The Commission publishes its action plan to “reignite the entrepreneurial spirit in Europe” which includes a focus on a second chance for honest entrepreneurs (working with the Member States to reduce the duration and cost of bankruptcy procedures and to make it easier for entrepreneurs to start again) and on creating better opportunities for specific groups that are underrepresented (women, young people, older people and migrants).
Unleashing Europe's entrepreneurial potential to bring back growth
Export pdf , word Brussels, 9 January 2013
To return to growth and higher levels of employment, Europe needs more entrepreneurs. With 4 million new jobs created every year, new companies, especially small and medium sized enterprises (SMEs), create the most new jobs in Europe. Therefore, European Commission Vice President Antonio Tajani presented today an action plan to support entrepreneurs and revolutionise entrepreneurial culture in Europe. The plan stresses the key role of education and training to nurture new generations of entrepreneurs, and includes specific measures to help budding entrepreneurs among young people, women, seniors, migrants, and the unemployed. The high level of EU unemployment leaves untapped human resources, especially amongst women and young people. The plan also tackles obstacles to entrepreneurship such as ambitious measures to facilitate start-ups and new businesses, make transfers of business ownership more successful, improve access to finance, and give honest entrepreneurs a second chance after bankruptcy.
European Commission Vice President Antonio Tajani, responsible for entrepreneurship and industry, said: "To make it very clear: more entrepreneurs mean more jobs, more innovation and more competitiveness. Becoming an entrepreneur and making a vision come true takes a lot of personal risk and effort. Entrepreneurs are the heroes of our time. Entrepreneurship is also the most powerful driver of economic growth in economic history. Therefore, we want to make entrepreneurship an attractive and accessible prospect for European citizen. This is the key message of our action plan. If we can unleash Europe's entrepreneurial potential, we can bring back growth to Europe."
MEMO/13/7 Eurobarometer Entrepreneurship 2012: Over the past three years the share of EU citizen who want to be their own boss has fallen from 45% to 37%. This drop is caused by less promising business prospects due to the current crisis.
MEMO/13/5 Entrepreneurship as a main driver for economic growth
Entrepreneurship 2020 Action Plan
Entrepreneurial education triggers increase of new companies
Between 15% and 20% of students who participate in a mini-company programme in secondary school will later start their own company, a figure that is about three to five times of that of the general population. Higher education in entrepreneurship can boost high-tech and high growth companies by supporting business ecosystems, partnerships and industrial alliances.
The plan also covers six key areas where action is needed to create an environment in which entrepreneurs can flourish and grow:
- Access to finance - besides strengthening its existing financial instruments, the Commission also proposes to create a European market for microfinance and to simplify tax structures to allow SMEs to raise funds via direct private investments (such as mini-bonds, crowd funding, and angel investments).
- Support during the crucial phases of the business lifecycle: As about 50% of companies fail in their first five years, Member States should devote greater resources to help new businesses to get through this critical period, such as management training, R&D coaching, and networking with peers, potential suppliers and clients.
- Unleash new business opportunities of the digital age: SMEs grow two to three times faster when they embrace ICT. Reinforced support for web-based start-ups and skills improvement can help both web entrepreneurs as well as more traditional businesses.
- Easier transfers of business ownership: Every year approximately 450,000 firms with 2 million employees are transferred to new owners across Europe leading to the loss of an estimated 150,000 companies with 600,000 jobs. The Commission proposes to expand the markets for enterprises and remove barriers to cross-border business transfers.
- Second chances for honest entrepreneurs after bankruptcy: By far the majority (96%) of bankruptcies are due to a string of late payments or other practical problems. Yet 'second starters' are more successful. Therefore, the Commission has just proposed to shift focus away from liquidation and to helping businesses overcome financial difficulties (IP/12/1354).
- Administrative simplification: The Commission will continue to vigorously pursue the reduction of regulatory burden.
The Commission also intends to promote entrepreneurship in specific segments of the population:
- Women's entrepreneurial potential - the fact that women only account for 34.4% of the self-employed in Europe suggests that they need more encouragement and support to become entrepreneurs.
- Senior citizens - retired business people have precious know-how that should be transferred to future generations to make it easier for them to start companies.
- As migrant populations often face difficulties in the labour market, self-employment is a precious opportunity for their economic empowerment and social inclusion.
- Business development support for unemployed should include training, business advice and mentorship.
