Inquiry Regarding the Application of EU Regulation 651/2014 and Harmonization of Requirements in the Baltic Region

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)

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?

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?