European Investment Fund (EIF)
These statutes lay down the operating rules for the European Investment Fund (EIF). The EIF supports the growth and development of small and medium-sized enterprises. Its founder members are the European Investment Bank (EIB), the Commission and private European financial institutions.
Statutes of the European Investment Fund - approved 14 June 1994 and amended 19 June 2000 by the General Meeting [Official Journal C 225 of 10.08.2001]
The statutes of the European Investment Bank (EIB) authorise its Board of Governors, by unanimous decision, to create a European Investment Fund (EIF). The EIF was founded by a decision of the Board of Governors on 25 May 1993 and started its activities in 1994. These statutes set out the Fund's objectives, structure, capital, members, financial resources, intervention instruments, control rules and the relationship between the bodies of the EIB and of the EIF.
Contribution to the pursuit of Community objectives
The main objective of the EIF is to support the creation, growth and development of small and medium-sized enterprises (SMEs) through venture capital instruments and guarantees. It may conduct its activities in the territory of the Member States of the Community, in countries that have applied to become members of the Community and in respect of which the accession process has commenced, in countries of the European Free Trade Association [PDF] and in countries adjacent to the EU where cross-border projects are involved. The Fund has legal personality and financial autonomy.
It supports Community objectives through the following:
- the provision of guarantees as well as other comparable instruments for loans and other financial obligations in whatever form is legally permissible;
- the acquisition, holding, managing and disposal of holdings in enterprises subject to the conditions decided on at the EIF's Annual General Meeting;
- other activities connected with the tasks of the EIF, including borrowing operations.
The statutes provide for an initial capital of 2 000 million, which may be increased by decision of the General Meeting acting by a majority of 85% of the votes cast. In the event of an increase in capital, each member is entitled to subscribe to a fraction of the increase corresponding to the ratio between the shares subscribed to by that member and the capital of the Fund before the increase. The members of the Fund are liable for the obligations of the Fund only up to the amount of their share of the capital subscribed and not paid in.
The fund is managed and administered by the General Meeting, the Board of Directors and the Chief Executive.
General Meeting - The General Meeting consists of the members of the Fund, i.e. the European Community, represented by the European Commission, the EIB and the financial institutions listed in the annex to the statutes.
In particular, it takes decisions authorising the Fund to conduct financial operations in order to achieve Community objectives. It also:
- approves the Fund's Rules of Procedure;
- decides on the admission of new members;
- approves the annual report of the Board of Directors;
- approves the annual balance sheet and profit and loss account;
- decides on the appropriation and distribution of the net income of the Fund; etc.
The General Meeting is held once a year when convened by the Chairman of the Board of Directors. Each member of the Fund has a number of votes equal to the number of shares it has subscribed. Decisions are adopted by the majority of the votes cast, unless otherwise provided for by the statutes. The quorum required for the holding of General Meetings is constituted when members present or represented hold not less than 50 per cent of the subscribed capital. General Meetings are chaired by the representative of the member with the highest number of shares in the Fund. The General Meeting may also vary the number of members on the Board of Directors.
Board of Directors - The Board of Directors consists of seven members appointed by the AGM and designated by the members of the Fund. Members act independently and serve the best interests of the Fund. They are accountable only to the General Meeting. Their term of office is two years and is renewable.
The Board of Directors
- decides on all operations of the Fund.
- adopts guidelines and guiding principles for Fund operations and management;
- draws up proposals for submission to the General Meeting;
- lays down the general conditions for acquisitions of shares in the Fund;
- sets return criteria for the Fund's operations; etc.
The Board of Directors is chaired by one of its members. It meets as often as required by the interests of the Fund and at least once per quarter. Decisions are adopted by majority, provided not less than half of the Board members are present.
The Chief Executive - The Chief Executive acts independently, but is accountable to the Board of Directors. The appointment is for an extendable five-year term.
The Chief Executive is responsible for the day-to-day management of the Fund. He/she must:
- act in line with the guidelines and guiding principles adopted by the Board of Directors;
- submit the annual report of the Fund to the Board of Directors;
- oversee the drawing up of the annual accounts of the Fund;
- submit to the Board of Directors any reports or additional memoranda provided for in the statutes.
How the EIF works
The Fund accounts are audited annually by an audit board consisting of between three and five auditors appointed by the General Meeting.
The level of remuneration or other income sought by the Fund in connection with its activities must reflect the risks incurred, cover the operating expenses and establish reserves.
With respect to the provision of guarantees, the limits on the commitments of the Fund are laid down by the Board of Directors. The limits on the commitments of the Fund when acquiring shareholdings in enterprises are laid down by the General Meeting.
The overall commitments of the EIF may not exceed, for guarantee operations, three times the amount of subscribed capital (this ceiling may be raised by decision of the General Meeting up to a maximum of five times the subscribed capital) and, for acquisitions of shareholdings, the amount decided by the General Meeting.
The Board of Directors may, if circumstances so require, temporarily suspend the operations of the Fund. It refers the matter to the General Meeting, which, acting with a qualified majority of 85% of the votes cast, may decide to permanently terminate the operations of the Fund.
The Fund carries out its tasks in cooperation with third parties and international organisations. Disputes between the Fund and beneficiaries of its operations are decided by the competent national courts. The Fund's headquarters are in Luxembourg.
The EIB is a public bank set up to promote EU policies. It was founded in 1958 under the Treaty of Rome at the same time as the European Economic Community (EEC). The EIB grants loans, which it finances through borrowing on the capital markets rather than by drawing on the EU budget. It often cofinances projects with the European Commission, which manages the EU's non-reimbursable aid, particularly the structural funds.
The EIF is the risk capital arm of the EIB. It was created in 1994 to promote small and medium-sized enterprises (SMEs), in particular, and invests in venture capital funds aimed at supporting rapidly developing enterprises and companies operating in new technology industries. It also provides guarantees for claims on SMEs to banks granting medium- or long-term loans to these companies. In addition, the EIF's Financial Engineering and Advisory Services division actively engages in providing strategic and technical counselling to its counterparts in the public and private sectors.
This fact sheet is not legally binding on the European Commission. It does not claim to be exhaustive and does not represent an official interpretation of the text of the Treaty.