The Commission will now closely work with Member States, business organisations and relevant stakeholders to implement the action plan in the perspective to lead Europe out of the crisis, including a roadmap with specific targets and dates to deliver tangible results.
37% of Europeans would like to be their own boss
Almost 4 out of 10 Europeans would like to be their own boss if they could. If this potential could be tapped, millions of new businesses could be added to the almost 21 million small and medium-sized enterprises (SMEs) in the EU. Various obstacles prevent Europeans from opting for self-employment, in particular fear of bankruptcy and risk of irregular income. The Flash Eurobarometer "Entrepreneurship in the EU and beyond" (FL354), presented today by European Commission Vice President Antonio Tajani, also highlights that in 2009 more Europeans (45%) wanted to be self-employed. This is a drop of 20% within three years, which reflects the current economic situation with its less promising business prospects.
Yet there are still millions who consider becoming their own boss, driven by the prospects of personal independence, better income and freedom to choose the place and time of work.
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Entrepreneurship 2020 Action Plan
The Entrepreneurship Action Plan is a blueprint for decisive action to unleash Europe's entrepreneurial potential, to remove existing obstacles and to revolutionise the culture of entrepreneurship in Europe. Investments in changing the public perception of entrepreneurs, in entrepreneurship education and to support groups that are underrepresented among entrepreneurs are indispensable if we want to create enduring change. Only if a large number of Europeans recognise an entrepreneurial career as a rewarding and attractive option will entrepreneurial activity in Europe thrivein the long term.
Draft communication [175 KB]
Citizen's summary [16 KB]
Turning failure into success: second chances for honest bankrupts
Business failure, like business creation, is part of a dynamic, healthy market. Evidence shows that by far the majority (96%) of bankruptcies are due to a string of late payments or other objective problems – they are, in other words 'honest failures', without any fraud by the entrepreneur. http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2007:0584:FIN:en:PDF Entrepreneurs are nevertheless treated by many bankruptcy laws as if they were fraudulent, having to go through complex procedures before they can be discharged. In some Member States the procedure may take such a long time that entrepreneurs will not consider another business venture ( In some Member States liquidation procedure of the business takes approximately 1-2 years. An additional 3 to 9 years are needed to start again business). In some cases they may be legally barred from starting a new enterprise for much or all of their lifetimes.
Even after a discharge, former bankrupts are stigmatised and have difficulties financing a new enterprise. Therefore, many potential entrepreneurs simply give up and do not consider trying again.
Yet research shows that 'second starters' are more successful and survive longer than average start-ups; they grow faster and employ more workers. Thus, a failure in entrepreneurship should not result in a "life sentence" prohibiting any future entrepreneurial activity but should be seen as an opportunity for learning and improving
– a viewpoint that we already today fully accept as the basis of progress in scientific research. Consequently, any move to encourage a new generation of entrepreneurs must include reassurance that, if their first idea does not fly, they will not be forever barred from trying to 'take off' again. Thus bankruptcy laws must provide for swift, efficient ways of lodging and
recovering claims for creditor enterprises, while faster and more affordable procedures for winding up businesses and for discharge from bankruptcy should be put in place. The Commission adopted last December a Communication on a new European approach to business failure and insolvency to create a more business friendly environment, for example
by improving the efficiency of national insolvency laws including the length and costs of the period of discharge from bankruptcy. As a first step to be taken, the Commission also adopted at the same time a proposal for the modernisation of the Regulation on insolvency proceedings58 which will ensure cross-border recognition of the rescue of enterprises and also includes facilitating the lodging of claims in another Member State.
The Commission will:
- Launch a public consultation so as to receive views from stakeholders on the issues identified in the Communication on a new European approach to business failure and insolvency, including on giving honest bankrupts a second chance and on shortening and aligning the "time to discharge".
The Member States are invited to:
- Reduce when possible, the discharge time and debt settlement for an honest entrepreneur after bankruptcy to a maximum of three years by 2013. 59
- Offer support services to businesses for early restructuring, advice to prevent bankruptcies and support for SMEs to restructure and re-launch.
- Provide advisory services to bankrupt entrepreneurs to manage debt and to facilitate economic and social inclusion and develop programmes for 'second starters' for mentoring, training and business networking.
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Giving honest businesses a second chance: Commission proposes modern insolvency rules
Press Release, Strasbourg, 12 December 2012
Businesses hit by the economic crisis will be thrown a lifeline under a new proposal from the European Commission today to modernise Europe’s rules on cross-border business insolvency, helping to give otherwise viable businesses a ‘second chance’. The Commission is proposing to modernise the current rules on cross border insolvency which date from 2000. Benefitting from ten years of experience, the new rules will shift focus away from liquidation and develop a new approach to helping businesses overcome financial difficulties, all the while protecting creditors' right to get their money back.
