Index 
Texts adopted
Thursday, 18 April 2019 - StrasbourgFinal edition
China, notably the situation of religious and ethnic minorities
 Cameroon
 Brunei
 Eurojust-Denmark Agreement on Criminal Justice Cooperation *
 CO2 emission performance standards for new heavy duty vehicles ***I
 Promotion of clean and energy-efficient road transport vehicles ***I
 Use of digital tools and processes in company law ***I
 Cross-border conversions, mergers and divisions ***I
 European Defence Fund ***I
 Exposures in the form of covered bonds ***I
 Covered bonds and covered bond public supervision ***I
 InvestEU ***I
 European Maritime Single Window environment ***I
 Disclosures relating to sustainable investments and sustainability risks ***I
 Persistent organic pollutants ***I
 Clearing obligation, reporting requirements and risk-mitigation techniques for OTC derivatives, and trade repositories ***I
 Authorisation of CCPs and recognition of third-country CCPs ***I
 Promotion of the use of SME growth markets ***I
 Negotiations with Council and Commission on European Parliament's right of inquiry: legislative proposal
 A comprehensive European Union framework on endocrine disruptors

China, notably the situation of religious and ethnic minorities
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European Parliament resolution of 18 April 2019 on China, notably the situation of religious and ethnic minorities (2019/2690(RSP))
P8_TA(2019)0422RC-B8-0255/2019

The European Parliament,

–  having regard to its previous resolutions on the situation in China, in particular those of 26 November 2009 on China: minority rights and application of the death penalty(1), of 10 March 2011 on the situation and cultural heritage in Kashgar (Xinjiang Uyghur Autonomous Region)(2), of 15 December 2016 on the cases of the Larung Gar Tibetan Buddhist Academy and Ilham Tohti(3), of 12 September 2018 on the state of EU-China relations(4) and of 4 October 2018 on mass arbitrary detention of Uyghurs and Kazakhs in the Xinjiang Uyghur Autonomous Region(5),

–  having regard to the EU-China Strategic Partnership launched in 2003 and to the joint communication from the Commission and the High Representative of the Union for Foreign Affairs and Security Policy of 22 June 2016 entitled ‘Elements for a new EU strategy on China’(JOIN(2016)0030),

–  having regard to the EU guidelines on the promotion and protection of freedom of religion or belief, adopted by the Foreign Affairs Council on 24 June 2013,

–  having regard to the joint communication from the Commission and the High Representative of the Union for Foreign Affairs and Security Policy of 12 March 2019 entitled ‘EU-China – A strategic outlook’(JOIN(2019)0005),

–  having regard to the ‘Joint statement of the 21st EU-China summit’ of 9 April 2019,

–  having regard to the EU-China dialogue on human rights, launched in 1995, and the 37th round thereof, held in Brussels on 1 and 2 April 2019,

–  having regard to Article 36 of the Constitution of the People’s Republic of China, which guarantees all citizens the right to freedom of religious belief, and to Article 4 thereof, which upholds the rights of ‘minority nationalities’,

–  having regard to the International Covenant on Civil and Political Rights of 16 December 1966, signed by China in 1998, but not ratified,

–  having regard to the Universal Declaration of Human Rights of 1948,

–  having regard to the concluding observations of the UN Committee on the Elimination of Racial Discrimination’s review of China,

–  having regard to Rules 135(5) and 123(4) of its Rules of Procedure,

A.  whereas in its strategic framework on human rights and democracy, the EU pledges that human rights, democracy, and the rule of law will be promoted ‘in all areas of the EU’s external actions without exception’, and that the EU will ‘place human rights at the centre of its relations with all third countries including strategic partners’; whereas this should remain at the centre of the long-standing relationship between the EU and China, in accordance with the EU’s commitment to uphold these very same values in its external action and China’s expressed interest in respecting international laws and standards relating to human rights in its own development;

B.  whereas China has been successful in lifting 700 million people out of poverty, but whereas since President Xi Jinping assumed power in March 2013, the human rights situation in China has continued to deteriorate, with the government stepping up its hostility towards peaceful dissent, the freedoms of expression and religion, and the rule of law; whereas the Chinese authorities have detained and prosecuted hundreds of human rights defenders, lawyers and journalists;

C.  whereas the new regulations on religious affairs that took effect on 1 February 2018 are more restrictive towards religious groups and activities, and force them to fall more closely into line with party policies; whereas freedom of religion and conscience has reached a new low point since the start of the economic reforms and the opening up of China in the late 1970s; whereas China is home to one of the largest populations of religious prisoners;

D.  whereas, while an accord was reached between the Holy See and the Chinese Government in September 2018 concerning the appointments of bishops in China, the Christian religious communities have been facing increasing repression in China, with Christians, both in underground and government-approved churches, being targeted through the harassment and detention of believers, the demolition of churches, the confiscation of religious symbols and the crackdown on Christian gatherings; whereas Chinese authorities in some provinces do not allow persons under 18 years of age to attend religious activities; whereas in September 2018 China banned the Zion Church, the biggest house congregation in China with more than 1 500 followers;

E.  whereas the situation in Xinjiang, where 10 million Muslim Uyghurs and ethnic Kazakhs live, has rapidly deteriorated, as stability and the control of Xinjiang has been elevated to a top priority of the Chinese authorities, driven by both periodic terrorist attacks in, or allegedly connected to, Xinjiang by Uyghurs and the strategic location of the Xinjiang Uyghur Autonomous Region for the Belt and Road Initiative; whereas there is information that the Xinjiang camp system has expanded into other parts of China;

F.  whereas an extrajudicial detention programme has been established, holding ‘from tens of thousands to upwards of a million Uyghurs’ who are being forced to undergo political ‘re-education’ according to estimates cited by the UN Committee on the Elimination of Racial Discrimination, without being charged or tried, for undetermined periods of time, and are therefore being arbitrarily detained under the pretext of countering terrorism and religious extremism; whereas a policy of strict restrictions on religious practices and the Uyghur language and customs has been developed in the Xinjiang province;

G.  whereas a sophisticated network of invasive digital surveillance has been developed, including facial recognition technology and data collection;

H.  whereas the Chinese Government has refused numerous requests from the UN Working Group on Enforced or Involuntary Disappearances (WGEID), the UN High Commissioner for Human Rights and other UN Special Procedures mandates to send independent investigators to Xinjiang;

I.  whereas the situation in Tibet has deteriorated over the past few years, in spite of economic growth and infrastructure development, with the Chinese Government curtailing a wide range of human rights under the pretext of security and stability, and engaging in relentless attacks against Tibetan identity and culture;

J.  whereas the surveillance and control measures in Tibet have been on the increase over the past few years, as well as arbitrary detentions, acts of torture and ill-treatment; whereas the Chinese Government has created an environment in Tibet in which there are no limits to state authority, the climate of fear is pervasive, and every aspect of public and private life is tightly controlled and regulated; whereas in Tibet, any acts of non-violent dissent or criticism of state policies with regard to ethnic or religious minorities can be considered as ‘splittist’ and therefore criminalised; whereas access to the Tibet Autonomous Region today is more restricted than ever before;

K.  whereas an extremely high number of Tibetans, mostly monks and nuns, have reportedly set themselves on fire since 2009 in protest against restrictive Chinese policies in Tibet, and in support of the return of the Dalai Lama and the right to religious freedom in the Aba/Ngaba county prefecture in Sichuan Province and other parts of the Tibetan plateau; whereas no progress has been made in the resolution of the Tibetan crisis in the last 10 years;

1.  Is deeply concerned about the increasingly repressive regime that many religious and ethnic minorities, in particular Uyghurs and Kazakhs, Tibetans and Christians face, placing additional restraints on the constitutional guarantees of their right to freedom of cultural expression and religious belief, to freedom of speech and expression and to peaceful assembly and association; demands that the authorities respect these fundamental freedoms;

2.  Calls on the Chinese Government to immediately end the practice of arbitrary detentions, without any charge, trial or conviction for criminal offence, of members of the Uyghur and Kazakh minority and Tibetans , to close all camps and detention centres and to release the detained persons immediately and unconditionally;

3.  Calls for the immediate release of arbitrarily detained people, prisoners of conscience, including practitioners of Falun Gong and for a stop to be put to enforced disappearances, and insists that all individuals are able to choose their legal representative, have access to their family and to medical assistance, as well as have their cases investigated;

4.  Calls on the Chinese Government to immediately release: Uyghurs, including Ilham Tohti, Tashpolat Tiyip, Rahile Dawut, Eli Mamut, Hailaite Niyazi, Memetjan Abdulla, Abduhelil Zunun, and Abdukerim Abduweli; individuals persecuted for their religious beliefs, including Zhang Shaojie, Hu Shigen, Wang Yi, and Sun Qian; Tibetan activists, writers and religious figures who face criminal charges or have been imprisoned for exercising their right to freedom of expression, including Tashi Wangchuk and Lobsang Dargye;

5.  Calls for the immediate release of the Swedish national book publisher Gui Minhai and the two Canadian citizens Michael Spavor and Michael Kovrig;

6.  Urges the Chinese Government to release the full details of persons disappeared in Xinjiang to their families;

7.  Calls on the Chinese authorities to end their campaigns against Christian congregations and organisations and to stop the harassment and detention of Christian pastors and priests and the forced demolitions of churches;

8.  Calls on the Chinese authorities to uphold the linguistic, cultural, religious and other fundamental freedoms of Tibetans, and to refrain from settlement policies in favour of the Han people and to the disadvantage of the Tibetans, as well as from forcing Tibetan nomads to abandon their traditional lifestyle;

9.  Condemns the campaigns carried out via the ‘patriotic education’ approach, including measures to stage-manage Tibetan Buddhist monasteries; is concerned that China’s criminal law is being abused to persecute Tibetans and Buddhists, whose religious activities are equated with ‘separatism’; deplores the fact that the environment for practising Buddhism in Tibet has worsened significantly after the Tibetan protests of March 2008, with the Chinese Government adopting a more pervasive approach to ‘patriotic education’;

10.  Urges the Chinese authorities to implement the constitutionally guaranteed right to freedom of religious belief for all Chinese citizens;

11.  Recalls the importance of the EU and its Member States raising the issue of human rights violations at every political level with the Chinese authorities, in line with the EU’s commitment to project a strong, clear and unified voice in its approach to the country, including the annual Human Rights Dialogue, Strategic Dialogue, High-Level Economic Dialogue, and Summit, as well as the forthcoming Euro-Asia Summit;

12.  Underlines that while in their joint statement issued after the 21st EU-China Summit, the EU and China reaffirmed that all human rights are universal, indivisible, interdependent and interrelated, the EU should urge China to act accordingly; deplores the fact that at the EU-China Summit of 9 April 2019 urgent human rights concerns once again played a marginal role; takes the view that if and when EU-China summit language is weak on human rights, the Council, the European External Action Service (EEAS) and the Commission should decline to include it at all and issue a separate communication on the topic with a meaningful assessment both of the situation and why stronger language could not be agreed;

13.  Calls on EU Member States to prevent any activities undertaken by the Chinese authorities in the EU’s territory to harass members of Turkic communities, Tibetans and other religious or ethnic groups in order to compel them to act as informants, to force their return to China or silence them;

14.  Calls on the Chinese authorities to allow free, meaningful and unhindered access to Xinjiang province and Tibet Autonomous Region for journalists and international observers, including for the UN High Commissioner for Human Rights and UN Special Procedures; calls for the EU and the Member States to take the lead during the next session of the UN Human Rights Council on a resolution establishing a fact-finding mission to Xinjiang;

15.  Calls on the Chinese Government to guarantee unfettered respect of citizens’ rights in the Chinese Constitution, with regard to Article 4, which protects national minorities; Article 35, which protects the freedoms of speech, the press, assembly, association, procession and demonstration; Article 36, which recognises the right to freedom of religious belief; and Article 41, which guarantees the right to criticise and make suggestions regarding any state organ or official;

16.  Urges China to ratify the International Covenant on Civil and Political Rights;

17.  Urges China to give EU diplomats, journalists and citizens unfettered access to Tibet in reciprocity for the free and open access to the entire territories of the EU Member States that Chinese travellers enjoy; urges the EU institutions to take the issue of access to Tibet into serious consideration in the discussions on the EU-China visa facilitation agreement;

18.  Expresses its disappointment at the fact that the 37th round of the EU-China Human Rights Dialogue brought no substantial results; regrets, furthermore, that the Chinese delegation did not take part on 2 April in the continuation of the dialogue that provided for an exchange of views with civil society organisations;

19.  Urges the VP/HR, the EEAS and Member States to monitor the worrying human rights developments in Xinjiang more intensively, including increased government repression and surveillance, and to speak out against violations of human rights in China both privately and publicly;

20.  Calls on the Council to consider adopting targeted sanctions against officials responsible for the crackdown in the Xinjiang Uyghur Autonomous Region;

21.  Calls for the EU, its Member States and the international community to halt all exports and technology transfers of goods and services that are being used by China to extend and improve its cyber surveillance and predictive profiling apparatus; is deeply concerned that China is already exporting such technologies to authoritarian states around the world;

22.  Instructs its President to forward this resolution to the Vice-President of the Commission / High Representative of the Union for Foreign Affairs and Security Policy, the Council, the Commission, the governments and parliaments of the Member States, and the Government and the Parliament of the Peoples’ Republic of China.

(1) OJ C 285 E, 21.10.2010, p. 80.
(2) OJ C 199 E, 7.7.2012, p. 185.
(3) OJ C 238, 6.7.2018, p. 108.
(4) Texts adopted, P8_TA(2018)0343.
(5) Texts adopted, P8_TA(2018)0377.


Cameroon
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European Parliament resolution of 18 April 2019 on Cameroon (2019/2691(RSP))
P8_TA(2019)0423RC-B8-0245/2019

The European Parliament,

–  having regard to the statement of 7 March 2019 by the Chair of its Subcommittee on Human Rights, Antonio Panzeri, on the situation in Cameroon,

–  having regard to the declaration of 5 March 2019 by the Vice-President of the Commission / High Representative of the Union for Foreign Affairs and Security Policy (VP/HR) on the deteriorating political and security situation in Cameroon,

–  having regard to the various statements by the Spokesperson of the VP/HR on the situation in Cameroon, in particular that of 31 January 2019,

–  having regard to the Preliminary Statement of 9 October 2018 of the African Union Election Observation Mission to the 2018 presidential elections in Cameroon,

–  having regard to the statement of 11 December 2018 by UN experts on the crackdown on protests,

–  having regard to the statement of 6 March 2019 of the African Commission on Human and Peoples’ Rights on the human rights situation in Cameroon,

–  having regard to Cameroon’s anti-terrorism law of 2014,

–  having regard to the Universal Declaration of Human Rights,

–  having regard to the International Covenant on Civil and Political Rights of 1966,

–  having regard to the ACP-EU Partnership Agreement (‘Cotonou Agreement’),

–  having regard to the African Charter on Human and Peoples’ Rights of 1981, which Cameroon has ratified,

–  having regard to the Constitution of the Republic of Cameroon,

–  having regard to Rules 135(5) and 123(4) of its Rules of Procedure,

A.  whereas Cameroon faces a number of simultaneous political and security challenges, including threats from Boko Haram in its Far North region, cross-border threats along its eastern border with the Central African Republic, and an internal armed separatist rebellion in its Anglophone Northwest and Southwest regions;

B.  whereas presidential elections were held in Cameroon on 7 October 2018; whereas these elections were marked by allegations of fraud and the reporting of irregularities; whereas President Paul Biya has been in power since 1982; whereas the constitution of Cameroon was amended in 2008 to remove term limits;

C.  whereas supporters and allies of the Cameroon Renaissance Movement (MRC) opposition party led by Maurice Kamto organised protests in Douala, Yaoundé, Dshang, Bafoussam and Bafang; whereas state security forces used disproportionate force, including tear gas and rubber bullets, to suppress these protests;

D.  whereas around 200 people, including Maurice Kamto and other opposition leaders, were arbitrarily arrested in January 2019 and detained without immediate access to a lawyer; whereas the crimes with which these opposition supporters and their leader have been charged include insurrection, hostilities against the fatherland, rebellion, destruction of public buildings and goods, contempt of the President of the Republic and gatherings of a political nature;

E.  whereas on 9 April 2019 the Court of Appeal in Cameroon’s Central Region confirmed the decision taken in the first instance, and rejected the release of Maurice Kamto and six others; whereas the proceedings in the Court of Appeal took place in the absence of Maurice Kamto and his lawyers;

F.  whereas the Cameroonian authorities have taken disproportionate action in initiating military trials of some of the opposition members, exacerbating the political unrest in Cameroon; whereas the accused, if convicted, could face the death penalty;

G.  whereas the Cameroonian authorities have repeatedly restricted freedom of expression by shutting down the internet, harassing and detaining journalists, refusing licenses to independent media and stepping up political attacks against the independent press;

H.  whereas tensions persist between Cameroon’s majority Francophone and minority Anglophone communities; whereas Cameroon’s Northwest and Southwest regions remain predominantly English-speaking with different education and legal systems;

I.  whereas in late 2016 the discrimination against and relative neglect of the Anglophone regions, and the imposition of the French legal system and language in their courts and classrooms, led to peaceful strikes by teachers and lawyers and to peaceful demonstrations;

J.  whereas the violence has escalated since October 2018, and the large-scale operations conducted by the security forces often involve abuses and lead to human rights violations, including unlawful killings, rape, violence against women and children, and the destruction of property;

K.  whereas armed separatists have carried out mass kidnappings, including of schoolchildren and students, have undertaken targeted killings of police, law enforcement and local authority officials, have been involved in extortion, have enforced weekly ‘ghost town’ protests, and have boycotted and torched educational institutions and hospitals, thereby depriving thousands of young people of access to education, and the general population of access to healthcare;

L.  whereas, as a result of the crisis, an estimated 444 000 people have been internally displaced and a further 32 000 have fled to neighbouring Nigeria; whereas the overall humanitarian crisis facing Cameroon encompasses over 600 000 internally displaced people, around 35 000 refugees from neighbouring conflicts, and 1.9 million people at risk of food insecurity;

M.  whereas in 2018 and 2019 the Government of Cameroon implemented the Emergency Humanitarian Assistance Plan for the Northwest and Southwest regions with a view to ensuring multi-faceted protection of and assistance to displaced persons as a matter of priority and the provision of healthcare to people affected by the crisis;

N.  whereas gender-based violence and the persecution of minorities remain serious problems; whereas Cameroon’s penal code punishes sexual relations between persons of the same sex with up to five years of imprisonment; whereas the police and ‘gendarmes’ (military police) continue to arrest and harass LGTBQI people;

O.  whereas Boko Haram continues to commit serious human rights abuses and violations of international humanitarian law in the Far North region, including the looting and destruction of property, and the killing and abduction of civilians;

1.  Deplores the cases of torture, forced disappearances and extrajudicial killings perpetrated by the security services and armed separatists; expresses particular concern at the actions of government forces in the violence; calls on the security forces to respect international human rights law when carrying out operations, and calls on the Government to take immediate steps to end the violence and impunity in the country;

2.  Condemns the use of excessive force against protestors and political opponents, and violations of the freedoms of the press, expression and assembly; deeply regrets the arrest and detention of Maurice Kamto and other peaceful protestors; calls for the immediate release by the Cameroonian authorities of Maurice Kamto and all other detainees held on politically motivated charges, regardless of whether they were arrested before or after the 2018 presidential elections;

3.  Further calls on the Government of Cameroon to cease all harassment and intimidation of political activists, including by lifting the ban on peaceful political gatherings, demonstrations and protests, and to take action to clamp down on instances of hate speech;

4.  Recalls that military courts should not, under any circumstances, have jurisdiction over the civilian population; reminds Cameroon of its international obligations to uphold the right to a fair trial for all citizens before independent courts of law;

5.  Recalls that the death penalty has not been used in Cameroon since 1997; notes that this is a milestone in the country’s path to full abolition; reiterates the European Union’s absolute opposition to the death penalty and calls on the Government of Cameroon to confirm that it will not seek the death penalty for political activists and protesters;

6.  Expresses concern at the Government of Cameroon’s failure to hold its security forces to account, which has exacerbated the violence and the culture of impunity; calls for an independent and transparent investigation into the use of force by the police and security forces against protesters and political opponents, and for those responsible to be held to account in fair trials;

7.  Urges Cameroon’s authorities to adopt all necessary measures consistent with the country’s human rights obligations to end the cycle of violence; calls in particular for the Government to organise an inclusive political dialogue aimed at finding a peaceful and lasting solution to the crisis in the Anglophone regions; calls on the international community to help facilitate an inclusive national peace dialogue by offering to play a mediating role;

8.  Regrets the unwillingness of both parties to the conflict to engage in peace talks; urges the African Union and the Economic Community of the Central African States to push for the organisation of such talks and calls for the EU to stand ready to support this process; considers that, in the absence of progress, the crisis in Cameroon should be considered by the United Nations Security Council; further calls for the EU to use the political leverage provided by development aid and other bilateral programmes to enhance the defence of human rights in Cameroon;

9.  Urges the Government of Cameroon to build a genuine, representative and vibrant democracy; calls therefore on the Government to convene all political stakeholders for a consensual review of the electoral system, with the aim of ensuring a free, transparent and credible electoral process; calls for this process to take place before any further elections are held in order to promote peace and avoid post-electoral crises; calls for the EU to step up technical assistance to support Cameroon in its efforts to strengthen its electoral procedures and make them more democratic;

10.  Reiterates that a vibrant and independent civil society is essential for upholding human rights and the rule of law; expresses concern that the activities of the Cameroon Anglophone Civil Society Consortium have been banned; urges the Government to lift the ban and ensure an open space in which civil society can operate;

11.  Expresses concern that the 2014 anti-terrorism law is being misused to restrict fundamental freedoms; supports the requests made by UN experts that the law be reviewed to ensure that it is not used to restrict the rights to freedom of expression, peaceful assembly and association;

12.  Notes the decision of the United States to scale back its military assistance to Cameroon owing to credible allegations of gross violations of human rights by security forces; calls on the Commission to undertake an assessment of EU support to security services in this regard and to report back to the European Parliament; calls for the EU and its Member States to ensure that no support given to the Cameroonian authorities contributes to or facilitates human rights violations;

13.  Instructs its President to forward this resolution to the Council, the Commission, the Vice-President of the European Commission / High Representative of the Union for Foreign Affairs and Security Policy, the EU Special Representative for Human Rights, the ACP-EU Council, the institutions of the African Union, and the Government and Parliament of Cameroon.


Brunei
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European Parliament resolution of 18 April 2019 on Brunei (2019/2692(RSP))
P8_TA(2019)0424RC-B8-0242/2019

The European Parliament,

–  having regard to the statement of 3 April 2019 by the Spokesperson of the Vice-President of the Commission / High Representative of the Union for Foreign Affairs and Security Policy (VP/HR) on the implementation of the Penal Code Order in Brunei Darussalam,

–  having regard to the EU Guidelines on the death penalty, on torture and other cruel, inhuman or degrading treatment or punishment, on human rights defenders, and on the promotion and protection of the enjoyment of all human rights by LGTBI persons,

–  having regard to the statement of 1 April 2019 by the UN High Commissioner for Human Rights, Michelle Bachelet, urging Brunei to stop the entry into force of the ‘draconian’ new penal code,

–  having regard to the Universal Declaration of Human Rights,

–  having regard to the UN Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment, which Brunei signed in 2015,

–  having regard to the Convention on the Rights of the Child,

–  having regard to the Convention on the Elimination of All Forms of Discrimination against Women,

–  having regard to the ASEAN Human Rights Declaration of 2012,

–  having regard to the ASEAN-EU Plan of Action 2018-2022,

–  having regard to the ASEAN-EU Policy Dialogue on Human Rights of 29 November 2017,

–  having regard to the statement of 2 April 2019 by the Deputy Spokesperson of the US State Department on the implementation of phases two and three of the Sharia Penal Code in Brunei,

–  having regard to Rules 135(5) and 123(4) of its Rules of Procedure,

A.  whereas in 2014 Brunei introduced the Sharia Penal Code, to be implemented in three phases; whereas the third phase of implementation entered into force on 3 April 2019; whereas this third phase puts into effect provisions including death by stoning for consensual same-sex acts, extramarital sex and abortion, as well as amputation of limbs for stealing; whereas the code also imposes the death penalty for insulting or defamation of Prophet Mohammad by both Muslims and non-Muslims; whereas the Sharia Penal Code applies to both Muslims and non-Muslims, including foreigners, as well as to offences committed outside the country by citizens or permanent residents;

B.  whereas children who have reached puberty and are convicted of the offences concerned can receive the same punishments as adults; whereas some younger children may be subjected to whipping;

C.  whereas, prior to the introduction of the Sharia Penal Code, homosexuality was illegal in Brunei and was punishable by up to 10 years’ imprisonment;

D.  whereas the last elections in Brunei were held in 1962; whereas the Sultan occupies the roles of both Head of State and Prime Minister, and is invested with full executive authority;

E.  whereas the UN Special Rapporteur on Torture has stated that any form of corporal punishment is contrary to the prohibition of torture and other cruel, inhuman or degrading treatment or punishment, and cannot be considered a lawful sanction under international law; whereas some of the punishments enshrined in the Penal Code amount to torture, cruel, inhumane and degrading treatment as prohibited by the Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment, to which Brunei has been a signatory since 2015;

F.  whereas the provisions under the Sharia Penal Code violate Brunei’s obligations in international human rights law, including the right to life, freedom from torture and other ill-treatment, freedom of expression, freedom of religion and the right to privacy; whereas the provisions of the code discriminate on the basis of sexual orientation, as well as against women and against religious minorities in Brunei, and may incite violence;

G.  whereas the Joint UN Programme on HIV and AIDS (UNAIDS) and the UN Population Fund (UNFPA) have stated that the provisions of the Brunei Penal Code that criminalise homosexuality and punish forms of reproductive healthcare have a disproportionate impact on women and LGBTI people, creating barriers to accessing health information and services, impeding access to sexual and reproductive health and rights, and negatively affecting public health;

H.  whereas tradition, religion and culture in Brunei are used to justify discrimination against women and LGTBI people; whereas the report on Brunei of 11 March 2019 of the Office of the UN High Commissioner for Human Rights i states that there are deep-rooted patriarchal attitudes and use of discriminatory stereotypes which are reflected in women’s academic and professional choices, their unequal position in the labour market, and in marriage and family relations; whereas these stereotypes are root causes of violence against women;

I.  whereas Brunei is known for its multi-ethnic population with a wide variety of religions, including Islam, Christianity, Buddhism, Hinduism and various indigenous religions, living peacefully together; whereas Brunei’s constitution recognises religious freedom and prescribes that ‘all religions may be practised in peace and harmony by the persons professing them’; whereas, despite Brunei’s constitution, the Government has prohibited the proselytising and teaching of all religions but Islam, and has banned all public Christmas celebrations;

J.  whereas Brunei has a de facto moratorium on the use of the death penalty, with the last execution having been carried out in 1957; whereas the Sharia Penal Code will effectively reintroduce the death penalty if implemented; whereas the EU condemns the death penalty, wherever, whenever;

K.  whereas the adoption of the new laws has sparked international outrage and calls for a boycott of the hotels owned by the Brunei Investment Agency (BIA); whereas this agency is part of Brunei’s Ministry of Finance and Economy and owns a variety of investment projects all over the world; whereas the BIA has stated that its core values include mutual respect and the positive valuation of difference and diversity;

L.  whereas Brunei has only ratified two UN core international human rights conventions, the Convention on the Rights of the Child and the Convention on the Elimination of All Forms of Discrimination against Women; whereas the third cycle of the Universal Periodic Review of Brunei will be launched on 10 May 2019;

M.  whereas the EU has suspended the negotiations for a partnership and cooperation agreement with Brunei;

1.  Strongly condemns the entry into force of the retrograde Sharia Penal Code; urges the Brunei authorities to immediately repeal it and to ensure that Brunei’s laws comply with international law and standards consistently with Brunei’s obligations under international human rights instruments, including with regard to sexual minorities, religious minorities and non-believers;

2.  Reiterates its condemnation of the death penalty; calls on Brunei to continue its moratorium on the use of the death penalty as a step towards abolition;

3.  Strongly condemns the use of torture and cruel, degrading and inhuman treatment in all circumstances; underlines that the provisions of the Sharia Penal Code violate Brunei’s obligations under international human rights law, and that the punishments under it violate customary international law prohibitions against torture and other ill-treatment;

4.  Is deeply concerned by the fact that while many countries are decriminalising consensual same-sex conduct, Brunei has regrettably become the seventh country to punish consensual homosexual acts with the death penalty; calls on the authorities of Brunei to respect international human rights and to decriminalise homosexuality;

5.  Calls on the Brunei authorities to ensure the principle of equality before the law of all citizens and respect for the fundamental rights of all citizens, without distinction on any grounds, including gender, sexual orientation, race or religion; is strongly concerned about the possible application of the criminal law to children; calls on Brunei under no circumstances to apply capital punishment, torture or imprisonment to such children;

6.  Calls on the Brunei authorities to fully respect religious freedom in the Sultanate, as laid down in its own constitution, and to allow the public celebration of all religious festivals, including Christmas; stresses that legislation in this regard must strictly comply with human rights;

7.  Encourages the Brunei authorities to foster political dialogue with key civil society stakeholders, human rights organisations, faith-based institutions and business organisations, both inside and outside Brunei, in order to foster and safeguard human rights on its territory; highlights the right to express critical or satirical opinions as a legitimate exercise of freedom of expression, enshrined in the international human rights framework;

8.  Urges Brunei to ratify the remaining UN core international human rights instruments, including the International Covenant on Civil and Political Rights and the Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment; calls on the Brunei authorities to extend a standing invitation to visit in the framework of all Special Procedures of the UN Human Rights Council;

9.  Calls on the European External Action Service (EEAS), in the event of effective implementation of the Sharia Penal Code, to consider the adoption at EU level of restrictive measures related to serious human rights violations, including asset freezes and visa bans;

10.  Calls on the VP/HR to make the relaunch of the negotiations for the EU-Brunei partnership and cooperation agreement subject to the conformity of the Penal Code with international law and international human rights standards;

11.  Highlights the work of human rights defenders in promoting and protecting the rights of LGTBI persons; calls on the EU institutions to increase their support to civil society organisations and human rights defenders in Brunei;

12.  Calls on the EU Delegation to Indonesia and Brunei Darussalam in Jakarta, the EU Delegation to ASEAN and the EEAS to closely monitor the situation and to consult with the Brunei authorities, ambassadors and representatives in this regard; calls on the EEAS to include the situation in Brunei as an item on the agenda of the next ASEAN-EU Policy Dialogue on Human Rights;

13.  Encourages the Member States to actively participate in the forthcoming Universal Periodic Review, which will take place from 6 to 17 May 2019 and will examine Brunei’s human rights record;

14.  Stresses that for as long as the current Penal Code is in force, the EU institutions must consider blacklisting the hotels owned by the Brunei Investment Agency;

15.  Calls for the EU and its Member States to respect the international legal framework with regard to access to asylum procedures and humanitarian protection for victims of Brunei’s current Penal Code;

16.  Instructs its President to forward this resolution to the Council, the Commission, the Vice-President of the Commission / High Representative of the Union for Foreign Affairs and Security Policy, the European External Action Service, the governments of the Member States, the UN Secretary-General, the UN High Commissioner for Human Rights, the UN Commission on the Status of Women, the UN Human Rights Council, the ASEAN Secretariat, the ASEAN Intergovernmental Commission on Human Rights, the Sultan of Brunei, Hassanal Bolkiah, and the Government of Brunei.


Eurojust-Denmark Agreement on Criminal Justice Cooperation *
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European Parliament legislative resolution of 18 April 2019 on the draft Council implementing decision approving the conclusion by Eurojust of the Agreement on Criminal Justice Cooperation between Eurojust and the Kingdom of Denmark (07770/2019 – C8-0152/2019 – 2019/0805(CNS))
P8_TA(2019)0425A8-0192/2019

(Consultation)

The European Parliament,

–  having regard to the Council draft (07770/2019),

–  having regard to Article 39(1) of the Treaty on European Union, as amended by the Treaty of Amsterdam, and Article 9 of Protocol No 36 on transitional provisions, pursuant to which the Council consulted Parliament (C8-0152/2019),

–  having regard to Council Decision 2002/187/JHA of 28 February 2002 setting up Eurojust with a view to reinforcing the fight against serious crime(1), and in particular Article 26a(2) thereof,

–  having regard to Rule 78c of its Rules of Procedure,

–  having regard to the report of the Committee on Civil Liberties, Justice and Home Affairs (A8-0192/2019),

1.  Approves the Council draft;

2.  Calls on the Council to notify Parliament if it intends to depart from the text approved by Parliament;

3.  Asks the Council to consult Parliament again if it intends to substantially amend the text approved by Parliament;

4.  Instructs its President to forward its position to the Council and the Commission.

(1) OJ L 63, 6.3.2002, p. 1.


CO2 emission performance standards for new heavy duty vehicles ***I
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Resolution
Text
Annex
European Parliament legislative resolution of 18 April 2019 on the proposal for a regulation of the European Parliament and of the Council setting CO2 emission performance standards for new heavy-duty vehicles (COM(2018)0284 – C8-0197/2018 – 2018/0143(COD))
P8_TA(2019)0426A8-0354/2018

(Ordinary legislative procedure: first reading)

The European Parliament,

–  having regard to the Commission proposal to Parliament and the Council (COM(2018)0284),

–  having regard to Article 294(2) and Article192(1) of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C8‑0197/2018),

–  having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

–  having regard to the opinion of the European Economic and Social Committee of 17 October 2018(1),

–  after consulting the Committee of the Regions,

–  having regard to the provisional agreement approved by the committee responsible under Rule 69f(4) of its Rules of Procedure and the undertaking given by the Council representative by letter of 22 February 2019 to approve Parliament’s position, in accordance with Article 294(4) of the Treaty on the Functioning of the European Union,

–  having regard to Rule 59 of its Rules of Procedure,

–  having regard to the report of the Committee on the Environment, Public Health and Food Safety and the opinion of the committee on Transport and Tourism (A8-0354/2018),

1.  Adopts its position at first reading hereinafter set out(2);

2.  Takes note of the statement by the Commission annexed to this resolution;

3.  Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

4.  Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Position of the European Parliament adopted at first reading on 18 April 2019 with a view to the adoption of Regulation (EU) 2019/… of the European Parliament and of the Council setting CO2 emission performance standards for new heavy-duty vehicles and amending Regulations (EC) No 595/2009 and (EU) 2018/956 of the European Parliament and of the Council and Council Directive 96/53/EC

(As an agreement was reached between Parliament and Council, Parliament's position corresponds to the final legislative act, Regulation (EU) 2019/1242.)

ANNEX TO THE LEGISLATIVE RESOLUTION

Statement by the Commission

The Commission is pursuing the technical development of the Vehicle Energy Consumption Calculation Tool (VECTO) with a view of updating it regularly and in a timely manner, in the light of innovation and to take account of the implementation of new technologies improving the fuel efficiency of heavy-duty vehicles.

(1) OJ C 62, 15.2.2019, p. 286.
(2) This position replaces the amendments adopted on 14 November 2018 (Texts adopted, P8_TA(2018)0455).


