Regulation (EU) No 346/2013 of the European Parliament and of the CouncilDangos y teitl llawn

CHAPTER I U.K. SUBJECT MATTER, SCOPE AND DEFINITIONS

Article 1 U.K.

This Regulation lays down uniform requirements and conditions for managers of collective investment undertakings that wish to use the designation ‘[F1 SEF]’ in relation to the marketing of qualifying social entrepreneurship funds in the [F2 United Kingdom].

It also lays down F3 ... rules for the marketing of qualifying social entrepreneurship funds to eligible investors [F4 in the United Kingdom], for the portfolio composition of qualifying social entrepreneurship funds, for the eligible investment instruments and techniques to be used by qualifying social entrepreneurship funds as well as for the organisation, conduct and transparency of managers that market qualifying social entrepreneurship funds [F4 in the United Kingdom].

Textual Amendments

F1 Word in Art. 1 substituted (31.12.2020) by The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(1)(a)(i) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F2 Words in Art. 1 substituted (31.12.2020) by The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(1)(a)(ii) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F3 Word in Art. 1 omitted (31.12.2020) by virtue of The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(1)(b)(i) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F4 Words in Art. 1 substituted (31.12.2020) by The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(1)(b)(ii) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

Article 2 U.K.

1. This Regulation applies to managers of collective investment undertakings as defined in point (a) of Article 3(1) that meet the following conditions:

(a) their assets under management in total do not exceed the threshold referred to in [F5 sub-paragraph (a) of regulation 9(1) of the AIFM Regulations];

(b) they are established in the [F6 United Kingdom];

(c) they are subject to registration with the [F7 FCA in accordance with regulation 10 of the AIFM Regulations]; and

(d) they manage portfolios of qualifying social entrepreneurship funds.

[F8 2. Articles 3 to 6, Articles 10 and 13, points (d), (e) and (f) of Article 14(1), Articles 15a [F9 , 18 and 19]F10 ... 22 and 22a of this Regulation shall apply to managers of collective investment undertakings [F11 who have permission under Part 4A of FSMA to carry on the regulated activity specified by article 51ZC of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (managing an AIF)] [F12 and who manage] portfolios of qualifying social entrepreneurship funds and intend to use the designation ‘[F13 SEF]’ in relation to the marketing of those funds in the [F14 United Kingdom].]

3. Where managers of qualifying social entrepreneurship funds are external managers and are registered in accordance with Article 15, they may additionally manage [F15 UK UCITS (which has the meaning given in section 237 of FSMA)].

Textual Amendments

F5 Words in Art. 2(1)(a) substituted (31.12.2020) by The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(2)(a)(i) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F6 Words in Art. 2(1)(b) substituted (31.12.2020) by The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(2)(a)(ii) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F7 Words in Art. 2(1)(c) substituted (31.12.2020) by The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(2)(a)(iii) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F8 Substituted by Regulation (EU) 2017/1991 of the European Parliament and of the Council of 25 October 2017 amending Regulation (EU) No 345/2013 on European venture capital funds and Regulation (EU) No 346/2013 on European social entrepreneurship funds (Text with EEA relevance).

F9 Words in Art. 2(2) substituted (31.12.2020) by The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(2)(b)(i) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F10 Words in Art. 2(2) omitted (31.12.2020) by virtue of The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(2)(b)(ii) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F11 Words in Art. 2(2) substituted (31.12.2020) by The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(2)(b)(iii) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F12 Words in Art. 2(2) substituted (31.12.2020) by The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(2)(b)(iv) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F13 Word in Art. 2(2) substituted (31.12.2020) by The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(2)(b)(v) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F14 Words in Art. 2(2) substituted (31.12.2020) by The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(2)(b)(vi) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F15 Words in Art. 2(3) substituted (31.12.2020) by The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(2)(c) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

Article 3 U.K.

