meeting include that it:

decides on the increase of the EIF’s authorised capital;

approves any changes to the Statutes and to its Rules of Procedure;

decides on the admission of members;

approves the annual report and accounts;

decides on the appropriation and distribution of the EIF’s net income;

appoints the members and alternate members of the Board of Directors and of the Audit Board.

2.

Board of Directors comprises members appointed by the General Meeting and designated by EIF shareholders for a 2-year period. The Board usually meets 10 times per year, and proposals may also be submitted for decision by written procedure. Its members act to serve the EIF’s best interests and are accountable to the General Meeting. It:

decides on all EIF operations (in certain limited instances, this power has been delegated to the Chief Executive);

adopts guidelines and guiding principles for operations and management;

appoints, and may dismiss, the Chief Executive and the Deputy Chief Executive;

draws up proposals for submission to the General Meeting;

lays down the general conditions for acquisitions of EIF shares.

The Chairman of the Board is elected from amongst its members by a majority vote. Decisions are adopted by majority, provided no fewer than half its members are present.

3.

The Chief Executive, who may be appointed for 5 years, is accountable to the Board. Acting independently, he/she is responsible for day-to-day management and must:

act in line with the Board’s guidelines;

submit the annual report and other reports to the Board;

oversee the drawing up of the annual accounts.

How the EIF works

The European Investment Fund (EIF) is part of the European Investment Bank Group. Its central mission is to support Europe’s micro, small and medium-sized enterprises (SMEs) by facilitating their access finance. EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment.

EIF accounts are audited by an independent external auditor. EIF’s Audit Board consists of 3 members, nominated respectively by the EIB, the European Commission and the financial institution shareholders, and 1 alternate member, designated on a rotating basis by the 3 shareholder groups. The members are appointed by and accountable to the General Meeting. The Audit Board, as an oversight body, confirms annually that, to the best of its knowledge and judgement, the operations of EIF have been carried out in compliance with the Statutes and the Rules of Procedure, and that the financial statements give a true and fair view of the financial position of EIF as regards its assets and liabilities, and of the results of its operations for the financial year under review.

EIF overall commitments may not exceed 3 times the amount of subscribed capital for guarantee operations. Under Article 26 of the Statutes, this ceiling may be raised to a maximum of 8 times the subscribed capital by the General Meeting. For participations, the amount is decided by the General Meeting.

Disputes between the EIF and its beneficiaries are decided by the competent national courts or through arbitration. Disputes concerning the measures adopted by the EIF’s bodies are subject to the jurisdiction of the Court of Justice of the European Union.

The Protocol on the Privileges and Immunities of the European Union (Protocol No 7) applies to the EIF, members of its bodies and its staff.

European Fund for Strategic Investments

In partnership with the European Commission, the EIF and EIB play a key role in the Investment Plan for Europe with the setting up of the European Fund for Strategic Investments (EFSI). Launched in 2015, EFSI seeks to mobilise private financing for strategic investments that cannot be funded by the market alone. EIF is responsible for the implementation of financing actions in favour of SMEs and Mid-Caps (i.e. companies with between 250 and 3,000 employees) under the SME Window of EFSI.

BACKGROUND

The EIF was established in 1994 and has its headquarters in Luxembourg.

ACT

Statutes of the European Investment Fund approved 14 June 1994 and amended 19 June 2000, 30 November 2007, 8 March 2012 and 27 May 2014 by the General Meeting (OJ C 95, 21.3.2015, pp. 22–31)

last update 19.10.2015

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