Promotion of clean and energy-efficient road transport vehicles ***I
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Resolution
Text
European Parliament legislative resolution of 18 April 2019 on the proposal for a directive of the European Parliament and of the Council amending Directive 2009/33/EC on the promotion of clean and energy-efficient road transport vehicles (COM(2017)0653 – C8-0393/2017 – 2017/0291(COD))
P8_TA(2019)0427A8-0321/2018

(Ordinary legislative procedure: first reading)

The European Parliament,

–  having regard to the Commission proposal to Parliament and the Council (COM(2017)0653),

–  having regard to Article 294(2) and Article 192 of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C8‑0393/2017),

–  having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

–  having regard to the opinion of the European Economic and Social Committee of 19 April 2018(1),

–  having regard to the opinion of the Committee of the Regions of 5 July 2018(2),

–  having regard to the provisional agreement approved by the committee responsible under Rule 69f(4) of its Rules of Procedure and the undertaking given by the Council representative by letter of 20 February 2019 to approve Parliament’s position, in accordance with Article 294(4) of the Treaty on the Functioning of the European Union,

–  having regard to Rule 59 of its Rules of Procedure,

–  having regard to the report of the Committee on the Environment, Public Health and Food Safety and the opinion of the Committee on Transport and Tourism (A8-0321/2018),

1.  Adopts its position at first reading hereinafter set out(3);

2.  Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

3.  Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Position of the European Parliament adopted at first reading on 18 April 2019 with a view to the adoption of Directive (EU) 2019/… of the European Parliament and of the Council amending Directive 2009/33/EC on the promotion of clean and energy-efficient road transport vehicles

(As an agreement was reached between Parliament and Council, Parliament's position corresponds to the final legislative act, Directive (EU) 2019/1161.)

(1) OJ C 262, 25.7.2018, p. 58.
(2) OJ C 387, 25.10.2018, p. 70.
(3) This position replaces the amendments adopted on 25 October 2018 (Texts adopted, P8_TA(2018)0424).


Use of digital tools and processes in company law ***I
PDF 119kWORD 47k
Resolution
Text
European Parliament legislative resolution of 18 April 2019 on the proposal for a directive of the European Parliament and of the Council amending Directive (EU) 2017/1132 as regards the use of digital tools and processes in company law (COM(2018)0239 – C8-0166/2018 – 2018/0113(COD))
P8_TA(2019)0428A8-0422/2018

(Ordinary legislative procedure: first reading)

The European Parliament,

–  having regard to the Commission proposal to Parliament and the Council (COM(2018)0239),

–  having regard to Article 294(2) and Article 50 (1) and points (b), (c), (f) and (g) of Article 50 (2) of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C8‑0166/2018),

–  having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

–  having regard to the opinion of the European Economic and Social Committee of 17 October 2018(1),

–  having regard to the provisional agreement approved by the committee responsible under Rule 69f(4) of its Rules of Procedure and the undertaking given by the Council representative by letter of 14 February 2019 to approve Parliament’s position, in accordance with Article 294(4) of the Treaty on the Functioning of the European Union,

–  having regard to Rule 59 of its Rules of Procedure,

–  having regard to the report of the Committee on Legal Affairs (A8-0422/2018),

1.  Adopts its position at first reading hereinafter set out;

2.  Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amends its proposal;

3.  Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Position of the European Parliament adopted at first reading on 18 April 2019 with a view to the adoption of Directive (EU) 2019/… of the European Parliament and of the Council amending Directive (EU) 2017/1132 as regards the use of digital tools and processes in company law

(As an agreement was reached between Parliament and Council, Parliament's position corresponds to the final legislative act, Directive (EU) 2019/1151.)

(1) OJ C 62, 15.2.2019, p. 24.


Cross-border conversions, mergers and divisions ***I
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Resolution
Text
European Parliament legislative resolution of 18 April 2019 on the proposal for a directive of the European Parliament and of the Council amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers and divisions (COM(2018)0241 – C8-0167/2018 – 2018/0114(COD))
P8_TA(2019)0429A8-0002/2019

(Ordinary legislative procedure: first reading)

The European Parliament,

–  having regard to the Commission proposal to Parliament and the Council (COM(2018)0241),

–  having regard to Article 294(2) and Article 50(1) and (2), of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C8-0167/2018),

–  having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

–  having regard to the opinion of the European Economic and Social Committee of 17 October 2018(1),

–  having regard to the provisional agreement approved by the committee responsible under Rule 69f(4) of its Rules of Procedure and the undertaking given by the Council representative by letter of 27 March 2019 to approve Parliament’s position, in accordance with Article 294(4) of the Treaty on the Functioning of the European Union,

–  having regard to Rule 59 of its Rules of Procedure,

–  having regard to the report of the Committee on Legal Affairs and also the opinions of the Committee on Employment and Social Affairs and the Committee on Economic and Monetary Affairs (A8-0002/2019),

1.  Adopts its position at first reading hereinafter set out;

2.  Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

3.  Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Position of the European Parliament adopted at first reading on 18 April 2019 with a view to the adoption of Directive (EU) 2019/… of the European Parliament and of the Council amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers and divisions

(As an agreement was reached between Parliament and Council, Parliament's position corresponds to the final legislative act, Directive (EU) 2019/2121.)

(1) OJ C 62, 15.2.2019, p. 24.


European Defence Fund ***I
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Resolution
Consolidated text
European Parliament legislative resolution of 18 April 2019 on the proposal for a regulation of the European Parliament and of the Council establishing the European Defence Fund (COM(2018)0476 – C8-0268/2018 – 2018/0254(COD))
P8_TA(2019)0430A8-0412/2018

(Ordinary legislative procedure: first reading)

The European Parliament,

–  having regard to the Commission proposal to Parliament and the Council (COM(2018)0476),

–  having regard to Article 294(2), and Article 173(3), Article 182(4), Article 183 and the second paragraph of Article 188, of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C8‑0268/2018),

–  having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

–  having regard to the opinion of the European Economic and Social Committee of 12 December 2018(1),

–  having regard to the letter from its President to the committee chairs of 25 January 2019 outlining the Parliament's approach to the Multiannual Financial Framework (MFF) post-2020 sectorial programmes,

–  having regard to the letter from the Council to the President of the European Parliament of 1 April 2019 confirming the common understanding reached between the co-legislators during negotiations,

–  having regard to Rule 59 of its Rules of Procedure,

–  having regard to the report of the Committee on Industry, Research and Energy and the opinions of the Committee on Foreign Affairs, the Committee on Budgets and the Committee on the Internal Market and Consumer Protection (A8-0412/2018),

1.  Adopts its position at first reading hereinafter set out(2);

2.  Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

3.  Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Position of the European Parliament adopted at first reading on 18 April 2019 with a view to the adoption of Regulation (EU) …/… of the European Parliament and of the Council establishing the European Defence Fund

P8_TC1-COD(2018)0254


(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 173(3), Article 182(4), Article 183 and the second paragraph of Article 188 thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Having regard to the opinion of the European Economic and Social Committee,

Acting in accordance with the ordinary legislative procedure(3),

Whereas:

(-1b)  The Union’s geopolitical context has changed dramatically in the last decade. The situation in Europe's neighbouring regions is unstable and the Union faces a complex and challenging environment combining the emergence of new threats, like hybrid and cyber-attacks and the return of more conventional challenges. Faced with that context both European citizens and their political leaders share the view that more has to be done collectively in the area of defence.

(-1c)  The defence sector is characterised by increasing costs of defence equipment and by high research and development ('R&D') costs that limit the launch of new defence programmes and directly impact on the competitiveness and innovation capacity of the European Defence Technological and Industrial Base. In view of this cost escalation, the development of a new generation of major defence systems and of new defence technologies should be supported at the Union level in order to increase cooperation between Member States in defence equipment investments.

(1)  In the European Defence Action Plan, adopted on 30 November 2016, the Commission committed to complement, leverage and consolidate collaborative efforts by Member States in developing defence technological and industrial capabilities to respond to security challenges, as well as to foster a competitive, innovative and efficient European defence industry throughout the Union and beyond, thus also supporting the creation of a more integrated defence market in Europe and fostering the internal market uptake of European defence products and technologies, thus increasing the non-dependency on non-EU sources. It proposed in particular to launch a European Defence Fund (the 'Fund') to support investments in joint research and the joint development of defence products and technologies, thus fostering synergies and cost-effectiveness, and to promote the Member States’ joint purchase and maintenance of defence equipment. This Fund would complement national funding already used for this purpose and should act as an incentive for Member States to cooperate and invest more in defence. The Fund would support cooperation during the whole cycle of defence products and technologies.

(2)  The Fund would contribute to the establishment of a strong, competitive and innovative European defence technological and industrial ▌base and go hand in hand with the Union's initiatives towards a more integrated European Defence Market and in particular, the two Directives(4) on procurement and on EU transfers in the defence sector adopted in 2009.

(3)  Following an integrated approach and in order to contribute to the enhancement of the competitiveness and innovation capacity of the Union's defence industry, a European Defence Fund should be established. The Fund should aim at enhancing the competitiveness, innovation, efficiency and technological autonomy of the Union's defence industry thereby contributing to the Union's strategic autonomy by supporting the cross border cooperation between Member States and cooperation between enterprises, research centres, national administrations, international organisations and universities throughout the Union, in the research phase and in the development phase of defence products and technologies. To achieve more innovative solutions and an open internal market, the Fund should support and facilitate the widening of cross-border cooperation of defence small and medium sized enterprises (“SMEs”) and middle capitalisation companies (“mid-caps”).

Within the Union, common defence capability shortfalls are identified in the Common Security and Defence Policy ▌ framework notably through the Capability Development Plan, while the Overarching Strategic Research Agenda also identifies common defence research objectives. Other Union processes such as the Coordinated Annual Review on Defence and ▌Permanent Structured Cooperation will support the implementation of relevant priorities through identifying and taking forward opportunities for enhanced cooperation with a view to fulfilling the EU level of ambition on security and defence. Where appropriate, regional and international priorities, including those in the North Atlantic Treaty Organisation context, may also be taken into account if they are in line with Union priorities and do not prevent any Member State or an associated country from participating, while also taking into account that unnecessary duplication should be avoided.

(4)  The research phase is crucial ▌, as it conditions the capacity ▌ and the autonomy of the European industry to develop products and the independence of Member States as defence end-users. The research phase linked to the development of defence capabilities may include significant risks, in particular related to the low level of maturity and the disruption of technologies. The development phase, which usually follows the research ▌ phase, also entails significant risks and costs that hamper the further exploitation of the results of research and adversely impact the competitiveness and innovation of the Union's defence industry. The Fund should thus foster the link between the research and the development phases.

(5)  The Fund should not support basic research, which should instead be supported through other schemes, but may include defence-oriented fundamental research likely to form the basis of the solution to recognised or expected problems or possibilities.

(6)  The Fund could support actions pertaining to both new and the upgrade of existing products and technologies. Actions for the upgrade of existing defence products and technologies should be eligible only where pre-existing information needed to carry out the action ▌ is not subject to any restriction by non-associated third countries or non-associated third country entities in such a way that the action cannot be carried out. When applying for the Union funding, legal entities should be required to provide the relevant information to establish the absence of restrictions. In the absence of such information, ▌ Union funding should not be possible.

(6a)   The Fund should financially support actions conducive to developing disruptive technologies for defence. As disruptive technologies can be based on concepts or ideas originating from non-traditional defence actors, the Fund should allow for sufficient flexibility in consulting stakeholders and regarding the implementation of such actions.

(7)  In order to ensure that the Union's and its Member States' international obligations are respected in the implementation of this Regulation, actions relating to products or technologies the use, development or production of which are prohibited by international law should not be financially supported by the Fund. In this respect, the eligibility of actions related to new defence products or technologies ▌should also be subject to developments in international law. Actions for the development of lethal autonomous weapons without the possibility for meaningful human control over the selection and engagement decisions when carrying out strikes against humans should also not be eligible for financial support by the Fund, without prejudice to the possibility to provide funding for actions for the development of early warning systems and countermeasures for defensive purposes.

(8)  The difficulty to agree on consolidated defence capability requirements and common technical specifications or standards hampers cross-border collaboration between Member States and between legal entities based in different Member States. The absence of such requirements, specifications and standards has led to increased fragmentation of the defence sector, technical complexity, delays and inflated costs, unnecessary duplication as well as decreased interoperability. The agreement on common technical specifications should be a prerequisite for actions involving a higher level of technological readiness. Activities leading to common defence capability requirements ▌ as well as activities aiming at supporting the creation of a common definition of technical specifications or standards should also be eligible for support by the Fund, in particular where they foster interoperability.

(9)  As the objective of the Fund is to support the competitiveness, efficiency and innovation of the Union defence industry by leveraging and complementing collaborative defence research and technology activities and de-risking the development phase of cooperative projects, actions related to the research and the development of a defence product or technology should be eligible to benefit from it. This will also apply to the upgrade, including the interoperability thereof, of existing defence products and technologies.

(10)  Given that the Fund aims particularly at enhancing cooperation between legal entities and Member States across Europe, an action should be eligible for funding ▌ if it is undertaken by a cooperation within a consortium of at least three legal entities based in at least three different Member States ▌ or associated countries. At least three of these ▌ eligible entities established in at least two different Member States ▌or associated countries should not be ▌controlled, directly or indirectly, by the same entity or should not control each other. In this context, control should be understood as the ability to exercise a decisive influence on a legal entity directly or indirectly through one or more intermediate legal entities. Taking into account the specificities of disruptive technologies for defence, as well as of studies, these activities could be carried out by a single legal entity. In order to boost the cooperation between Member States the Fund may also support joint pre-commercial procurement.

(11)  Pursuant to [reference to be updated as appropriate according to a new decision on OCTs: Article 94 of Council Decision 2013/755/EU(5)], entities established in Overseas Countries and Territories (OCTs) should be eligible for funding subject to the rules and objectives of the Fund and possible arrangements applicable to the Member State to which the OCTs is linked.

(12)  As the Fund aims at enhancing the competitiveness and efficiency ▌ of the Union's defence industry, only entities established in the Union or in associated countries and not subject to control by non-associated third countries or non-associated third country entities should in principle be eligible for support. In this context, control should be understood as the ability to exercise a decisive influence on a legal entity directly or indirectly through one or more intermediate legal entities. Additionally, in order to ensure the protection of essential security and defence interests of the Union and its Member States, the infrastructure, facilities, assets and resources used by the recipients and their subcontractors in actions financially supported by the Fund should not be located on the territory of non-associated third countries, and their executive management structures should be established in the Union or in an associated country. Accordingly, an entity which is established in a non-associated third country or an entity which is established in the Union or in an associated country but which has its executive management structures in a non-associated third country is not eligible to be a recipient or subcontractor involved in the action. In order to safeguard the essential security and defence interests of the Union and its Member States, those eligibility conditions should also apply to funding provided through procurement, by derogation from Article 176 of the Financial Regulation.

(13)  In certain circumstances, ▌ it should be possible to derogate from the principle that recipients and their subcontractors involved in an action financially supported by the Fund are not be subject to control by non-associated third countries or non-associated third country entities. In that context, legal entities established in the Union or in an associated country that are controlled by a non-associated third country or a non-associated third country entity should be eligible as recipients or subcontractors involved in the action provided that strict conditions relating to the security and defence interests of the Union and its Member States are fulfilled. The participation of such legal entities should not contravene the objectives of the Fund. Applicants should provide all relevant information about the infrastructure, facilities, assets and resources to be used in the action. Member States' concerns regarding security of supply should also be taken into account in this respect.

(13-a)  In the framework of the EU's restrictive measures, adopted on the basis of Article 29 TEU and 215(2) TFEU, no funds or economic resources may be made available, directly or indirectly, to or for the benefit of designated legal persons, entities or bodies. Such designated entities, and entities owned or controlled by them, therefore cannot be financially supported by the Fund.

(13a)  Union funding should be granted following competitive calls for proposals issued in accordance with the Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council (the ‘Financial Regulation’)(6). However, in certain duly justified and exceptional circumstances, Union funding may also be granted in accordance with Article 195(e) of the Financial Regulation. As the award of funding in accordance with Article 195(e) of the Financial Regulation constitutes a derogation from the general rule of following competitive calls for proposals, those exceptional circumstances should be interpreted strictly. In this context, for a grant to be awarded without a call for proposals, the degree to which the proposed action corresponds to the objectives of the Fund with respect to cross-border industrial collaboration and competition throughout the supply chain should be assessed by the Commission assisted by the committee of Member States (the 'committee').

(14)  If a consortium wishes to participate in an eligible action and the financial assistance of the Union is to take the form of a grant, the consortium should appoint one of its members as a coordinator who will be the principal point of contact.

(15)  In case an action financially supported by the Fund is managed by a project manager appointed by Member States or associated countries, the Commission should consult the project manager prior to executing the payment to the recipients, so that the project manager can ensure that the time-frames are respected by the recipients. ▌The project manager should provide the Commission with ▌ observations on the progress of the action so that the Commission can validate whether the conditions to proceed to the payment are fulfilled.

(15a)  The Commission should implement the Fund under direct management so as to maximise effectiveness and efficiency of the delivery and ensure full consistency with other Union initiatives. Therefore, the Commission should remain responsible for the selection and award procedures, including as regards ethics assessments. In justified cases, the Commission may however entrust certain implementation tasks for specific actions financially supported by the Fund to bodies referred to in Article 62(1)(c) of the Financial Regulation. This could for example be the case when a project manager has been appointed by Member States co-financing an action provided the requirements of the Financial Regulation are met. Such an entrustment would help to streamline the management of co-financed actions and ensure a smooth coordination of the financing agreement with the contract signed between the consortium and the project manager appointed by Member States which co-finance the action.

(16)  In order to ensure that the funded actions are financially viable, it is necessary that the applicants demonstrate that the costs of the action not covered by the Union's funding are covered by other means of financing.

(17)  Different types of financial arrangement should be at the disposal of Member States for the joint development and acquisition of defence capabilities. The ▌Commission could provide different types of arrangements that Member States could use on a voluntary basis to address challenges for collaborative development and procurement from a financing perspective. The use of such financial arrangements could further foster the launch of collaborative and cross-border defence projects and increase the efficiency of defence spending, including for projects supported by the ▌ Fund.

(18)  Given the specificities of the defence industry, where demand comes almost exclusively from Member States and associated countries, which also control all acquisition of defence-related products and technologies, including exports, the functioning of the defence sector is unique and does not follow the conventional rules and business models that govern more traditional markets. Industry therefore cannot undertake substantial self-funded defence Research and Development (R&D’) projects and Member States and associated countries often fully fund all R&D cost. To achieve the objectives of the Fund, notably to incentivise cooperation between legal entities from different Member States and associated countries, and taking into account the specificities of the defence sector, up to the totality of the eligible costs should be covered for actions that take place ahead of the development of prototype phase.

(19)  The prototype phase is a crucial phase where Member States or associated countries usually decide on their consolidated investment and start the acquisition process of their future defence products or technologies. This is the reason why, at this specific stage, Member States and associated countries agree on the necessary commitments including cost-sharing and ownership of the project. To ensure the credibility of their commitment, the financial assistance of the Union under the Fund should normally not exceed 20 % of the eligible costs.

(20)  For actions beyond the prototype phase, funding up to 80% should be foreseen. These actions which are closer to product and technology finalisation may still involve substantial costs.

(21)  Stakeholders in the defence sector are facing specific indirect costs, such as costs for security. Furthermore, stakeholders are working in a specific market where they – without any demand on the buyers' side – cannot recover the R&D costs like in the civilian sector. Therefore, it is justified to allow a flat rate of 25 % as well as the possibility ▌to charge indirect costs calculated in accordance with the usual accounting practices of the recipients if these practises are accepted by their national authorities for comparable activities in the defence domain, which have been communicated to the Commission. ▌

(21a)  Actions with participation of cross-border SMEs and mid-caps support the opening up of the supply chains and contribute to the objectives of the Fund. Such actions should therefore be eligible for an increased funding rate benefitting all participating entities.

(22)  In order to ensure that the funded actions will contribute to the competitiveness and efficiency of the European defence industry, it is important that Member States ▌ intend to jointly procure the final product or use the technology, notably through joint cross-border procurement, where Member States jointly organise their procurement procedures in particular with the use of a central purchasing body.

(22a)  In order to ensure that the actions financially supported by the Fund contribute to the competitiveness and efficiency of the European defence industry, they should be market-oriented, demand driven and commercially viable in the medium to long term. The eligibility criteria for development actions should therefore take into account the fact that Member States intend, including through a Memorandum of Understanding or a letter of intent, to procure the final defence product, or use the technology, in a coordinated way. The award criteria for development actions should also take into account the fact that Member States commit politically or legally, to jointly use, own or maintain the final defence product or technology.

(23)  The promotion of innovation and technological development in the Union defence industry should take place in a manner coherent with the security and defence interests of the Union. Accordingly, the actions contribution to those interests and to the defence research and capability priorities commonly agreed by Member States should serve as an award criterion. ▌

(24)  Eligible actions developed in the context of Permanent Structured Cooperation ▌ in the institutional framework of the Union should ensure enhanced cooperation between legal entities in the different Member States on a continuous basis and thus directly contribute to the aims of the Fund. If selected, such projects should thus be eligible for an increased funding rate.

(25)  The Commission will take into account the other activities financed under the Horizon Europe Framework programme in order to avoid unnecessary duplication and ensure the cross-fertilisation and synergies between civil and defence research.

(26)  Cybersecurity and cyber defence are increasingly important challenges and the Commission and the High Representative of the Union for Foreign Affairs and Security Policy recognised the need to establish synergies between cyber defence actions within the scope of the Fund and Union initiatives in the field of cybersecurity, such as those announced in the Joint Communication on cybersecurity. In particular, the European Cybersecurity Industrial, Technology and Research Competence Centre to be set up should seek synergies between the civilian and defence dimensions of cybersecurity. It could actively support Member States and other relevant actors by providing advice, sharing expertise and facilitating collaboration with regard to projects and actions as well as when requested by Member States acting as a project manager in relation to the ▌ Fund.

(27)  An integrated approach should be ensured by bringing together activities covered by the Preparatory Action on Defence Research ('PADR') launched by the Commission within the meaning of Article 58(2)(b) of the Financial Regulation and the European Defence Industrial Development Programme ('EDIDP') established by Regulation (EU) 2018/1092 of the European Parliament and of the Council(7), and to harmonise the conditions for participation, to create a more coherent set of instruments, and to increase the innovative, collaborative and economic impact, while avoiding unnecessary duplication and fragmentation. With this integrated approach, the Fund would also contribute to a better exploitation of the results of defence research, covering the gap between the research and the development phases taking into account the specificities of the defence sector, and promoting all forms of innovation, including disruptive innovation ▌. Positive spillover effects can also be expected, where applicable, in the civilian field.

(28)  Where appropriate in view of the specificities of the action, the ▌ objectives of the Fund should be also addressed through financial instruments and budgetary guarantees under ▌ InvestEU.

(29)  Financial support should be used to address market failures or sub-optimal investment situations, in a proportionate manner and actions should not duplicate or crowd out private financing or distort competition in the internal market. Actions should have a clear ▌ added value for the Union.

(30)  The types of financing and the methods of implementation of the Fund should be chosen on the basis of their ability to achieve the specific objectives of the actions and to deliver results, taking into account, in particular, the costs of controls, the administrative burden, and the expected risk of non-compliance. This should include consideration of the use of lump sums, flat rates and unit costs, as well as financing not linked to costs as referred to in Article ▌ 125(1) ▌ of the Financial Regulation.

(31)  The Commission should establish annual ▌ work programmes in line with the objectives of the Fund, and taking into account the initial lessons learned from the EDIDP and the PADR. The Commission should be assisted in the establishment of the work programmes by the committee. The Commission should endeavour to find solutions which command the widest possible support within the committee. In that context, the committee may meet in the configuration of national defence and security experts to provide specific assistance to the Commission, including to provide advice with regard to the protection of classified information in the framework of the actions. It is for the Member States to designate their respective representatives on that committee. Committee members should be given early and effective opportunities to examine the draft implementing acts and express their views.

(31a)  The categories of the work programmes should contain functional requirements in order to clarify for industry what functionalities and tasks have to be carried out by the capabilities which will be developed. Such requirements should give a clear indication of the expected performances but should not be directed to specific solutions or specific entities and should not prevent competition at the level of the calls for proposals.

(31b)  During the elaboration of the work programmes, the Commission should also ensure, through appropriate consultations with the committee, that the proposed research or development actions avoid unnecessary duplication. In this context, the Commission may carry out an upfront assessment of possible duplication cases with existing capabilities or already funded research or development projects within the Union.

(31bb)  The Commission should ensure the coherence of the work programmes throughout the industrial cycle of defence products and technologies.

(31bc)  The work programmes should also ensure that a credible proportion of the overall budget benefits actions enabling the cross-border participation of SMEs.

(31c)   In order to benefit from its expertise in the defence sector, the European Defence Agency will be given the status of an observer in the committee. Given the specificities of the defence area, the European External Action Service should also assist in the committee.

(32)  In order to ensure uniform conditions for the implementation of this Regulation implementing powers should be conferred on the Commission as regards the adoption of the work programme and for awarding the funding to selected development actions. In particular, while implementing development actions, the specificities of the defence sector, notably the responsibility of Member States and/or associated countries for the planning and acquisition process, should be taken into account. These implementing powers should be exercised in accordance with Regulation (EU) ▌ No 182/2011 of the European Parliament and of the Council ▌(8).

(32a)  After evaluation of the proposals with the help of independent experts, whose security credentials should be validated by the relevant Member States, the Commission should select the actions to be financially supported by the Fund. The Commission should establish a database of independent experts. The database should not be made public. The independent experts should be appointed on the basis of their skills, experience and knowledge, taking account of the tasks to be assigned to them. As far as possible, when appointing the independent experts, the Commission should take appropriate measures to seek a balanced composition within the expert groups and evaluation panels in terms of variety of skills, experience, knowledge, geographical diversity and gender, taking into account the situation in the field of the action. An appropriate rotation of experts and appropriate private-public sector balance should also be sought. Member States should be informed of the evaluation results with the ranking list of selected actions and of the progress of the funded actions. In order to ensure uniform conditions for the implementation of this Regulation, implementing powers should be conferred on the Commission as regards the adoption and the implementation of the work programme, as well as for the adoption of the award decisions. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council.

(32b)  Independent experts should not evaluate, advise or assist on matters with regard to which they have a conflict of interests, in particular as regards their current position. In particular, they should not be in a position where they could use the information received to the detriment of the consortium they evaluate.

(32bb)  ▌When proposing new defence products or technologies or the upgrade of existing ones, applicants should commit themselves to complying with ethical principles, such as those relating to the welfare of human beings and the protection of the human genome, reflected also in relevant national, Union and international law, including the Charter of Fundamental Rights of the European Union and the European Convention on Human Rights and, where relevant, its Protocols. The Commission should ensure that proposals are systematically screened to identify those actions raising serious ethical issues and submit them to an ethics assessment.

(33)  In order to support an open internal market, the participation of cross-border SMEs and mid-caps, either as members of consortia, ▌ subcontractors or as entities in the supply chain should be encouraged.

(34)  The Commission should endeavour to maintain a dialogue with ▌Member States and industry to ensure the success of the Fund. As a co-legislator and key stakeholder, the European Parliament should also be engaged in this regard.

(35)  This Regulation lays down a financial envelope for the European Defence Fund which is to constitute the prime reference amount, within the meaning of [the new inter-institutional agreement] between the European Parliament, the Council and the Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management(9), for the European Parliament and the Council during the annual budgetary procedure. The Commission should ensure that administrative procedures are kept as simple as possible and incur a minimum amount of additional expenses.

(36)  The Financial Regulation applies to the Fund, unless otherwise specified. It lays down rules on the implementation of the Union budget, including the rules on grants, prizes, procurement, financial assistance, financial instruments and budgetary guarantees.

(37)  Horizontal financial rules adopted by the European Parliament and the Council on the basis of Article 322 of the Treaty on the Functioning of the European Union (TFEU) apply to this Regulation. These rules are laid down in the Financial Regulation and determine in particular the procedure for establishing and implementing the budget through grants, procurement, prizes, indirect implementation, and provide for checks on the responsibility of financial actors. Rules adopted on the basis of Article 322 TFEU also concern the protection of the Union's budget in case of generalised deficiencies as regards the rule of law in the Member States, as the respect for the rule of law is an essential precondition for sound financial management and effective EU funding.

(38)  In accordance with the Financial Regulation, Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council(10), Council Regulation (Euratom, EC) No 2988/95(11), Council Regulation (Euratom, EC) No 2185/96(12) and Council Regulation (EU) 2017/1939(13), the financial interests of the Union are to be protected through proportionate measures, including the prevention, detection, correction and investigation of irregularities, including fraud, the recovery of funds lost, wrongly paid or incorrectly used and, where appropriate, the imposition of administrative sanctions. In particular, in accordance with Regulation (EU, Euratom) No 883/2013 and Regulation (Euratom, EC) No 2185/96, the European Anti-Fraud Office (OLAF) may carry out administrative investigations, including on-the-spot checks and inspections, with a view to establishing whether there has been fraud, corruption or any other illegal activity affecting the financial interests of the Union. In accordance with Regulation (EU) 2017/1939, the European Public Prosecutor's Office (the ‘EPPO) may investigate and prosecute ▌offences against the Union's financial interests, ▌as provided for in Directive (EU) 2017/1371 of the European Parliament and of the Council(14). In accordance with the Financial Regulation, any person or entity receiving Union funds is to fully cooperate in the protection of the Union’s financial interests, to grant the necessary rights and access to the Commission, OLAF, the EPPO in respect of those Member States participating in enhanced cooperation pursuant to Regulation (EU) 2017/1939, and the European Court of Auditors (ECA) and to ensure that any third parties involved in the implementation of Union funds grant equivalent rights.

(39)  Third countries which are members of the European Economic Area (EEA) may participate in Union programmes in the framework of the cooperation established under the EEA agreement, which provides for the implementation of the programmes by a decision under that agreement. A specific provision should be introduced in this Regulation to grant the necessary rights for and access to the authorising officer responsible, the European Anti-Fraud Office (OLAF) as well as the European Court of Auditors to comprehensively exert their respective competences.

(40)  Pursuant to paragraph 22 and 23 of the Inter-institutional agreement for Better Law-Making of 13 April 2016, there is a need to evaluate this regulation on the basis of information collected through specific monitoring requirements, while avoiding overregulation and administrative burdens, in particular on Member States. These requirements, where appropriate, can include measurable indicators, as a basis for evaluating the effects of the regulation on the ground. The Commission should carry out an interim evaluation no later than four years after the start of the Fund implementation, including with a view to submitting proposals for any appropriate amendments to the present Regulation, and a final evaluation at the end of the implementation period of the Fund, examining the financial activities in terms of financial implementation results and to the extent possible at that point in time, results and impact. In this context, the final evaluation report should also help identify where the Union is dependent on third countries for the development of defence products and technologies. This final report should also analyse the cross-border participation of SMEs and mid-caps in projects financially supported by the Fund as well as the participation of SMEs and mid-caps to the global value chain, and the contribution of the Fund to addressing the shortfalls identified in the Capability Development Plan, and should include information on the origin of the recipients, the number of Member States and associated countries involved in individual actions and the distribution of the generated intellectual property rights. The Commission may also propose amendments to this Regulation to react on possible developments during the implementation of the Fund.

(40a)  The Commission should regularly monitor the implementation of the Fund and annually report on the progress made, including how lessons identified and lessons learned from the EDIDP and the PADR are being taken into account in the implementation of the Fund. To this end, the Commission should put in place necessary monitoring arrangements. This report should be presented to the European Parliament and to the Council, and should not contain sensitive information.

(41)  Reflecting the importance of tackling climate change in line with the Union's commitments to implement the Paris Agreement and the United Nations Sustainable Development Goals, this Fund ▌will contribute to mainstream climate action in the Union's policies and to the achievement of an overall target of 25 % of the EU budget expenditures supporting climate objectives. Relevant actions will be identified during the Fund's preparation and implementation, and reassessed in the context of its mid-term evaluation.

(42)  As the Fund supports only the research and the development phases of defence products and technologies, in principle the Union should not have ownership or intellectual property rights (IPRs) over the products or technologies resulting from the funded actions unless the Union assistance is provided through public procurement. However, for research actions, interested Member States and associated countries should have the possibility to use the results of funded actions to participate in follow-up cooperative development ▌.

(43)  The Union financial support should not affect the transfer of defence-related products within the Union in accordance with Directive 2009/43/EC of the European Parliament and the Council(15) nor the export of products, equipment or technologies. The export of military equipment and technologies by the Member States is regulated by Common Position 944/2008/CFSP.

(44)  The use of sensitive background information, including data, know how or information, generated before or outside the performance of the Fund, or access by unauthorised individuals to ▌results generated in connection to actions financially supported by the Fund may have an adverse impact on the interests of the Union or of one or more of the Member States. The handling of sensitive information should thus be governed by ▌ relevant Union and national law ▌.

(44a)  In order to ensure the security of classified information at the requisite level, the minimum standards on industrial security should be complied with when signing classified funding and financing agreements. For that purpose, and in accordance with Commission Decision (EU, Euratom) 2015/444, the Commission is to communicate the Programme Security Instructions, including the Security Classification Guide, for advice to the experts designated by Member States.

(45)  In order to be able to supplement or amend the impact pathway indicators, where considered necessary, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission. ▌It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement on Better Law-Making of 13 April 2016. In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States' experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.

(46)  The Commission should manage the Fund having due regard to the requirements of confidentiality and security, in particular classified information and sensitive information.

▌HAVE ADOPTED THIS REGULATION:

TITLE I

COMMON PROVISIONS APPLICABLE FOR RESEARCH AND DEVELOPMENT

Article 1

Subject matter

This Regulation establishes the European Defence Fund ('the Fund'), as set out in Article 1(3)(b) of Regulation …/…/EU [Horizon - 2018/0224(COD)].

It lays down the objectives of the Fund, the budget for the period 2021-2027, the forms of Union funding and the rules for providing such funding.

