ECFs will not be permitted to invest in the following sensitive sectors for which the guidelines on State Aid and Risk Capital do not apply:
(i) synthetic fibres and yarns;
(ii) motor vehicles;
(iv) steel - ECSC products;
(v) steel - non- ECSC products;
(vii) transport; and
(viii) the production of agricultural and fisheries products listed in Annex I referred to in Article 32 of the EC Treaty.
Guidance for Prospective ECF Managers
ANNEX D – DEFINITION OF “QUALIFYING TRADE”
Most trades qualify, provided that they are conducted on a commercial basis with a view to making profits. A trade will not qualify if one or more excluded activities together make up a 'substantial part' of that trade18. The main excluded activities are:
dealing in land, financial instruments, or in goods other than in the course of an ordinary trade of retail or wholesale distribution;
financial activities, property development, or providing legal or accountancy services;
leasing (including letting assets on hire, except in the case of certain ship-chartering activities);
receiving royalties or licence fees, except where these arise from an intangible asset such as a patent or know-how, most or all of which has been created by the company (or one of its subsidiaries);
farming, market gardening, or forestry;
operating or managing hotels, guest houses, hostels, or nursing or residential care homes; and
providing services to another company in certain circumstances where the other company's trade consists to a substantial extent in excluded activities.
18 This will depend on the relevant facts and circumstances, but it is generally considered that an activity makes up a „substantial part‟ where it amounts to more than 20 per cent of the trade.