ANNEX C – RESTRICTED SECTORS

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;

(iii) shipbuilding;

(iv) steel - ECSC products;

(v) steel - non- ECSC products;

(vi) coal;

(vii) transport; and

(viii) the production of agricultural and fisheries products listed in Annex I referred to in Article 32 of the EC Treaty.

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.

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