Article 2

Definitions

For the purposes of this Regulation, the following definitions apply:

(0)  'applicant' means a legal entity submitting an application for support by the Fund after a call for proposals or in accordance with Article 195(e) of the Financial Regulation;

(1)  'blending operations' means actions supported by the EU budget, including within blending facilities pursuant to Article 2(6) of the Financial Regulation, combining non-repayable forms of support ▌or financial instruments from the EU budget with repayable forms of support from development or other public finance institutions, as well as from commercial finance institutions and investors;

(1a)  'certification' means the process by which a national authority certifies that the defence product, tangible or intangible component or technology complies with the applicable regulations;

(1b)  'classified information' means any information or material, in any form, the unauthorised disclosure of which could cause varying degrees of prejudice to the interests of the European Union, or of one or more of the Member States, and which bears an EU classification marking or a corresponding classification marking, in line with the agreement between the Member States of the European Union, meeting within the Council, regarding the protection of classified information exchanged in the interests of the European Union (2011/C 202/05);

(1c)  'consortium' means a collaborative grouping of applicants or recipients bound by a consortium agreement and constituted to carry out an action under the Fund;

(1d)  'coordinator' means a legal entity which is a member of a consortium and has been appointed by all the members of the consortium to be the principal point of contact in relations with the Commission;

(2)  'control' means the ability to exercise a decisive influence on an legal entity directly or indirectly through one or more intermediate legal entities;

(3)  'development action' means any action consisting ▌of defence-oriented activities primarily in the development phase, covering new products or technologies or the upgrading of existing ones, excluding the production or use of weapons;

(4)  'disruptive technology for defence' means a technology inducing radical change, including an enhanced or completely new technology, inducing a paradigm shift in the concepts and conduct of defence affairs including by replacing existing defence technologies or rendering them obsolete;

(5)  'executive management structures' means of a legal entity appointed in accordance with national law, and, where applicable, reporting to the chief executive officer, which is empowered to establish the legal entity's strategy, objectives and overall direction, and which oversees and monitors management decision-making;

(5a)  'foreground information' means data, know-how or information generated in the performance of the Fund, whatever its form or nature;

(6)  'legal entity' means any ▌legal person created and recognised as such under national law, Union law or international law, which has legal personality and which may, acting in its own name, exercise rights and be subject to obligations, or an entity without a legal personality in accordance with Article ▌ 197(2)(c) ▌of the Financial Regulation;

(7)  ‘middle capitalisation company' or 'mid-cap' means an enterprise that is not a ▌SME▌ and that has ▌up to 3 000 employees, where the staff headcount is calculated in accordance with Articles 3 to ▌6 of ▌the Annex to Commission Recommendation 2003/361/EC(16);

(8)  'pre-commercial procurement' means the procurement of research and development services involving risk-benefit sharing under market conditions, competitive development in phases, where there is a clear separation of the research and development services procured from the deployment of commercial volumes of end-products;

(9)  ‘project manager' means any contracting authority established in a Member State or an associated country, tasked by a Member State or an associated country or a group of Member States ▌or associated countries to manage multinational armament projects permanently or on an ad-hoc basis;

(9a)  'qualification' means the entire process of demonstrating that the design of a defence product, tangible or intangible component or technology meets the specified requirements, providing objective evidence by which particular requirements of a design are demonstrated to have been met;

(10)  'recipient' means any legal entity with which a funding or financing agreement has been signed or to which a funding or financing decision has been notified;

(11)  'research action' means any action consisting primarily of research activities, notably applied research and where necessary fundamental research, with the aim of acquiring new knowledge and with an exclusive focus on defence applications;

(12)  'results' means any tangible or intangible effect of the action, such as data, know-how or information, whatever its form or nature, whether or not it can be protected, as well as any rights attached to it, including intellectual property rights;

(12a)  'sensitive information' means information and data, including classified information, that must be protected from unauthorised access or disclosure because of obligations laid down in national or Union law or in order to safeguard the privacy or security of an individual or organisation;

(12b)  'small and medium-sized enterprises' or 'SMEs' means small and medium-sized enterprises as defined in Commission Recommendation 2003/361/EC;

(13)  'special report' means a specific deliverable of a research action summarising its results, providing extensive information on the basic principles, the aims, the actual outcomes, the basic properties, the performed tests, the potential benefits, the potential defence applications and the expected exploitation path of the research towards development, including information on the ownership of IPRs but not requiring the inclusion of IPR information;

(14)  'system prototype' means a model of a product or technology that can demonstrate performance in an operational environment;

(15)  'third country' means a country that is not a member of the Union;

(16)  'non-associated third country' means a third country that is not an associated country in accordance with Article 5;

(17)  'non-associated third country entity' means a legal entity established in a non-associated third country or, where it is established in the Union or in an associated country, having its executive management structures in a non-associated third country;

Article 3

Objectives of the Fund

1.  The general objective of the Fund is to foster the competitiveness, efficiency and innovation capacity of the European defence technological and industrial base throughout the Union, which contributes to the Union strategic autonomy and its freedom of action, by supporting collaborative actions and cross-border cooperation between legal entities throughout the Union, in particular SMEs and mid-caps as well as strengthening and improving the agility of both defence supply and value chains, widening cross-border cooperation between legal entities and fostering the better exploitation of the industrial potential of innovation, research and technological development, at each stage of the industrial life cycle of defence products and technologies. ▌

2.  The Fund shall have the following specific objectives:

(a)  support collaborative research ▌that could significantly boost the performance of ▌future capabilities throughout the Union, aiming at maximising innovation and introducing new defence products and technologies, including disruptive ones, and at the most efficient use of defence research spending in the Union;

(b)  support collaborative development ▌of defence products and technologies, thus contributing to greater efficiency of defence spending within the Union, achieving greater economies of scale, reducing the risk of unnecessary duplication and as such incentivising the market uptake of European products and technologies and reducing the fragmentation of defence products and technologies throughout the Union. Ultimately, the Fund will lead to an increase in the standardisation of defence systems and greater interoperability between Member States' capabilities.

Such cooperation shall be consistent with defence capability priorities commonly agreed by Member States within the framework of the Common Foreign and Security Policy and particularly in the context of the Capability Development Plan.

In this regard, regional and international priorities, when they serve the Union's security and defence interests as determined under the Common Foreign and Security Policy, and taking into account the need to avoid unnecessary duplication, may also be taken into account, where appropriate, wherever they do not exclude the possibility of participation of any Member State or associated country.

Article 4

Budget

1.  In accordance with Article 9(1) of Regulation …/…/EU the financial envelope for the implementation of the European Defence Fund for the period 2021 – 2027 shall be EUR 11 453 260 000 in 2018 prices EUR 13 000 000 000 in current prices.

2.  The ▌distribution of the amount referred to in paragraph 1 shall be:

(a)  ▌EUR 3 612 182 000 in 2018 prices (EUR 4 100 000 000 for research actions;

(b)  ▌ EUR 7 841 078 000 in 2018 prices (EUR 8 900 000 000 in current prices) for development actions.

2a.  In order to respond to unforeseen situations or new developments and needs, the Commission may reallocate amounts between the allocations for research actions and development actions referred to in paragraph 2, up to a maximum of 20 %.

3.  The amount referred to in paragraph 1 may be used for technical and administrative assistance for the implementation of the Fund, such as preparatory, monitoring, control, audit and evaluation activities including corporate information technology systems.

4.  At least 4 % and up to 8 % of the financial envelope referred to in paragraph 1 shall be allocated to calls for proposals or awards of funding supporting disruptive technologies for defence.

Article 5

Associated countries

The Fund shall be open to the European Free Trade Association (EFTA) members which are members of the European Economic Area (EEA), in accordance with the conditions laid down in the EEA agreement. Any financial contribution to the Fund pursuant to this Article shall constitute assigned revenue in accordance with Article [21(5)] of the Financial Regulation.

Article 6

Support to disruptive technologies for defence

1.  The Commission shall award funding following open and public consultations on ▌technologies with a focus on defence applications having the potential to disrupt defence affairs in the areas of intervention defined in the work programmes.

2.  The work programmes shall lay down the most appropriate form of funding to finance these disruptive technologies for defence.

Article 7

Ethics

1.  Actions implemented under the Fund shall comply with relevant national, Union and international law, including the Charter of Fundamental Rights of the European Union. These actions shall also comply with ethical principles reflected also in relevant national, Union and international law.

2.  Before the signature of the funding agreement, proposals shall be screened by the Commission, on the basis of an ethics self-assessment prepared by the consortium, to identify those actions raising ▌serious ethical issues including with regard to the conditions of implementation and, where appropriate, shall be submitted to an ethics assessment.

Ethics screenings and assessments shall be carried out by the Commission with the support of independent experts with various backgrounds, in particular with recognised expertise on defence ethics.

The conditions for the implementation of activities with ethically sensitive issues shall be specified in the funding agreement.

The Commission shall ensure the transparency of the ethics procedures as much as possible and shall report on this in the framework of its obligations under Article 32. Experts shall be nationals of as broad a range of Member States as possible.

3.  Entities participating in the action shall obtain all relevant approvals or other mandatory documents required by national or local ethics committees or other bodies such as data protection authorities before the start of the relevant activities. Those documents shall be kept on file and provided to the Commission upon request.

5.  Proposals which are not ethically acceptable shall be rejected ▌.

Article 8

Implementation and forms of EU funding

1.  The Fund shall be implemented in direct management in accordance with the Financial Regulation.

1a.  By derogation from paragraph 1, in justified cases, specific actions may be implemented under indirect management by bodies referred to in Article 62(1)(c) of the Financial Regulation. This may not cover the selection and award procedure, as referred to in Article 12.

2.  The Fund may provide funding in accordance with the Financial Regulation, through grants, prizes and procurement, and where appropriate in view of the specificities of the action, financial instruments within blending operations.

2a.  Blending operations shall be implemented in accordance with Title X of the Financial Regulation and the InvestEU Regulation.

2b.  Financial instruments shall be strictly directed to the recipients only.

Article 10

Eligible entities

1.  Recipients and ▌ subcontractors involved in the action financially supported by the Fund shall be ▌ established in the Union or in an associated country ▌.

1a.  The infrastructure, facilities, assets and resources of the recipients and subcontractors involved in an action which are used for the purposes of the actions financially supported by the Fund shall be located on the territory of a Member State or of an associated country for the entire duration of an action, and their executive management structures shall be established in the Union or in an associated country.

1b.  For the purpose of an action financially supported by the Fund, the recipients and subcontractors involved in an action shall not be subject to control by a non-associated third country or by a non-associated third country entity.

2.  By derogation from paragraph 1b of this Article, a legal entity established in the Union or in an associated country and controlled by a non-associated third country or a non-associated third country entity shall be eligible as a recipient or subcontractor involved in an action only if guarantees approved by the Member State or the associated country in which it is established, in accordance with its national procedures, are made available to the Commission. Those guarantees may refer to the legal entity's executive management structure established in the Union or in an associated country. If deemed to be appropriate by the Member State or associated country in which the legal entity is established, those guarantees may also refer to specific governmental rights in the control over the legal entity.

The guarantees shall provide assurances that the involvement in an action of such a legal entity would not contravene the security and defence interests of the Union and its Member States as established in the framework of the Common Foreign and Security Policy pursuant to Title V of the TEU, or the objectives set out in Article 3. The guarantees shall also comply with the provisions of Articles 22 and 25. The guarantees shall in particular substantiate that, for the purpose of the action, measures are in place to ensure that:

(a)  ▌control over the applicant legal entity is not exercised in a manner that retrains or restricts ▌ its ability to carry the action out the action and to deliver results, that imposes restrictions concerning its infrastructure, facilities, assets, resources, intellectual property or know-how needed for the purpose of the action, or that undermines its capabilities and standards necessary to carry out the action;

(b)  ▌access by a non-associated third countries or by a non-associated third country entity to ▌ sensitive information relating to the action is prevented; and the employees or other persons involved in the action ▌have a national security clearance issued by a Member State or an associated country, where appropriate;

(c)  ownership of the intellectual property arising from, and the results of, the action remain within the recipient during and after completion of the action, are not subject to control or restrictions by non-associated third countries or other non-associated third country entity, and are not exported outside the Union or outside associated countries, nor is access to them from outside the Union or outside associated countries granted, without the approval of the Member States or the associated country in which the legal entity is established and in accordance with the objectives set out in Article 3.

If deemed to be appropriate by the Member State or the associated country in which the legal entity is established, additional guarantees may be provided.

The Commission shall inform the committee referred to in Article 28 of any legal entity deemed to be eligible in accordance with this paragraph.

4.  Where are no competitive substitutes are readily available in the Union or in an associated country, recipients and subcontractors involved in an action may use their assets, infrastructure, facilities and resources located or held outside the territory of the Union’s Member States or associated countries provided that that usage does not contravene the security and defence interests of the Union and its Member States, is consistent with the objectives set out in Article 3 and is fully in line with Articles 22 and 25. ▌ The costs related to those activities shall not be eligible for financial support by the Fund.

4a.  When carrying out an eligible action, recipients and subcontractors involved in the action may also cooperate with legal entities established outside the territory of the Member States or of associated countries, or controlled by a non-associated third country or by a non-associated third country entity, including by using the assets, infrastructure, facilities and resources of such legal entities, provided that this does not contravene the security and defence interests of the Union and its Member States. Such cooperation shall be consistent with the objectives set out in Article 3 and shall be fully in line with Articles 22 and 25.

There shall be no unauthorised access by a non-associated third country or other non-associated third country entity to classified information relating to the carrying out of the action and potential negative effects over security of supply of inputs critical to the action shall be avoided.

The costs related to those activities shall not be eligible for support by the Fund.

6.  Applicants shall provide all relevant information necessary for the assessment of the eligibility criteria ▌. In the event of a change during the carrying out of an action which might put into question the fulfilment of the eligibility criteria, the relevant legal entity shall inform the Commission, which shall assess whether these eligibility criteria and conditions continue to be met and shall address the potential impact on the funding of the action.

7.  ▌

8.  ▌

9.  For the purpose of this Article, subcontractors involved in an action financially supported by the Fund refers to subcontractors with a direct contractual relationship to a recipient, other subcontractors to which at least 10% of the total eligible costs of the action is allocated, and subcontractors which may require access to classified information ▌ in order to carry out the action, and which are not members of the consortium.

Article 11

Eligible actions

1.  Only actions implementing the objectives referred to in Article 3 shall be eligible for funding.

2.  The Fund shall provide support for actions covering ▌new defence products and technologies and the upgrade of existing products and technologies provided that the use of pre-existing information needed to carry out the actions for the upgrade is not subject to a restriction by a non-associated third country or a non-associated third country entity, directly, or indirectly through one or more intermediary legal entities, in such a way that the action cannot be carried out.

3.  An eligible action shall relate to one or more of the following activities:

(a)  activities aiming to create, underpin and improve ▌knowledge, products and technologies, including disruptive ▌ technologies, which can achieve significant effects in the area of defence;

(b)  activities aiming to increase interoperability and resilience, including secured production and exchange of data, to master critical defence technologies, to strengthen the security of supply or to enable the effective exploitation of results for defence products and technologies;

(c)  studies, such as feasibility studies to explore the feasibility of a new or improved technologies, products, processes, services and solutions ▌;

(d)  the design of a defence product, tangible or intangible component or technology as well as the definition of the technical specifications on which such design has been developed which may include partial tests for risk reduction in an industrial or representative environment;

(e)  the development of a model of a defence product, tangible or intangible component or technology, which can demonstrate the element's performance in an operational environment (system prototype);

(f)  the testing of a defence product, tangible or intangible component or technology;

(g)  the qualification of a defence product, tangible or intangible component or technology ▌;

(h)  the certification of a defence product, tangible or intangible component or technology ▌;

(i)  the development of technologies or assets increasing efficiency across the life cycle of defence products and technologies;

4.  ▌The action shall be undertaken in a cooperation within a consortium of at least three eligible entities which are established in at least three different Member States ▌or associated countries. At least three of these eligible entities established in at least two Member States ▌or associated countries shall not, during the whole implementation of the action, be ▌controlled, directly or indirectly, by the same entity, and shall not control each other.

5.  Paragraph 4 shall not apply to ▌action relating to disruptive technologies for defence or to actions referred to in point c) ▌of paragraph 3 ▌.

6.  Actions for the development of products and technologies the use, development or production of which is prohibited by applicable international law shall not be eligible.

Actions for the development of lethal autonomous weapons without the possibility for meaningful human control over the selection and engagement decisions when carrying out strikes against humans shall also not be eligible for financial support by the Fund, without prejudice to the possibility to provide funding for actions for the development of early warning systems and countermeasures for defensive purposes.

Article 12

Selection and award procedure

1.  Union funding shall be granted following competitive calls for proposals issued in accordance with the Financial Regulation. In certain duly justified and exceptional circumstances, Union funding may also be granted in accordance with Article ▌ 195(e) ▌ of the Financial Regulation.

2a.  For the award of funding ▌, the Commission shall act by means of implementing acts adopted in accordance with the procedure referred to in Article 28 paragraph 2.

Article 13

Award criteria

▌Each proposal shall be assessed on the basis of the following criteria:

(a)  contribution to excellence or potential of disruption in the defence domain in particular by showing that the expected results of the proposed action present significant advantages over existing defence products or technologies;

(b)  contribution to the innovation and technological development of the European defence industry, in particular by showing that the proposed action includes ground-breaking or novel concepts and approaches, new promising future technological improvements or the application of technologies or concepts previously not applied in defence sector, while avoiding unnecessary duplication;

(c)  contribution to the competitiveness of the European defence industry by showing that the proposed action is a demonstrably positive balance of cost efficiency and effectiveness, thus creating new market opportunities across the Union and beyond and accelerating the growth of companies throughout the Union;

(d)  contribution to the autonomy of the European defence technological and industrial base, including by increasing the ‘non-dependency on non-EU sources and strengthening security of supply, and to the security and defence interests of the Union in line with the priorities referred to in Article 3 ▌;

(e)  contribution to the creation of new cross-border cooperation between legal entities established in Member States or associated countries, in particular for SMEs and mid-caps with a substantial participation in the action, as recipients, subcontractors or as other entities in the supply chain, and which are established in Member States ▌or associated countries other than those where the entities in the consortium which are not SMEs or mid-caps are established;

(f)  quality and efficiency of the implementation of the action.

Article 14

Co-financing rate

1.  The Fund shall finance up to 100 % of the eligible costs of an activity, listed in Article 11(3), without prejudice to Article 190 of the Financial Regulation.

2.  By derogation from paragraph 1:

(a)  for activities defined in Article 11(3) (e) the financial assistance of the Fund shall not exceed 20% of the eligible costs thereof,

(b)  for activities defined in Article 11(3) (f) to (h) the financial assistance of the Fund shall not exceed 80% of the eligible costs thereof.

3.  For development actions, the funding rates shall be increased in the following cases:

(a)  an activity developed in the context of Permanent Structured Cooperation as established by Council Decision (CFSP) 2017/2315 of 11 December 2017 may benefit from a funding rate increased by an additional 10 percentage points;

(b)  an activity may benefit from an increased funding rate, as referred to in the second and third subparagraphs of this paragraph, where at least 10 % of the total eligible costs of the activity are allocated to SMEs established in a Member State or in an associated country and which participate in the activity as recipients, subcontractors or as entities in the supply chain.

The funding rate may be increased by percentage points equivalent to the percentage of the total eligible costs of the activity allocated to SMEs established in Member States or in associated countries in which recipients that are not SMEs are established and which participate in the activity as recipients, subcontractors or as entities in the supply chain, up to an additional 5 percentage points.

The funding rate may be increased by percentage points equivalent to twice the percentage of the total eligible costs of the activity allocated to SMEs established in Member States or in associated countries other than those in which recipients that are not SMEs are established and which participate in the activity as recipients, subcontractors or as entities in the supply chain;

(c)  an activity may benefit from a funding rate increased by an additional 10 percentage points where at least 15 % of the total eligible costs of the activity are allocated to mid-caps established in the Union or in an associated country.

(d)  the overall increase in the funding rate of an activity shall not exceed 35 percentage points.

The financial assistance of the Union provided under the Fund, including increased funding rates, shall not cover more than 100 % of the eligible costs of the action.

Article 15

Financial capacity

By derogation from Article ▌ 198 ▌of the Financial Regulation:

(a)  the financial capacity shall be verified only for the coordinator and only if the requested funding from the Union is equal to or greater than EUR 500 000. However, if there are grounds to doubt the financial capacity, the Commission shall verify also the financial capacity of other applicants or of coordinators below the threshold referred to in the first sentence;

(b)  the financial capacity shall not be verified in respect of legal entities whose viability is guaranteed by a Member States’ relevant authorities;

(c)  if the financial capacity is structurally guaranteed by another legal entity, the financial capacity of the latter shall be verified.

Article 16

Indirect costs

1.  By derogation from Article 181(6) of the Financial Regulation, indirect eligible costs shall be determined by applying a flat rate of 25 % of the total direct eligible costs, excluding direct eligible costs of subcontracting and financial support to third parties and any unit costs or lump sums which include indirect costs.

2.  As an alternative, indirect eligible costs ▌may be determined in accordance with the recipient's usual cost accounting practices on the basis of actual indirect costs provided that these cost accounting practices are accepted by national authorities for comparable activities in the defence domain, in accordance with Article ▌ 185 ▌ of the Financial Regulation and communicated to the Commission.

Article 17

Use of single lump sum or contribution not linked to costs

1.  Where the Union grant co-finances less than 50 % of the total costs of the action, the Commission may use:

(a)  a contribution not linked to costs referred to in Article ▌ 180(3) ▌ of the Financial Regulation and based on the achievement of results measured by reference to previous set milestones or through performance indicators; or

(b)  a single lump sum referred to in Article ▌ 182 ▌ of the Financial Regulation and based on the provisional budget of the action already endorsed by the national authorities of the co-financing Member States and associated countries.

2.  Indirect costs shall be included in the lump sum.

Article 18

Pre-commercial procurement

1.  The Union may support pre-commercial procurement through awarding a grant to contracting authorities or contracting entities as defined in Directives 2014/24/EU(17), 2014/25/EU(18) and 2009/81/EC(19) of the European Parliament and of the Council, which are jointly procuring defence research and development ▌services or coordinating their procurement procedures.

2.  The procurement procedures:

(a)  shall be in line with the provisions of this Regulation;

(b)  may authorise the award of multiple contracts within the same procedure (multiple sourcing);

(c)  shall provide for the award of the contracts to the tender(s) offering best value for money while ensuring absence of conflict of interest.

Article 19

Guarantee Fund

Contributions to a mutual insurance mechanism may cover the risk associated with the recovery of funds due by recipients and shall be considered a sufficient guarantee under the Financial Regulation. The provisions laid down in [Article X of] Regulation XXX [successor of the Regulation on the Guarantee Fund] shall apply.

Article 20

Eligibility conditions for procurement and prizes

1.  Articles 10 and 11 shall apply mutatis mutandis to prizes.

2.  Article 10, by derogation from Article 176 of the Financial Regulation, and Article 11, shall apply mutatis mutandis for the procurement of studies referred to in Article 11(3)(c).

TITLE II

SPECIFIC PROVISIONS APPLICABLE FOR RESEARCH ACTIONS

Article 22

Ownership of results of research actions

1.  The results of research actions financially supported by the Fund shall be owned by the recipients generating them. Where legal entities jointly generate results, and where their respective contribution cannot be ascertained, or where it is not possible to separate such joint results, the legal entities shall have joint ownership of the results. The joint owners shall conclude an agreement regarding the allocation and terms of exercise of that joint ownership in accordance with their obligations under the grant agreement.

2.  By derogation from paragraph 1, if Union support is provided in the form of public procurement, results of research actions financially supported by the Fund shall be owned by the Union. Member States and associated countries shall enjoy access rights to the results, free of charge, upon their written request.

3.  ▌The results of research actions financially supported by the Fund shall not be subject to any control or restriction by a non-associated third country or by a non-associated third country entity, directly, or indirectly through one or more intermediate legal entities, including in terms of technology transfer.

4.  With regard to results generated by recipients through actions financially supported by the Fund and without prejudice to paragraph 8a of this Article, the Commission to be notified ex ante of any transfer of ownership ▌ or ▌ granting of an exclusive license ▌ to a non-associated third country or to a non-associated third country entity. If such transfer of ownership contravene the ▌ security and defence interests of the Union and its Member States or the objectives of this Regulation as set out in Article 3, the funding provided under the fund shall be reimbursed.

5.  The national authorities of Member States and associated countries shall enjoy access rights to the special report of research action that has received Union funding. Such access rights shall be granted on a royalty-free basis and transferred by the Commission to the Member States and associated countries after ensuring that appropriate confidentiality obligations are in place.

6.  The national authorities of Member States and associated countries shall use the special report solely for purposes related to the use by or for their armed forces, or security or intelligence forces, including within the framework of their cooperative programmes. Such usage shall include, but not be limited to, the study, evaluation, assessment, research, design, ▌ and product acceptance and certification, operation, training and disposal ▌, as well as the assessment and drafting of technical requirements for procurement.

7.  The recipients shall grant access rights to the results of research activities financially supported by the Fund on a royalty-free basis to the Union institutions, bodies or agencies, for the duly justified purpose of developing, implementing and monitoring existing Union policies or programmes in the fields of its competence. Such access rights shall be limited to non-commercial and non-competitive use.

8.  Specific provisions regarding ownership, access rights and licensing shall be laid down in the funding agreements and the contracts regarding pre-commercial procurement to ensure maximum uptake of the results and to avoid any unfair advantage. The contracting authorities shall enjoy at least royalty-free access rights to the results for their own use and the right to grant, or require the recipients to grant, non-exclusive licences to third parties to exploit the results under fair and reasonable conditions without any right to sub-license. All Member States and associated countries shall have royalty-free access to the special report. If a contractor fails to commercially exploit the results within a given period after the pre-commercial procurement as identified in the contract, it shall transfer any ownership of the results to the contracting authorities.

8a.  The provisions laid down in this Regulation shall not affect the export of products, equipment or technologies integrating results of research activities financially supported by the Fund, and shall not affect the discretion of Member States as regards policy on the export of defence-related products.

8b.   Any two or more Member States or associated countries that, multilaterally or within the frame of the Union organisation, have jointly concluded one or several contracts with one or more recipients to further develop together results of research activities supported by the Fund, shall enjoy access rights to those results owned by such recipients and that are necessary for the execution of the contract or contracts. Such access rights shall be granted on a royalty-free basis and under specific conditions aimed at ensuring that those rights will be used only for the purpose of the contract or contracts and that appropriate confidentiality obligations will be in place.

TITLE III

SPECIFIC PROVISIONS APPLICABLE FOR DEVELOPMENT ACTIONS

Article 23

Additional eligibility criteria for development actions

1.  ▌The consortium shall demonstrate that the remaining costs of an activity that are not covered by the Union support will be covered by other means of financing such as by Member States' ▌or associated countries’ contributions or co-financing from legal entities.

2.  Activities as referred to in point (d) of Article 11 paragraph 3▌ shall be based on harmonised capability requirements jointly agreed by at least two Member States ▌or associated countries.

3.  With regard to activities referred to in points (e) to (h) of Article 11 paragraph 3, the consortium shall demonstrate by means of documents issued by national authorities that:

(a)  at least two Member States ▌or associated countries intend to procure the final product or use the technology in a coordinated way, including through joint procurement where applicable;

(b)  the activity is based on common technical specifications jointly agreed by the Member States ▌or associated countries that are to co-finance the action or that intend to jointly procure the final product or to jointly use the technology.

Article 24

Additional award criteria for development actions

In addition to the award criteria referred to in Article 13, the work programme shall also take into consideration:

(a)  the contribution to increasing efficiency across the life cycle of defence products and technologies, including cost-effectiveness and the potential for synergies in the procurement and maintenance process and disposal processes;

(b)  the contribution to the further integration of the European defence industry throughout the Union through the demonstration by the recipients that Member States have committed to jointly use, own or maintain the final product or technology in a coordinated way.

Article 25

Ownership of results of development actions

1.  The Union shall not own the products or technologies resulting from development actions financially supported by the Fund, nor shall it have any intellectual property rights regarding the results of those actions.

2.  The results of actions financially supported by the Fund shall not be subject to any control or restriction by non-associated third countries or by non-associated third country entities, directly or indirectly through one or more intermediate legal entities, including in terms of technology transfer.

2a.  This Regulation shall not affect the discretion of Member States as regards policy on the export of defence-related products.

3.  With regard to results generated by recipients through actions financially supported by the Fund and without prejudice to paragraph 2a of this Article, the Commission shall be notified ex ante of any transfer of ownership ▌to a non-associated third countries or to non-associated third country entities. If such transfer of ownership ▌contravenes the ▌security defence and interests of the Union and its Member States or the objectives ▌ set out in Article 3, ▌the funding provided under the Fund shall be reimbursed.

4.  If Union assistance is provided in the form of public procurement of a study, Member States ▌or associated countries shall have the right, free of charge, to a non-exclusive licence for the use thereof upon their written request.

TITLE IV

GOVERNANCE, MONITORING, EVALUATION AND CONTROL

Article 27

Work programmes

1.  The Fund shall be implemented by annual work programmes established in accordance with Article 110 of the Financial Regulation. Work programmes shall set out, where applicable, the overall amount reserved for blending operations. Work programmes shall set out the overall budget benefiting the cross-border participation of SMEs.

2.  The Commission shall adopt the work programmes by means of implementing acts in accordance with the procedure referred to in Article 28 paragraph 2.

3.  The work programmes shall set out in detail the research topics and the categories of actions to be financially supported by the Fund. Those categories shall be in line with the defence priorities referred to in Article 3.

With the exception of the part of the work programme dedicated to disruptive technologies for defence applications, those research topics and categories of actions shall cover products and technologies in the fields of:

(a)  preparation, protection, deployment and sustainability;

(b)  information management and superiority and command, control, communication, computers, intelligence, surveillance and reconnaissance (C4ISR), cyber defence and cybersecurity; and

(c)  engagement and effectors.

4.  The work programmes shall contain, where appropriate, functional requirements and specify the form of EU funding in accordance with Article 8, while not preventing competition at the level of calls for proposals.

The transition of results of research actions demonstrating added value already financially supported by the Fund into the development phase may also be taken into consideration in the work programmes.

Article 28

Committee

1.  The Commission shall be assisted by a committee within the meaning of Regulation (EU) No 182/2011. The European Defence Agency shall be invited as an observer to provide its views and expertise. The European External Action Service shall also be invited to assist.

The committee shall also meet in special configurations, including in order to discuss defence and security aspects, relating to actions under the Fund.

2.  Where reference is made to this paragraph, Article 5 of Regulation (EU) No 182/2011 shall apply.

Where the committee delivers no opinion, the Commission shall not adopt the draft implementing act and the third sub-paragraph of Article 5(4) of Regulation (EU) No 182/2011 shall apply.

Article 28a

Consultation of the project manager

In case a project manager is appointed by a Member State or an associated country, the Commission shall consult the project manager on progress made with regard to the action before the payment is executed.

Article 29

Independent experts

1.  The Commission shall appoint independent experts to assist in the ethics scrutiny of Article 7 and in the evaluation of proposals pursuant to Article ▌ 237 ▌ of the Financial Regulation. ▌

2.  Independent experts shall be Union citizens from as broad a range of Member States as possible and be selected on the basis of calls for expressions of interest addressed to ▌ Ministries of Defence and subordinated agencies, other relevant governmental bodies, research institutes, universities, business associations or enterprises of the defence sector with a view to establishing a list of experts. By derogation from Article ▌ 237 ▌ of the Financial Regulation, this list shall not be made public.

3.  The security credentials of appointed independent experts shall be validated by the respective Member State.

4.  The Committee referred to in Article 28 shall be informed annually on the list of experts, to be transparent as to the security credentials of the experts. The Commission shall also ensure that experts do not evaluate, advise or assist on matters with regard to which they have a conflict of interests.

5.  Independent experts shall be chosen on the basis of their skills, experience and knowledge appropriate to carry out the tasks assigned to them.

Article 30

Application of the rules on classified information

1.  Within the scope of this Regulation:

(a)  each Member State ▌ shall ensure that it▌ offers a degree of protection of European Union classified information equivalent to that provided by the ▌ security rules of the Council set out in the Annexes to Decision 2013/488/EU (20);

(a1)  the Commission shall protect classified information in accordance with the rules on security as set out in Commission Decision (EU, Euratom) 2015/444 of 13 March 2015 on the security rules for protecting EU classified information;

(c)  natural persons resident in and legal persons established in ▌ third countries may deal with EU classified information regarding the Fund only where they are subject, in those countries, to security regulations ensuring a degree of protection at least equivalent to that provided by the Commission's rules on security set out in Commission Decision (EU, Euratom) 2015/444 and by the security rules of the Council set out in ▌Decision 2013/488/EU;

(c1)   the equivalence of the security regulations applied in a third country or international organisation shall be defined in a security of information agreement, including industrial security matters if relevant, concluded between the Union and that third country or international organisation in accordance with the procedure provided for in Article 218 TFEU and taking into account Article 13 of Decision 2013/488/EU;

(d)  without prejudice to Article 13 of Decision 2013/488/EU and to the rules governing the field of industrial security as set out in Commission Decision (EU, Euratom) 2015/444, a natural person or legal person, third country or international organisation may be given access to European Union classified information where deemed necessary on a case-by-case basis, according to the nature and content of such information, the recipient's need-to-know and the degree of advantage to the Union.

2.  When actions involve, require ▌or contain classified information, the relevant funding body shall specify in the call for proposals/tenders documents the measures and requirements necessary to ensure the security of such information at the requisite level.

3.  The Commission shall set up a secured exchange system in order to facilitate exchange of sensitive and classified information between the Commission and the Member States and associated countries and, where appropriate, with the applicants and the recipients. The system shall take into account the Member States' national security regulations.

4.  The originatorship of classified foreground information generated in the performance of a research or development action shall be decided upon by the Member States on whose territory the recipients are established. For that purpose, those Member States may decide on a specific security framework for the protection and handling of classified information relating to the action and shall inform the Commission thereof. Such a security framework shall be without prejudice to the possibility for the Commission to have access to the necessary information for the implementation of the action.

If no such specific security framework is set up by those Member States, the Commission shall set up the security framework for the action in accordance with the provisions of Commission Decision (EU, Euratom) 2015/444.

The applicable security framework for the action has to be in place at the latest before the signature of the funding agreement or the contract.

Article 31

Monitoring and reporting

1.  Indicators to monitor implementation and progress of the Fund towards the achievement of the general and specific objectives set out in Article 3 are set out in Annex.

2.  To ensure effective assessment of progress of the Fund towards the achievement of its objectives, the Commission is empowered to adopt delegated acts in accordance with Article 36 to amend the Annex to review or complement the indicators where considered necessary and to supplement this Regulation with provisions on the establishment of a monitoring and evaluation framework.

3.  The Commission shall regularly monitor the implementation of the Fund and annually report, to the European Parliament and the Council, on the progress made, including how lessons identified and lessons learned from EDIDP and PADR are being taken into account in the implementation of the Fund. To this end, the Commission shall put in place necessary monitoring arrangements.

4.  The performance reporting system shall ensure that data for monitoring the Fund implementation and results are collected efficiently, effectively and in a timely fashion. To that end, proportionate reporting requirements shall be imposed on recipients of Union funds.

Article 32

Evaluation of the Fund

1.  Evaluations shall be carried out in a timely manner to feed into the decision-making process.

2.  The interim evaluation of the Fund shall be performed once there is sufficient information available about its implementation ▌, but no later than four years after the start of its implementation. The interim evaluation report shall notably include ▌ an assessment of the governance of the Fund, including as regards the provisions related to independent experts, the implementation of the ethics procedures as referred to in Article 7 and of the lessons learned from EDIDP and PADR, implementation rates, project award results including the level of involvement of SMEs and mid-caps ▌ and the degree of their cross-border participation, rates of reimbursement of indirect costs as defined in Article 16, the amounts allocated to disruptive technologies in calls for proposals, and funding granted in accordance with Article ▌ 195 ▌ of the Financial Regulation, by 31 July 2024. The interim evaluation shall also contain information on the countries of origin of the recipients, the number of countries involved in individual projects and, where possible, the distribution of the generated intellectual property rights. The Commission may submit proposals for any appropriate amendments to the present Regulation.

3.  At the end of the implementation period but no later than four years after ▌31 December 2027, a final evaluation of the Fund implementation shall be carried out by the Commission. The final evaluation report shall include the results of the implementation and to the extent possible given timing the impact of the Fund. The report, building on relevant consultations of Member States and associated countries and key stakeholders, shall notably assess the progress made towards the achievement of the objectives set out in Article 3. It shall also help identify where the Union is dependent on third countries for the development of defence products and technologies. It shall also analyse cross border participation, including of SMEs and mid-caps, in projects implemented under the Fund as well as the integration of SMEs and mid-caps in the global value chain and the contribution of the Fund to addressing the shortfalls identified in the Capability Development Plan. The evaluation shall also contain information on the countries of origin of the recipients and, where possible, the distribution of the generated intellectual property rights.

4.  The Commission shall communicate the conclusions of the evaluations accompanied by its observations, to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions.

