The schemes were notified to the European Commission as state aids in 2007. The Government is legally obliged to demonstrate that the rules governing the schemes comply with the appropriate guidelines and treaties.
Legislation implementing changes to the schemes and announced in the Budget will be introduced in the Finance Bill 2010, to provide time for consultation with industry over the detail.
The Government says the changes will increase use of the schemes, providing greater investment finance to small companies seeking to grow.
Exchequer Secretary, Angela Eagle MP, says: “This is excellent news for the venture capital industry, particularly at this challenging time. State aid approval of the three venture capital schemes allows the Government to provide certainty over the future of the schemes. The Government is confident that they will continue to encourage substantial investment into small companies which is vital to our economic recovery.”
EISA director Martin Sherwood says: “EIS schemes are a vital source of funding for the UK’s SME sector, particularly at a time when access to bank debt is historically low.
“Measures announced in last week’s Budget helped maintain their attractiveness from an investment point of view, while the granting of state aid approval provide certainty to the venture capital industry, investors and small companies over the future of the schemes.”