Minister Martin welcomes Commission approval of BES and Seed Capital Schemes

The Minister for Enterprise, Trade and Employment Mr. Micheál Martin, T.D. today (Friday 29^th October 2004) strongly welcomed the European Commission approval of the Business Expansion Scheme (BES) and the Seed Capital Scheme (SCS) with effect from the 5^th February 2004. “These schemes are a vital source of seed capital, which is the life blood of start-up companies. They foster the development and growth of many Small and Medium Enterprises leading to the creation of quality employment opportunities,” the Minister said.

In accordance with the approval received from the European Commission, a small number of amendments to the legislation governing the schemes will be necessary. These amendments will take affect from 5 February 2004 and are as follows;

• Qualifying companies under BES and SCS will be SME’s within the meaning of the Community definition in force¹. The legislation will provide that the current Community definition of an SME will be applicable to 31 December 2004 and will also provide that the revised Community definition² will apply from 1 January 2005.

• The schemes will respect the investment tranche ceilings per company as set out in the “Commission Communication on State Aid and Risk Capital”. i.e. from 5 February 2004 a company may not raise more than €750,000 in any six month period. The limit of €1 million will remain as the lifetime limit a company can raise.

• Ship Building and European Coal and Steel Community sectors will be explicitly excluded from BES and SCS.

• Firms in difficulties, as defined by the Community Guidelines on State Aid for rescuing and restructuring firms in difficulty will not qualify for BES and SCS.

• Individual investments in companies registered in the EEA, and with an establishment in Ireland that carries out qualifying activities, will be eligible to BES and SCS.

Approval from the European Commission was required under Article 88 (3) of the EC Treaty.

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Commission Regulation (EC) No 70/2001, Annex 1. Small and medium-sized enterprises, are defined as enterprises which: have fewer than 250 employees, and have either, an annual turnover not exceeding EUR 40 million, or an annual balance-sheet total not exceeding EUR 27 million, conform to the criterion of independence as defined in paragraph 3.

Commission Recommendation effective from 1 January 2005. The category of SMEs is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding EUR 50 million, and/or an annual balance sheet total not exceeding EUR 43 million.

ENDS/ETE 1270