Decision No 593/2004/EC of the European Parliament and of the Council
of 21 July 2004
amending Council Decision 2000/819/EC on a multiannual programme for enterprise and entrepreneurship, and in particular for small and medium-sized enterprises (SMEs) (2001-2005)
(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community, and in particular Article 157(3) thereof,
Having regard to the proposal from the Commission,
Having regard to the opinion of the European Economic and Social Committee,
Opinion delivered on 30 June 2004 (not yet published in the Official Journal).
After consulting the Committee of the Regions,
Acting in accordance with the procedure laid down in Article 251 of the Treaty,
Opinion of the European Parliament of 22 April 2004 (not yet published in the Official Journal) and Council Decision of 19 July 2004.
Whereas:
(1) On 5 November 1997, the Commission adopted Decision 97/761/EC approving a support mechanism for the creation of transnational joint ventures for SMEs in the Community.
OJ L 310, 13.11.1997, p. 28.
(2) The ETF Start-up Facility, the Joint European Venture (JEV) programme and the SME Guarantee Facility were measures provided for in Council Decision 98/347/EC of 19 May 1998 on measures of financial assistance for innovative and job-creating small and medium-sized enterprises (SMEs) — the growth and employment initiative.
OJ L 155, 29.5.1998, p. 43.
(3) The multiannual programme set up by Decision 2000/819/EC, aims at improving the financial environment for business, in particular by improving the functioning of the ETF Start-up Facility, amending the SME Guarantee Facility and, with regard to JEV, by using, for the benefit of undertakings planning to enter into a transnational partnership, the commitments effected up until 31 December 2000 under Decision 98/347/EC.
OJ L 333, 29.12.2000, p. 84. Decision amended by the 2003 Act of Accession.
(4) The purpose of the ETF Start-up Facility, JEV programme, and SME Guarantee Facility must be to efficiently address market failures in the access for SMEs to risk capital through enhancing participation of both private and public actors, with the aim of reaching distribution rates of 100 %.
(5) According to point IV of Annex II to Decision 2000/819/EC, experience has shown that the JEV programme needs to be simplified in order to enable SMEs' requests for financial contributions to be dealt with quickly by the financial intermediaries and Commission departments and to ensure that Community resources are used correctly. It was also stated that the Commission was examining the possibility of adapting the eligibility criteria in order to respond more effectively to the needs of SMEs with regard to cross-border investments, including those in applicant States.
(6) On 10 October 2002 the European Parliament adopted a resolution on the Report from the Commission to the European Parliament and the Council on Growth and Employment Initiative — measures on financial assistance for innovative and job-creating small and medium-sized enterprises (SMEs), where it notes that the JEV programme in its current form is no longer appropriate.
OJ C 279 E, 20.11.2003, p. 78.
(7) The Commission's evaluation of the Growth and Employment Initiative as at 29 May 2002 concludes that the take-up of the JEV programme by the market is low, the job creation effect limited and the administrative cost very high and that JEV should be phased out as soon as possible.
(8) For reasons of cost-efficiency, the Community should withdraw progressively from programmes that involve micro-management of small amounts of money, as is the case with the projects financed under the JEV programme.
(9) After careful analysis, it has to be concluded that a substantial simplification of the JEV programme is not possible, since any substantial change to the structure or eligibility criteria of the programme would change its nature and therefore be outside the scope of the legal basis (Decision 98/347/EC). Therefore it would not be possible to use the remaining committed budget nor would it be possible to use the budget for projects involving the then accession countries and the candidate countries.
(10) The budget for the JEV programme was committed on the basis of framework agreements signed with the financial intermediaries in the JEV network, thus creating a direct legal relationship between the Commission and these intermediaries. Therefore a replacement of these existing framework agreements with direct legal agreements between the Commission and SMEs, which, in this particular programme, would have resulted in simplification and improved protection of the financial interests of the Community, is not possible.
(11) Only relatively minor procedural changes would be possible without losing the remaining committed budget, and these are deemed to be insufficient to ensure that the JEV programme performs significantly better.
(12) It is not possible to use the remaining committed budget for projects involving the then accession countries and the candidate countries, since this budget was committed under the Growth and Employment Initiative (1998-2000) and is therefore reserved exclusively for those states that are members of the European Union and European Economic Area, as provided by Decision 98/347/EC.
(13) Since the phasing-out of the other two European transnational joint venture programmes — European Community Investment Partners (ECIP) for the developing countries in Asia, Latin America, the Mediterranean region and South Africa (ALAMEDSA countries) in 1999 and the Programme to promote SME joint ventures and other joint agreements (JOP) in the Central and Eastern European Countries (CEECs) and New Independent States (NIS) in 2000 — many financial intermediaries in the JEV network have scaled down or ceased this activity because of the low volume of JEV applications from SMEs with the result that in the majority of Member States, in reality, it is no longer possible to apply for participation in the programme.
(14) In view of the clear conclusion of the evaluation, it is not considered appropriate to propose replacing the JEV programme with a similar one.
(15) The phasing-out of the JEV programme should not affect the rights and obligations of the Community, the financial intermediaries or the beneficiaries (SMEs) that relate to approved projects.
(16) In observance of their legitimate expectations, the financial intermediaries should be allowed to present applications for financial contributions for SMEs for a certain period after this Decision has been adopted.
(17) On 23 October 2003 the European Parliament adopted a resolution on entrepreneurship in Europe, where it calls for the establishment of systems allowing improved access, in particular for small and micro-enterprises, to European Investment Bank/European Investment Fund funds for investments in new technologies and investments linked to training.
(18) For the purpose of promoting innovation, research and development and entrepreneurship by SMEs, as requested by the Barcelona Council, an environment favourable to private sector investment in research and development, in particular through venture capital, should be encouraged.
(19) The Commission has committed itself to reforming the existing multiannual programme for enterprise and entrepreneurship in due time taking into account the necessity of promoting cooperation between enterprises and business organisations and of supporting dialogue between horizontal and sectoral or professional organisations of small and micro-enterprises and craft enterprises.
(20) The Council of 26 November 2002 stated that Member States, the Commission and financial institutions should consider how to improve the financial framework for biotechnologies.
(21) The European Parliament requested, in its resolution on life sciences and biotechnologies of 21 November 2002, that the Commission should identify how to overcome the issue of insufficient funding regarding biotech start-ups and asked the European Investment Bank to give favourable consideration to follow-up actions.
OJ C 25 E, 29.1.2004, p. 384.
(22) Decision 2000/819/EC should be amended accordingly,
HAVE ADOPTED THIS DECISION:

Article 1 Decision 2000/819/EC is hereby amended as follows:
1. Article 5(1) shall be replaced by the following:

‘1. The Commission shall submit to the European Parliament and to the Council an annual report on the implementation of the financial instruments of this programme for 2004 as well as a similar end report for 2005 (the final year).’;

2. Annex I shall be amended as follows:
(a) in the first indent of point 4(a)(i), the first sentence shall be replaced by the following:

‘— by investing in relevant specialised venture capital funds, particularly in seed funds, smaller funds, funds operating regionally or funds focused on specific sectors or technologies, or venture capital funds financing R&D, e.g. funds linked to research centres and science parks which in turn provide risk capital for SMEs.’;

(b) in point 4(a)(i) the following subparagraph shall be added:

‘The start-up phase is normally defined as up to five years. However, for companies in specific high technology sectors, in particular life sciences, the start-up phase can be up to 10 years, due to the extended pre-commercialisation product development and testing phases that are characteristic of these particular sectors.’;

(c) in point 4(a)(iv), the following subparagraphs shall be added:

‘The Joint European Venture programme shall be phased out.
The financial intermediaries may present applications for financial contributions from SMEs to the Commission until 29 December 2004.
Applications and projects shall be dealt with according to Article 4 and Annex II of Council Decision 98/347/EC of 19 May 1998 on measures of financial assistance for innovative and job-creating small and medium-sized enterprises (SMEs) — the growth and employment initiative.
OJ L 155, 29.5.1998, p. 43.’’

(d) in the first indent of point 5, the word ‘fifth’ shall be deleted;
3. in Annex II, point IV shall be deleted.
Article 2 This Decision shall enter into force on the twentieth day following its publication in the Official Journal of the European Union.
Article 3 This Decision is addressed to the Member States.
Done at Strasbourg, 21 July 2004.
For the European Parliament
The President
J. P. Borrel
For the Council
The President
A. Nicolaï