Article 33

Audits

Audits on the use of the Union contribution carried out by persons or entities, including by other than those mandated by the Union Institutions or bodies, shall form the basis of the overall assurance pursuant to Article ▌ 127 ▌of the Financial Regulation. The European Court of Auditors shall examine the accounts of all revenue and expenditure of the Union according to Article 287 TFEU.

Article 34

Protection of the financial interests of the Union

Where a third country participates in the Fund by a decision under an international agreement or by virtue of any other legal instrument, the third country shall grant the necessary rights and access required for the authorising officer responsible, ▌OLAF and the European Court of Auditors to comprehensively exert their respective competences. In the case of the OLAF, such rights shall include the right to carry out investigations, including on-the-spot checks and inspections, provided for in Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council concerning investigations conducted by the European Anti-Fraud Office▌.

Article 35

Information, communication and publicity

1.  The recipients of Union funding shall acknowledge the origin and ensure the visibility of the Union funding (in particular when promoting the actions and their results) by providing coherent, effective and proportionate targeted information to multiple audiences, including, the media and the public. The possibility to publish academic papers based on the results of research actions shall be regulated in the funding or financing agreement.

2.  The Commission shall implement information and communication actions relating to the Fund, and its actions and results. Financial resources allocated to the Fund shall also contribute to the communication of the political priorities of the Union, as far as they are related to the objectives referred to in Article 3.

2a.  Financial resources allocated to the Fund may also contribute to the organisation of dissemination activities, match-making events and awareness-raising activities, in particular aiming at opening up supply chains to foster the cross-border participation of SMEs.

TITLE V

DELEGATED ACTS, TRANSITIONAL AND FINAL PROVISIONS

Article 36

Delegated acts

1.  The power to adopt delegated acts referred to in Article 31 shall be conferred on the Commission for an indeterminate period of time from the date of entry into force of this Regulation.

2.  The delegation of power referred to in Article 31 may be revoked at any time by the European Parliament or by the Council. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect the day following the publication of the decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in force.

3.  Before adopting a delegated act, the Commission shall consult experts designated by each Member State in accordance with the principles laid down in the Interinstitutional Agreement on Better Law-Making of 13 April 2016.

4.  As soon as it adopts a delegated act, the Commission shall notify it simultaneously to the European Parliament and to the Council.

5.  A delegated act adopted pursuant to Article 31 shall enter into force only if no objection has been expressed either by the European Parliament or by the Council within a period of two months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by two months at the initiative of the European Parliament or of the Council.

Article 37

Repeal

Regulation (EU) 2018/1092 (European Defence Industrial Development Programme) is repealed with effect from 1 January 2021.

Article 38

Transitional provisions

1.  This Regulation shall not affect the continuation or modification of the actions concerned, until their closure, under Regulation (EU) 2018/1092 as well as the Preparatory Action for Defence Research, which shall continue to apply to the actions concerned until their closure, as well as to their results.

2.  The financial envelope of the Fund may also cover technical and administrative assistance expenses necessary to ensure the transition between the Fund and the measures adopted under its predecessors, the European Defence Industrial Development Programme and the Preparatory Action for Defence Research.

3.  If necessary, appropriations may be entered in the budget beyond 2027 to cover the expenses provided for in Article 4 paragraph 4, to enable the management of actions not completed by 31 December 2027.

Article 39

Entry into force

This Regulation shall enter into force on the third day following that of its publication in the Official Journal of the European Union. It shall be applicable as from 1st January 2021.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at …,

For the European Parliament For the Council

The President The President

ANNEX

INDICATORS TO REPORT ON PROGRESS OF THE FUND TOWARDS THE ACHIEVEMENT OF ITS SPECIFIC OBJECTIVES

Specific objective set out in Article 3(2)(a):

Indicator 1 Participants

Measured by: Number of legal entities involved (sub-divided by size, type and nationality)

Indicator 2 Collaborative research

Measured by:

2.1  Number and value of funded projects

2.2  Cross-border collaboration: share of contracts awarded to SMEs and mid-caps, with value of contracts to cross-border collaboration

2.3  Share of recipients that did not carry out research activities with defence applications before the entry into force of the Fund

Indicator 3 Innovation products

Measured by:

3.1   Number of new patents deriving from projects financially supported by the Fund

3.2  Aggregated distribution of patents amongst mid-caps, SMEs and legal entities that are neither mid-caps nor SMEs

3.3  Aggregated distribution of patents per Member States

Specific objective set out in Article 3(2)(b):

Indicator 4 Collaborative capability development

Measured by: Number and value of funded actions address the capability shortfalls identified in the Capability Development Plan

Indicator 4 Continuous support over the full R&D cycle

Measured by: The presence in the background of IPRs or results generated in previously supported actions

Indicator 5 Job creation/support:

Measured by: Number of supported defence R&D employees per Member State

(1) OJ C 110, 22.3.2019, p. 75.
(2) This position replaces the amendments adopted on 12 December 2018 (Texts adopted, P8_TA(2018)0516).
(3) Position of the European Parliament of 18 April 2019. The text highlighted in grey has not been agreed in the framework of interinstitutional negotiations.
(4) Directive 2009/43/EC of the European Parliament and of the Council of 6 May 2009, simplifying terms and conditions of transfers of defence-related products within the Community, OJ L 146, 10.6.2009, p. 1; Directive 2009/81/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of procedures for the award of certain works contracts, supply contracts and service contracts by contracting authorities or entities in the fields of defence and security (OJ L 216, 20.8.2009, p. 76).
(5) Council Decision 2013/755/EU of 25 November 2013 on the association of the overseas countries and territories with the European Union (Overseas Association Decision) (OJ L 344, 19.12.2013, p. 1).
(6) Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ L 193, 30.7.2018).
(7) Regulation (EU) 2018/1092 of the European Parliament and of the Council of 18 July 2018 establishing the European Defence Industrial Development Programme aiming at supporting the competitiveness and innovation capacity of the Union's defence industry (OJ L 200, 7.8.2018, p. 30).
(8) Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down the rules and general principles concerning mechanisms for control by Member States of the Commission’s exercise of implementing powers (OJ L 55, 28.2.2011, p. 13).
(9) Reference to be updated: OJ C 373, 20.12.2013, p. 1. The agreement is available at: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.C_.2013.373.01.0001.01.ENG&toc=OJ:C:2013:373:TOC
(10) Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council of 11 September 2013 concerning investigations conducted by the European Anti-Fraud Office (OLAF) and repealing Regulation (EC) No 1073/1999 of the European Parliament and of the Council and Council Regulation (Euratom) No 1074/1999 (OJ L 248, 18.9.2013, p. 1.
(11) Council Regulation (EC, Euratom) No 2988/95 of 18 December 1995 on the protection of the European Communities financial interests (OJ L 312, 23.12.1995, p. 1):
(12) Council Regulation (Euratom, EC) No 2185/96 of 11 November 1996 concerning on-the-spot checks and inspections carried out by the Commission in order to protect the European Communities' financial interests against fraud and other irregularities (OJ L 292, 15.11.1996, p. 2).
(13) Council Regulation (EU) 2017/1939 of 12 October 2017 implementing enhanced cooperation on the establishment of the European Public Prosecutor’s Office (‘the EPPO’) (OJ L 283, 31.10.2017, p. 1).
(14) Directive (EU) 2017/1371 of the European Parliament and of the Council of 5 July 2017 on the fight against fraud to the Union's financial interests by means of criminal law (OJ L 198, 28.7.2017, p. 29).
(15) Directive 2009/43/EC of the European Parliament and the Council of 6 May 2009 simplifying terms and conditions of transfers of defence-related products within the Community (OJ L 146, 10.6.2009, p. 1).
(16) Commission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises (OJ L 124, 20.5.2003, p. 36)
(17) Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement and repealing Directive 2004/18/EC (OJ L 94, 28.03.2014, p. 65).
(18) Directive 2014/25/EU of the European Parliament and of the Council of 26 February 2014 on procurement by entities operating in the water, energy, transport and postal services sectors and repealing Directive 2004/17/EC (OJ L 94, 28.03.2014, p. 243).
(19) Directive 2009/81/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of procedures for the award of certain works contracts, supply contracts and service contracts by contracting authorities or entities in the fields of defence and security, and amending Directives 2004/17/EC and 2004/18/EC (OJ L 216, 20.08.2009, p. 76).
(20) OJ L 274, 15.10.2013, p. 1.


Exposures in the form of covered bonds ***I
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Resolution
Text
European Parliament legislative resolution of 18 April 2019 on the proposal for a regulation of the European Parliament and of the Council on amending Regulation (EU) No 575/2013 as regards exposures in the form of covered bonds (COM(2018)0093 – C8-0112/2018 – 2018/0042(COD))
P8_TA(2019)0431A8-0384/2018

(Ordinary legislative procedure: first reading)

The European Parliament,

–  having regard to the Commission proposal to Parliament and the Council (COM(2018)0093),

–  having regard to Article 294(2) and Article 114 of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C8‑0112/2018),

–  having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

–  having regard to the opinion of the European Central Bank of 22 August 2018(1),

–  having regard to the opinion of the European Economic and Social Committee of 11 July 2018(2),

–  having regard to the provisional agreement approved by the committee responsible under Rule 69f(4) of its Rules of Procedure and the undertaking given by the Council representative by letter of 20 March 2019 to approve Parliament’s position, in accordance with Article 294(4) of the Treaty on the Functioning of the European Union,

–  having regard to Rule 59 of its Rules of Procedure,

–  having regard to the report of the Committee on Economic and Monetary Affairs (A8-0384/2018),

1.  Adopts its position at first reading hereinafter set out;

2.  Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

3.  Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Position of the European Parliament adopted at first reading on 18 April 2019 with a view to the adoption of Regulation (EU) 2019/… of the European Parliament and of the Council on amending Regulation (EU) No 575/2013 as regards exposures in the form of covered bonds

(As an agreement was reached between Parliament and Council, Parliament's position corresponds to the final legislative act, Regulation (EU) 2019/2160.)

(1) OJ C 382, 23.10.2018, p. 2.
(2) OJ C 367, 10.10.2018, p. 56.


Covered bonds and covered bond public supervision ***I
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Resolution
Text
Annex
European Parliament legislative resolution of 18 April 2019 on the proposal for a directive of the European Parliament and of the Council on the issue of covered bonds and covered bond public supervision and amending Directive 2009/65/EC and Directive 2014/59/EU (COM(2018)0094 – C8-0113/2018 – 2018/0043(COD))
P8_TA(2019)0432A8-0390/2018

(Ordinary legislative procedure: first reading)

The European Parliament,

–  having regard to the Commission proposal to Parliament and the Council (COM(2018)0094),

–  having regard to Article 294(2) and Articles 53 and 114 of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C8-0113/2018),

–  having regard to the opinion of the Committee on Legal Affairs on the proposed legal basis,

–  having regard to Article 294(3) and Article 114 of the Treaty on the Functioning of the European Union,

–  having regard to the opinion of the European Economic and Social Committee of 11 July 2018(1),

–  having regard to the provisional agreement approved by the committee responsible under Rule 69f(4) of its Rules of Procedure and the undertaking given by the Council representative by letter of 20 March 2019 to approve Parliament’s position, in accordance with Article 294(4) of the Treaty on the Functioning of the European Union,

–  having regard to Rules 59 and 39 of its Rules of Procedure,

–  having regard to the report of the Committee on Economic and Monetary Affairs (A8-0390/2018),

1.  Adopts its position at first reading hereinafter set out;

2.  Takes note of the statement by the Commission annexed to this resolution;

3.  Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

4.  Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Position of the European Parliament adopted at first reading on 18 April 2019 with a view to the adoption of Directive (EU) 2019/… of the European Parliament and of the Council on the issue of covered bonds and covered bond public supervision and amending Directives 2009/65/EC and 2014/59/EU

(As an agreement was reached between Parliament and Council, Parliament's position corresponds to the final legislative act, Directive (EU) 2019/2162.)

ANNEX TO THE LEGISLATIVE RESOLUTION

Statement on change of Delegated Regulation (EU) 2015/61 with regard to liquidity coverage requirements for credit institutions

The requirements for a dedicated liquidity buffer for covered bonds set out in Article 16 of the proposal for [a Directive of the European Parliament and of the Council on the issue of covered bonds and covered bond public supervision and amending Directive 2009/65/EC and Directive 2014/59/EU] may result in an overlap with the requirements for credit institutions to maintain a general liquidity buffer, as set out in Delegated Regulation (EU) 2015/61.

In order to address this overlap and to ensure, at the same time, that a dedicated liquidity buffer for covered bonds is applied also during the period covered by the Liquidity Coverage Ratio (LCR), the Commission is willing to amend Delegated Regulation (EU) 2015/61 in order to cater for the specific situation of covered bonds. Such amendment should be adopted in time for it to be able to enter into force before the date of application of the Directive on the issue of covered bonds and covered bond supervision.

(1) OJ C 367, 10.10.2018, p. 56.


InvestEU ***I
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Resolution
Consolidated text
European Parliament legislative resolution of 18 April 2019 on the proposal for a regulation of the European Parliament and of the Council establishing the InvestEU Programme (COM(2018)0439 – C8-0257/2018 – 2018/0229(COD))
P8_TA(2019)0433A8-0482/2018

(Ordinary legislative procedure: first reading)

The European Parliament,

–  having regard to the Commission proposal to Parliament and the Council (COM(2018)0439),

–  having regard to Article 294(2) and Article 173 and the third paragraph of Article 175 of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C8‑0257/2018),

–  having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

–  having regard to the opinion of the European Economic and Social Committee of 17 October 2018(1),

–  having regard to the opinion of the Committee of the Regions of 5 December 2018(2),

–  having regard to the letter from its President to the committee chairs of 25 January 2019 outlining the Parliament's approach to the Multiannual Financial Framework (MFF) post-2020 sectorial programmes,

–  having regard to the letter from the Council to the President of the European Parliament of 1 April 2019 confirming the common understanding reached between the co-legislators during negotiations,

–  having regard to Rule 59 of its Rules of Procedure,

–  having regard to the joint deliberations of the Committee on Budgets and the Committee on Economic and Monetary Affairs under Rule 55 of the Rules of Procedure,

–  having regard to the report of the Committee on Budgets and the Committee on Economic and Monetary Affairs and also the opinions of the Committee on Industry, Research and Energy, the Committee on Transport and Tourism, the Committee on the Environment, Public Health and Food Safety, the Committee on Regional Development and the Committee on Culture and Education (A8-0482/2018),

1.  Adopts its position at first reading hereinafter set out(3);

2.  Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

3.  Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Position of the European Parliament adopted at first reading on 18 April 2019 with a view to the adoption of Regulation (EU) 2019/… of the European Parliament and of the Council establishing the InvestEU Programme

P8_TC1-COD(2018)0229


THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 173 and the third paragraph of Article 175 thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Having regard to the opinion of the European Economic and Social Committee(4),

Having regard to the opinion of the Committee of the Regions(5),

Acting in accordance with the ordinary legislative procedure(6),

Whereas:

(1)  With 1,8 % of EU GDP, down from 2,2 % in 2009, infrastructure investment activities in the Union in 2016 were about 20 % below investment rates before the global financial crisis. Thus, while a recovery in investment-to-GDP ratios in the Union can be observed, it remains below what might be expected in a strong recovery period and is insufficient to compensate years of underinvestment. More importantly, the current investment levels and forecasts do not cover the Union’s structural investment for sustaining long-term growth needs in the face of technological change and global competitiveness, including for innovation, skills, infrastructure, small and medium-sized enterprises ('SMEs') and the need to address key societal challenges such as sustainability or population ageing. Consequently, continued support is necessary to address market failures and sub-optimal investment situations to reduce the investment gap in targeted sectors to achieve the Union's policy objectives.

(2)  Evaluations have underlined that the variety of financial instruments delivered under the 2014-2020 Multiannual Financial Framework period has led to some overlaps. That variety has also produced complexity for intermediaries and final recipients who were confronted with different eligibility and reporting rules. Absence of compatible rules also hampered the combination of several Union funds although such combination would have been beneficial to support projects in need of different types of funding. Therefore, a single fund, the InvestEU Fund, building also on the experience with the European Fund for Strategic Investments set up under the Investment Plan for Europe, should be set up in order to achieve a more efficiently functioning support to final recipients by integrating and simplifying the financial offer under a single budgetary guarantee scheme, thereby improving the impact of Union intervention while reducing the cost to the Union budget.

(3)  In the last years, the Union has adopted ambitious strategies to complete the Single Market and to stimulate sustainable and inclusive growth and jobs, such as the Europe 2020 Strategy, the Capital Markets Union, the Digital Single Market Strategy, the European Agenda for Culture, the Clean Energy for all Europeans package, the Union Action Plan for the Circular Economy, the Low-Emission Mobility Strategy, the EU level of ambition on Security and Defence ▌, the Space Strategy for Europe and the European Pillar of Social Rights. The InvestEU Fund should exploit and reinforce synergies between those mutually reinforcing strategies through providing support to investment and access to financing.

(4)  At Union level, the European Semester of economic policy coordination is the framework to identify national reform priorities and monitor their implementation. Member States, in cooperation, where appropriate, with local and regional authorities, develop their own national multiannual investment strategies in support of those reform priorities. The strategies should be presented alongside the yearly National Reform Programmes as a way to outline and coordinate priority investment projects to be supported by national or Union funding, or by both. They should also serve to use Union funding in a coherent manner and to maximise the added value of the financial support to be received notably from the European Structural and Investment Funds, the European Investment Stabilisation Function and the InvestEU Fund, where relevant.

(5)  The InvestEU Fund should contribute to improving the competitiveness and socio-economic convergence of the Union, including in the field of innovation ▌, digitisation, the efficient use of resources in accordance with a circular economy, the sustainability and inclusiveness of the Union's economic growth and the social resilience ▌and integration of the Union capital markets, including solutions addressing their fragmentation and diversifying sources of financing for the Union enterprises. To that end, the InvestEU Fund should support projects that are technically and, economically viable by providing a framework for the use of debt, risk sharing and equity instruments underpinned by a guarantee from the Union's budget and by financial contributions from implementing partners as relevant. It should be demand-driven while support under the InvestEU Fund should at the same time focus on providing strategic, long-term benefits in key areas of Union policy which would otherwise not be funded or be insufficiently funded, thereby contributing to meeting policy objectives of the Union. Support under the Fund should cover a wide range of sectors and regions, while avoiding excessive sectoral or geographical concentration.

(5a)  Cultural and creative sectors are resilient and fast growing sectors in the Union, generating both economic and cultural value from intellectual property and individual creativity. However, the intangible nature of their assets limits their access to private financing which is essential to invest, scale-up and compete at an international level. The InvestEU Programme should continue to facilitate access to finance for SMEs and organisations from the cultural and creative sectors.

(6)  The InvestEU Fund should support investments in tangible and intangible assets, including cultural heritage, to foster sustainable and inclusive growth, investment and employment, and thereby contributing to improved well-being and fairer income distribution and greater economic, social and territorial cohesion in the Union. InvestEU-funded projects should meet Union environmental and social standards, including labour rights. Intervention through the InvestEU Fund should complement Union support delivered through grants.

(7)  The Union endorsed the objectives set out in the United Nations Agenda 2030 and its Sustainable Development Goals and the Paris Agreement in 2015 as well as the Sendai Framework for Disaster Risk Reduction 2015-2030. To achieve the agreed objectives, including those embedded in the environmental policies of the Union, action pursuing sustainable development is to be stepped up significantly. Therefore, the principles of sustainable development should feature prominently in the design of the InvestEU Fund.

(8)  The InvestEU Programme should contribute to building a sustainable finance system in the Union which supports the re-orientation of private capital towards sustainable investments in accordance with the objectives set out in the Commission Action Plan for Financing Sustainable Growth(7).

(9)  Reflecting the importance of tackling climate change in line with the Union's commitments to implement the Paris Agreement and the United Nations Sustainable Development Goals, the InvestEU Programme will contribute to mainstream climate actions and to the achievement of an overall target of 25 % of the Union budget expenditures supporting climate objectives over the MFF 2021-2027 period and an annual target of 30 % as soon as possible and at the latest by 2027. Actions under the InvestEU Programme are expected to contribute at least 40 % of the overall financial envelope of the InvestEU Programme to climate objectives. Relevant actions will be identified during the InvestEU Programme's preparation and implementation and reassessed in the context of the relevant evaluations and review processes.

(10)  The contribution of the InvestEU Fund to the achievement of the climate target will be tracked through an EU climate tracking system developed by the Commission in cooperation with potential implementing partners and using in an appropriate way the criteria established by [Regulation on the establishment of a framework to facilitate sustainable investment(8)] for determining whether an economic activity is environmentally sustainable. The InvestEU Programme should also contribute to the implementation of other dimensions of the Sustainable Development Goals (SDGs).

(11)  According to the 2018 Global Risks Report issued by the World Economic Forum, half of the ten most critical risks threatening the global economy relate to the environment. Such risks include air, soil, inland water and ocean pollution, extreme weather events, biodiversity losses and failures of climate-change mitigation and adaptation. Environmental principles are strongly embedded in the Treaties and many of the Union's policies. Therefore, the mainstreaming of environmental objectives should be promoted in the InvestEU Fund related operations. Environmental protection and related risk prevention and management should be integrated in the preparation and implementation of investments. The EU should also track its biodiversity-related and air pollution control-related expenditure in order to fulfil the reporting obligations under the Convention on Biological Diversity and Directive (EU) 2016/2284 of the European Parliament and of the Council(9) Investment allocated to environmentally sustainability objectives should therefore be tracked using common methodologies coherent with that developed under other Union programmes applying to climate, biodiversity and air pollution management in order to allow assessing the individual and combined impact of investments on the key components of the natural capital, including air, water, land and biodiversity.

(12)  Investment projects receiving substantial Union support, notably in the area of infrastructure, should be screened by the implementing partner to determine if they have an environmental, climate or social impact and if so, should be subject to sustainability proofing in accordance with guidance that should be developed by the Commission in close cooperation with potential implementing partners under the InvestEU Programme and, using in an appropriate way the criteria established by [Regulation on establishment of a framework to facilitate sustainable investment] for determining whether an economic activity is environmentally sustainable and coherently with the guidance developed for other programmes of the Union. In line with the principle of proportionality such guidance should include adequate provisions to avoid undue administrative burden and projects below a certain size as defined in the guidance should be excluded from the sustainability proofing. Where the implementing partner concludes that no sustainability proofing is to be carried out, it should provide a justification to the Investment Committee. Operations that are inconsistent with the achievement of the climate objectives should not be eligible for support under this Regulation.

(13)  Low infrastructure investment rates in the Union during the financial crisis undermined the Union's ability to boost sustainable growth, competitiveness and convergence. Sizeable investments in the European infrastructure, in particular with regard to interconnection and energy efficiency and to creating a Single European Transport Area, are fundamental to meet the Union's sustainability targets, including the Union’s commitments towards the SDGs, and the 2030 energy and climate targets. Accordingly, support from the InvestEU Fund should target investments into transport, energy, including energy efficiency and renewable and other safe and sustainable low-emission energy sources, environmental, climate action, maritime and digital infrastructure. The InvestEU Programme should prioritise areas that are under-invested, and in which additional investment is required. To maximise the impact and the value added of Union financing support, it is appropriate to promote a streamlined investment process enabling visibility of the project pipeline and maximising synergies across relevant Union programmes in areas such as transport, energy and digitisation. Bearing in mind safety and security threats, investment projects receiving Union support should include infrastructure resilience, including infrastructure maintenance and safety, and take into account principles for the protection of citizens in public spaces. This should be complementary to the efforts made by other Union funds such as the European Regional Development Fund providing support for security components of investments in public spaces, transport, energy and other critical infrastructure.

(13a)  The InvestEU Programme should contribute, where appropriate, to the objectives of the [revised Renewables Directive] and the [Governance Regulation], as well as promote energy efficiency in investment decisions.

(13b)   Genuine multimodality is an opportunity to create an efficient and environmentally friendly transport network that uses the maximum potential of all means of transport and generates synergy between them. The InvestEU Programme could support investment in multimodal transport hubs, which - in spite of their significant economic potential and business case - carry a significant risk for private investors. The Programme could also contribute to the development and deployment of Intelligent Transport Systems (ITS). The InvestEU Programme should help to boost efforts to design and apply technologies that help to improve the safety of vehicles and road infrastructure.

(13c)  The InvestEU Programme should contribute to EU policies concerning seas and oceans, through the development of projects and enterprises in the area of the Blue Economy, and its Finance Principles. This may include interventions in the area of maritime entrepreneurship and industry, an innovative and competitive maritime industry, as well as renewable marine energy and circular economy.

(14)  Whereas the level of overall investment in the Union is increasing, investment in higher-risk activities such as research and innovation is still inadequate. The resulting underinvestment in research and innovation is damaging to the industrial and economic competitiveness of the Union and the quality of life of its citizens. The InvestEU Fund should provide the appropriate financial products to cover different stages in the innovation cycle and a wide range of stakeholders, in particular to allow the upscaling of and deployment of solutions at a commercial scale in the Union, in order to make such solutions competitive on world markets and to promote Union excellence in sustainable technologies at a global level, in synergy with Horizon Europe, including the European Innovation Council. In that regard, the experience gained from the financial instruments deployed under Horizon 2020 such as InnovFin to facilitate and accelerate access to finance for innovative businesses should serve as a strong basis to deliver this targeted support.

(14 a)  Tourism is an important area for the Union economy and the InvestEU Programme should contribute to strengthening its long-term competitiveness by supporting operations promoting sustainable, innovative and digital tourism.

(15)  A significant effort is urgently needed to invest in and boost the digital transformation and to distribute the benefits of it to all Union citizens and businesses. The strong policy framework of the Digital Single Market Strategy should now be matched by investment of a similar ambition, including in artificial intelligence in line with the Digital Europe Programme.

(16)  ▌SMEs represent over 99 % of businesses in the Union and their economic value is significant and crucial ▌. However, they face challenges when accessing finance because of their perceived high risk and lack of sufficient collateral. Additional challenges arise from the need for SMEs and social economy enterprises to stay competitive by engaging in digitisation, internationalisation, transformation in a logic of circular economy, innovation activities and skilling up their workforce. Moreover, compared to larger enterprises, they have access to a more limited set of financing sources: they typically do not issue bonds, have only limited access to stock exchanges or large institutional investors. Innovative solutions such as the acquisition of a business or a participation in a business by employees are also increasingly common for SMEs and social economy enterprises. The challenge in accessing finance is even greater for those SMEs whose activities focus on intangible assets. SMEs in the Union rely heavily on banks and debt financing in the form of bank overdrafts, bank loans or leasing. Supporting SMEs that face the above challenges by making it easier for them to gain access to finance and providing more diversified sources of funding is necessary for increasing the ability of SMEs to finance their creation, growth, innovation and sustainable development, ensure their competitiveness, withstand economic downturns, and for making the economy and the financial system more resilient during economic downturn or shocks and capable of creating jobs and social well-being. This is also complementary to the initiatives already undertaken in the context of the Capital Markets Union. The InvestEU Fund should therefore build on successful programmes such as COSME and provide working capital and investment throughout the life cycle of a company, financing for leasing transactions and an opportunity to focus on specific, more targeted financial products.

(17)  As set out in the reflection paper on the social dimension of Europe(10) and the European Pillar of Social Rights(11) and the Union framework for the UN Convention on the Rights of Persons with disabilities, building a more inclusive and fairer Union is a key priority for the Union to tackle inequality and foster social inclusion policies in Europe. Inequality of opportunities affects in particular access to education, training, culture, employment, health and social services. Investment in the social, skills and human capital-related economy, as well as in the integration of vulnerable populations in the society, can enhance economic opportunities, especially if coordinated at Union level. The InvestEU Fund should be used to support investment in education and training, including the re-skilling and upskilling of workers, inter alia in regions depending on a carbon intensive economy and affected by the structural transition to a low-carbon economy, help increase employment, in particular among the unskilled and long-term unemployed, and improve the situation with regard to gender equality, equal opportunities, intergenerational solidarity, the health and social services sector, social housing, homelessness, digital inclusiveness, community development, the role and place of young people in society as well as vulnerable people, including third country nationals. The InvestEU Programme should also contribute to the support of European culture and creativity. To counter the profound transformations of societies in the Union and of the labour market in the coming decade, it is necessary to invest in human capital, social infrastructure, microfinance, ethical and social enterprise finance and new social economy business models, including social impact investment and social outcomes contracting. The InvestEU Programme should strengthen nascent social market eco-system, increasing the supply of and access to finance to micro- and social enterprises and social solidarity institutions, to meet the demand of those who need it the most. The report of the High-Level Task-Force on Investing in Social Infrastructure in Europe(12) has identified a total investment gap of at least EUR 1,5 trillion for the period between 2018 and 2030 in social infrastructure and services, including for education, training, health and housing, which call for support, including at the Union level. Therefore, the collective power of public, commercial and philanthropic capital, as well as support from alternative types of financial providers such as ethical, social and sustainable actors, and from foundations, should be harnessed to support the social market value chain development and a more resilient Union.

(18)  The InvestEU Fund should operate under four policy windows, mirroring the key Union policy priorities, namely sustainable infrastructure; research, innovation and digitisation: SMEs; and social investment and skills.

(18a)  While the SME window should primarily focus on benefitting SMEs, small midcap companies are also eligible under this window. Midcap companies should be eligible for support under the other three windows.

(19)  Each policy window should be composed of two compartments, that is to say an EU compartment and a Member State compartment. The EU compartment should address Union-wide or Member State specific market failures or sub-optimal investment situations in a proportionate manner; supported actions should have a clear European added value. The Member State compartment should give Member States as well as regional authorities via their Member State the possibility to contribute a share of their resources of Funds under shared management to the provisioning of the EU guarantee to use the EU guarantee for financing or investment operations to address specific market failures or sub-optimal investment situations in their own territory, as set out in the contribution agreement, including in vulnerable and remote areas such as the outermost regions of the Union, to deliver objectives of the Fund under shared management. Actions supported from the InvestEU Fund through either EU or Member State compartments should not duplicate or crowd out private financing or distort competition in the internal market.

(20)  The Member State compartment should be specifically designed to allow the use of funds under shared management to provision a guarantee issued by the Union. That possibility would increase the added value of the Union backed budgetary guarantee by providing it to a wider range of financial recipients and projects and diversifying the means of achieving the objectives of the funds under shared management, while ensuring a consistent risk management of the contingent liabilities by implementing the guarantee given by the Commission under indirect management. The Union should guarantee the financing and investment operations foreseen by the guarantee agreements concluded between the Commission and implementing partners under the Member State compartment, the Funds under shared management should provide the provisioning of the guarantee, following a provisioning rate determined by the Commission and set out in the contribution agreement signed with the Member State, based on the nature of the operations and the resulting expected losses, and the Member State would assume losses above the expected losses by issuing a back-to-back guarantee in favour of the Union. Such arrangements should be concluded in a single contribution agreement with each Member State that voluntarily chooses such option. The contribution agreement should encompass the one or more specific guarantee agreements to be implemented within the Member State concerned, as well as any regional ring-fencing, on the basis of the rules of the InvestEU Fund. The setting out of the provisioning rate on a case by case basis requires a derogation from Article 211(1) of Regulation (EU, Euratom) No 2018/1046(13) (the 'Financial Regulation'). This design provides also a single set of rules for budgetary guarantees supported by funds managed centrally or by funds under shared management, which would facilitate their combination.

(20a)  A partnership between the Commission and the EIB Group should be established drawing on the relative strengths of each partner to ensure maximum policy impact, deployment efficiency, appropriate budgetary and risk management oversight and should support an effective and inclusive direct access.

(20b)  The Commission should seek the views of other potential implementing partners along with the EIB Group on investment guidelines, climate tracking and sustainability guidance documents and common methodologies, as appropriate, with a view to ensuring inclusiveness and operationality, until the set-up of the governance bodies, whereafter involvement of implementing partners should take place in the framework of the advisory board and the steering board.

(21)  The InvestEU Fund should be open to contributions from third countries that are members of the European Free Trade Association, acceding countries, candidates and potential candidates, countries covered by the Neighbourhood policy and other countries, in accordance with the conditions laid down between the Union and those countries. This should allow continuing cooperating with the relevant countries, where appropriate, in particular in the fields of research and innovation as well as SMEs.

(22)  This Regulation lays down a financial envelope for other measures of the InvestEU Programme than the provisioning of the EU guarantee, which is to constitute the prime reference amount, within the meaning of [reference to be updated as appropriate according to the new inter-institutional agreement: point 17 of the Interinstitutional Agreement of 2 December 2013 between the European Parliament, the Council and the Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management(14)], for the European Parliament and the Council during the annual budgetary procedure.

(23)  The EU guarantee of EUR 40 817 500 000 (current prices) at Union level is expected to mobilise more than EUR 698 194 079 000 of additional investment across the Union and should be ▌ allocated between the policy windows.

(23a)  On [date], the Commission declared that, "[w]Without prejudice to the prerogatives of the Council in the implementation of the Stability and Growth Pact, one-off contributions by Member States, either by a Member State or by national promotional banks classified in the general government sector or acting on behalf of a Member State, into thematic or multi-country investment platforms should in principle qualify as one-off measures, within the meaning of Articles 5(1) and 9(1) of Council Regulation (EC) No 1466/97 and Article 3(4) of Council Regulation (EC) No 1467/97. In addition, without prejudice to the prerogatives of the Council in the implementation of the SGP, the Commission will consider to what extent the same treatment as for EFSI in the context of the Commission communication on flexibility can be applied to InvestEU as the successor instrument to EFSI with regard to one-off contributions provided by Member States in cash to finance an additional amount of the EU guarantee for the purposes of the Member State compartment.".

(24)  The EU guarantee underpinning the InvestEU Fund should be implemented indirectly by the Commission relying on implementing partners with outreach to final intermediaries, where applicable, and final recipients. The selection of the implementing partners should be transparent and free from any conflict of interest. A guarantee agreement allocating guarantee capacity from the InvestEU Fund should be concluded by the Commission with each implementing partner, to support its financing and investment operations meeting the InvestEU Fund objectives and eligibility criteria. The risk management of the guarantee should not hamper direct access to the guarantee by the implementing partners. Once the guarantee is granted under the EU compartment to implementing partners, they should be fully responsible for the whole investment process and the due diligence of the financing or investment operations. The InvestEU Fund should support projects that typically have a higher risk profile than the projects supported by normal operations of implementing partners and that could not have been carried out during the period in which the EU guarantee can be used, or not to the same extent, by other public or private sources without InvestEU support.

(24a)  The InvestEU Fund should be provided with a governance structure the function of which should be commensurate with its sole purpose of ensuring the appropriate use of the EU guarantee, in line with ensuring the political independence of investment decisions. That governance structure should be composed of an advisory board, a steering board and a fully independent Investment Committee. The overall composition of the governance structure should strive to achieve gender balance. The governance structure should not encroach upon or interfere with the decision-making of the EIB Group or other implementing partners, or be a substitute for their respective governing bodies.

(25)  An Advisory Board consisting of representatives of the implementing partners and of representatives of Member States, of one expert appointed by the European Economic and Social Committee and of an expert appointed by the Committee of the Regions should be established in order to exchange information and for exchanges on the take-up of the financial products deployed under the InvestEU Fund and to discuss on evolving needs and new products, including specific territorial market gaps.

(25a)  A Steering Board composed of representatives of the Commission, of implementing partners and of one non-voting expert appointed by the European Parliament should determine the strategic and operational guidance for the InvestEU.

