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EC Considers Further Relaxation Of State Aid Rules

 |  April 7, 2020

The European Commission is considering proposals that would allow EU member States to help companies through the injection of equity, the latest move aimed at relaxing State aid rules to tackle the coronavirus crisis. 

According to the Financial Times, the new proposal calls on member States to “provide further support in equity or hybrid capital instruments” to those businesses directly affected by the pandemic, people with direct knowledge of the plan said. Under the scheme, the granting of financial support would be conditional on companies meeting certain standards of good governance and giving commitments on how they would use the aid. 

The proposal is still being drafted, but it may be announced later this week. Member States could approve the new measures shortly thereafter, though people close to the process said the timing could slip and that discussions were still ongoing. The EU’s State aid rules restrict how member States can recapitalize companies. 

“Their investments are either on strict market terms or count as aid with stringent conditions, including requiring companies to shrink and restructure their businesses,” said James Webber, a partner at Shearman & Sterling in London.

Full Content: Financial Times

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