BVCA: Gauzes's disclosure requirement worsens defective directive. Imposing regime designed for public companies on struggling venture capitalists and small companies battling to restore profitability is ‘risible’.
The British Private Equity and Venture Capital Association responds to the publication of the revised Alternative Investment Fund Managers Directive by Jean-Paul Gauzes, rapporteur to the EU's Committee on Economic and Monetary Affairs.
Simon Walker, Chief Executive of the BVCA, said:
'The disclosure requirement put forward by the Committee on Economic and Monetary Affairs worsens a deeply defective directive.
It is risible to impose on struggling venture capitalists or small companies battling to restore profitability, a disclosure regime designed for public companies, merely because they are owned by funds.
Such firms simply cannot afford the £30,000 it will cost for disclosure which does not apply to competitors, whether they are owned by individuals, families, Russian oligarchs or sovereign wealth funds.
It discriminates against fund-owned businesses and destroys any pretence of a level playing field.
It will be deeply damaging to the British economy where such companies are legion. By contrast, it will have minimal effect on those continental European economies where this form of ownership is much less common.
Equally, removing size thresholds could impose oppressive capital requirements on the venture capital firms the European Union claims to support.
The committee's vague and uncertain suggestion that ‘the Commission should conduct a review of relevant company law legislation’ provides no comfort whatsoever. Nor do equally uncertain references to a ‘proportionality principle’ which invite subjective and unpredictable interpretation.
In the words of the report commissioned by the European Parliament, this directive is ‘poorly constructed, ill-focused and premature’. It needs wholesale rewriting: not tinkering around the edges.'
© BVCA – The British Private Equity and Venture Capital Association
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