(26)  The Commission should assess the compatibility of investment and financing operations submitted by the implementing partners with Union law and policies whereas the decisions on financing and investment operations should ultimately be taken by an implementing partner.

(27)  An independent secretariat hosted by the Commission and answerable to the chairperson of the Investment Committee should assist the Investment Committee.

(28)  An Investment Committee composed of independent experts should conclude on the granting of the support from the EU guarantee to financing and investment operations fulfilling the eligibility criteria, thereby providing external expertise in investment assessments in relation to projects. The Investment Committee should have different configurations to best cover different policy areas and sectors.

(29)  In selecting implementing partners for the deployment of the InvestEU Fund, the Commission should consider the counterpart's capacity to fulfil the objectives of the InvestEU Fund and contribute its own resources, in order to ensure adequate geographical coverage and diversification, to crowd-in private investors and to provide sufficient risk diversification as well as ▌solutions to address market failures and sub-optimal investment situations. Given its role under the Treaties, its capacity to operate in all Member States and the existing experience under the current financial instruments and the EFSI, the European Investment Bank (‘EIB’) Group should remain a privileged implementing partner under the InvestEU Fund's EU compartment. In addition to the EIB Group, national promotional banks or institutions should be able to offer a complementary financial product range given that their experience and capabilities at national and regional level could be beneficial for the maximisation of the impact of public funds on the whole territory of the Union, and to ensure a fair geographical balance of projects. The InvestEU Programme should be implemented in such a way as to promote a level playing field for smaller and younger promotional banks or institutions. Moreover, it should be possible to have other international financial institutions as implementing partners, in particular when they present a comparative advantage in terms of specific expertise and experience in certain Member States and when they present an EU majority of shareholding. It should also be possible for other entities fulfilling the criteria laid down in the Financial Regulation to act as implementing partners.

(30)  With a view to promoting improved geographic diversification, investment platforms may be established, combining the efforts and expertise of implementing partners with other national promotional banks with limited experience in the use of financial instruments. Such structures should be encouraged, including with available support from the InvestEU Advisory Hub. It is appropriate to bring together co-investors, public authorities, experts, education, training and research institutions, the relevant social partners and representatives of the civil society and other relevant actors at Union, national and regional levels, to promote the use of investment platforms in relevant sectors.

(31)  The EU guarantee under the Member State compartment should be allocated to any implementing partner eligible according to Article 62(1)(c) of the Financial Regulation, including national or regional promotional banks or institutions, the EIB, the European Investment Fund and other international financial institutions. When selecting implementing partners under the Member State compartment, the Commission should take into account the proposals made by each Member State, as reflected in the contribution agreement. In accordance with Article 154 of the Financial Regulation, the Commission must carry out an assessment of the rules and procedures of the implementing partner to ascertain that they provide a level of protection of the financial interest of the Union equivalent to the one provided by the Commission.

(32)  Financing and investment operations should ultimately be decided by an implementing partner in its own name, implemented in accordance with its internal rules, policies and procedures and accounted for in its own financial statements or, where applicable, disclosed in the notes to the financial statements. Therefore, the Commission should exclusively account for any financial liability arising from the EU guarantee and disclose the maximum guarantee amount, including all relevant information on the guarantee provided.

(33)  The InvestEU Fund should, where appropriate, allow for a smooth, seamless and efficient blending of grants or financial instruments, or both, funded by the Union budget or by other funds, such as the EU Emissions Trading System (ETS) Innovation Fund with that guarantee in situations where this is necessary to best underpin investments to address particular market failures or sub-optimal investment situations.

(34)  Projects submitted by implementing partners for support under the InvestEU Programme, which include blending with support from another Union programmes, should as a whole also be consistent with the objectives and eligibility criteria contained in the rules of the relevant Union programmes. The use of the EU guarantee should be decided under the rules of the InvestEU Programme.

(35)  The InvestEU Advisory Hub should support the development of a robust pipeline of investment projects in each policy window through advisory initiatives to be implemented by the EIB Group, other advisory partners or directly by the Commission. The InvestEU Advisory Hub should promote geographic diversification with a view to contributing to the Union objectives of economic, social, and territorial cohesion and reducing regional disparities. The InvestEU Advisory Hub should pay particular attention to the aggregation of small-sized projects into larger portfolios. The Commission, the EIB Group and the other advisory partners should cooperate closely with a view to ensuring efficiency, synergies and effective geographic coverage of support across the Union, taking into account the expertise and local capacity of local implementing partners, as well as the European Investment Advisory Hub. In addition ▌, the InvestEU Advisory Hub should provide a central entry point for project development assistance delivered under the InvestEU Advisory Hub for authorities and for project promoters.

(35a)  The InvestEU Advisory Hub should be established by the Commission with the EIB Group as the main partner, building in particular on the experience acquired under the European Investment Advisory Hub. The Commission should be responsible for the policy steer of the InvestEU Advisory Hub and for the management of the central entry point. The EIB Group should deliver advisory initiatives under the policy windows. In addition, the EIB Group should provide operational services to the Commission, including by providing input to the strategic and policy guidelines, mapping existing and emerging advisory initiatives, assessing advisory needs and advising the Commission on optimal ways to address these needs through existing or new advisory initiatives.

(36)  In order to ensure a wide geographic outreach of the advisory services across the Union and to successfully leverage local knowledge about the InvestEU Fund, a local presence of the InvestEU Advisory Hub should be ensured, where needed, taking into account existing support schemes and the presence of local partners, with a view to provide tangible, proactive, tailor-made assistance on the ground. In order to facilitate the provision of advisory support at local level and to ensure efficiency, synergies and effective geographic coverage of support across the Union, the InvestEU Advisory Hub should cooperate with national promotional banks or institutions, as well as benefit from and make use of their expertise.

(36a)  The InvestEU Advisory Hub should provide advisory support to small-sized projects and projects for start-ups, especially when start-ups seek to protect their research and innovation investments by obtaining intellectual property (IP) titles, such as patents, taking into account the existence of and seeking synergies with other services able to cover such actions.

(37)  In the context of the InvestEU Fund, there is a need to provide project development and capacity building support to develop the organisational capacities and market development activities needed to originate quality projects. Moreover, the aim is to create the conditions for the expansion of the potential number of eligible recipients in nascent market segments, in particular where the small size of individual projects raises considerably the transaction cost at the project level, such as for the social finance ecosystem, including philanthropic organisations and for the cultural and creative sectors. The capacity building support should ▌be complementary and additional to actions undertaken under other Union programmes that cover a specific policy area. An effort should also be made to support the capacity building of potential project promoters, in particular local organisations and authorities.

(38)  The InvestEU Portal should be established to provide for an easily accessible and user-friendly project database to promote visibility of investment projects searching for financing with enhanced focus on the provision of a possible pipeline of investment projects, compatible with Union law and policies, to the implementing partners.

(39)  Pursuant to paragraphs 22 and 23 of the Inter-institutional agreement for Better Law-Making of 13 April 2016(15), there is a need to evaluate the InvestEU Programme on the basis of information collected through specific monitoring requirements, while avoiding overregulation and administrative burdens, in particular on Member States. These requirements, where appropriate, can include measurable indicators, as a basis for evaluating the effects of the InvestEU Programme on the ground.

(40)  A solid monitoring framework, based on output, outcome and impact indicators should be implemented to track progress towards the Union's objectives. In order to ensure accountability to European citizens, the Commission should report annually to the European Parliament and the Council on the progress, impact and operations of the InvestEU Programme.

(41)  Horizontal financial rules adopted by the European Parliament and the Council on the basis of Article 322 of the Treaty on the Functioning of the European Union apply to this Regulation. These rules are laid down in the Financial Regulation and determine in particular the procedure for establishing and implementing the budget through grants, procurement, prizes, indirect implementation, and provide for checks on the responsibility of financial actors. Rules adopted on the basis of Article 322 TFEU also concern the protection of the Union's budget in case of generalised deficiencies as regards the rule of law in the Member States, as the respect for the rule of law is an essential precondition for sound financial management and effective EU funding.

(42)  Regulation (EU, Euratom) No [the new FR] applies to InvestEU Programme. It lays down rules on the implementation of the Union budget, including the rules on budgetary guarantees.

(43)  In accordance with Regulation (EU, Euratom) No 2018/1046 of the European Parliament and of the Council(16) (the ‘Financial Regulation’), Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council(17), Council Regulation (Euratom, EC) No 2988/95(18), Council Regulation (Euratom, EC) No 2185/96(19) and Council Regulation (EU) 2017/1939(20), the financial interests of the Union are to be protected through proportionate measures, including the prevention, detection, correction and investigation of irregularities, including fraud, the recovery of funds lost, wrongly paid or incorrectly used and, where appropriate, the imposition of administrative sanctions. In particular, in accordance with Regulation (EU, Euratom) No 883/2013 and Regulation (Euratom, EC) No 2185/96 the European Anti-Fraud Office (OLAF) may carry out administrative investigations, including on-the-spot checks and inspections, with a view to establishing whether there has been fraud, corruption or any other illegal activity affecting the financial interests of the Union. In accordance with Regulation (EU) 2017/1939, the European Public Prosecutor's Office (‘the EPPO) may investigate and prosecute ▌offences against the Union’s financial interests ▌as provided for in Directive (EU) 2017/1371 of the European Parliament and of the Council(21). In accordance with the Financial Regulation, any person or entity receiving Union funds is to fully cooperate in the protection of the Union’s financial interests, to grant the necessary rights and access to the Commission, OLAF, the EPPO in respect of those Member States participating in enhanced cooperation pursuant to Regulation (EU) 2017/1939, and the European Court of Auditors and to ensure that any third parties involved in the implementation of Union funds grant equivalent rights.

(44)  Third countries which are members of the European Economic Area (EEA) may participate in Union programmes in the framework of the cooperation established under the EEA agreement, which provides for the implementation of the programmes by a decision under that agreement. Third countries may also participate on the basis of other legal instruments. A specific provision should be introduced in this Regulation to grant the necessary rights for and access to the authorising officer responsible, the European Anti-Fraud Office (OLAF) as well as the European Court of Auditors to comprehensively exert their respective competences.

(45)  Pursuant to [reference to be updated as appropriate according to a new decision on OCTs: Article 88 of Council Decision 2013/755/EU], persons and entities established in overseas countries and territories (OCTs) are eligible for funding subject to the rules and objectives of InvestEU Programme and possible arrangements applicable to the Member State to which the relevant OCT is linked.

(46)  In order to supplement the non-essential elements of this Regulation with investment guidelines and with a scoreboard of indicators, to facilitate a prompt and flexible adaptation of the performance indicators and to adjust ▌the provisioning rate, the power to adopt acts in accordance with Article 290 of the TFEU should be delegated to the Commission in respect of drawing-up the investment guidelines for the financing and investment operations under different policy windows, the scoreboard, the amendment of Annex III to this Regulation to review or complement the indicators and the adjustment of the provisioning rate. In line with the principle of proportionality, such investment guidelines should include adequate provisions to avoid undue administrative burden. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement on Better Law-Making of 13 April 2016. In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States' experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.

(47)  The InvestEU Programme should address Union-wide and/or Member State specific market failures and sub-optimal investment situations and provide for Union-wide market testing of innovative financial products, and systems to spread them, for complex market failures. Therefore, action at Union level is warranted,

HAVE ADOPTED THIS REGULATION:

CHAPTER I

GENERAL PROVISIONS

Article 1

Subject matter

This Regulation establishes the InvestEU Fund providing for an EU guarantee supporting financing and investment operations carried out by the implementing partners in support of the Union’s internal policies.

This Regulation also establishes an advisory support mechanism to support the development of investable projects and access to financing and to provide related capacity building (‘InvestEU Advisory Hub’). It also establishes a database granting visibility to projects for which project promoters seek financing and which provides investors with information about investment opportunities (‘InvestEU Portal’).

It lays down the objectives of the InvestEU Programme, the budget and the amount of the EU guarantee for the period 2021 to 2027, the forms of Union funding and the rules for providing such funding.

Article 2

Definitions

For the purposes of this Regulation, the following definitions apply:

(1)  'blending operations' means operations supported by the Union budget combining non-repayable forms of support or repayable support or both from the Union budget with repayable forms of support from development or other public finance institutions, as well as from commercial finance institutions and investors; for the purposes of this definition, Union programmes financed from sources other than the Union budget, such as the EU Emissions Trading System (ETS) Innovation Fund, can be assimilated to Union programmes financed by the Union budget;

(1a)  'EIB' means the European Investment Bank;

(1b)  'EIB Group' means the European Investment Bank and its subsidiaries or other entities as defined in Article 28(1) of the EIB Statute;

(1c)  'financial contribution' means the contribution from an implementing partner in the form of own risk taking capacity that shall be provided on a pari passu basis with the EU guarantee or in other forms that allow an efficient implementation of the InvestEU Programme while ensuring appropriate alignment of interest;

(1d)  'contribution agreement' means the legal instrument whereby the Commission and one or more Member States specify the conditions of the EU guarantee under the Member State compartment, as laid down in Article 9;

(2)  'EU guarantee' means an overall irrevocable, unconditional and on demand guarantee provided by the Union budget under which the budgetary guarantees in accordance with Article 219(1) of the Financial Regulation take effect through the signature of individual guarantee agreements with implementing partners;

(3)  'financial product' means a financial mechanism or arrangement ▌under the terms of which the implementing partner provides direct or intermediated financing to final recipients in any of the forms referred to in Article 13;

(4)  'financing and/or investment operations' means operations to provide finance directly or indirectly to final recipients in the form of financial products, carried out by an implementing partner in its own name, provided by it in accordance with its internal rules, policies and procedures and accounted for in its own financial statements or, where applicable, disclosed in the notes to the financial statements;

(5)  'Funds under shared management' means funds that foresee the possibility of allocating an amount thereof to the provisioning of a budgetary guarantee under the Member State compartment of the InvestEU Fund, namely the European Regional Development Fund (ERDF), the European Social Fund+ (ESF+), the Cohesion Fund, the European Maritime and Fisheries Fund (EMFF) and the European Agriculture Fund for Rural Development (EAFRD);

(6)  'guarantee agreement' means the legal instrument whereby the Commission and an implementing partner specify the conditions for proposing financing or investment operations to be granted the benefit of the EU guarantee, for providing the budgetary guarantee for those operations and for implementing them in accordance with the provisions of this Regulation;

(7)  'implementing partner' means the eligible counterpart such as a financial institution or other intermediary with whom the Commission signs a guarantee agreement ▌;

(8)  'InvestEU Advisory Hub' means the technical assistance defined in Article 20;

(8a)  'Advisory Agreement’ means the legal instrument whereby the Commission and the advisory partner specify the conditions for the implementation of the InvestEU Advisory Hub;

(8b)  ‘advisory initiative’ means technical assistance and advisory services supporting investment, including capacity building activities, as defined in Articles 20(1) and (2), implemented by advisory partners, by external service providers contracted by the Commission or by an executive agency;

(8c)  ‘advisory partner’ means the eligible entity such as a financial institution or other entity with whom the Commission signs an agreement to implement one or more advisory initiatives, except the advisory initiatives implemented through external service providers contracted by the Commission or by executive agencies;

(9)  'InvestEU Portal' means the database defined in Article 21;

(10)  'InvestEU Programme' means the InvestEU Fund, the InvestEU Advisory Hub, the InvestEU Portal and blending operations, collectively;

(10b)  ‘investment platforms’ means special purpose vehicles, managed accounts, contract-based co-financing or risk-sharing arrangements or arrangements established by any other means by which entities channel a financial contribution in order to finance a number of investment projects, and which may include:

(a)  national or sub-national platforms that group together several investment projects on the territory of a given Member State;

(b)  cross-border, multi-country, regional or macro-regional platforms that group together partners from several Member States, regions or third countries interested in projects in a given geographic area;

(c)  thematic platforms that group together investment projects in a given sector.

(11)  'microfinance' means microfinance as defined in Regulation [[ESF+] number];

(13)  'national promotional banks or institutions' (NPBIs) means legal entities carrying out financial activities on a professional basis which are given mandate by a Member State or a Member State's entity at central, regional or local level, to carry out development or promotional activities;

(14)  'small and medium-sized enterprises (SMEs)' means micro, small and mediumsized enterprises as defined in the Annex to Commission Recommendation 2003/361/EC(22);

(15)  'small midcap companies' means entities employing up to 499 employees that are not SMEs;

(16)  'social enterprise' means a social enterprise as defined in Regulation [[ESF+] number];

(17)  'third country' means a country that is not a member of the Union.

Article 3

Objectives of the InvestEU Programme

1.  The general objective of the InvestEU Programme is to support the policy objectives of the Union by means of financing and investment operations contributing to:

(a)  the competitiveness of the Union, including research, innovation and digitisation;

(b)  growth and employment in the Union economy, ▌its sustainability and its enviromental and climate dimension contributing to the achievement of the SDGs and the objectives of the Paris climate agreement and to the creation of high-quality jobs;

(c)  the social resilience ▌, inclusiveness and innovativeness of the Union;

(ca)  the promotion of scientific and technological advance, of culture, education and training;

(d)  the integration of the Union capital markets and the strengthening of the Single Market, including solutions addressing the fragmentation of the Union capital markets, diversifying sources of financing for Union enterprises and promoting sustainable finance.

(da)   the promotion of economic, social and territorial cohesion.

2.  The InvestEU Programme has the following specific objectives:

(a)  to support financing and investment operations in sustainable infrastructure in the areas referred to in point (a) of Article 7(1);

(b)  to support financing and investment operations in research, innovation and digitisation, including support for the upscaling of innovative companies and the rolling out of technologies to market;

(c)  to increase the access to and the availability of finance for, and to enhance the global competitiveness of, SMEs, and ▌ for small mid-cap companies;

(d)  to increase the access to and the availability of microfinance and finance to social enterprises, support financing and investment operations related to social investment, competences and skills and develop and consolidate social investment markets, in the areas referred to in point (d) of Article 7(1).

Article 4

Budget and amount of the EU guarantee

1.  The EU guarantee for the purposes of the EU compartment referred to in point (a) of Article 8(1) shall be EUR 40 817 500 000 (current prices). It shall be provisioned at the rate of 40 %.

An additional amount of the EU guarantee may be provided for the purposes of the Member State compartment referred to in point (b) of Article 8(1), subject to the allocation by Member States, pursuant to [Article 10(1)] of Regulation [[CPR] number](23) and Article [75(1)] of Regulation [[CAP plan] number](24), of the corresponding amounts.

An additional amount of the EU guarantee may also be provided in the form of cash by Member States for the purposes of the Member State compartment.

The contributions from third countries referred to in Article 5 shall also increase the EU guarantee referred to in the first subparagraph, providing a provisioning in cash in full in accordance with [Article 218(2] of the [Financial Regulation].

2.  The indicative distribution of the amount referred to in the first subparagraph of paragraph 1 is set out in Annex I to this Regulation. The Commission may modify the amounts referred to in that Annex I, where appropriate, by up to 15 % for each objective. It shall inform the European Parliament and the Council of any modification.

3.  The financial envelope for the implementation of the measures provided in Chapters V and VI shall be EUR 525 000 000 (current prices).

4.  The amount referred to in paragraph 3 may also be used for technical and administrative assistance for the implementation of the InvestEU Programme, such as preparatory, monitoring, control, audit and evaluation activities including corporate information technology systems.

Article 5

Third countries associated to the InvestEU Fund

The EU compartment of the InvestEU Fund referred to in point (a) of Article 8(1) and each of the policy windows referred to in Article 7(1) may receive contributions from the following third countries in order to participate in certain financial products pursuant to [Article 218(2)] of the [Financial Regulation]:

(a)  European Free Trade Association (EFTA) members which are members of the European Economic Area (EEA), in accordance with the conditions laid down in the EEA agreement;

(b)  acceding countries, candidate countries and potential candidates, in accordance with the general principles and general terms and conditions for their participation in Union programmes established in the respective framework agreements and Association Council decisions, or similar agreements, and in accordance with the specific conditions laid down in agreements between the Union and them;

(c)  countries covered by the European Neighbourhood Policy, in accordance with the general principles and general terms and conditions for the participation of those countries in Union programmes established in the respective framework agreements and association council decisions, or similar agreements, and in accordance with the specific conditions laid down in agreements between the Union and those countries;

(d)  third countries, in accordance with the conditions laid down in a specific agreement covering the participation of the third country to any Union programme, provided that the agreement:

(i)  ensures a fair balance as regards the contributions and benefits of the third country participating in the Union programmes;

(ii)  lays down the conditions of participation in the programmes, including the calculation of financial contributions to individual programmes and their administrative costs. These contributions shall constitute assigned revenues in accordance with Article [21(5)] of the [Financial Regulation];

(iii)  does not confer to the third country a decisional power on the programme;

(iv)  guarantees the rights of the Union to ensure sound financial management and to protect its financial interests.

Article 6

Implementation and forms of Union funding

1.  The EU guarantee shall be implemented in indirect management with bodies referred to in Article 62(1)(c)(ii), (iii), (v) and (vi) of the Financial Regulation. Other forms of EU funding under this Regulation shall be implemented in direct or indirect management in accordance with the Financial Regulation, including grants implemented in accordance with its Title VIII and blending operations implemented in accordance with this Article as smoothly as possible and ensuring efficient and coherent support of Union policies.

2.  Financing and investment operations covered by the EU guarantee which form part of the blending operation combining support under this Regulation with support provided under one or more other Union programmes or by the EU Emissions Trading System (ETS) Innovation Fund shall:

(a)  be consistent with the policy objectives and comply with the eligibility criteria set out in the rule on the Union programme under which the support is decided;

(b)  comply with this Regulation.

3.  Blending operations including a financial instrument fully financed by other Union programmes or by the ETS Innovation Fund without use of the EU guarantee under this Regulation shall comply with the policy objectives and eligibility criteria set out in the rules of the Union programme under which the support is provided.

4.  In accordance with Article 6(2), the non-repayable forms of support and/or financial instruments from the Union budget forming part of the blending operation referred to in paragraphs 2 and 3 shall be decided under the rules of the relevant Union programme and shall be implemented within the blending operation in accordance with this Regulation and with [Title X] of the [Financial Regulation].

The reporting shall also include the elements on the consistency with the policy objectives and eligibility criteria set out in the rules of the Union programme under which support is decided as well on the compliance with this Regulation.

CHAPTER II

InvestEU Fund

Article 7

Policy windows

1.  The InvestEU Fund shall operate through the following four policy windows that shall address market failures or sub-optimal investment situations within their specific scope:

(a)  sustainable infrastructure policy window: comprises sustainable investment in the areas of transport, including multimodal transport, road safety, also in line with the EU objective of eliminating fatal road accidents and serious injuries by 2050, renewal and maintenance of rail and road infrastructure, energy, in particular renewable energy, energy efficiency in line with the 2030 energy framework, buildings renovation projects focused on energy savings and the integration of buildings into a connected energy, storage, digital and transport system, improving interconnection levels, digital connectivity and access including in rural areas, supply and processing of raw materials, space, oceans, water, including inland waterways, waste management in line with the waste hierarchy and the circular economy, nature and other environment infrastructure, cultural heritage, tourism, equipment, mobile assets and deployment of innovative technologies that contribute to the environmental climate resilience or social sustainability objectives of the Union, or to both, and meet the environmental or social sustainability standards of the Union;

(b)  research, innovation and digitisation policy window: comprises research, product development and innovation activities, transfer of technologies and research results to the market, supporting market enablers and cooperation between enterprises, demonstration and deployment of innovative solutions and support to scaling up of innovative companies ▌as well as digitisation of Union industry;

(c)  SMEs policy window: access to and availability of finance primarily for SMEs, including innovative ones and those operating in the cultural and creative sectors, as well as for small mid-cap companies;

(d)  social investment and skills policy window: comprises microfinance, social enterprise finance and social economy and measures to promote gender equality skills, education, training and related services; social infrastructure (including health and educational infrastructure and social and student housing); social innovation; health and long-term care; inclusion and accessibility; cultural and creative activities with a social goal; integration of vulnerable people, including third country nationals.

2.  Where a financing or investment operation proposed to the Investment Committee referred to in Article 19 falls under more than one policy window, it shall be attributed to the window under which its main objective or the main objective of most of its sub-projects fall, unless the investment guidelines define otherwise.

3.  Financing and investment operations shall be screened to determine if they have an environmental, climate or social impact and if so, shall be subject to climate, environmental and social sustainability proofing with a view to minimise detrimental impacts and maximise benefits on climate, environment and social dimension. For that purpose, promoters requesting financing shall provide adequate information based on guidance to be developed by the Commission. Projects below a certain size defined in the guidance shall be excluded from the proofing. Projects that are inconsistent with the achievement of the climate objectives shall not be eligible for support under this Regulation.

The Commission guidance shall, in accordance with Union environmental objectives and standards, allow to:

(a)  as regards adaptation, ensure the resilience to the potential adverse impacts of climate change through a climate vulnerability and risk assessment, including relevant adaptation measures, and, as regards mitigation, integrate the cost of greenhouse gas emissions and the positive effects of climate mitigation measures in the cost-benefit analysis;

(b)  account for consolidated project impact in terms of the principal components of the natural capital relating to air, water, land and biodiversity;

(c)  estimate the social impact, including on gender equality, the social inclusion of certain areas or populations and the economic development of areas and sectors affected by structural challenges such as the decarbonisation needs of the economy;

(ca)  identify projects that are inconsistent with the achievement of climate objectives.

(cb)  provide implementing partners with guidance for the purpose of the screening foreseen under paragraph 3, subparagraph 1. In case the implementing partner concludes that no sustainability proofing is to be carried out, it shall provide a justification to the Investment Committee.

4.  Implementing partners shall provide the information necessary to allow the tracking of investment that contributes to meeting the Union objectives on climate and environment, based on guidance to be provided by the Commission.

5.  Implementing partners shall target that at least 55 % of the investment under the sustainable infrastructure policy window contribute to meeting the Union objectives on climate and environment.

The Commission together with implementing partners shall seek to ensure that the part of the budgetary guarantee used for the sustainable investment window is distributed aiming at a balance between the different areas.

6.  The Commission is empowered to adopt delegated acts in accordance with Article 26 to define the investment guidelines for each of the policy windows. The investment guidelines shall be prepared in close dialogue with the EIB Group and other potential implementing partners.

6a.  The Commission shall make the information on the application or interpretation of the investment guidelines available to the implementing partners, the Investment Committee and the advisory partners.

Article 8

Compartments

1.  The policy windows referred to in Article 7(1) shall each consist of two compartments addressing ▌market failures or sub-optimal investment situations as follows:

(a)  the EU compartment shall address any of the following situations:

(i)  market failures or sub-optimal investment situations related to Union policy priorities ▌;

(ii)  Union wide and/or Member State specific market failures or sub-optimal investment situations; or

(iii)  ▌market failures or sub-optimal investment situations, in particular new or complex ones, which require the development of innovative financial solutions and market structures;

(b)  the Member State compartment shall address specific market failures or sub-optimal investment situations in one or several regions or Member States to deliver the policy objectives of the contributing Funds under shared management in particular to strengthen economic, social and territorial cohesion in the European Union by addressing imbalances among its regions.

2.  The compartments referred to in paragraph 1 shall, where appropriate, be used in a complementary manner to support a financing or investment operation, including by combining support from both compartments.

Article 9

Specific provisions applicable to the Member State compartment

1.  Amounts allocated by a Member State on a voluntary basis under Article [10(1)] of Regulation [[CPR] number] or Article [75(1)] of Regulation [[CAP plan] number] shall be used for the provisioning of the part of the EU guarantee under the Member State compartment covering financing and investment operations in the Member State concerned or for the possible contribution from Funds under shared management to the InvestEU Advisory Hub. Those amounts shall contribute to the achievement of the policy objectives selected in the Partnership Agreement and in the programmes which contribute to InvestEU.

Amounts allocated under the third subparagraph of Article 4(1) shall be used for the provisioning of the guarantee.

2.  The establishment of that part of the EU guarantee under the Member State compartment shall be subject to the conclusion of a contribution agreement between the Member State and the Commission.

The fourth subparagraph of Article 9(2) and Article 9(5) shall not apply to the additional amount provided by a Member State under the third subparagraph of Article 4(1).

The provisions in this Article relating to amounts allocated under Article 10(1) of Regulation [CPR number] or Article 75(1) of Regulation [CAP plan] are not applicable to a contribution agreement concerning an additional amount by a Member State, referred to in the third subparagraph of Article 4(1).

The Member State and the Commission shall conclude the contribution agreement or an amendment to it within four months following the Commission Decision adopting the Partnership Agreement or the CAP plan or simultaneously to the Commission Decision amending a programme or a CAP plan.

Two or more Member States may conclude a joint contribution agreement with the Commission.

By derogation from [Article 211(1)] of the [Financial Regulation], the provisioning rate of the EU guarantee under the Member State compartment shall be set at 40 % and maybe adjusted downwards or upwards in each contribution agreement to take account of the risks attached to the financial products intended to be used.

3.  The contribution agreement shall at least contain the following elements:

(a)  the overall amount of the part of the EU guarantee under the Member State compartment pertaining to the Member State, its provisioning rate, the amount of the contribution from Funds under shared management, the constitution phase of the provisioning in accordance with an annual financial plan and the amount of the resulting contingent liability to be covered by a back-to-back guarantee provided by the Member State concerned;

(b)  the Member State strategy consisting of the financial products and their minimum leverage, the geographical coverage, including the regional coverage if needed, types of projects, the investment period and, where applicable, the categories of final recipients and of eligible intermediaries;

(c)  the potential implementing partner or partners proposed in accordance with Article 12, and the obligation of the Commission to inform the Member State about the implementing partner or partners selected;

(d)  the possible contribution from Funds under shared management to the InvestEU Advisory Hub;

(e)  the annual reporting obligations towards the Member State, including reporting in accordance with the relevant indicators related to the policy objectives covered in the Partnership Agreement or programme and referred to in the contribution agreement;

(f)  provisions on the remuneration of the part of the EU guarantee under the Member State compartment;

(g)  possible combination with resources under the EU compartment, including in a layered structure to achieve better risk coverage in accordance with Article 8(2).

4.  The contribution agreements shall be implemented by the Commission through guarantee agreements signed with implementing partners pursuant to Article 14 and advisory agreements signed with advisory partners.

Where, within nine months from the signature of the contribution agreement, no guarantee agreement has been concluded or the amount of a contribution agreement is not fully committed through one or more guarantee agreements, the contribution agreement shall be terminated or prolonged, by mutual agreement, in the first case or amended accordingly in the second case ▌. The unused amount of provisioning coming from amounts allocated by Member States under Article [10(1) of Regulation [[CPR]] of Article [75(1)] of Regulation [[CAP]] shall be re-used pursuant to [Article 10(5)] of Regulation [[CPR] number] and Article [75(5)] of Regulation [[CAP plan] number]. The unused amount of provisioning coming from amounts allocated by a Member State under the third subparagraph of Article 4(1) shall be paid back to the Member State.

Where the guarantee agreement has not been duly implemented within a period specified in Article [10(6)] of Regulation [[CPR] number] or in Article [75(6)] of Regulation [[CAP plan] number], the contribution agreement shall be amended ▌. The unused amount of provisioning coming from amounts allocated by Member States under Article [10(1) of Regulation [[CPR]] of Article [75(1)] of Regulation [[CAP]] shall be re-used pursuant to [Article 10(5)] of Regulation [[CPR] number] and Article [75(5)] of Regulation [[CAP plan] number]. The unused amount of provisioning coming from amounts allocated by a Member State under the third subparagraph of Article 4(1) shall be paid back to the Member State.

5.  The following rules shall apply to the provisioning for the part of the EU guarantee under the Member State compartment established by a contribution agreement:

(a)  after the constitution phase referred to in point (a) of paragraph 3 of this Article, any annual surplus of provisions, calculated by comparing the amount of provisions required by the provisioning rate and the actual provisions, shall be re-used pursuant to [Article 10(7)] of the [CPR] and to Article [75(7)] of the [[CAP plan] number];

(b)  by derogation from [Article 213(4)] of the [Financial Regulation], after the constitution phase referred to in point (a) of paragraph 3 of this Article, the provisioning shall not give rise during the availability of that part of the EU guarantee under the Member State compartment to annual replenishments;

(c)  the Commission shall immediately inform the Member State where, as a result of calls on that part of the EU guarantee under the Member State compartment, the level of provisions for that part of the EU guarantee falls below 20 % of the initial provisioning;

(d)  if the level of provisions for that part of the EU guarantee under the Member State compartment reaches 10 % of the initial provisioning, the Member State concerned shall provide to the common provisioning fund up to 5 % of the initial provisioning upon request by the Commission.

CHAPTER IIA

PARTNERSHIP BETWEEN THE COMMISSION AND THE EIB GROUP

Article 9a

Scope of the partnership

1.  The Commission and the EIB Group shall form a partnership under this Regulation with the objective of supporting programme implementation and consistency, inclusivity, additionality, and efficiency of deployment. In accordance with the terms of this Regulation and as further specified in the agreements referred to in paragraph 2, the EIB Group:

(a)  shall implement the portion of the EU guarantee specified in Article 10(1b);

(b)  shall support the implementation of the EU compartment, and where applicable in accordance with Article 12(1) the Member State compartment, of the InvestEU Fund, in particular by:

(i)  contributing together with potential implementing partners to the investment guidelines in accordance with Article 7(6), contributing to the design of the scoreboard in accordance with Article 19(1a) and to other documents setting out the operational guidance of the InvestEU Fund,

(ii)  defining, together with the Commission and potential implementing partners, the risk methodology and risk mapping system relating to the financing and investment operations of the implementing partners in order to allow such operations to be assessed on a common rating scale,

(iii)  upon request by the Commission and in agreement with the potential implementing partner concerned, carrying out an assessment of, and providing targeted technical advice on, the systems of that potential implementing partner, where and to the extent required by the conclusions of the audit of the pillar assessment in view of the implementation of the financial products envisaged by that potential implementing partner,

(iv)  providing a non-binding opinion on the banking related aspects, notably on the financial risk and financial terms related to the portion of the EU guarantee to be allocated to the implementing partner as defined in the guarantee agreements to be concluded with implementing partners other than the EIB Group. The Commission shall, as appropriate, engage with the implementing partner based on the findings of the opinion. It shall inform the EIB Group on the outcome of its decision making,

(v)  carrying out simulations and projections on the financial risk and remuneration of the aggregate portfolio based on assumptions agreed with the Commission,

(vi)  carrying out financial risk measurement and financial reporting of the aggregate portfolio, and

(vii)  providing restructuring and recovery services set out in the agreement referred to in Article 9a(2)(b) to the Commission, at the request of the Commission and in agreement with the implementing partner, in accordance Article 14(2)(g), where the implementing partner is no longer responsible for pursuing restructuring and recovery activities under the relevant guarantee agreement;

(c)  may, upon request by a national promotional bank or institution, provide capacity building referred to in Article 20(2)(f) to that national promotional bank or institution and/or other services, related to the implementation of financial products supported by the EU guarantee;

(d)  shall, in relation to the InvestEU Advisory Hub,

(i)  be allocated an amount of up to EUR 375 million out of the financial envelope referred to in Article 4(3) for advisory initiatives and operational tasks referred to in point (ii);

(ii)  advise the Commission and perform operational tasks, to be laid down in the agreement referred to in Article 9a(2)(c), by:

1.  supporting the Commission in the design, the establishment and functioning of the InvestEU Advisory Hub;

2.  providing an assessment of requests for advisory services not considered by the Commission as falling under existing advisory initiatives with a view to support the allocation decision of the Commission;

3.  supporting national promotional banks or institutions by providing capacity building referred to in Article 20(2)(f), upon their request, in relation to the development of their advisory capabilities to participate in advisory initiatives;

4.  at the request of the Commission and of a potential advisory partner and subject to the agreement of the EIB Group, contracting with advisory partners on behalf of the Commission for the delivery of advisory initiatives.

