Europe Climbs On Regulation Easing Bandwagon

Regulatory burdens may be easing in the United States. Now Europe is beginning to lower barriers to the free flow of venture capital on the continent.

The changes both here and abroad appear to be for the better. They are being taken in measured steps, though some key decisions have yet to be made.

According to Bloomberg, the European Commission is examining a proposal to allow venture funds raised in one of the bloc’s 27 nations to invest in any other country without re-registering.

The commission last year granted private-equity firms this freedom to invest with a single registration as long as they agree to transparency rules.

A quick response from the European Private Equity and Venture Capital Association noted that the change would permit greater flows of capital to small businesses while lowering costs and decreasing risk.

The so-called venture capital passport for funds would mean developing a “common statute” honored across the EU and could be in place by the end of 2012, the commission said.

The proposed change comes as U.S. regulators at the Securities and Exchange Commission re-examine the 500-investor threshold that forces private companies to release financial information. It appears the level could be raised as companies, such as Facebook, are poised to collide with it. The SEC also is looking at changing restrictions on IPO-related communications, the general solicitation ban and rules regarding special purpose vehicles, which let investors pool their money for private company investments without becoming registered shareholders.

With so much change ahead, there is a terrific doctoral thesis in the making. A timely study will be to examine what impact this has all had.