Subject: FW: Inquiry Regarding the Application of EU Regulation 651/2014 and Harmonization of Requirements in the Baltic Region
From: "Kersti Kunder" <[email-masked]>
To: "LIAA Invest" <[email-masked]>
Cc: <[email-masked]>, <[email-masked]>, <[email-masked]>, <[email-masked]>, <[email-masked]>, <[email-masked]>, <[email-masked]>, <[email-masked]>, <[email-masked]>, <[email-masked]>
Date: Mon, 14 Oct 2024 17:56:59 +0300

Dear Colleagues

Thank You for Your questions, what a great initiative to standardize 
practices between member states!

I think we can have an open discussion here.

Our answers from Estonian Business and Innovation Agency (Enterprise 
Estonia):

1.	What financial information do you require from company groups to ensure 
that they are not classified as "undertakings in difficulty"?-  We use the 
last approved annual report. Estonian companies provide their annual reports 
to the Estonian Business register by 30 of June every year, and reports are 
accessible to all: Search for a legal person | e-Äriregister (rik.ee) 
<https://ariregister.rik.ee/eng>

However – if the company is in difficuties based on annual report, we ask 
them to provide a more recent report which would show that they are not in 
difficulties any more.

If there are foreign companies in the group, we ask applicant to provide 
their last approved annual reports.

2.	Do you assess related companies, such as other companies owned by the 
parent company, using the parent company’s consolidated financial 
statements, or do you require individual financial reports from each company 
within the group?

– can be done  both ways. At first we  evaluate on the applicant level and 
then on the group level. If we have consolidated data, then group level will 
be evaluated on the basis of consolidated data. If the applicant does not 
provide us consolidated data, then we take annual reports from Business 
register or ask from applicant all the group members annual reports and 
evaluate them separately.

We also assess all companies owned through natural person who has majority 
stake in other companies (over 50% shares).

We do not consider partner companies (25-50% shares) to be part of the group 
when determing undertakings in difficulties.

European Comission has explained:

As already set out in replies to earlier questions, the other criteria of 
Article 2(18) for determining whether an undertaking is in difficulty need 
to be assessed at both, the level of the legal entity applying for aid and 
the level of the group to which such entity belongs. The assessment at the 
level of the group should be carried out on the basis of consolidated 
financial statements. If such consolidated financial statements are not 
available it is possible to carry out a plausibility check of the financial 
situation of the group on the basis of stand-alone financial statements of 
the individual entities forming the group, by adding up these stand alone 
financial statements. It is not necessary to assess separately individual 
entities forming a group.

We don`t have regulation or rules written down in one document at the moment 
unfortunately regarding UID. But we do use EC User guide to the SME 
Definition.

I hope this is information is useful.

We have some questions about your practises regarding the size of the 
company:

1.	How you determine the number of employees – do you count members of the 
management board,  owners (shareholders), members of the supervisory board? 
They are usually not counted in annual reports.
2.	In case one natural person owns the majority shares in company A and also 
in companies B and C – do you consider all these companies as linked 
companies even if they do not operate on the same or adjacent markets?
3.	If the majority of shares is owned by more individuals (acting jointly) – 
do you consider the enterprises involved as linked if they operate on the 
same or adjacent markets?
4.	Do you count same family members acting jointly and having several 
companies as single economic entity (a group)? T.ex. if individuals acting 
jointly have same surnames, how do you determine they are relatives and 
acting jointly?
5.	When determing the size of the group, do you have some exceptions for 
some group members? T.ex If an aid applicant (company) is part of a larger 
group, but he has different field of activity and you don`t count this 
applicant to group and he may be small enterprise although group is large 
enterprise – is it possible?

Hope all of you find time to answer!

PS! Can we save your contacts in case we have further questions regarding 
similar questions about UID and defining the size of the company?

Best regards

Kersti Kunder

Senior Consultant

Reporting and Information

Grant Centre

Estonian Business and Innovation Agency (Enterprise Estonia)

+372 5615 6549

+372 627 9748

[email-masked] <mailto:[email-masked]>

Sepise 7, 11415 Tallinn

 <http://www.eis.ee/> www.eis.ee

From: LIAA Invest <[email-masked] <mailto:[email-masked]> >
Sent: Friday, October 11, 2024 3:08 PM
To: Klienditeenindus <[email-masked] 
<mailto:[email-masked]> >; [email-masked] 
<mailto:[email-masked]> ; 
<mailto:[email-masked]> [email-masked]; 
[email-masked] <mailto:[email-masked]> ; [email-masked] 
<mailto:[email-masked]>
Cc: [email-masked] <mailto:[email-masked]> ;  <mailto:[email-masked]> 
[email-masked]; [email-masked] <mailto:[email-masked]> ; 
[email-masked] <mailto:[email-masked]> ; Andris Blumbahs 
<[email-masked] <mailto:[email-masked]> >; Eva 
Kalniņa <[email-masked] <mailto:[email-masked]> >
Subject: Inquiry Regarding the Application of EU Regulation 651/2014 and 
Harmonization of Requirements in the Baltic Region

Dear Colleagues,

I hope this message finds you well.

On behalf of the Investment and Development Agency of Latvia (LIAA), I would 
like to inquire about the current practices regarding the financial 
evaluation of company groups and partner enterprises in your country, 
particularly concerning the application of EU Regulation 651/2014 on the 
status of undertakings in difficulty.

We have identified that EU Member States interpret Commission Regulation 
(EU) No 651/2014 of 17 June 2014 , which declares certain categories of aid 
compatible with the internal market in accordance with Articles 107 and 108 
of the Treaty, in different ways. The document relates to Article 18(2) of 
the EEA Agreement. In particular, we are interested in understanding how 
your country applies this regulation when evaluating large international 
company groups whose subsidiaries apply for support. 
<https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32014R0651> 
https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32014R0651

To ensure a harmonized application of the regulation, we kindly request 
clarification on the following:

1.	What financial information do you require from company groups to ensure 
that they are not classified as "undertakings in difficulty"?

2.	Do you assess related companies, such as other companies owned by the 
parent company, using the parent company’s consolidated financial 
statements, or do you require individual financial reports from each company 
within the group?

Additionally, we would appreciate if you could share any relevant materials 
or guidelines outlining the evaluation principles used in your country. 
Please feel free to send them in your local language if necessary, as we can 
arrange for translation.

We look forward to receiving your response and learning more about the 
approaches taken by your institutions in this area.

Eva Kalniņa

Projektu attīstības nodaļa

Investīciju projektu departaments

Pērses iela 2, Rīga, LV-1442

Mob. Tālr.: +371 26414932

 <http://www.liaa.gov.lv/> liaa.gov.lv

latvia.eu

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