The EIB Group shall ensure that its tasks referred to in paragraph 1(d), point (ii) are conducted entirely independently from its role as an advisory partner.

2.  The banking related information transmitted to the EIB Group by the Commission under (ii), (iv), (v) and (vi) of (1)(b) shall be limited to information strictly required for the EIB Group to carry out its obligations under these points. The Commission shall define, in close dialogue with the EIB Group and potential implementing partners, the nature and scope of the above mentioned information taking into account the requirements for sound financial management of the EU guarantee,  legitimate interests of the implementing partner regarding commercially sensitive information and the needs of the EIB Group for the purpose of meeting its obligations under those points.

3.  The modalities of the partnership shall be laid down in agreements, including:

(a)  on the granting and implementation of the portion of the EU guarantee specified in Article 10(1b):

(i)  a guarantee agreement between the Commission and the EIB Group, or

(ii)  separate guarantee agreements between the Commission and the EIB and/or a subsidiary or other entity as defined in Article 28(1) of the EIB Statute;

(b)  an agreement between the Commission and the EIB Group in relation to points (b) and (c) of paragraph 1;

(c)  an agreement between the Commission and the EIB Group in relation to the InvestEU Advisory Hub;

(d)  service agreements between the EIB Group and national promotional banks and institutions concerning capacity building and other services in accordance with point (c) of paragraph 1.

4.  Without prejudice to Articles 15(3) and 20(4), the costs incurred by the EIB Group for the performance of tasks referred to in points (b) and (c) of paragraph 1 shall comply with the conditions agreed under the agreement referred to in point (b) of paragraph 2 and may be covered from the repayments or revenues attributable to the EU guarantee contributed to the provisioning, in accordance with Article 211(4) and (5) of the Financial Regulation, or be charged on to the envelope referred to in Article 4(3), upon justification of these costs by the EIB Group and within an overall cap of EUR 7 000 000.

5.  The costs incurred by the EIB Group for the performance of the operational tasks referred to in point (d)(ii) of paragraph 1 shall be fully covered and paid from the amount referred to in point (d)(i) of paragraph 1, upon justification of these costs by the EIB Group and within an overall cap of EUR 10 000 000.

Article 9b

Conflict of interest

Within the framework of the partnership the EIB Group shall take all necessary measures and precautions to avoid conflicts of interests with other implementing partners, including through putting in place a dedicated and independent team for the tasks referred to in Article 9a(1)(b)(iii), (iv), (v), and (vi) which shall be subject to strict confidentiality rules, which shall continue to apply to those that have left the team. The EIB Group or other implementing partners shall inform the Commission without delay of any situation constituting or likely to lead to any such conflict. In case of doubt, the Commission shall decide if a conflict of interest exists and shall inform the EIB Group thereof. In the event of a conflict of interest, the EIB Group shall take appropriate measures. The steering board shall be informed of the measures taken and their results.

The EIB Group shall take the necessary precautions to avoid conflict of interest situations in the implementation of the InvestEU Advisory Hub, in particular in relation to the operational tasks in its role of supporting the Commission referred to in Article 9a(1)(d)(ii). In the event of a conflict of interest, the EIB Group shall take appropriate measures.

CHAPTER III

EU guarantee

Article 10

EU guarantee

1.  The EU guarantee shall be granted as an irrevocable, unconditional and on demand guarantee to the implementing partners in accordance with Article 219(1) of the Financial Regulation and managed in accordance with Title X of the Financial Regulation in indirect management.

1a.  The remuneration of the EU guarantee shall be linked to the characteristics and risk profile of the financial products, taking into due account the nature of the underlying financing and investment operations and the fulfilment of the policy objectives targeted. This may include, in duly justified cases related to the nature of the policy objectives targeted by the financial product to be implemented and to the affordability for targeted final recipients, a reduction of the cost or improvement of the terms of financing provided to the final recipient by modulating the remuneration of the EU guarantee, or, where necessary, by covering the outstanding administrative costs borne by the implementing partner through the EU budget, in particular:

(a)  in situations where stressed financial market conditions would prevent the realisation of an operation under market-based pricing, or

(b)  where necessary to catalyse financing and investment operations in sectors or areas experiencing a significant market failure or suboptimal investment situation and to facilitate the establishment of investment platforms,

to the extent that the reduction of the remuneration of the EU guarantee or the coverage of the outstanding administrative costs borne by implementing partners do not significantly impact the provisioning of the InvestEU guarantee.

The reduction of the remuneration of the EU guarantee shall fully benefit final recipients.

1b.  The condition set out in Article 219(4) of the Financial Regulation shall to each implementing partner on a portfolio basis.

1c.  75 % of the EU guarantee under the EU compartment as referred to in first sub-paragraph of Article 4(1), amounting to EUR 30 613 125 000, shall be granted to the EIB Group. The EIB Group shall provide an aggregate financial contribution amounting to EUR 7 653 281 250. This contribution shall be provided in a manner and form that facilitates the implementation of the InvestEU Fund and the achievement of the objectives set out in Article 12(2).

1d.  The remaining 25 % of the EU guarantee under the EU compartment shall be granted to other implementing partners, which are also to provide a financial contribution to be determined in the guarantee agreements.

1e.  Best efforts shall be made to ensure that at the end of the investment period a wide range of sectors and regions will be covered and excessive sectoral or geographical concentration is avoided. These efforts shall include incentives for the smaller or less sophisticated NPBIs that have a comparative advantage due to their local presence, knowledge and investment competencies. Those efforts shall be supported by the Commission through the development of a coherent approach.

2.  Support of the EU guarantee may be granted for financing and investment operations covered by this Regulation for an investment period ending on 31 December 2027. Contracts between the implementing partner and the final recipient or the financial intermediary or other entity referred to in Article 13(1)(a) shall be signed by 31 December 2028.

Article 11

Eligible financing and investment operations

1.  The InvestEU Fund shall only support financing and investment operations that

(a)  comply with the conditions set out in points (a) to (e) of Article 209(2) of the Financial Regulation, in particular with the ▌requirements regarding market failures, sub-optimal investment situations and additionality as set out in points (a) and (b) of Article 209(2) of the Financial Regulation and in Annex V to this Regulation and, where appropriate, maximising private investment in accordance with point (d) of Article 209(2) of the Financial Regulation;

(b)  contribute to the Union policy objectives and fall under the scope of the areas eligible for financing and investment operations under the appropriate window in accordance with Annex II to this Regulation; ▌

(ba)  do not provide financial support to the excluded activities defined in point B of Annex V to this Regulation; and

(c)  are consistent with the investment guidelines.

2.  In addition to projects situated in the Union, the InvestEU Fund may support the following projects and operations through financing and investment operations:

(a)  ▌projects between entities located or established in one or more Member States and extending to one or more third countries, including acceding countries, candidate countries and potential candidates, countries falling within the scope of the European Neighbourhood Policy, the European Economic Area or the European Free Trade Association, or to an overseas country or territory as set out in Annex II to the TFEU, or to an associated third country, whether or not there is a partner in those third countries or overseas countries or territories;

(b)  financing and investment operations in countries referred to in Article 5 which have contributed to a specific financial product.

3.  The InvestEU Fund may support financing and investment operations providing finance to recipients which are legal entities established in any of the following countries:

(a)  a Member State or an overseas country or territory linked to it;

(b)  a third country or territory associated to the InvestEU Programme in accordance with Article 5;

(c)  a third country referred to in point (a) of paragraph 2, where applicable;

(d)  other countries where needed for financing a project in a country or territory referred to in points (a) to (c).

Article 12

Selection of implementing partners other than the EIB Group

1.  The Commission shall select, in accordance with Article 154 of the Financial Regulation, the implementing partners, other than the EIB Group.

Implementing partners may form a group. An implementing partner may be a member of one or more groups.

For the EU compartment, the eligible counterparts shall have expressed their interest in relation to the portion of the EU guarantee referred to in Article 10(1c).▌

For the Member State compartment, the Member State concerned may propose one or more ▌counterparts as implementing partners from among those that have expressed their interest ▌. The Member State concerned may also propose the EIB Group as an implementing partner and may contract, at its own expense, the EIB Group to provide the services listed in Article 9a.

Where the Member State concerned does not propose an implementing partner, the Commission shall proceed in accordance with the second subparagraph of this paragraph among those implementing partners that can cover financing and investment operations in the geographical areas concerned.

2.  When selecting implementing partners, the Commission shall ensure that the portfolio of financial products under the InvestEU Fund meets the following objectives:

(a)  to maximise the coverage of the objectives laid down in Article 3;

(b)  to maximise the impact of the EU guarantee through the own resources committed by the implementing partner;

(c)  to maximise, where appropriate, private investment;

(ca)  to promote innovative financial and risk solutions to address market failures and sub-optimal investment situations;

(d)  to achieve geographical diversification via gradual allocation of the EU guarantee, and to allow for the financing of smaller projects;

(e)  to provide sufficient risk diversification.

3.  When selecting the implementing partners, the Commission shall also take into account:

(a)  the possible cost and remuneration to the Union budget;

(b)  the capacity of the implementing partner to implement thoroughly the requirements of Articles 155(2) and 155(3) of the Financial Regulation related to tax avoidance, tax fraud, tax evasion, money laundering, terrorism financing and non-cooperative jurisdictions.

4.  National promotional banks or institutions may be selected as implementing partners, subject to fulfilling the requirements laid down in this Article and in the second subparagraph of Article 14(1).

Article 13

Eligible types of financing

1.  The EU guarantee may be used towards risk coverage for the following types of financing provided by the implementing partners:

(a)  loans, guarantees, counter-guarantees, capital market instruments, any other form of funding or credit enhancement, including subordinated debt, or equity or quasi-equity participations, provided directly or indirectly through financial intermediaries, funds, investment platforms or other vehicles to be channelled to final recipients;

(b)  funding or guarantees by an implementing partner to another financial institution enabling the latter to undertake financing activities referred to in point (a).

In order to be covered by the EU guarantee, the financing referred to in points (a) and (b) of the first subparagraph of this paragraph shall be granted, acquired or issued for the benefit of financing or investment operations referred to in Article 11(1), where the financing by the implementing partner has been granted in accordance with a financing agreement or transaction signed or entered into by the implementing partner after the signature of the guarantee agreement between the Commission and the implementing partner and which has not expired or been cancelled.

2.  Financing and investment operations through funds or other intermediate structures shall be supported by the EU guarantee in accordance with provisions to be laid down in the investment guidelines even if such structure invests a minority of its invested amounts outside the Union and in the countries referred to Article 11(2) or into assets other than those eligible under this Regulation.

Article 14

Guarantee agreements

1.  The Commission shall conclude a guarantee agreement with each implementing partner on the granting of the EU guarantee in accordance with the requirements of this Regulation up to an amount to be determined by the Commission.

In case implementing partners form a group ▌, a single guarantee agreement shall be concluded between the Commission and each implementing partner within the group or with one implementing partner on behalf of the group.

2.  The guarantee agreements shall contain, in particular, provisions concerning:

(a)  the amount and the terms of the financial contribution which is to be provided by the implementing partner;

(b)  the terms of the funding or the guarantees which are to be provided by the implementing partner to another legal entity participating in the implementation, whenever that is the case;

(c)  in accordance with Article 16, detailed rules on the provision of the EU guarantee, including coverage of portfolios of specific types of instruments and the respective events triggering possible calls on the EU guarantee;

(d)  the remuneration for risk-taking that is to be allocated in proportion to the respective share in the risk-taking of the Union and the implementing partner or as adjusted in duly justified cases pursuant to Article 16(1);

(e)  the payment conditions;

(f)  the commitment of the implementing partner to accept the decisions by the Commission and the Investment Committee as regards the use of the EU guarantee for the benefit of a proposed financing or investment operation, without prejudice to the decision-making of the implementing partner on the proposed operation without the EU guarantee;

(g)  provisions and procedures relating to the recovery of claims that is to be entrusted to the implementing partner;

(h)  financial and operational reporting and monitoring of the operations under the EU guarantee;

(i)  key performance indicators, in particular as regards the use of the EU guarantee, the fulfilment of the objectives and criteria laid down in Articles 3, 7 and 11 as well as the mobilisation of private capital;

(j)  where applicable, provisions and procedures relating to blending operations;

(k)  other relevant provisions in compliance with the requirements of Article 155(2) and Title X of the Financial Regulation;

(l)  the existence of adequate mechanisms for private investors’ potential concerns.

3.  A guarantee agreement shall also provide that remuneration attributable to the Union from financing and investment operations covered by this Regulation is to be provided after the deduction of payments due upon calls on the EU guarantee.

4.  In addition, a guarantee agreement shall provide that any amount due to the implementing partner related to the EU guarantee shall be deducted from the overall amount of remuneration, revenues and repayments due by the implementing partner to the Union from financing and investment operations covered by this Regulation. Where this amount is not sufficient to cover the amount due to an implementing partner in accordance with Article 15(3), the outstanding amount shall be drawn from the provisioning of the EU guarantee.

5.  Where the guarantee agreement is concluded under the Member State compartment, it may provide for the participation of representatives from the Member State or the regions concerned in the monitoring of the implementation of the guarantee agreement.

Article 15

Requirements for the use of the EU guarantee

1.  The granting of the EU guarantee shall be subject to the entry into force of the guarantee agreement with the relevant implementing partner.

2.  Financing and investment operations shall be covered by the EU guarantee only where they fulfil the criteria laid down in this Regulation and in the relevant investment guidelines and where the Investment Committee has concluded that they fulfil the requirements for benefiting from the support of the EU guarantee. The implementing partners shall remain responsible for ensuring the compliance of the financing and investment operations with this Regulation and the relevant investment guidelines.

3.  No administrative costs or fees related to the implementation of financing and investment operations under the EU guarantee shall be due to the implementing partner by the Commission, unless the nature of the policy objectives targeted by the financial product to be implemented and the affordability for targeted final recipients or the type of financing provided allow the implementing partner to duly justify to the Commission the need for an exception. Coverage of such costs by the EU budget shall be limited to an amount strictly required to implement the relevant financing and investment operations, and be provided only to the extent to which the cost is not covered by revenues received by implementing partners on the financing and investment operations concerned. The fee arrangements shall be laid down in the guarantee agreement and shall comply with the modalities set out in Article 14(4) and with Article 209(2)(g) of the Financial Regulation.

4.  In addition, the implementing partner may use the EU guarantee to meet the relevant share of any recovery costs, unless deducted from recovery proceeds, in accordance with Article 14(4).

Article 16

Coverage and terms of the EU guarantee

1.  The remuneration for risk-taking shall be allocated between the Union and an implementing partner in proportion to their respective share in the risk-taking of a portfolio of financing and investment operations or, where relevant, of individual operations. The remuneration of the EU guarantee may be reduced in duly justified cases referred to in the second sub-paragraph of Article 10(1).

The implementing partner shall have an appropriate exposure at its own risk to financing and investment operations supported by the EU guarantee, unless exceptionally the policy objectives targeted by the financial product to be implemented are of such nature that the implementing partner could not reasonably contribute its own risk-bearing capacity to it.

2.  The EU guarantee shall cover:

(a)  for debt products referred to in Article 13(1)(a):

(i)  the principal and all interest and amounts due to the implementing partner but not received by it in accordance with the terms of the financing operations until the event of default; for subordinated debt a deferral, reduction or required exit shall be considered to be an event of default;

(ii)  restructuring losses;

(iii)  losses arising from fluctuations of currencies other than the euro in markets where possibilities for long-term hedging are limited;

(b)  for equity or quasi-equity investments referred to in Article 13(1)(a), the amounts invested and their associated funding cost and losses arising from fluctuations of currencies other than the euro;

(c)  for funding or guarantees by an implementing partner to another legal entity referred to in Article 13(1)(b), the amounts used and their associated funding costs.

3.  Where the Union makes a payment to the implementing partner upon a call on the EU guarantee, it shall be subrogated into the relevant rights, to the extent they continue to exist, of the implementing partner relating to any of its financing or investment operations covered by the EU guarantee.

The implementing partner shall, on behalf of the Union, pursue the recovery of claims for the amounts subrogated and reimburse the Union from the sums recovered.

CHAPTER IV

GOVERNANCE

Article 17

Advisory Board

1.  The Commission and the Steering Board shall be advised by an advisory board ▌.

1a.  The advisory board shall strive to ensure gender balance and shall comprise:

(a)  one representative of each implementing partner;

(b)  one representative of each Member State;

(c)  one expert appointed by the European Economic and Social Committee;

(d)  one expert appointed by the Committee of the Regions.

4.  The advisory board ▌shall be chaired by a representative of the Commission. The representative nominated by the EIB Group shall be the vice-chair.

The advisory board shall meet regularly and at least twice a year at the request of the Chairperson. ▌

5.  The advisory board shall

(a)  ▌provide advice to the Commission and the Steering Board on the design of financial products to be implemented under this Regulation;

(b)  provide advice to the Commission and the Steering Board about market developments, market failures and sub-optimal investment situations and market conditions;

(c)  exchange views on market developments and share best practices.

5a.  Meetings of representatives of the Member States in a separate format shall also be organised at least twice a year and chaired by the Commission.

5b.  The Advisory Board and its Member State format may issue recommendations on the implementation and functioning of the InvestEU programme, to be considered by the Steering Board.

5c.  The detailed minutes of the meetings of the Advisory Board shall be made public as soon as possible after they have been approved by the Advisory Board.

The Commission shall establish the operating rules and procedures and manage the secretariat of the Advisory Board. All relevant documentation and information shall be made available to the Advisory Board to exercise its tasks.

5d.  The NPBIs represented in the advisory board shall select from among themselves the representatives of other implementing partners than the EIB Group in the steering board referred to in Article 17a(1). The NPBIs shall aim at a balanced representation in the steering board in terms of their size and geographical location. The representatives selected shall represent the agreed common position of all implementing partners other than the EIB Group.

Article 17a

Steering Board

1.  A steering board shall be established for the InvestEU Programme. It shall be composed of four representatives of the Commission, three representatives of the EIB Group and two representatives of other implementing partners than the EIB Group and one expert appointed as a non-voting member by the European Parliament. That expert shall not seek or take instructions from Union institutions, bodies, offices or agencies, from any Member State government or from any other public or private body and shall act in full independence. The expert shall perform his or her duties impartially and in the interest of the InvestEU Fund.

Members shall be appointed for a term of four years, renewable once, with the exception of the representatives of other implementing partners than the EIB Group who will be appointed for a term of two years.

2.  The steering board shall select a Chairperson from among the Commission representatives for a term of four years, renewable once. The Chairperson shall report bi-annually to the representatives of the Member States in the advisory board on the implementation and the functioning of the InvestEU Programme.

The detailed minutes of steering board meetings shall be published as soon as they have been approved by the steering board.

3.  The steering board shall:

(a)  determine strategic and operational guidance for the implementing partners, including guidance on the design of financial products and on other operating policies and procedures necessary for the functioning of the InvestEU Fund;

(b)  adopt the risk methodological framework developed by the Commission in cooperation with the EIB Group and the other implementing partners;

(c)  oversee the implementation of the InvestEU Programme;

(d)  be consulted, reflecting the views of all its members, on the shortlist of candidates for the Investment Committee before selection in accordance with Article 19(2);

(e)  adopt the rules of procedure of the secretariat for the Investment Committee referred to in Article 19(2).

(f)  adopt the rules applicable to the operations with investment platforms.

4.  The steering board shall use a consensual approach in its discussions, therefore taking the utmost possible account of the positions of all members. If the members cannot converge in their positions, decisions of the steering board are taken by qualified majority of its voting members, consisting of at least seven votes.

Article 17b

Scoreboard

1.  A scoreboard of indicators (the ‘Scoreboard’) shall be established to ensure an independent, transparent and harmonised assessment by the Investment Committee of requests for the use of the EU guarantee for a proposed financing or investment operation by an implementing partner.

2.  Implementing partners shall fill out the Scoreboard on their proposals for financing and investment operations.

3.  The Scoreboard shall, in particular, cover the following elements:

(a)  description of the financing and investment operation;

(b)  contribution to EU policy objectives;

(c)  additionality, description of the market failure or sub-optimal investment situation and financial and technical contribution by the implementing partner;

(d)  investment impact;

(e)  financial profile of the financing and investment operation;

(f)  complementary indicators.

4.  The Commission shall be empowered to adopt delegated acts in accordance with Article 26 to supplement this Regulation by establishing additional elements of the scoreboard, including detailed rules for the scoreboard to be used by the implementing partners.

Article 18

Policy check

3.  The Commission shall confirm whether the proposed financing and investment operations by the implementing partners other than the EIB comply with Union law and policies.

3a.  In the case of EIB financing and investment operations within the scope of this Regulation, such operations shall not be covered by the EU guarantee where the Commission delivers an unfavourable opinion within the framework of the procedure provided for in Article 19 of Protocol No 5.

Article 19

Investment Committee

1.  A fully independent Investment Committee shall be established for the InvestEU Fund. It shall:

(a)  examine the proposals for financing and investment operations submitted by implementing partners for coverage under the EU guarantee and having passed a check of compliance with Union law and policies carried out by the Commission, as referred to in Article 18(3) or having received a favourable opinion within the framework of the procedure provided for in Article 19 of Protocol 5;

(b)  verify their compliance with this Regulation and the relevant investment guidelines,

(ba)  give particular attention to the additionality requirement referred to in Article 209(2)(b) of the Financial Regulation and in Annex V to this Regulation and to the requirement to crowd in private investment referred to in Article 209(2)(d) of the Financial Regulation; and

(c)  check whether the financing and investment operations that would benefit from the support of the EU guarantee comply with all the relevant requirements.

2.  The Investment Committee shall meet in four different configurations, corresponding to the policy windows referred to in Article 7 (1).

Each configuration of the Investment Committee shall be composed of six remunerated external experts. The experts shall be selected in accordance with Article 237 of the Financial Regulation and be appointed by the Commission, at the recommendation of the steering board, for a ▌term of up to four years, renewable once. They shall be remunerated by the Union. The Commission, at the recommendation of the steering board, may decide to renew the term of office of an incumbent member of the Investment Committee without availing itself of the procedure laid down in this paragraph.

The experts shall have a high level of relevant market experience in project structuring and financing or financing of SMEs or corporates.

The composition of the Investment Committee shall ensure that it has a wide knowledge of the sectors covered by the policy windows referred to in Article 7(1) and of the geographic markets in the Union and that it is gender-balanced as a whole.

Four members shall be permanent members of all four configurations of the Investment Committee. In addition, the four configurations shall each have two experts with experience in investment in sectors covered by that policy window. At least one of the permanent members shall have expertise in sustainable investment. The Steering Board shall assign the Investment Committee members to its appropriate configuration or configurations. The Investment Committee shall elect a chairperson from among its permanent members.

3.  When participating in the activities of the Investment Committee, its members shall perform their duties impartially and in the sole interest of the InvestEU Fund. They shall not seek or take instructions from the implementing partners, the institutions of the Union, the Member States, or any other public or private body.

CVs and declarations of interest of each member of the Investment Committee shall be made public and constantly updated. Each member of the Investment Committee shall communicate without delay to the Commission and the steering board all information needed to check on an ongoing basis the absence of any conflict of interest.

The steering board may recommend to the Commission to remove a member from his or her functions if he or she does not respect the requirements laid down in this paragraph or for other duly justified reasons.

4.  When acting in accordance with this Article, the Investment Committee shall be assisted by a secretariat. The secretariat shall be independent and answerable to the chairperson of the Investment Committee. The secretariat shall be administratively located in the Commission. The rules of procedure for the secretariat shall ensure the confidentiality of exchanges of information and documents between implementing partners and the respective governing bodies. The EIB Group may submit its proposals for financing and investment operations directly to the Investment Committee and shall notify them to the secretariat.

The documentation provided by the implementing partners shall comprise a standardised request form, the scoreboard referred to in Article 17b and any other document the Investment Committee considers relevant, notably a description of the character of the market failure or sub-optimal investment situation and how this will be alleviated by the financing or investment operation as well as a solid assessment demonstrating the additionality of the financing or investment operation. The secretariat shall check the completeness of the documentation provided by the implementing partners other than the EIB Group. The Investment Committee may seek clarifications relating to a proposal for an investment or financing operation from the implementing partner concerned, including through direct presence during the discussion of the aforementioned operation. Any project assessment conducted by an implementing partner shall not be binding on the Investment Committee for the purposes of granting a financing or investment operation the benefit of the coverage by the EU guarantee.

The Investment Committee shall use in its assessment and verification of the proposals a scoreboard of indicators referred to in Article 17b.

5.  Conclusions of the Investment Committee shall be adopted by simple majority of all members, provided that such simple majority includes at least one of the non-permanent experts of the policy window under which the proposal is made. In case of a draw, the chair of the Investment Committee has the casting vote.

Conclusions of the Investment Committee approving the support of the EU guarantee to a financing or investment operation shall be publicly accessible and shall include the rationale for the approval and information on the operation, in particular its description, the identity of the promoters or financial intermediaries, and the objectives of the operation. The conclusions shall also refer to the global assessment stemming from the scoreboard.

The scoreboard shall be publicly available after the signature of a financing or investment operation or sub-project, if applicable.

The publications referred to in the second and third subparagraphs shall not contain commercially sensitive information or personal data not to be disclosed under the Union data protection rules. Commercially sensitive parts of the conclusions of the Investment Committee shall be forwarded by the Commission to the European Parliament and to the Council upon request subject to strict confidentiality requirements.

Twice a year, ▌the Investment Committee ▌shall submit to the European Parliament and to the Council a list of all the conclusions as well as the published scoreboards relating thereto. That submission shall include the decisions rejecting the use of the EU guarantee and be subject to strict confidentiality requirements.

Conclusions of the Investment Committee shall be made available in a timely manner to the implementing partner concerned.

All information related to proposals for financing and investment operations provided to the Investment Committee and the conclusions upon them by the Investment Committee shall be recorded in a central repository by the secretariat of the Investment Committee.

6.  Where the Investment Committee is requested to approve the use of the EU guarantee for a financing or investment operation that is a facility, programme or structure which has underlying sub-projects, that approval shall comprise the underlying sub-projects, unless the Investment Committee decides to retain the right to approve them separately. If the approval concerns sub-projects of a size below EUR 3 000 000, the Investment Committee shall not retain this right.

6a.  The Investment Committee may, where it deems it necessary, bring to the Commission any operational issue relating to the application or interpretation of the investment guidelines.

CHAPTER V

InvestEU Advisory Hub

Article 20

InvestEU Advisory Hub

1.  The InvestEU Advisory Hub shall provide advisory support for the identification, preparation, development, structuring, procuring and implementation of investment projects, or enhance the capacity of promoters and financial intermediaries to implement financing and investment operations. Its support may cover any stage of the life-cycle of a project or financing of a supported entity, as appropriate.

The Commission shall sign advisory agreements with the EIB Group and other potential advisory partners and charge them with the provision of advisory support, as referred to in the previous subparagraph, and the services referred to in paragraph 2. The Commission shall also be able to implement advisory initiatives, including through contracting external service providers. The Commission shall establish the central entry point to the InvestEU Advisory Hub and allocate the requests for advisory support to the appropriate advisory initiative. The Commission, the EIB Group and the other advisory partners shall cooperate closely with a view to ensuring efficiency, synergies and effective geographic coverage of support across the Union, while taking due account of existing structures and work.

▌Advisory initiatives shall be available as a component under each policy window referred to in Article 7(1) covering ▌sectors under that window. In addition, ▌advisory initiatives shall be available under a cross-sectoral component.

2.  The InvestEU Advisory Hub shall in particular provide the following services:

(a)  providing a central point of entry, managed and hosted by the Commission, for project development assistance under the InvestEU Advisory Hub for authorities and for project promoters ▌;

(aa)  dissemination to authorities and project promoters of all available additional information regarding the investment guidelines including information on the application or interpretation of the investment guidelines provided by the Commission;

(b)  assisting project promoters, where appropriate, in developing their projects to fulfil the objectives and eligibility criteria set out in Articles 3, 7 and 11 and facilitating development of aggregators for small-sized projects, including through investment platforms referred to in point (e); however, such assistance does not prejudge the conclusions of the Investment Committee on the coverage of the support of the EU guarantee to such projects;

(c)  supporting actions and leveraging local knowledge to facilitate the use of the InvestEU Fund support across the Union and contributing actively where possible to the objective of sectorial and geographical diversification of the InvestEU Fund by supporting the implementing partners in originating and developing potential financing and investment operations;

(d)  facilitating the establishment of collaborative platforms for peer-to-peer exchange and sharing of data, knowhow and best practices to support project pipeline and sector development;

(e)  providing proactive advisory support on the establishment of investment platforms including cross-border and macro regional investment platforms as well as investment platforms bundling small and medium-sized projects in one or more Member States by theme or by region;

(ea)   supporting the use of blending with grants or financial instruments funded by the Union budget or by other sources in order to strengthen synergies and complementarity between Union instruments and maximise the leverage and impact of the InvestEU Programme;

(f)  supporting actions for capacity building to develop organisational capacities, skills and processes and accelerate investment readiness of organisations in order for promoters and authorities to build investment project pipelines, develop financing mechanisms and investment platforms and to manage projects and for financial intermediaries to implement financing and investment operations for the benefit of entities that face difficulties in obtaining access to finance, including through support to develop risk assessment capacity or sector specific knowledge;

(fa)  providing advisory support for start-ups, especially when seeking to protect their research and innovation investments by obtaining intellectual property titles, such as patents.

3.  The InvestEU Advisory Hub shall be available to public and private project promoters, including SMEs and start-ups, to public authorities and to national promotional banks, financial and non-financial intermediaries.

4.  The Commission shall conclude an advisory agreement with each advisory partner on the implementation of one or more advisory initiatives. Fees may be charged for the services referred to in paragraph 2 to cover part of the costs for providing those services, except for services provided to public project promoters and non-profit institutions, which shall be free of charge where justified. Fees charged to SMEs for the services referred to in paragraph 2 shall be capped at one third of the cost of the provision of those services.

5.  In order to achieve the objective referred to in paragraph 1 and to facilitate the provision of advisory support, the InvestEU Advisory Hub shall build upon the expertise of the Commission, the EIB Group and the other advisory partners.

5a.  Each advisory initiative shall be set up based on a costs sharing mechanism between the Commission and the advisory partner, unless the Commission in duly justified cases where the specificities of the advisory initiative so requires, and ensuring a coherent and equitable treatment across advisory partners, accepts to cover all costs of the advisory initiative.

6.  The InvestEU Advisory Hub shall have local presence, where necessary. It shall be established in particular in Member States or regions that face difficulties in developing projects under the InvestEU Fund. The InvestEU Advisory Hub shall assist in the transfer of knowledge to the regional and local level with a view to building up regional and local capacity and expertise for support referred to in paragraph 1, including support to implement and accommodate small-sized projects.

6a.  In order to provide the advisory support referred in paragraph 1 and to facilitate the provision of that advisory support at local level, the InvestEU Advisory Hub shall cooperate where possible with and benefit from the expertise of national promotional banks or institutions. Cooperation agreements with national promotional banks or institutions shall be concluded under the InvestEU Advisory Hub, where appropriate, with at least one national promotional bank or institution per Member State.

7.  The implementing partners shall, as appropriate, propose to project promoters applying for financing, including in particular small-sized projects, to refer their projects to request the InvestEU Advisory Hub support in order to enhance, where appropriate, the preparation of their projects and to allow for the assessment of the possibility of bundling projects.

The implementing partners and advisory partners shall also inform promoters, where relevant, of the possibility of listing their projects on the InvestEU Portal referred to in Article 21.

CHAPTER VI

Article 21

InvestEU Portal

1.  The InvestEU Portal shall be established by the Commission. It shall be an easily accessible and user-friendly project database, providing relevant information for each project.

2.  The InvestEU Portal shall provide a channel for project promoters to bring their projects for which they are seeking finance visible and thus provide information on them to investors. The inclusion of projects in the InvestEU Portal shall be without prejudice to the decisions on the final projects selected for support under this Regulation, under any other instrument of the Union, or for public funding.

3.  Only projects that are compatible with Union law and policies shall be listed on the Portal.

4.  Projects meeting the conditions set out in paragraph 3 shall be transmitted by the Commission to the relevant implementing partners, and as appropriate, where an advisory initiative exists, to the InvestEU Advisory Hub.

5.  Implementing partners shall examine projects falling within their geographic and activity scope.

CHAPTER VII

ACCOUNTABILITY, monitoring and reporting, evaluation and control

Article 21a

Accountability

1.  At the request of the European Parliament or of the Council, the Chairperson of the Steering Board shall report on the performance of the InvestEU Fund to the requesting institution, including by participating in a hearing before the European Parliament.

2.  The Chairperson of the Steering Board shall reply orally or in writing to questions addressed to the InvestEU Fund by the European Parliament or the Council, in any event within five weeks of the date of receipt of a question.

Article 22

Monitoring and reporting

1.  Indicators to report on progress of the InvestEU Programme implementation towards the achievement of the general and specific objectives set out in Article 3 are set in Annex III to this Regulation.

2.  To ensure effective assessment of progress of the InvestEU Programme towards the achievement of its objectives, the Commission is empowered to adopt delegated acts in accordance with Article 26 to amend Annex III to this Regulation to review or complement the indicators where considered necessary and the provisions on the establishment of a monitoring and evaluation framework.

3.  The performance reporting system shall ensure that data for monitoring implementation and results are collected efficiently, effectively and in a timely manner, and allow for adequate risk and guarantee portfolio monitoring. To that end, proportionate reporting requirements shall be imposed on the implementing partners, the advisory partners and other recipients of Union funds, as appropriate.

4.  The Commission shall report on the implementation of InvestEU Programme in accordance with Articles 241 and 250 of the Financial Regulation. In accordance with Article 41(5) of the Financal Regulation the annual report shall provide information on the level of implementation of the Programme against its objectives and performance indicators. For that purpose, the implementing partners shall provide annually the information, including on the functioning of the guarantee, necessary to allow the Commission to comply with its reporting obligations.

5.  In addition, each implementing partner shall submit every six months a report to the Commission on the financing and investment operations covered by this Regulation, broken down by the EU compartment and the Member State compartment ▌, as appropriate. The implementing partner shall also submit information on the Member State compartment to the Member State whose compartment it implements. The report shall include an assessment of compliance with the requirements on the use of the EU guarantee and with the key performance indicators laid down in Annex III to this Regulation. The report shall also include operational, statistical, financial and accounting data and an estimation of expected cash flows on each financing and investment operation and at the compartment, policy window and the InvestEU Fund level. Once a year, the report from the EIB Group and, where appropriate, from other implementing partners, shall also include information on barriers to investment encountered when carrying out financing and investment operations covered by this Regulation. The reports shall contain the information the implementing partners shall provide in accordance with Article 155(1)(a) of the Financial Regulation.

