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New EU law to help firms get funding

Tuesday, March 12 14:21:44

The European Parliament voted today to change EU rules to make it easier for venture capital funds to invest in start-up businesses across the 27-country bloc.

The change, which introduces a special EU "passport" for funds that invest in new small enterprises, is part of a broader push to make European law more growth-friendly by cutting the regulatory burden on some types of investment or lending.

By lifting the requirement on venture capital funds to apply for approval to operate in each EU country where they are active, it should become easier for such groups to invest and raise funds across the European Union.

Michel Barnier, the European commissioner in charge of financial regulation, called on investors to "seize the new opportunities as a matter of urgency".

His remarks underscore the sense of alarm among political leaders as the euro zone remains in economic recession, in the face of falling investment and slack consumer spending.

In addition to the bleak economic outlook, small businesses are finding it increasingly difficult to borrow from banks, who are reigning in lending after the collapse of a credit bubble.

"These new EU initiatives will increase opportunities for innovative start-ups or social businesses to find capital," Barnier said in a statement. "Better funding for smaller companies is key for Europe's economy."