The new rules will increase the efficiency and effectiveness of cross-border insolvency proceedings, affecting an estimated 50 000 companies across the EU every year. This is a first step towards an EU "rescue and recovery" culture to help companies and individuals in financial difficulties; this is explored further in a policy communication adopted in parallel today which identifies those areas of national insolvency law which have the greatest potential to create an "unfriendly" business environment and to hamper the development of an efficient insolvency framework in the internal market.
"Businesses are essential to creating prosperity and jobs, but setting one up – and keeping it going – is tough, especially in today’s economic climate," said Vice-President Viviane Reding, the EU's Justice Commissioner. "Our current insolvency rules need updating to make it easier for viable businesses in financial difficulties to keep afloat rather than liquidating. 1.7 million jobs are lost to insolvencies every year - We want to give honest companies and the people they employ a second chance."
Vice-President Antonio Tajani, Commission or Industry and Entrepreneurship added: "Research shows that 'second starters' are more successful and survive longer than average start-ups; they grow faster and employ more workers. Thus, a failure in entrepreneurship should not result in a "life sentence" prohibiting any future entrepreneurial activity but should be seen as an opportunity for learning and improving – a viewpoint that we already today fully accept as the basis of progress in scientific research."
Insolvencies are a fact of life in a dynamic, modern economy. Around half of enterprises survive less than five years, and around 200 000 firms go bankrupt in the EU each year. This means that some 600 companies in Europe go bust every day. A quarter of these bankruptcies have a cross-border element. But evidence suggests that failed entrepreneurs learn from their mistakes and are generally more successful the second time around. Up to 18% of all entrepreneurs who go on to be successful have failed in their first venture. It is therefore essential to have modern laws and efficient procedures in place to help businesses, which have sufficient economic substance, overcome financial difficulties and to get a "second chance".
The revision of the EU Insolvency Regulation seeks to modernise the existing rules so that they support restructuring of business in difficulties and create a business-friendly environment, especially in times of financial difficulties. It will bring the Regulation, which dates from 2000 up to date with developments in national insolvency laws, in particular in terms of highly indebted firms. Creditors' interests can also be served by a restructuring, as it can mean that they are more likely to get back their money that might otherwise be lost in a winding-up.
It will also increase legal certainty, by providing clear rules to determine jurisdiction, and ensuring that when a debtor is faced with insolvency proceedings in several Member States, the courts handling the different proceedings work closely with one another. Information to creditors will be improved by obliging Member States to publish key decisions – about the opening of insolvency proceedings, for example. All in all, these changes will improve the efficiency and effectiveness of cross-border insolvency proceedings.
This proposal is also intended as a first step towards an EU "rescue and recovery" culture in cases of companies and individuals in financial difficulties more generally. The challenge is to address the debtor's financial difficulties while protecting the creditor's interests. In the future, there could be separate rules for honest entrepreneurs and for cases where the bankruptcy was fraudulent or irresponsible. In the case of honest bankruptcies, a shortened discharge period in relation to debts and the legal restrictions stemming from bankruptcy would make sure entrepreneurship does not end up as a "life-sentence" should a business go bust.
The proposal for a regulation will now pass to European Parliament and to the Council of the EU for negotiation and adoption.
Background
European Insolvency Law is laid down in Regulation (EC) No 1346/2000 on insolvency proceedings (the “Insolvency Regulation”), which has applied since 31 May 2002. The Regulation contains rules on jurisdiction, recognition and applicable law and provides for the coordination of insolvency proceedings opened in several Member States. The Regulation applies whenever the debtor has assets or creditors in more than one Member State.
On 30 March 2012, the Commission launched a public consultation on modernising EU rules governing insolvencies. Small and large businesses, self-employed individuals, insolvency practitioners, judicial authorities, public authorities, creditors, academics and the general public were invited to share their experience with insolvency and in particular cross-border insolvency.
For more information
MEMO/12/969
European Commission – Insolvency proceedings:
http://ec.europa.eu/justice/civil/commercial/insolvency/index_en.htm
Homepage of Viviane Reding, Vice-President of the European Commission and EU Commissioner for Justice:
http://ec.europa.eu/reding |