Article 23

Evaluation

1.  Evaluations shall be done in a timely manner to feed into the decision-making process.

2.  [By 30 September 2024], the Commission shall submit to the European Parliament and to the Council an independent interim evaluation on the InvestEU Programme, in particular on the use of the EU guarantee, on the functioning of the modalities put in place under Article 9a(1)(b) and (c), on the allocation of the EU guarantee provided for in paragraphs (1b) and (1c) of Article 10, on the implementation of the InvestEU Advisory Hub, on the budgetary allocation provided for in point (d)(i) of Article 9a(1), and on Article 7. The evaluation shall in particular demonstrate how the inclusion of the implementing partners and advisory partners have contributed to the achievement of InvestEU Programme targets as well as EU policy goals especially with regard to value added, geographical and sectoral balance of the supported financing and investment operations. The evaluation shall also assess the application of the sustainability proofing and the focus on SMEs reached under the SME window.

3.  At the end of the implementation of the InvestEU Programme, but no later than four years after the end of the period specified in Article 1, the Commission shall submit to the European Parliament and to the Council an independent final evaluation of the InvestEU Programme, in particular on the use of the EU guarantee.

4.  The Commission shall communicate the conclusions of the evaluations, accompanied by its observations, to the European Parliament, the Council, the European Economic and Social Committee and the Committee of Regions.

5.  The implementing partners and advisory partners shall contribute to and provide the Commission with the information necessary to perform the evaluations referred to in paragraphs 1 and 2.

6.  In accordance with [Article 211(1)] of the [Financial Regulation], the Commission shall every three years include in the annual report referred to in [Article 250] of the [Financial Regulation] a review of the adequacy of the provisioning rate laid down in Article 4(1) of this Regulation against the actual risk profile of the financing and investment operations covered by the EU guarantee. The Commission is empowered to adopt delegated acts in accordance with Article 26 in order to adjust, on the basis of that review, the provisioning rate laid down in Article 4(1) of this Regulation by up to 15%.

Article 24

Audits

Audits on the use of the Union funding carried out by persons or entities, including by others than those mandated by the Union institutions or bodies, shall form the basis of the overall assurance pursuant to Article 127 of the Financial Regulation.

Article 25

Protection of the financial interests of the Union

Where a third country participates in the InvestEU Programme by a decision under an international agreement or by virtue of any other legal instrument, the third country shall grant the necessary rights and access required for the authorizing officer responsible, the European Anti-Fraud Office (OLAF), the European Court of Auditors to comprehensively exert their respective competences. In the case of OLAF, such rights shall include the right to carry out investigations, including on-the-spot checks and inspections, provided for in Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council concerning investigations conducted by the European Anti-Fraud Office (OLAF).

Article 26

Exercise of delegation

1.  The power to adopt delegated acts is conferred on the Commission subject to the conditions laid down in this Article. Delegated acts concerning activities carried out by, or involving, the EIB Group and other implementing partners, shall be prepared following consultation with the EIB Group and potential implementing partners.

2.  The power to adopt delegated acts referred to in Articles 7(6), 17b, 22(2) and 23(6) shall be conferred on the Commission for a period of five years from [entry into force of this Regulation]. The Commission shall draw up a report in respect of the delegation of power not later than nine months before the end of that five-year period. The delegation of power shall be tacitly extended for periods of an identical duration, unless the European Parliament or the Council opposes such extension not later than three months before the end of each period.

3.  The delegation of power referred to in Articles 7(6), 17b, 22(2) and 23(6) may be revoked at any time by the European Parliament or by the Council. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect the day following the publication of the decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in force.

4.  Before adopting a delegated act, the Commission shall consult experts designated by each Member State in accordance with the principles laid down in the Interinstitutional Agreement on Better Law-Making of 13 April 2016.

5.  As soon as it adopts a delegated act, the Commission shall notify it simultaneously to the European Parliament and to the Council.

6.  A delegated act adopted pursuant to Articles 7(6), 17b, 22(2) and 23(6) shall enter into force only if no objection has been expressed either by the European Parliament or by the Council within a period of two months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by two months at the initiative of the European Parliament or of the Council.

CHAPTER VIII

TransParency and visibility

Article 27

Information, communication and publicity

1.  The implementing partners and advisory partners shall acknowledge the origin and ensure the visibility of the Union funding (in particular when promoting the actions and their results), by providing coherent, effective and targeted information to multiple audiences, including the media and the public.

1a.   The implementing partners and advisory partners shall inform, or shall oblige financial intermediaries to inform, the final recipients, including SMEs, of the existence of InvestEU support by making that information clearly visible, particularly in the case of SMEs, in the relevant agreement providing InvestEU support, thereby increasing public awareness and improving visibility.

2.  The Commission shall implement information and communication actions relating to the InvestEU Programme and its actions and results. Financial resources allocated to the InvestEU Programme shall also contribute to the corporate communication of the political priorities of the Union, as far as they are related to the objectives referred to in Article 3.

CHAPTER IX

TRANSITIONAL AND FINAL PROVISIONS

Article 28

Transitional provisions

1.  Revenues, repayments and recoveries from financial instruments established by programmes referred to in Annex IV to this Regulation may be used for the provisioning of the EU guarantee under this Regulation.

2.  Revenues, repayments and recoveries from the EU guarantee established by Regulation (EU) 2015/1017 may be used for the provisioning of the EU guarantee under this Regulation, unless used for the purposes referred to in Articles 4, 9 and 12 of Regulation (EU) 2015/1017.

Article 29

Entry into force

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

It shall apply from 1 January 2021.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at …,

For the European Parliament For the Council

The President The President

ANNEX I

Amounts per specific objective

The ▌indicative distribution referred to in Article 4(2) towards financial and investment operations shall be as follows:

(a)  ▌EUR 11 500 000 000 for objectives referred to in point (a) of Article 3(2);

(b)  ▌EUR 11 250 000 000 for objectives referred to in point (b) of Article 3(2);

(c)  ▌EUR 12 500 000 000 for objectives referred to in point (c) of Article 3(2);

(d)  ▌EUR 5 567 500 000 for objectives referred to in point (d) of Article 3(2).

ANNEX II

Eligible areas for financing and investment operations

The financing and investment operations may fall under one or more of the following areas:

1.  Development of the energy sector in accordance with the Energy Union priorities, including security of energy supply, clean energy transition and the commitments taken under the Agenda 2030 and the Paris Agreement, in particular through:

(a)  expansion of the generation, supply or use of clean and sustainable renewable and safe and sustainable other zero and low-emission energy sources and solutions;

(b)  energy efficiency and energy savings (with a focus on reducing demand through demand side management and the refurbishment of buildings);

(c)  development, smartening and modernisation of sustainable energy infrastructure particularly, but not limited to transmission and distribution level, storage technologies, electricity interconnection between Member States, smart grids);

(ca)  development of innovative zero- and low emission heat supply systems and combined production of electricity and heat;

(d)  production and supply of sustainable synthetic fuels from renewable/carbon-neutral sources, and other safe and sustainable zero- and low emission sources; bio-fuels, biomass and alternative fuels, including for all modes of transport, in line with the objectives of Directive 2018/2001;

(e)  infrastructure for carbon-capture, and for carbon storage in industrial processes, bio-energy plants and manufacturing facilities towards the energy transition.

2.  Development of sustainable and safe transport infrastructures and mobility solutions and equipment and innovative technologies in accordance with Union transport priorities and the commitments taken under the Paris Agreement, in particular through:

(a)  projects supporting development of the TEN-T infrastructure, including infrastructure maintenance and safety, and its urban nodes, maritime and inland ports, airports, multimodal terminals and their connection to the main networks and the telematic applications laid down in Regulation (EU) No 1315/2013;

(aa)  TEN-T infrastructure projects that make provision for the use of at least two different modes of transport, in particular multimodal freight terminals and passenger transport hubs;

(b)  smart and sustainable urban mobility projects, including inland waterway and innovative mobility solutions, (targeting low-emission urban transport modes, non-discriminatory accessibility, reduced air pollution and noise, energy consumption, smart cities networks, maintenance, or increase of safety levels and decrease of accidents, including for cyclists and pedestrians);

(c)  supporting the renewal and retrofitting of transport mobile assets with the view of deploying low-emission and zero-emissions mobility solutions, including the use of alternative fuels in vehicles of all transport modes;

(d)  railway infrastructure, other rail projects, inland waterway infrastructure, mass transit projects and maritime ports and motorways of the sea;

(e)  alternative fuels infrastructure for all modes of transport, including electric charging infrastructure;

(ea)  other smart and sustainable mobility projects, targeting:

(i)  road safety

(ii)  accessibility

(iii)  emission reduction,

(iv)  the development and deployment of new transport technologies and services such as in relation to connected and autonomous modes of transport or integrated ticketing;

(eb)  projects to maintain or upgrade existing transport infrastructure, including motorways on the TEN-T where necessary to upgrade, maintain or improve road safety, develop ITS services or guarantee infrastructure integrity and standards, safe parking areas and facilities, recharging and refuelling stations for alternative fuels.

3.  Environment and resources, in particular through:

(a)  water, including drinking water supply and sanitation, and networks efficiency, leakages reduction, infrastructure for the collection and treatment of waste water, coastal infrastructure and other water-related green infrastructure;

(b)  waste management infrastructure;

(c)  projects and enterprises in the fields of environmental resource management and sustainable technologies;

(d)  enhancement and restoration of eco systems and their services including through enhancement of nature and biodiversity by means of green and blue infrastructure projects;

(e)  sustainable urban, rural and coastal development;

(f)  climate change actions, climate adaptation and mitigation, including natural hazard disaster risk reduction;

(g)  projects and enterprises that implement circular economy by integrating resource efficiency aspects in the production and product life-cycle, including the sustainable supply of primary and secondary raw materials;

(h)  decarbonisation of and substantial reduction of emissions of energy-intensive industries, including ▌demonstration of innovative low-emission technologies and their deployment;

(ha)  decarbonisation of the energy production and distribution chain by phasing out the use of coal and oil;

(hb)  projects promoting sustainable cultural heritage.

4.  Development of digital connectivity infrastructure, in particular through projects supporting deployment of very high capacity digital networks, 5G connectivity and improving digital connectivity and access, particularly to rural areas and peripheral regions.

5.  Research, development and innovation, in particular through:

(a)  research, including research infrastructure and support to academia, and innovation projects contributing to the objectives of Horizon Europe;

(b)  corporate projects, including training and the promotion of the creation of clusters and business networks;

(c)  demonstration projects and programmes as well as deployment of related infrastructures, technologies and processes;

(d)  collaborative research and innovation projects between academia, research and innovation organisations and industry; public-private partnerships and civil society organisations;

(e)  knowledge and technology transfer;

(ea)  research in the field of Key Enabling Technologies (KETs) and their industrial applications, including new and advanced materials;

(f)  new effective and accessible healthcare products, including pharmaceuticals, medical devices, diagnostics and advanced therapy medicinal products, new antimicrobials and innovative development process that avoid using animal testing.

6.  Development, ▌deployment and scaling-up of digital technologies and services, notably contributing to the objectives of the Digital Europe Programme in particular through:

(a)  artificial intelligence;

(aa)  quantum technology;

(b)  cybersecurity and network protection infrastructures;

(c)  internet of things;

(d)  blockchain and other distributed ledger technologies;

(e)  advanced digital skills;

(ea)  robotics and automatisation;

(eb)  photonics;

(f)  other advanced digital technologies and services contributing to the digitisation of the Union industry and the integration of digital technologies, services and skills in the transport sector of the Union.

7.  Financial support to entities employing up to 499 employees, with a particular focus on SMEs, and small mid cap companies, in particular through:

(a)  provision of working capital and investment;

(b)  provision of risk financing from seed to expansion stages to ensure technological leadership in innovative and sustainable sectors, including enhancing their digitisation and innovation capacity and to ensure their global competitiveness;

(ba)  provision of financing for the acquisition of a business or a participation in a business by employees.

8.  Cultural and creative sectors, cultural heritage, media, audio-visual sector, ▌ journalism and press, in particular through but not limited to the development of new technologies, the use of digital technologies and technological management of intellectual property rights.

9.  Tourism.

9a.  Rehabilitation of industrial sites (including contaminated sites) and restoration for sustainable use.

10.  Sustainable agriculture, forestry, fishery, aquaculture and other elements of the wider sustainable bioeconomy.

11.  Social investments, including those supporting the implementation of the European Pillar of Social Rights, in particular through:

(a)  microfinance, ethical, social enterprise finance and social economy;

(b)  demand for and supply of skills;

(c)  education, training and related services, including for adults;

(d)  social infrastructure, in particular

(i)  inclusive education and training, including early childhood education and care, and their related educational infrastructure and facilities, alternative childcare, student housing and digital equipment, that are accessible for all;

(ii)  social housing;

(iii)  health and long-term care, including clinics, hospitals, primary care, home services and community-based care;

(e)  social innovation, including innovative social solutions and schemes aiming at promoting social impacts and outcomes in the areas referred to in this point;

(f)  cultural activities with a social goal;

(fa)  measures to promote gender equality;

(g)  integration of vulnerable people, including third country nationals;

(h)  innovative health solutions, including e-health, health services and new care models;

(i)  inclusion of and accessibility for persons with disabilities.

12.  Development of the defence industry, thereby contributing to the Union's strategic autonomy, in particular through support for:

(a)  the Union’s defence industry supply chain, in particular through financial support to SMEs and mid-caps;

(b)  companies participating in disruptive innovation projects in the defence sector and closely related dual-use technologies;

(c)  the defence sector supply chain when participating in collaborative defence research and development projects, including those supported by the European Defence Fund;

(d)  infrastructure for defence research and training▐.

13.  Space, in particular through the development of the space sector in line with Space Strategy objectives:

(a)  to maximize the benefits for the Union society and economy;

(b)  to foster the competitiveness of space systems and technologies, addressing in particular vulnerability of supply chains;

(c)  to underpin space entrepreneurship, including downstream development;

(d)  to foster Union's autonomy for safe and secure access to space, including dual use aspects.

13a.  Seas and oceans, through the development of projects and enterprises in the area of the Blue Economy, and its Finance Principles in particular through maritime entrepreneurship and industry, renewable marine energy and circular economy.

ANNEX III

Key performance indicators

1.  Volume of InvestEU financing (broken down by policy window)

1.1  Volume of operations signed

1.2  Investment mobilised

1.3  Amount of private finance mobilised

1.4  Leverage and multiplier effect achieved

2.  Geographical coverage of InvestEU financing (broken down by policy window, country and region at the NUTS 2 level)

2.1  Number of countries covered by operations

2.1a  Number of regions covered by operations

2.1b  Volume of operations per Member State and per region

3.  Impact of InvestEU financing

3.1  Number of jobs created or supported

3.2  Investment supporting climate objectives and, where applicable, detailed per policy window

3.3  Investment supporting digitalisation

3.3a  Investment supporting industrial transition

4.  Sustainable Infrastructure

4.1  Energy: Additional renewable and other safe and sustainable zero and low-emission energy generation capacity installed (MW)

4.2  Energy: Number of households, number of public and commercial premises with improved energy consumption classification

4.2a  Energy: Estimated energy savings generated by the projects in Kw/hour

4.2b  Energy: Annual green-house gas emissions reduced/avoided in tonnes of eq. CO2

4.2c  Energy: Volume of investment in the development, smartening and modernisation of sustainable energy infrastructure

4.3  Digital: Additional households, enterprises or public buildings with broadband access of at least 100 Mbps upgradable to Gigabit speed, or number of WIFI-hotspots created

4.4  Transport: Investment mobilised, in particular in TEN-T

–  Number of cross-border and missing links projects (including projects relating to urban nodes, regional cross-border rail connections, multimodal platforms, maritime ports, inland ports, connections to airports and rail-road terminals of the TEN-T core and comprehensive network)

–  Number of projects contributing to the digitalisation of transport, in particular through the deployment of ERTMS, RIS, ITS, VTMIS/e-Maritime services and SESAR

–  Number of alternative fuel supply points built or upgraded

–  Number of projects contributing to the safety of transport

4.5  Environment: Investment contributing to the implementation of plans and programmes required by the Union environmental acquis relating to air quality, water, waste and nature

5.  Research, Innovation and Digitisation

5.1  Contribution to the objective of 3% of the Union's GDP invested in research, development and innovation

5.2  Number of enterprises supported by size carrying out research and innovation projects

6.  SMEs

6.1  Number of enterprises supported by size (micro, small, medium sized and small mid-caps)

6.2  Number of enterprises supported by stage (early, growth/expansion)

6.2a  Number of enterprises supported by Member State and region at NUTS 2 level

6.2b  Number of enterprises supported by sectors by NACE code

6.2c  Percentage of investment volume under the SME window directed towards SMEs

7.  Social Investment and Skills

7.1  Social infrastructure: Capacity and access to supported social infrastructure by sector: housing, education, health, other

7.2  Microfinance and social enterprise finance:  Number of microfinance recipients and social economy enterprises supported

7.5  Skills: Number of individuals acquiring new skills or having their skills validated and certified: formal, education and training qualification

ANNEX IV

The InvestEU Programme - Predecessor instruments

A.  Equity Instruments:

—  European Technology Facility (ETF98): Council Decision No 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).

—  TTP: Commission decision adopting a complementary financing decision concerning the financing of actions of the activity "Internal market of goods and sectoral policies" of the Directorate-General Enterprises & Industry for 2007 and adopting the framework decision concerning the financing of the preparatory action "The EU assuming its role in a globalised world" and of four pilot projects "Erasmus young entrepreneurs", "Measures to promote cooperation and partnerships between micro and SMEs", "Technological Transfer" and "European Destinations of excellence" of the Directorate-General Enterprises & Industry for 2007 (C(2007)531).

—  European Technology Facility (ETF01): Council Decision No 2000/819/EC of 20 December 2000 on a multiannual programme for enterprise and entrepreneurship, and in particular for small and medium-sized enterprises (SMEs) (2001-2005) (OJ L 333, 29.12.2000, p. 84).

—  GIF: Decision No 1639/2006/EC of the European Parliament and of the Council of 24 October 2006 establishing a Competitiveness and Innovation Framework Programme (2007 to 2013) (OJ L 310, 9.11.2006, p. 15).

—  Connecting Europe Facility (CEF): Regulation (EU) No 1316/2013 of the European Parliament and of the Council of 11 December 2013 establishing the Connecting Europe Facility, amending Regulation (EU) No 913/2010 and repealing Regulations (EC) No 680/2007 and (EC) No 67/2010 (OJ L 348, 20.12.2013, p. 129) as modified by Regulation (EU) 2015/1017 of the European Parliament and of the Council of 25 June 2015 on the European Fund for Strategic Investments, the European Investment Advisory Hub and the European Investment Project Portal and amending Regulations (EU) No 1291/2013 and (EU) No 1316/2013 — the European Fund for Strategic Investments (OJ L 169, 1.7.2015, p. 1).

—  COSME EFG: Regulation (EU) No 1287/2013 of the European Parliament and of the Council of 11 December 2013 establishing a Programme for the Competitiveness of Enterprises and small and medium-sized enterprises (COSME) (2014 - 2020) and repealing Decision No 1639/2006/EC (OJ L 347, 20.12.2013, p. 33).

—  InnovFin Equity:

–  Regulation (EU) No 1291/2013 of the European Parliament and of the Council of 11 December 2013 establishing Horizon 2020 - the Framework Programme for Research and Innovation (2014-2020) and repealing Decision No 1982/2006/EC (OJ L 347, 20.12.2013, p. 104);

–  Regulation (EU) No 1290/2013 of the European Parliament and of the Council of 11 December 2013 laying down the rules for participation and dissemination in "Horizon 2020 - the Framework Programme for Research and Innovation (2014-2020)" and repealing Regulation (EC) No 1906/2006 (OJ L 347, 20.12.2013, p. 81);

–  Council Decision No 2013/743/EU of 3 December 2013 establishing the specific programme implementing Horizon 2020 - the Framework Programme for Research and Innovation (2014-2020) and repealing Decisions 2006/971/EC, 2006/972/EC, 2006/973/EC, 2006/974/EC and 2006/975/EC (OJ L 347, 20.12.2013, p. 965).

—  EaSI Capacity Building Investments Window: Regulation (EU) No 1296/2013 of the European Parliament and of the Council of 11 December 2013 on a European Union Programme for Employment and Social Innovation ("EaSI") and amending Decision No 283/2010/EU establishing a European Progress Microfinance Facility for employment and social inclusion (OJ L 347, 20.12.2013, p. 238).

B.  Guarantee Instruments:

—  SME Guarantee Facility '98 (SMEG98): Council Decision No 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).

—  SME Guarantee Facility '01 (SMEG01): Council Decision No 2000/819/EC of 20 December 2000 on a multiannual programme for enterprise and entrepreneurship, and in particular for small and medium-sized enterprises (SMEs) (2001-2005) (OJ L 333, 29.12.2000, p. 84).

—  SME Guarantee Facility '07 (SMEG07): Decision No 1639/2006/EC of the European Parliament and of the Council of 24 October 2006 establishing a Competitiveness and Innovation Framework Programme (2007 to 2013) (OJ L 310, 9.11.2006, p. 15).

—  European Progress Microfinance Facility – Guarantee (EPMF-G): Decision No 283/2010/EU of the European Parliament and of the Council of 25 March 2010 establishing a European Progress Microfinance Facility for employment and social inclusion (OJ L 87, 7.4.2010, p. 1).

—  RSI:

–  Decision No 1982/2006/EC of the European Parliament and of the Council of 18 December 2006 concerning the Seventh Framework Programme of the European Community for research, technological development and demonstration activities (2007-2013) Statements by the Commission (OJ L 412, 30.12.2006, p. 1);

–  Council Decision No 2006/971/EC of 19 December 2006 concerning the Specific Programme Cooperation implementing the Seventh Framework Programme of the European Community for research, technological development and demonstration activities (2007 to 2013) (OJ L 400, 30.12.2006, p. 86);

–  Council Decision No 2006/974/EC of 19 December 2006 on the Specific Programme: Capacities implementing the Seventh Framework Programme of the European Community for research, technological development and demonstration activities (2007 to 2013) (OJ L 400, 30.12.2006, p. 299).

—  EaSI-Guarantee: Regulation (EU) No 1296/2013 of the European Parliament and of the Council of 11 December 2013 on a European Union Programme for Employment and Social Innovation ("EaSI") and amending Decision No 283/2010/EU establishing a European Progress Microfinance Facility for employment and social inclusion (OJ L 347, 20.12.2013, p. 238).

—  COSME Loan Guarantee Facility (COSME LGF): Regulation (EU) No 1287/2013 of the European Parliament and of the Council of 11 December 2013 establishing a Programme for the Competitiveness of Enterprises and small and medium-sized enterprises (COSME) (2014 - 2020) and repealing Decision No 1639/2006/EC (OJ L 347, 20.12.2013, p. 33).

—  InnovFin Debt:

–  Regulation (EU) No 1290/2013 of the European Parliament and of the Council of 11 December 2013 laying down the rules for participation and dissemination in "Horizon 2020 - the Framework Programme for Research and Innovation (2014-2020)" and repealing Regulation (EC) No 1906/2006 (OJ L 347, 20.12.2013, p. 81);

–  Regulation (EU) No 1291/2013 of the European Parliament and of the Council of 11 December 2013 establishing Horizon 2020 - the Framework Programme for Research and Innovation (2014-2020) and repealing Decision No 1982/2006/EC (OJ L 347, 20.12.2013, p. 104);

–  Council Decision No 2013/743/EU of 3 December 2013 establishing the specific programme implementing Horizon 2020 - the Framework Programme for Research and Innovation (2014-2020) and repealing Decisions 2006/971/EC, 2006/972/EC, 2006/973/EC, 2006/974/EC and 2006/975/EC (OJ L 347, 20.12.2013, p. 965).

—  Cultural and Creative Sectors Guarantee Facility (CCS GF): Regulation (EU) No 1295/2013 of the European Parliament and of the Council of 11 December 2013 establishing the Creative Europe Programme (2014 to 2020) and repealing Decisions No 1718/2006/EC, No 1855/2006/EC and No 1041/2009/EC (OJ L 347, 20.12.2013, p. 221).

—  Student Loan Guarantee Facility (SLGF): Regulation (EU) No 1288/2013 of the European Parliament and of the Council of 11 December 2013 establishing 'Erasmus+': the Union programme for education, training, youth and sport and repealing Decisions No 1719/2006/EC, No 1720/2006/EC and No 1298/2008/EC (OJ L 347, 20.12.2013, p. 50).

—  Private Finance for Energy Efficiency (PF4EE): Regulation (EU) No 1293/2013 of the European Parliament and of the Council of 11 December 2013 on the establishment of a Programme for the Environment and Climate Action (LIFE) and repealing Regulation (EC) No 614/2007 (OJ L 347, 20.12.2013, p. 185).

C.  Risk-Sharing Instruments:

—  Risk Sharing Finance Facility (RSFF): Decision No 1982/2006/EC of the European Parliament and of the Council of 18 December 2006 concerning the Seventh Framework Programme of the European Community for research, technological development and demonstration activities (2007-2013) Statements by the Commission (OJ L 412, 30.12.2006, p. 1).

—  InnovFin:

–  Regulation (EU) No 1290/2013 of the European Parliament and of the Council of 11 December 2013 laying down the rules for participation and dissemination in "Horizon 2020 - the Framework Programme for Research and Innovation (2014-2020)" and repealing Regulation (EC) No 1906/2006 (OJ L 347, 20.12.2013, p. 81);

–  Regulation (EU) No 1291/2013 of the European Parliament and of the Council of 11 December 2013 establishing Horizon 2020 - the Framework Programme for Research and Innovation (2014-2020) and repealing Decision No 1982/2006/EC (OJ L 347, 20.12.2013, p. 104).

—  Connecting Europe Facility Debt Instrument (CEF DI): Regulation (EU) No 1316/2013 of the European Parliament and of the Council of 11 December 2013 establishing the Connecting Europe Facility, amending Regulation (EU) No 913/2010 and repealing Regulations (EC) No 680/2007 and (EC) No 67/2010 (OJ L 348, 20.12.2013, p. 129).

—  Natural Capital Financing Facility (NCFF): Regulation (EU) No 1293/2013 of the European Parliament and of the Council of 11 December 2013 on the establishment of a Programme for the Environment and Climate Action (LIFE) and repealing Regulation (EC) No 614/2007 (OJ L 347, 20.12.2013, p. 185).

D.  Dedicated Investment Vehicles:

—  European Progress Microfinance Facility – Fonds commun de placements – fonds d'investissements spécialisés (EPMF FCP-FIS): Decision No 283/2010/EU of the European Parliament and of the Council of 25 March 2010 establishing a European Progress Microfinance Facility for employment and social inclusion (OJ L 87, 7.4.2010, p. 1).

—  Marguerite:

–  Regulation (EC) No 680/2007 of the European Parliament and of the Council of 20 June 2007 laying down general rules for the granting of Community financial aid in the field of the trans-European transport and energy networks (OJ L 162, 22.6.2007, p. 1);

–  Commission Decision of 25.2.2010 on European Union participation in the 2020 European Fund for Energy, Climate Change and Infrastructure (the Marguerite Fund) (C(2010)941).

—  European Energy Efficiency Fund (EEEF): Regulation (EU) No 1233/2010 of the European Parliament and of the Council of 15 December 2010 amending Regulation (EC) No 663/2009 establishing a programme to aid economic recovery by granting Community financial assistance to projects in the field of energy (OJ L 346, 30.12.2010, p. 5).

ANNEX V

Market failures, sub-optimal investment situations, additionality and excluded activities

A.  Market failures, sub-optimal investment situations and additionality

In accordance with Article 209 of the Financial Regulation the EU guarantee shall address market failures or sub-optimal investment situations (Article 209(2)(a)) and achieve additionality by preventing the replacement of potential support and investment from other public or private sources (Article 209(2)(b)).

In order to comply with points (a) and (b) of Article 209(2) of the Financial Regulation, the financing and investment operations benefitting from the EU guarantee shall fulfil the following requirements laid down in points 1 and 2 below:

1.  Market failures and sub-optimal investment situations

To address market failures or sub-optimal investment situations as referred to in Article 209(2)(a) of the Financial Regulation, the investments targeted by the financing and investment operations shall include one of following features:

(a)  Public good nature (such as education and skills, healthcare and accessibility, security and defence, and infrastructure available at no or negligible cost) for which the operator or company cannot capture sufficient financial benefits.

(b)  Externalities which the operator or company in general fails to internalise, such as R&D investment, energy efficiency, climate or environmental protection.

(c)  Information asymmetries, in particular in case of SMEs and small midcaps, including higher risk levels related to early stage firms, firms with mainly intangible assets or insufficient collateral, or firms focusing on higher risk activities.

(d)  Cross-border infrastructure projects and related services or funds investing on cross-border basis to address the fragmentation and enhancing coordination within the EU internal market.

(e)  Exposure to higher levels of risks in certain sectors, countries or regions beyond levels that private financial actors are able or willing to accept. This includes that the investment would not have been undertaken or not to the same extent because of its novelty or risks associated with innovation or unproven technology.

(f)  New and/or complex market failures or sub-optimal investment situations in accordance with Article 8(1)(a)(iii) of this Regulation.

2.  Additionality

Financing and investment operations shall fulfil both aspects of additionality as referred to in Article 209(2)(b) of the Financial Regulation. This means the operations would not have been carried out or not to the same extent by other public or private sources without the InvestEU Fund support. For the purposes of this Regulation, these shall be understood as financing and investment operations having to meet the following two criteria:

(1)  To be considered additional to the private sources referred to in Article 209(2)(b) of the Financial Regulation, the InvestEU Fund shall support the financing and investment operations of the implementing partners targeting investments which, due to their characteristics (public good nature, externalities, information asymmetries, socio-economic cohesion considerations or other), are unable to generate sufficient market-level financial returns or are perceived to be too risky (compared to the risk levels that the relevant private entities are willing to accept). Therefore, such financing and investment operations cannot access market financing at reasonable conditions in terms of pricing, collateral requirements, type of finance, tenor of financing provided or other conditions and would not be undertaken at all or to the same extent without public support.

(2)  To be considered additional to existing support from other public sources referred to in Article 209(2)(b) of the Financial Regulation the InvestEU Fund shall only support financing and investment operations for which the following conditions apply:

(a)  the financing or investment operations would not have been carried out or not to the same extent by the implementing partner without the InvestEU Fund support; and

(b)  the financing or investment operations would not have been carried out or not to the same extent under other existing public instruments, such as shared management financial instruments operating at regional and national level. However, a complementary use of InvestEU and other public resources shall be possible, in particular where EU value added can be achieved and where the use of public resources to achieve policy objectives in an efficient manner can be optimised.

To demonstrate that the financing and investment operations benefitting from the EU guarantee are additional to the existing market and other public support, the implementing partners shall provide information demonstrating at least one of the following features:

(a)  Support provided through subordinated positions in relation to other public or private lenders or within the funding structure.

(b)  Support provided through equity and quasi-equity or through debt with long tenors, pricing, collateral requirements or other conditions not sufficiently available on the market or from other public sources. Support to operations that carry a higher risk profile than the risk generally accepted by the implementing partner's own standard activities or support to implementing partners in exceeding own capacity to support such operations.

(c)  Participation in risk-sharing mechanisms targeting policy areas that exposes the implementing partner to higher risk levels compared to the levels generally accepted by the implementing partner or that private financial actors are able or willing to accept.

(d)  Support that catalyses/crowds in additional private or public financing and is complementary to other private and commercial sources, in particular from traditionally risk-averse investor classes or institutional investors, as a result of the signalling effect of the support provided under the InvestEU Fund.

(e)  Support provided through financial products not available or not offered to a sufficient level in the targeted countries or regions due to missing, underdeveloped or incomplete markets.

For intermediated financing and investment operations, notably for SME support, the additionality shall be verified at the level of the intermediary, rather than at the level of the final recipient. Additionality is deemed to exist when InvestEU Fund supports a financial intermediary in setting up a new portfolio with a higher level of risk or increasing the volume of activities that are already high risk, compared to the risk levels that private and public financial actors are currently able or willing to accept in the targeted Member State(s) or regions.

The EU guarantee shall not be granted for supporting refinancing operations (such as replacing existing loan agreements or other forms of financial support for projects which have already partially or fully materialised), except in specific exceptional and well justified circumstances in which it is demonstrated that the operation under the EU guarantee will enable a new investment in an eligible policy area of an amount, additional to customary volume of activity by the implementing partner or financial intermediary, at least equivalent to the amount of the operation that fulfils the eligibility criteria set out in this Regulation. The aforementioned criteria regarding market failure, sub-optimal investment situations and additionality shall apply also to such refinancing operations.

B.  Excluded activities

The InvestEU Fund shall not support:

(1)  activities which limit people’s individual rights and freedom or violate human rights;

(2)  in the area of defence activities, the use, development, or production of products and technologies that are prohibited by applicable international law;

(3)  tobacco related products and activities (production, distribution, processing, and trade);

(4)  activities excluded in Article [X] of the [Horizon Europe] Regulation: research on human cloning for reproductive purposes; activities intended to modify the genetic heritage of human beings which could make such changes heritable, activities to create human embryos solely for the purpose of research or for the purpose of stem cell procurement, including by means of somatic cell nuclear transfer;

(5)  gambling (production, construction, distribution, processing, trade or software related activities);

(6)  sex trade and related infrastructure, services and media;

(7)  activities involving live animals for experimental and scientific purposes insofar as compliance with the “Council of Europe’s Convention for the Protection of Vertebrate Animals used for Experimental and other Scientific Purposes” cannot be guaranteed;

(8)  real estate development activity, i.e. an activity with a sole purpose of renovating and re-leasing or re-selling existing buildings as well as building new projects; however, activities in the real-estate sector that are related to the specific objectives of the InvestEU as specified in Article 3(2) of this Regulation and/or to the eligible areas for financing and investment operations under Annex II to this Regulation, such as investments in energy efficiency projects or social housing, shall be eligible;

(9)  financial activities such as purchasing or trading in financial instruments. In particular, interventions targeting buy-out intended for asset stripping or replacement capital intended for asset stripping shall be excluded.

(10)  activities forbidden by applicable national legislation;

(11)  the decommissioning, the operation, the adaptation or the construction of nuclear power stations;

(12)  Investments related to mining / extraction, processing, distribution, storage or combustion of solid fossil fuels and oil as well as investments related to extraction of gas. This exclusion does not apply to:

i.  projects where there is no viable alternative technology;

ii.  projects related to pollution prevention and control;

iii.  projects equipped with Carbon Capture, Storage or Utilisation installations; industrial or research projects that lead to substantial reductions of greenhouse gas emissions compared to the applicable Emission Trading Scheme benchmark(s).

(13)  Investments in facilities for the disposal of waste in landfill. This exclusion does not apply to investments in:

i.  On-site landfill facilities that are an ancillary element of an industrial or mining investment project and where it has been demonstrated that landfilling is the only viable option to treat the industrial or mining wastes produced by the concerned activity itself;

ii.  Existing landfill facilities to ensure the utilisation of landfill gas and to promote landfill mining and the reprocessing of mining wastes.

(14)  Investments in Mechanical Biological Treatment (MBT) plants. This exclusion does not apply to investments to retrofit existing MBT plants for waste-to-energy purposes or recycling operations of separated waste such as composting and anaerobic digestion.

(15)  Investments in incinerators for the treatment of waste. This exclusion does not apply to investments in:

i.  Plants exclusively dedicated to treating non-recyclable hazardous waste;

ii.  Existing plants in order to increase energy efficiency, capture exhaust gases for storage or use or recover materials from incineration ashes provided such investments do not result in an increase of the plant waste processing capacity.

The implementing partners shall remain responsible for ensuring compliance at signature and monitoring the compliance of the financing and investment operations with exclusion criteria during the implementation of the project and undertaking appropriate remedial actions where relevant.

