By adopting the Act on the Establishment of the Economic Stabilization Fund of March 27, 2020, the German Parliament and the Federal Council established the Economic Stabilization Fund (“ESF”) as a special fund to stabilize the real economy in times of the COVID-19 pandemic. The ESF is intended to support German companies in the real economy suffering from the consequences of the COVID-19 pandemic by providing liquidity and capital support. We already discussed this topic – and numerous changes in corporate law for stabilization measures by the ESF – in our article “Establishing an Economic Stabilization Fund for the real economy“ on May 19, 2020.
On July 8, 2020, the EU Commission approved the central set of rules to grant and implement stabilization measures by the ESF. As a consequence, recapitalization measures of the ESF totaling up to EUR 250 million and ESF guarantees no longer have to be notified individually with the EU Commission. Applicant companies are therefore no longer subject to the sometimes time-consuming notification procedure.
Applications for liquidity and capital support may be submitted to the Federal Ministry for Economic Affairs and Energy. The implementing regulation required for processing of and deciding on applications is to be published shortly. The Federal Ministry for Economic Affairs and Energy has already made an application checklist available and work is underway on applications. The currently expected processing time is several weeks.
Exemptions may be granted on a case-by-case basis for smaller companies which are of particular importance for security or the economy.
In addition to the general eligibility criteria, the following criteria will be examined when deciding on applications:
Furthermore, the following conditions must be met for the granting of recapitalization:
There is no legal claim to receive support from the ESF.
The Federal Ministry for Economic Affairs and Energy clearly stipulated that the costs of the application have to be borne by the applicant in accordance with Section 19 Act on the Establishment of the Economic Stabilization Fund and the ESF cost ordinance, which is to be adopted shortly. The amount of the costs remains therefore unknown, but is expected to be close to those of state guarantees or similar measures.