'Mutual recognition' sought for venture capital funds[fr][de] 

Venture capital funds "face too many problems," said the Commission as it unveiled its proposal on Monday (7 January), noting that the market for risk capital is "fragmented along national lines and administrative, regulatory and tax rules", making cross-border investments difficult.

"The Commission invites the member states, when reviewing existing or adopting new legislation, to enable cross-border operations and consider mutual recognition of venture capital funds." It added that the proposed solution "implies that national authorities should have mutually acceptable levels of supervision and transparency on venture capital funds". 

Venture capital funds are "vitally important for the financing of growing innovative small companies," the Commission claimed.

The EU executive cited a recent industry-funded paper, which states that venture capital funds have helped create a million new jobs between 2000 and 2004. Investments increased from €5.5bn in 1995 to reach a record €36.9bn in 2004, according to the study, carried out by the Technische Universität in Munich for the European Private Equity and Venture Capital Association.

According to the principle of mutual recognition, goods which are lawfully produced in one EU member state cannot be banned from sale on the territory of another, even if their technical or quality specifications differ. The principle was introduced by a landmark judgement of the European Court of Justice, the Cassis de Dijon case, in 1979 and has been instrumental in creating a single market for goods across the EU.