(1) OJ C 62, 15.2.2019, p. 131.
(2) OJ C 86, 7.3.2019, p. 310.
(3) This position replaces the amendments adopted on 16 January 2019 (Texts adopted, P8_TA(2019)0026).
(4)OJ C […], […], p. […].
(5)OJ C […], […], p. […].
(6) Position of the European Parliament of 18 April 2019. The text highlighted in grey has not been agreed in the framework of interinstitutional negotiations.
(7)COM(2018)0097 final.
(8)COM(2018)0353.
(9)Directive (EU) 2016/2284 of the European Parliament and of the Council of 14 December 2016 on the reduction of national emissions of certain atmospheric pollutants, amending Directive 2003/35/EC and repealing Directive 2001/81/EC (OJ L 344, 17.12.2016, p. 1).
(10)COM(2017)0206.
(11)COM(2017)0250.
(12)Published as European Economy Discussion Paper 074 in January 2018.
(13)
(14)Reference to be updated: OJ C 373, 20.12.2013, p. 1. The agreement is available at: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.C_.2013.373.01.0001.01.ENG&toc=OJ:C:2013:373:TOC
(15)Interinstitutional Agreement between the European Parliament, the Council of the European Union and the European Commission on Better Law-Making of 13 April 2016 (OJ L 123, 12.5.2016, p. 1).
(16) Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ L 193, 30.7.2018, p. 1).
(17)Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council of 11 September 2013 concerning investigations conducted by the European Anti-Fraud Office (OLAF) and repealing Regulation (EC) No 1073/1999 of the European Parliament and of the Council and Council Regulation (Euratom) No 1074/1999 (OJ L 248, 18.9.2013, p. 1).
(18)Council Regulation (EC, Euratom) No 2988/95 of 18 December 1995 on the protection of the European Communities financial interests (OJ L 312, 23.12.1995, p. 1).
(19)Council Regulation (Euratom, EC) No 2185/96 of 11 November 1996 concerning on-the-spot checks and inspections carried out by the Commission in order to protect the European Communities' financial interests against fraud and other irregularities (OJ L 292, 15.11.1996, p. 2).
(20)Council Regulation (EU) 2017/1939 of 12 October 2017 implementing enhanced cooperation on the establishment of the European Public Prosecutor’s Office (‘the EPPO’) (OJ L 283, 31.10.2017, p. 1)
(21)Directive (EU) 2017/1371 of the European Parliament and of the Council of 5 July 2017 on the fight against fraud to the Union's financial interests by means of criminal law (OJ L 198, 28.7.2017, p. 29).
(22)Commission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises (OJ L 124, 20.5.2003, p. 36).
(23)
(24)


European Maritime Single Window environment ***I
PDF 121kWORD 49k
Resolution
Text
European Parliament legislative resolution of 18 April 2019 on the proposal for a Regulation of the European Parliament and of the Council establishing a European Maritime Single Window environment and repealing Directive 2010/65/EU (COM(2018)0278 – C8-0193/2018 – 2018/0139(COD))
P8_TA(2019)0434A8-0006/2019

(Ordinary legislative procedure: first reading)

The European Parliament,

–  having regard to the Commission proposal to Parliament and the Council (COM(2018)0278),

–  having regard to Article 294(2) and Article 100(2) of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C8‑0193/2018),

–  having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

–  having regard to the opinion of the European Economic and Social Committee of 17 October 2018(1) ,

–  after consulting the Committee of the Regions,

–  having regard to the provisional agreement approved by the committee responsible under Rule 69f(4) of its Rules of Procedure and the undertaking given by the Council representative by letter of 14 February 2019 to approve Parliament’s position, in accordance with Article 294(4) of the Treaty on the Functioning of the European Union,

–  having regard to Rule 59 of its Rules of Procedure,

–  having regard to the report of the Committee on Transport and Tourism (A8-0006/2019),

1.  Adopts its position at first reading hereinafter set out;

2.  Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

3.  Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Position of the European Parliament adopted at first reading on 18 April 2019 with a view to the adoption of Regulation (EU) 2019/… of the European Parliament and of the Council establishing a European Maritime Single Window environment and repealing Directive 2010/65/EU

(As an agreement was reached between Parliament and Council, Parliament's position corresponds to the final legislative act, Regulation (EU) 2019/1239.)

(1) OJ C 62, 15.2.2019, p. 265.


Disclosures relating to sustainable investments and sustainability risks ***I
PDF 128kWORD 42k
Resolution
Text
European Parliament legislative resolution of 18 April 2019 on the proposal for a regulation of the European Parliament and of the Council on disclosures relating to sustainable investments and sustainability risks and amending Directive (EU) 2016/2341 (COM(2018)0354 – C8-0208/2018 – 2018/0179(COD))
P8_TA(2019)0435A8-0363/2018

(Ordinary legislative procedure: first reading)

The European Parliament,

–  having regard to the Commission proposal to Parliament and the Council (COM(2018)0354),

–  having regard to Article 294(2) and Article 114 of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C8‑0208/2018),

–  having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

–  having regard to the opinion of the European Economic and Social Committee of 17 October 2018(1),

–  having regard to the opinion of the Committee of the Regions of 5 December 2018(2),

–  having regard to the provisional agreement approved by the committee responsible under Rule 69f(4) of its Rules of Procedure and the undertaking given by the Council representative by letter of 27 March 2019 to approve Parliament’s position, in accordance with Article 294(4) of the Treaty on the Functioning of the European Union,

–  having regard to Rule 59 of its Rules of Procedure,

–  having regard to the report of the Committee on Economic and Monetary Affairs and the opinion of the Committee on the Environment, Public Health and Food Safety (A8-0363/2018),

1.  Adopts its position at first reading hereinafter set out;

2.  Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

3.  Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Position of the European Parliament adopted at first reading on 18 April 2019 with a view to the adoption of Regulation (EU) 2019/… of the European Parliament and of the Council on sustainability-related disclosures in the financial services sector

(As an agreement was reached between Parliament and Council, Parliament's position corresponds to the final legislative act, Regulation (EU) 2019/2088.)

(1) OJ C 62, 15.2.2019, p. 97
(2)OJ C 86, 7.3.2019, p. 24.


Persistent organic pollutants ***I
PDF 123kWORD 55k
Resolution
Text
European Parliament legislative resolution of 18 April 2019 on the proposal for a regulation of the European Parliament and of the Council on persistent organic pollutants (recast) (COM(2018)0144 - C8-0124/2018 – 2018/0070(COD))
P8_TA(2019)0436A8-0336/2018

(Ordinary legislative procedure – recast)

The European Parliament,

–  having regard to the Commission proposal to Parliament and the Council (COM(2018)0144),

–  having regard to Article 294(2) and Article 192(1) of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C8‑0124/2018),

–  having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

–  having regard to the opinion of the European Economic and Social Committee of 12 July 2018(1),

–  after consulting the Committee of the Regions,

–  having regard to the Interinstitutional Agreement of 28 November 2001 on a more structured use of the recasting technique for legal acts(2),

–  having regard to the letter of 10 September 2018 sent by the Committee on Legal Affairs to the Committee on the Environment, Public Health and Food Safety in accordance with Rule 104(3) of its Rules of Procedure,

–  having regard to the provisional agreement approved by the committee responsible under Rule 69f(4) of its Rules of Procedure and the undertaking given by the Council representative by letter of 1 March 2019 to approve Parliament’s position, in accordance with Article 294(4) of the Treaty on the Functioning of the European Union,

–  having regard to Rules 104 and 59 of its Rules of Procedure,

–  having regard to the report of the Committee on the Environment, Public Health and Food Safety (A8-0336/2018),

A.  whereas, according to the Consultative Working Party of the legal services of the European Parliament, the Council and the Commission, the Commission proposal does not include any substantive amendments other than those identified as such in the proposal and whereas, as regards the codification of the unchanged provisions of the earlier acts together with those amendments, the proposal contains a straightforward codification of the existing texts, without any change in their substance;

1.  Adopts its position at first reading hereinafter set out(3), taking into account the recommendations of the Consultative Working Party of the legal services of the European Parliament, the Council and the Commission;

2.  Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

3.  Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Position of the European Parliament adopted at first reading on 18 April 2019 with a view to the adoption of Regulation (EU) 2019/… of the European Parliament and of the Council on persistent organic pollutants (recast)

(As an agreement was reached between Parliament and Council, Parliament's position corresponds to the final legislative act, Regulation (EU) 2019/1021.)

(1) OJ C 367, 10.10.2018, p. 93.
(2) OJ C 77, 28.3.2002, p. 1.
(3) This position replaces the amendments adopted on 15 November 2018 (Texts adopted, P8_TA(2018)0463).


Clearing obligation, reporting requirements and risk-mitigation techniques for OTC derivatives, and trade repositories ***I
PDF 123kWORD 53k
Resolution
Text
European Parliament legislative resolution of 18 April 2019 on the proposal for a regulation of the European Parliament and of the Council amending Regulation (EU) No 648/2012 as regards the clearing obligation, the suspension of the clearing obligation, the reporting requirements, the risk-mitigation techniques for OTC derivatives contracts not cleared by a central counterparty, the registration and supervision of trade repositories and the requirements for trade repositories (COM(2017)0208 – C8-0147/2017 – 2017/0090(COD))
P8_TA(2019)0437A8-0181/2018

(Ordinary legislative procedure: first reading)

The European Parliament,

–  having regard to the Commission proposal to Parliament and the Council (COM(2017)0208),

–  having regard to Article 294(2) and Article 114 of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C8‑0147/2017),

–  having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

–  having regard to the opinion of the European Central Bank of 11 October 2017(1),

–  having regard to the opinion of the European Economic and Social Committee of 20 September 2017(2),

–  having regard to the provisional agreement approved by the committee responsible under Rule 69f(4) of its Rules of Procedure and the undertaking given by the Council representative by letter of 6 March 2019 to approve Parliament’s position, in accordance with Article 294(4) of the Treaty on the Functioning of the European Union,

–  having regard to Rule 59 of its Rules of Procedure,

–  having regard to the report of the Committee on Economic and Monetary Affairs (A8‑0181/2018),

1.  Adopts its position at first reading hereinafter set out;

2.  Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

3.  Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Position of the European Parliament adopted at first reading on 18 April 2019 with a view to the adoption of Regulation (EU) 2019/… of the European Parliament and of the Council amending Regulation (EU) No 648/2012 as regards the clearing obligation, the suspension of the clearing obligation, the reporting requirements, the risk-mitigation techniques for OTC derivative contracts not cleared by a central counterparty, the registration and supervision of trade repositories and the requirements for trade repositories

(As an agreement was reached between Parliament and Council, Parliament's position corresponds to the final legislative act, Regulation (EU) 2019/834.)

(1)OJ C 385, 15.11.2017, p. 10.
(2)OJ C 434, 15.12.2017, p. 63..


Authorisation of CCPs and recognition of third-country CCPs ***I
PDF 122kWORD 52k
Resolution
Text
European Parliament legislative resolution of 18 April 2019 on the proposal for a regulation of the European Parliament and of the Council amending Regulation (EU) No 1095/2010 establishing a European Supervisory Authority (European Securities and Markets Authority) and amending Regulation (EU) No 648/2012 as regards the procedures and authorities involved for the authorisation of CCPs and requirements for the recognition of third-country CCPs (COM(2017)0331 – C8-0191/2017 – 2017/0136(COD))
P8_TA(2019)0438A8-0190/2018

(Ordinary legislative procedure: first reading)

The European Parliament,

–  having regard to the Commission proposal to Parliament and the Council (COM(2017)0331),

–  having regard to Article 294(2) and Article 114 of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C8‑0191/2017),

–  having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

–  having regard to the opinion of the European Central Bank of 4 October 2017(1),

–  having regard to the opinion of the European Economic and Social Committee of 20 September 2017(2),

–  having regard to the provisional agreement approved by the committee responsible under Rule 69f(4) of its Rules of Procedure and the undertaking given by the Council representative by letter of 20 March 2019 to approve Parliament’s position, in accordance with Article 294(4) of the Treaty on the Functioning of the European Union,

–  having regard to Rule 59 of its Rules of Procedure,

–  having regard to the report of the Committee on Economic and Monetary Affairs (A8-0190/2018),

1.  Adopts its position at first reading hereinafter set out;

2.  Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

3.  Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Position of the European Parliament adopted at first reading on 18 April 2019 with a view to the adoption of Regulation (EU) 2019/… of the European Parliament and of the Council amending Regulation (EU) No 648/2012 as regards the procedures and authorities involved for the authorisation of CCPs and requirements for the recognition of third-country CCPs

(As an agreement was reached between Parliament and Council, Parliament's position corresponds to the final legislative act, Regulation (EU) 2019/2099.)

(1) OJ C 385, 15.11.2017, p. 3.
(2) OJ C 434, 15.12.2017, p. 63.


Promotion of the use of SME growth markets ***I
PDF 121kWORD 45k
Resolution
Text
European Parliament legislative resolution of 18 April 2019 on the proposal for a regulation of the European Parliament and of the Council amending Regulations (EU) No 596/2014 and (EU) 2017/1129 as regards the promotion of the use of SME growth markets (COM(2018)0331 – C8-0212/2018 – 2018/0165(COD))
P8_TA(2019)0439A8-0437/2018

(Ordinary legislative procedure: first reading)

The European Parliament,

–  having regard to the Commission proposal to Parliament and the Council (COM(2018)0331),

–  having regard to Article 294(2) and Article 114 of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C8‑0212/2018),

–  having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

–  having regard to the opinion of the European Economic and Social Committee of 19 September 2018(1),

–  having regard to the provisional agreement approved by the responsible committee under Rule 69f(4) of its Rules of Procedure and the undertaking given by the Council representative by letter of 20 March 2019 to approve Parliament’s position, in accordance with Article 294(4) of the Treaty on the Functioning of the European Union,

–  having regard to Rule 59 of its Rules of Procedure,

–  having regard to the report of the Committee on Economic and Monetary Affairs (A8-0437/2018),

1.  Adopts its position at first reading hereinafter set out;

2.  Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

3.  Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Position of the European Parliament adopted at first reading on 18 April 2019 with a view to the adoption of Regulation (EU) 2019/… of the European Parliament and of the Council amending Directive 2014/65/EU and Regulations (EU) No 596/2014 and (EU) 2017/1129 as regards the promotion of the use of SME growth markets

(As an agreement was reached between Parliament and Council, Parliament's position corresponds to the final legislative act, Regulation (EU) 2019/2115.)

(1) OJ C 440, 6.12.2018, p. 79.


Negotiations with Council and Commission on European Parliament's right of inquiry: legislative proposal
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European Parliament resolution of 18 April 2019 on the negotiations with the Council and Commission on the legislative proposal for a regulation on the European Parliament’s right of inquiry (2019/2536(RSP))
P8_TA(2019)0440B8-0238/2019

The European Parliament,

–  having regard to the first paragraph of Article 14 of the Treaty on European Union (TEU),

–  having regard to the third paragraph of Article 226 of the Treaty on the Functioning of the European Union (TFEU),

–  having regard to its legislative resolution of 16 April 2014 on a proposal for a regulation of the European Parliament on the detailed provisions governing the exercise of the European Parliament’s right of inquiry and repealing Decision 95/167/EC, Euratom, ECSC of the European Parliament, the Council and the Commission(1),

–  having regard to the respective paragraphs in its recommendation of 13 December 2017 to the Council and the Commission following the inquiry into money laundering, tax avoidance and tax evasion (PANA resolution, paragraphs 190-200)(2) and its recommendation of 4 April 2017 to the Council and the Commission following the inquiry into emission measurements in the automotive sector (EMIS resolution, paragraphs 76-94)(3),

–  having regard to the decision of its Conference of Presidents of 18 September 2014, in accordance with Rule 229 of its Rules of Procedure, to continue with consideration during the new parliamentary term of the above-mentioned legislative proposal for a regulation on the European Parliament’s right of inquiry,

–  having regard to the three working documents(4) of the Committee on Constitutional Affairs on the above-mentioned legislative proposal,

–  having regard to the concerns of the Council and the Commission regarding this legislative proposal, as expressed in the letter of 4 April 2014 to the Secretary-General of the European Parliament from the Secretaries-General of the Council and the Commission and in the letters to the Chair of the Committee on Constitutional Affairs of 28 April 2015 from the First Vice-President of the Commission, 3 September 2015 from the Luxembourg Council Presidency, 13 October 2016 from the Slovak Council Presidency and 25 October 2018 from the Austrian Council Presidency,

–  having regard to the debate in plenary on 13 December 2017, and especially the replies by the Estonian Council Presidency and the Commission, following the questions for oral answer (Rule 128) tabled on 29 November 2017 by Danuta Maria Hübner on behalf of the Committee on Constitutional Affairs to the Council and to the Commission on the European Parliament’s right of inquiry,

–  having regard to the debate in plenary on 17 April 2019, following the questions for oral answer (Rule 128) tabled on 22 January 2019 to the Council and to the Commission by Danuta Maria Hübner on behalf of the Committee on Constitutional Affairs on the legislative proposal for a regulation on the European Parliament’s right of inquiry(5),

–  having regard to the motion for a resolution of the Committee on Constitutional Affairs (B8‑0238/2019),

–  having regard to Rules 128(5) and 123(2) of its Rules of Procedure,

A.  whereas already in the first working document adopted by the Committee on Constitutional Affairs (AFCO) on 20 January 2015, it has been indicated that the ‘concerns’ expressed by the Council and the Commission ‘should not in themselves constitute an insurmountable objection’, with AFCO recognising that ‘there are alternative solutions and more flexible wordings, which would enable the deadlock on the regulation to be resolved’, indicating and proposing to the Council Presidency and to the Commission the way forward, with ‘political negotiations first’ followed by technical meetings;

B.  whereas the Council replied to this offer showing willingness and commitment to engage with Parliament, but with the condition that Parliament should first address the problematic and fundamental concerns of a legal and institutional nature;

C.  whereas AFCO adopted a second working document enabling the rapporteur to take further steps with the Council and Commission to negotiate a way to address the above-mentioned concerns; whereas a new negotiating strategy was adopted accordingly, and a document in the form of a non-paper describing, with political arguments, possible solutions for the way forward was sent to the Council and Commission on 30 June 2016;

D.  whereas on 10 October 2016 the three institutions decided to proceed with an informal exchange of views between their respective legal services so as to further clarify all the legal and institutional issues; whereas this enabled Parliament to propose a new wording of the regulation while leaving the main political divergences open;

E.  whereas despite the legal work done, the jurisconsults of the legal services of the Commission and Council were not able to formally endorse the document which emerged from the remarkable work carried out by the legal services of the three institutions, and this led to an effective standstill on this important file; whereas, consequently, a debate was held in plenary under AFCO’s auspices on 13 December 2017 following two questions for an oral answer, after which AFCO, on 3 May 2018, forwarded a new wording of the proposal in the form of a non-paper, representing the formal follow-up of the agreement reached between the AFCO Chair and the rapporteur, Ramón Jáuregui Atondo, with the Slovak Council Presidency and the Commission on 10 October 2016, stating that ‘in order for official negotiations to be launched, a presentation of a new wording of the EP proposal is necessary’;

F.  whereas the Council replied on 25 October 2018 to the proposed new wording based on the legal work carried out by the legal services, the experience of the two committees of inquiry (EMIS and PANA) established during this eighth term, and the proposal adopted by Parliament in 2014; whereas in its reply the Council formalised a new list of concerns, also going beyond the opinion of its own legal service, putting in question the work accomplished so far and listing the main institutional problems for Parliament, which are difficult to overcome; considers that by acting in this way the Council is not leaving any margin of manoeuvre for negotiations, while the idea behind the non-paper was in fact that the new text should open up negotiations and political discussions;

G.  whereas it is an inherent characteristic of all legislative chambers and a fundamental condition of the separation of powers in a democracy worthy of the name that a parliament should be able to hold the executive to account by setting up committees of inquiry with real powers to call witnesses and obtain documents;

H.  whereas all institutions of the European Union have regularly committed themselves to sincere cooperation, which in the case of the regulation in question is hard to discern;

1.  Expresses its deepest disagreement with the attitude of the Council (and the Commission), which is continuing to prevent, after more than four years of informal meetings and exchanges of letters and documents, a formal meeting to discuss at political level possible solutions to the problems identified, refusing to approve a political mandate to the Council Presidency that would open the door to meetings of a political nature aimed at resolving the most contentious issues and sounding out whether an agreement could be reached;

2.  Asks its President to bring Parliament’s concerns to the attention of the political leaders concerning the failure of the Council and Commission to comply with the principle of interinstitutional cooperation;

3.  Suggests that its Committee on Legal Affairs should examine the feasibility of preparing an action before the Court of Justice of the European Union in connection with the principle of mutual sincere cooperation between institutions (Article 13(2) of the TEU), and, in this connection, should also check and report on the violations by the Council of the actual legal framework of the committees of inquiry created during this term (PANA and EMIS);

4.  Underlines that as it is currently worded, the third paragraph of Article 226 of the TFEU, which stipulates a ‘special legislative procedure’ and requires the consent of the Council and the Commission for the adoption of a regulation on Parliament’s right of inquiry, does not oblige the Council and the Commission to negotiate, since they are obliged only to give or withhold their consent to Parliament’s proposal, and not to negotiate it with a view to reaching a common accord;

5.  Recommends that the legislative process arising from the right of legislative initiative conferred on Parliament by the Treaties must include, under the Interinstitutional Agreement on Better Law Making (IIA), a request for the establishment of a legislative calendar for the initiatives concerned, similarly as with the ordinary legislative procedure; underlines, moreover, that such a special legislative procedure must respect the provisions of the IIA concerning the institutional obligation to negotiate of all three institutions;

6.  Invites the Council and the Commission, if they are unable to give their consent to the proposal, to resume negotiations with the newly elected Parliament, acknowledging the progress made with the new wording of the proposal presented in the non-paper and based on the work carried out by the legal services of the three institutions; believes this is a more orderly and systematic text than that adopted in 2014, containing the same powers of investigation, but updated in line with the experiences of recent years and the current institutional reality;

7.  Calls on the political parties to ensure that their election programmes express their commitment to Parliament’s proposal for a new and updated regulation on its right of inquiry, and invites the different Spitzenkandidaten to offer their public and political support on this matter;

8.  Instructs its President to forward this resolution to the European Council, the Council, the Commission, the Court of Justice of the European Union and the national parliaments.

(1) OJ C 443, 22.12.2017, p. 39.
(2) OJ C 369, 11.10.2018, p. 132.
(3) OJ C 298, 23.8.2018, p. 140.
(4) PE544.488v03-00, PE571.670v03-00 and PE630.750v01-00.
(5) O-000003/19 and O-000004/19.


A comprehensive European Union framework on endocrine disruptors
PDF 146kWORD 50k
European Parliament resolution of 18 April 2019 on a comprehensive European Union framework on endocrine disruptors (2019/2683(RSP))
P8_TA(2019)0441B8-0241/2019

The European Parliament,

–  having regard to the Commission communication of 7 November 2018 (COM(2018)0734) entitled ‘Towards a comprehensive European Union framework on endocrine disruptors’ (hereinafter ‘the Communication’),

–  having regard to the Treaty on the Functioning of the European Union (TFEU) and, in particular, Article 191(2) thereof,

–  having regard to Regulation (EC) No 1107/2009 of the European Parliament and of the Council of 21 October 2009 concerning the placing of plant protection products on the market and repealing Council Directives 79/117/EEC and 91/414/EEC(1),

–  having regard to Commission Regulation (EU) 2018/605 of 19 April 2018 amending Annex II to Regulation (EC) No 1107/2009 by setting out scientific criteria for the determination of endocrine disrupting properties(2),

–  having regard to Regulation (EU) No 528/2012 of the European Parliament and of the Council of 22 May 2012 concerning the making available on the market and use of biocidal products(3),

–  having regard to Commission Delegated Regulation (EU) 2017/2100 of 4 September 2017 setting out scientific criteria for the determination of endocrine-disrupting properties pursuant to Regulation (EU) No 528/2012 of the European Parliament and Council(4),

–  having regard to Regulation (EC) No 1935/2004 of the European Parliament and of the Council of 27 October 2004 on materials and articles intended to come into contact with food and repealing Directives 80/590/EEC and 89/109/EEC(5),

–  having regard to Regulation (EC) No 1223/2009 of the European Parliament and of the Council of 30 November 2009 on cosmetic products(6),

–  having regard to Directive 2009/48/EC of the European Parliament and of the Council of 18 June 2009 on the safety of toys(7),

–  having regard to Regulation (EC) No 1272/2008 of the European Parliament and of the Council of 16 December 2008 on classification, labelling and packaging of substances and mixtures, amending and repealing Directives 67/548/EEC and 1999/45/EC, and amending Regulation (EC) No 1907/2006 (hereinafter ‘the CLP Regulation’)(8),

–  having regard to Decision No 1386/2013/EU of the European Parliament and of the Council of 20 November 2013 on a General Union Environment Action Programme to 2020 ‘Living well, within the limits of our planet’ (hereinafter ‘the 7th EAP’), and in particular Point 54 (iv) thereof(9),

–  having regard to the Sustainable Development Goals, in particular target 3.9(10);

–  having regard to the report by the UN Environment Programme (UNEP) and the World Health Organisation entitled ‘State of the science of endocrine disrupting chemicals – 2012’(11),

–  having regard to its resolution of 14 March 2013 on the protection of public health from endocrine disruptors(12),

–  having regard to the study of 15 January 2019 entitled ‘Endocrine Disruptors: from Scientific Evidence to Human Health Protection’, commissioned by Parliament’s Policy Department for Citizen’s Rights and Constitutional Affairs’(13),

–  having regard to Rule 123(2) of its Rules of Procedure,

A.  whereas the UNEP/WHO report of 2012 called endocrine disruptors (‘EDCs’) ‘a global threat’, and refers inter alia to the high incidence and the increasing trends of many endocrine-related disorders in humans, as well as noting that endocrine-related effects have been observed in wildlife populations;

B.  whereas according to the report, there is emerging evidence of adverse reproductive outcomes (infertility, cancers, malformations) from exposure to EDCs, and there is also mounting evidence of the effects of these chemicals on thyroid function, brain function, obesity and metabolism, and insulin and glucose homeostasis;

C.  whereas the fact that this class of chemicals induces adverse effects on human health and wildlife by interfering with the hormonal system is no longer disputed; whereas, therefore, there is no valid reason to postpone effective regulation;

D.  whereas the most recent study by the Institute for Risk Assessment Sciences, entitled ‘Health costs that may be associated with Endocrine Disrupting Chemicals’, found, when assessing five potentially EDC-related health effects, that ‘according to currently available literature, the socio-economic burden of EDC associated health effects for the EU may be substantial’, with estimates ranging from EUR 46 billion to EUR 288 billion per year(14);

E.  whereas the UNEP/WHO report states: ‘Close to 800 chemicals are known or suspected to be capable of interfering with hormone receptors, hormone synthesis or hormone conversion. However, only a small fraction of these chemicals have been investigated in tests capable of identifying overt endocrine effects in intact organisms’;

F.  whereas the Communication states in the context of the proposed Union Framework that ‘since 1999, the scientific evidence linking exposure to endocrine disruptors with human disease or negative impact on wildlife has become stronger’;

G.  whereas according to the 7th EAP, ‘in order to safeguard the Union’s citizens from environment-related pressures and risk to health and well-being, the 7th EAP shall ensure that by 2020 safety concerns related to endocrine disruptors are effectively addressed in all relevant Union legislation’;

H.  whereas according to the 7th EAP, this requires in particular ‘developing by 2018 (…) building on horizontal measures to be undertaken by 2015 to ensure (…) the minimisation of exposure to endocrine disruptors’;

I.  whereas to date the Commission has not adopted a Union strategy for a non-toxic environment, nor did it take horizontal measures by 2015 to ensure the minimisation of exposure to EDCs;

J.  whereas the revision of the 1999 Community strategy for EDCs is long overdue;

K.  whereas in the absence of a revised Union strategy for EDCs, Member States such as France, Sweden, Denmark and Belgium have taken steps at national level with a view to increasing the level of protection for their citizens through a variety of national measures;

L.  whereas it is in the interests of all to ensure that an effective and comprehensive European approach to EDCs is put in place in order to guarantee a high level of protection of human health and the environment;

M.  whereas a robust Union framework on EDCs and its effective implementation are crucial for the EU to contribute to fulfilling its commitment to target 3.9 of the Sustainable Development Goals, namely to ‘substantially reduce the number of deaths and illnesses from hazardous chemicals and air, water, and soil pollution and contamination’;

N.  whereas a robust Union framework on EDCs is also required to lay the foundations for a non-toxic circular economy, encouraging industrial innovation through safer substitution;

O.  whereas it is welcome that the Communication recognises the adverse effects of EDCs on human health and the environment, including mixture effects, highlights the objective of minimising overall exposure and recognises the need to have a horizontal approach for the identification of EDCs;

P.  whereas, however, the Communication lacks both a concrete action plan to minimise exposure to EDCs and a timeline for the next steps to move forward;

Q.  whereas key Union legislation in sensitive areas still lacks specific provisions on EDCs (e.g. for cosmetics, toys, or food contact materials);

R.  whereas the Commission has announced a Fitness Check to assess whether the relevant EU legislation on EDCs delivers its overall objective of protecting human health and the environment by minimising exposure to these substances; whereas the cross-cutting nature of the Fitness Check, as well as the Commission’s commitment that particular attention will be paid to the protection of vulnerable groups, are to be welcomed; whereas, however, this assessment should have been conducted years ago and it is regrettable that the Commission has only now decided to proceed with such a Fitness Check; whereas, therefore, the Fitness Check should not provide a justification for prolonging the delivery of concrete legislative and other actions;

S.  whereas the scientific criteria developed for the determination of EDCs in pesticides and biocides lack a category of ‘suspected EDCs’ and are therefore not fit for horizontal application; whereas this is not consistent with the classification of substances that are carcinogenic, mutagenic or toxic for reproduction (CMRs) under the CLP Regulation and the 7th EAP; whereas the ability to identify suspected EDCs is extremely important, all the more so because both the Cosmetics Regulation and the Toy Safety Directive not only restrict known and presumed CMRs (categories 1A and 1B), but also suspected CMRs (category 2);

T.  whereas there is a lack of adequate tests and data requirements to identify EDCs in the relevant Union legislation;

U.  whereas the Communication points to increasing evidence concerning mixture effects for EDCs (i.e. exposure to a combination of EDCs may produce an adverse effect at concentrations at which, individually, no effect has been observed), yet it does not make any proposals to address this issue;

V.  whereas the project ‘EDC-MixRisk’ under Horizon 2020 concluded that ‘current regulations of man-made chemicals systematically underestimate health risks associated with combined exposures to EDCs or potential EDCs’(15);

W.  whereas the failures in the implementation of the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) Regulation (high percentage of non-compliant registration dossiers, slow evaluations due to missing data and failure to take regulatory action on substances found following evaluation to pose a serious risk to human health or the environment) also lead to a failure to minimise exposure to known or suspected endocrine disruptors;

1.  Considers that the Union framework for EDCs as suggested by the Commission in the Communication is not adequate to address the threat to human health and the environment due to exposure to EDCs, and that it does not deliver what is required pursuant to the 7th EAP;

2.  Considers that EDCs are a class of chemicals that is of equivalent concern to substances classified as carcinogenic, mutagenic or toxic for reproduction (CMR substances), and should therefore be treated identically in Union legislation;

3.  Calls on the Commission to swiftly take all necessary action to ensure a high level of protection of human health and the environment against EDCs by effectively minimising overall exposure of humans and the environment to EDCs;

4.  Calls on the Commission to develop a horizontal definition based on the WHO definition for suspected EDCs as well as for known and presumed EDCs in line with the classification of CMRs in the CLP Regulation, no later than June 2020;

5.  Calls on the Commission to ensure that the horizontal definition is accompanied by proper guidance documents;

6.  Calls on the Commission to make legislative proposals no later than June 2020 to insert specific provisions on EDCs into Regulation (EC) No 1223/2009, similar to those on CMR substances;

7.  Calls on the Commission to draw up legislative proposals no later than June 2020 to insert specific provisions on EDCs into Directive 2009/48/EC, similar to those on CMR substances but without any reference to thresholds of classification, as such thresholds are not applicable for EDCs;

8.  Calls on the Commission to revise Regulation (EC) No 1935/2004 no later than June 2020 in order to effectively reduce the content of hazardous substances therein, with specific provisions to substitute the use of EDCs;

9.  Considers that there is an urgent need to accelerate test development and validation in order to properly identify EDCs, including new approach methodologies;

10.  Calls on the Commission to ensure that data requirements are continuously updated in all the relevant legislation in order to take account of the latest technical and scientific progress, so that EDCs can be properly identified;

11.  Calls on the Commission to take mixture effects and combined exposures into account in all relevant EU legislation;

12.  Calls on the European Chemicals Agency, the Commission and the Member States to take all necessary measures to ensure the compliance of registration dossiers with the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) Regulation by the end of 2019, to accelerate substance evaluation and to implement effectively the final conclusions of substance evaluations under REACH as an important means of minimising exposure to endocrine disruptors;

13.  Calls on the Commission to ensure adequate bio-monitoring of EDCs in human and animal populations, as well as the monitoring of EDCs in the environment, including in drinking water;

14.  Calls on the Commission to ensure that the Union framework on EDCs becomes an effective contribution to the Union strategy for a non-toxic environment, to be adopted as soon as possible;

15.  Calls on the Commission to promote research into EDCs, in particular with regard to their epigenetic and transgenerational effects, their effects on the microbiome, novel EDC modalities and characterisation of dose-response functions, as well as safer alternatives;

16.  Instructs its President to forward this resolution to the Council and the Commission, and to the governments and parliaments of the Member States.

(1) OJ L 309, 24.11.2009, p. 1.
(2) OJ L 101, 20.4.2018, p. 33.
(3) OJ L 167, 27.6.2012, p. 1.
(4) OJ L 301, 17.11.2017, p. 1.
(5) OJ L 338, 13.11.2004, p. 4.
(6) OJ L 342, 22.12.2009, p. 59.
(7) OJ L 170, 30.6.2009, p. 1.
(8) OJ L 353, 31.12.2008, p. 1.
(9) OJ L 354, 28.12.2013, p. 171.
(10) https://unstats.un.org/sdgs/METADATA?Text=&Goal=3&Target=3.9
(11) WHO/UNEP, ‘State of the Science of Endocrine Disrupting Chemicals – 2012’, World Health Organisation, 2013, http://www.who.int/ceh/publications/endocrine/en/
(12) OJ C 36, 29.1.2016, p. 85.
(13) Study – ‘Endocrine Disruptors: from Scientific Evidence to Human Health Protection’, European Parliament, Directorate-General for Internal Policies, Policy Department for Citizens’ Rights and Constitutional Affairs, 15 January 2019, available at: http://www.europarl.europa.eu/RegData/etudes/STUD/2019/608866/IPOL_STU(2019)608866_EN.pdf
(14) Rijk, I., van Duursen, M. and van den Berg, M, Health cost that may be associated with Endocrine Disrupting Chemicals – An inventory, evaluation and way forward to assess the potential health impact of EDC-associated health effects in the EU, Institute for Risk Assessment Sciences, University of Utrecht, 2016, available at: https://www.uu.nl/sites/default/files/rijk_et_al_2016_-_report_iras_-_health_cost_associated_with_edcs_3.pdf
(15) https://edcmixrisk.ki.se/wp-content/uploads/sites/34/2019/03/Policy-Brief-EDC-MixRisk-PRINTED-190322.pdf

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