1. For the purposes of this Regulation, the following definitions shall apply:

(a) ‘collective investment undertaking’ means an AIF as defined in [F16 regulation 3 of the AIFM Regulations];

(b) ‘qualifying social entrepreneurship fund’ [F17 , unless the contrary intention appears,] means a collective investment undertaking that:

(i)

intends to invest at least 70 % of its aggregate capital contributions and uncalled committed capital in assets that are qualifying investments, calculated on the basis of amounts investible after deduction of all relevant costs and holdings in cash and cash equivalents, within a time frame laid down in its rules or instruments of incorporation;

(ii)

does not use more than 30 % of its aggregate capital contributions and uncalled committed capital for the acquisition of assets other than qualifying investments, calculated on the basis of amounts investible after deduction of all relevant costs and holdings in cash and cash equivalents;

(iii)

is established within the [F18 United Kingdom];

(c) ‘manager of a qualifying social entrepreneurship fund’ means a legal person the regular business of which is managing at least one qualifying social entrepreneurship fund;

(d) ‘qualifying portfolio undertaking’ means an undertaking that:

(i)

at the time of an investment by the qualifying social entrepreneurship fund is not admitted to trading on a [F19 UK regulated market, an EU regulated market, a UK multilateral trading facility or an EU multilateral trading facility (as defined by points (13A), (13B), (14A) and (14B) of Article 2 of the Markets in Financial Instruments Regulation 2014);]

(ii)

[F8 has the achievement of measurable, positive social impacts as its primary objective in accordance with its articles of association, statutes or any other rules or instruments of incorporation establishing the business, where the undertaking:

• provides services or goods which generate a social return;

• employs a method of production of goods or services that embodies its social objective; or

• provides financial support exclusively to social undertakings as defined in the first two indents;]

(iii)

uses its profits primarily to achieve its primary social objective in accordance with its articles of association, statutes or any other rules or instruments of incorporation establishing the business and with the predefined procedures and rules therein, which determine the circumstances in which profits are distributed to shareholders and owners to ensure that any such distribution of profits does not undermine its primary objective;

(iv)

is managed in an accountable and transparent way, in particular by involving workers, customers and stakeholders affected by its business activities;

(v)

is established within the territory of [F20 the United Kingdom,], or in a third country provided that the third country:

• is not listed as a Non-Cooperative Country and Territory by the Financial Action Task Force on Anti-Money Laundering and Terrorist Financing,

• has signed an agreement with the [F21 United Kingdom] to ensure that the third country fully complies with the standards laid down in Article 26 of the OECD Model Tax Convention on Income and on Capital and ensures an effective exchange of information in tax matters, including any multilateral tax agreements;

(e) ‘qualifying investments’ means any of the following instruments:

(i)

equity or quasi-equity instruments that are issued by:

• a qualifying portfolio undertaking and acquired directly by the qualifying social entrepreneurship fund from the qualifying portfolio undertaking,

• a qualifying portfolio undertaking in exchange for an equity security issued by the qualifying portfolio undertaking, or

• an undertaking of which the qualifying portfolio undertaking is a majority-owned subsidiary and which is acquired by the qualifying social entrepreneurship fund in exchange for an equity instrument issued by the qualifying portfolio undertaking;

(ii)

securitised and un-securitised debt instruments, issued by a qualifying portfolio undertaking;

(iii)

units or shares of one or several other qualifying social entrepreneurship funds, provided that those qualifying social entrepreneurship funds have not themselves invested more than 10 % of their aggregate capital contributions and uncalled committed capital [F22 in—

(aa)

qualifying social entrepreneurship funds;

(bb)

European qualifying social entrepreneurship funds (which has the meaning given to ‘qualifying social entrepreneurship funds’ in Article 3(1)(b) of this Regulation as it applies in the European Union, as amended from time to time);]

(iv)

secured or unsecured loans granted by the qualifying social entrepreneurship fund to a qualifying portfolio undertaking;

(v)

any other type of participation in a qualifying portfolio undertaking;

(vi)

[F23 an instrument within the meaning of Article 3(1)(e)(ii) of this Regulation as it applies in the European Union, as amended from time to time;]

(f) ‘relevant costs’ means all fees, charges and expenses which are directly or indirectly borne by investors and which are agreed between the manager of a qualifying social entrepreneurship fund and the investors therein;

(g) ‘equity’ means ownership interest in an undertaking, represented by the shares or other forms of participation in the capital of the qualifying portfolio undertaking issued to its investors;

(h) ‘quasi-equity’ means any type of financing instrument which is a combination of equity and debt, where the return on the instrument is linked to the profit or loss of the qualifying portfolio undertaking and where the repayment of the instrument in the event of default is not fully secured;

