More stringent application of EU rules, affecting eligibility for grants & subsidies

 

We have recently been contacted by a number of member companies that have been confronted with difficulties when submitting an R&D project proposal at VLAIO (Flemish R&D Grant office). Since 1/10/2017 VLAIO conformed its internal evaluation criteria for grant funding with the European guidelines on State aid for rescuing and restructuring firms in difficulty.

 

According to the Community Guidelines, an undertaking (older than 3 years) is considered to be in difficulty if at least one of the following circumstances occurs:

  • A limited liability company where more than half of its subscribed share capital has disappeared as a result of accumulated losses.
    This is the case when deduction of accumulated losses from reserves (and all other elements generally considered as part of the own funds of the company) leads to a negative cumulative amount that exceeds half of the subscribed share capital.
  • A company where at least some members have unlimited liability for the debt of the company (27), where more than half of its capital as shown in the company accounts has disappeared as a result of accumulated losses.
  • The undertaking is subject to collective insolvency proceedings or fulfils the criteria under its domestic law for being placed in collective insolvency proceedings at the request of its creditors.
  • An undertaking that is not an SME, where, for the past two years:
    • the book debt to equity ratio has been greater than 7,5 and
    • the EBITDA interest coverage ratio has been below 1,0.

For the high-tech sector, the most dangerous criterium is definitely the first one.
This is also not a “Flanders only” issue. We expect equal problems in other regions or member states, today or in the near future. Please also realise that if you are younger than three years, you are not affected today, but will be in the near future.

 

We have been in contact with a number of parties working on this issue and plan to organise an info session early January 2018 (probably 17,18 or 19 January) where we hope to be able to present some possible solutions or avenues to address this problem.

 

We would appreciate if you would take the time to answer three questions in this form before 29/11/2017.

 

If you have any specific questions or in case you have any suggestions about this issue, please do not hesitate to get in touch with willem.dhooge@flanders.bio

 

 

 

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