(i) ‘marketing’ means a direct or indirect offering or placement at the initiative of the manager of a qualifying social entrepreneurship fund, or on its behalf, of units or shares of a qualifying social entrepreneurship fund that is managed by that manager to or with investors domiciled or with a registered office in the [F24 United Kingdom];

(j) ‘committed capital’ means any commitment pursuant to which an investor is obliged, within the time frame laid down in the rules or instruments of incorporation of the qualifying social entrepreneurship fund, to acquire an interest in, or to make capital contributions to, that fund;

F25 (k) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F26 (l) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F27 (m) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F28 (n) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F29 (o) ‘the FCA’ means the Financial Conduct Authority;

(p) ‘FSMA’ means the Financial Services and Markets Act 2000;

(q) ‘the AIFM Regulations’ means the Alternative Investment Fund Managers Regulations 2013;

(r) ‘the Markets in Financial Instruments Regulation 2014’ means Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012 as that Regulation forms part of domestic law and has effect from time to time.

Any reference in this Regulation to a sourcebook is to a sourcebook in the Handbook of Rules and Guidance published by the FCA containing rules made and guidance issued by the FCA under FSMA as the sourcebook has effect on IP completion day.]

With regard to point (c) of the first subparagraph, where the legal form of a qualifying social entrepreneurship fund permits internal management and where the governing body of the fund does not appoint an external manager, the qualifying social entrepreneurship fund itself shall be registered as the manager of a qualifying social entrepreneurship fund in accordance with Article 15. A qualifying social entrepreneurship fund that is registered as an internal manager of a social entrepreneurship fund shall not be registered as an external manager of a qualifying social entrepreneurship fund of other collective investment undertakings.

2. The [F30 Treasury may by regulations specify] the types of services or goods and the methods of production of services or goods that embody a social objective referred to in point (ii) of point (d) of paragraph 1 of this Article taking into account the different kinds of qualifying portfolio undertakings and those circumstances in which profits can be distributed to owners and investors.

Textual Amendments

F8 Substituted by Regulation (EU) 2017/1991 of the European Parliament and of the Council of 25 October 2017 amending Regulation (EU) No 345/2013 on European venture capital funds and Regulation (EU) No 346/2013 on European social entrepreneurship funds (Text with EEA relevance).

F16 Words in Art. 3(1)(a) substituted (31.12.2020) by The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(3)(a)(i) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F17 Words in Art. 3(1)(b) inserted (31.12.2020) by The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(3)(a)(ii)(aa) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F18 Words in Art. 3(1)(b)(iii) substituted (31.12.2020) by The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(3)(a)(ii)(bb) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F19 Words in Art. 3(1)(d)(i) substituted (31.12.2020) by The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(3)(a)(iii)(aa) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F20 Words in Art. 3(1)(d)(v) substituted (31.12.2020) by The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(3)(a)(iii)(bb) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F21 Words in Art. 3(1)(d)(v) substituted (31.12.2020) by The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(3)(a)(iii)(cc) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F22 Words in Art. 3(1)(e)(iii) substituted (31.12.2020) by The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(3)(a)(iv)(aa) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F23 Art. 3(1)(e)(vi) inserted (31.12.2020) by The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(3)(a)(iv)(bb) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F24 Words in Art. 3(1)(i) substituted (31.12.2020) by The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(3)(a)(v) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F25 Art. 3(1)(k) omitted (31.12.2020) by virtue of The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(3)(a)(vi) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F26 Art. 3(1)(l) omitted (31.12.2020) by virtue of The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(3)(a)(vi) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F27 Art. 3(1)(m) omitted (31.12.2020) by virtue of The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(3)(a)(vi) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F28 Art. 3(1)(n) omitted (31.12.2020) by virtue of The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(3)(a)(vi) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

F29 Art. 3(1)(o)-(r) and words inserted (31.12.2020) by The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(3)(a)(vii) (with savings in S.I. 2019/680, reg. 11) (as amended by The Financial Services and Economic and Monetary Policy (Consequential Amendments) (EU Exit) Regulations 2020 (revoked) 2020 (S.I. 2020/1301), regs. 1, 3, Sch. para. 24(a)); 2020 c. 1, Sch. 5 para. 1(1)

F30 Words in Art. 3(2) substituted (31.12.2020) by The Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/343), regs. 1(1), 3(3)(b) (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)