Government Decree No. 215 / 2020 Coll.
Government Decree on the implementation of certain provisions of the Act on Insurance and Financing of Exports with State Aid
Valid
Regulation
Effective from 29.04.2020
215
GOVERNMENT REGULATION
of 24 April 2020
on the implementation of certain provisions of the Act on Insurance and Financing of Exports with State Aid
The Government orders pursuant to Sections 1 (5) and 4 (5) and 4 (7) of Act No. 58 / 1995 Coll., on Insurance and Financing of Exports with State Aid and on supplementing Act No. 166 / 1993 Coll., on the Supreme Audit Office, as amended, as amended, as amended by Act No. 214 / 2020 Coll.:
Definition of terms
For the purposes of this Regulation:
(a) a lending bank a bank, a foreign bank carrying out banking activities on the territory of the Czech Republic through its branch or financial institution pursuant to the directly applicable European Union1 Regulation, irrespective of its registered office or place of registration subject to the authorisation regime of the home State and supervision of the home supervisory authority;
(b) an investment loan for innovation and improvement of production;
(c) by the recipient of a credit to an exporter, manufacturing undertaking or trading undertaking;
(d) the last accounting year of the accounting year as at 31 December 2019.
Purpose and scope of guarantees
(1) Guarantees for repayment of operating loans, working capital, innovation and improvement of the production and maintenance of business provided by credit banks to credit beneficiaries (hereinafter referred to as the "guarantee" or "guarantees") are provided for the purpose of maintaining and increasing liquidity availability for credit beneficiaries as an exceptional measure aimed at mitigating the economic and social impact of the COVID-19 pandemic.
(2) The purpose and scope of the guarantees must not exceed the definition given by the Communication from the European Commission concerning the conditions of State aid to the economy in response to the COVID-192 pandemic.
(3) The guarantee will be provided by 31 December 2021 at the latest, for commitments to repay the loan principal to one or more lending banks to the borrower up to the amount of the outstanding loan principal.
(4) Guarantees cannot be granted to business entities with the predominant economic activity of gambling, casinos and betting offices.
Conditions for granting guarantees
(1) The Export Insurance Corporation may provide a guarantee for the repayment of loans granted by credit banks to credit recipients who are facing liquidity shortages and who:
(a) have more than 250 employees over the last financial year according to the criteria laid down for the number of employees directly applicable to the European Union3), which may include employees of the controlling and controlling persons and persons controlled by the same controlling person4);
(b) demonstrate to the lending bank that the share of exports in the total annual sales of products, services and goods during the last financial year has reached at least 20% (hereinafter referred to as the "export share"), while the manufacturing undertaking or the trading undertaking demonstrates the share of exports indirectly through the export share of the exporter; the beneficiaries of loans whose main field of economic activity is accommodation will demonstrate to the lending bank, instead of the share of exports, that the share of annual revenues from the provision of services to foreign persons in the Czech Republic has reached at least 20% of the total annual revenues over the last financial year,
(c) do not benefit from another public aid instrument in connection with the COVID-19 pandemic, which is provided in the form of guarantees for loans or interest subsidies of the same underlying loan.
(2) A guarantee may be granted to the lending bank, subject to the conditions laid down in paragraph 1, and where:
(a) the lending bank shall submit to the export insurance undertaking:
1. a request from the lending bank for a guarantee, which shall include at least the identification data of the lending bank, the borrower and the connected group (1), the resulting internal rating step of the lending bank as a result of the assessment of the beneficiary of the loan on the basis of the results for the last financial year, the purpose, amount and timing of the drawdown and repayment of the loan provided, and data on any further collateral for repayment of the loan, the duration and amount of the guarantee,
2. An honest declaration by the beneficiary of the credit on the lack of liquidity, that it was not in bankruptcy on 31 December 2019 and on 12 March 2020 and has no obligation to the State, that it agrees to grant the guarantee and its terms and conditions, and that it undertakes to pay the export insurance undertaking on the basis of its call for payment to the credit bank on the basis of the guarantee and that it does not use other public support instruments under paragraph 1 (c);
3. Honorary declaration by the lending bank to verify the purpose referred to in point (c) (2);
(b) the export insurance undertaking shall, on the basis of the information and supporting documents referred to in (a), assess the creditee's creditworthiness by the lowest internal rating corresponding to B-;
(c) credit granted by the lending bank to the borrower
1. is not more than 25% of the total annual turnover of the beneficiary of the credit in 2019, where the turnover corresponds to the total annual turnover of the sale of products, the provision of services and the sale of goods for the last financial year, but at least equivalent to CZK 5 000 000, the margin of the lending bank for the loan granted does not exceed the following value for the period for which the loan is granted:
| Úvěr do 1 roku | Úvěr do 3 let | Úvěr do 6 let |
|---|---|---|
| 1,5 % p.a. | 1,75 % p.a. | 3,0 % p.a. |
2. it will be provided for the purpose of financing operating costs, working capital, expenditure on innovation and improvement of production (investment credit) and maintenance of business, and, where appropriate, on the basis of the agreement of the Export Insurance Corporation as well as on the financing of loans already granted to finance operating costs, working capital, expenditure on innovation and improvement of production and on the maintenance of business (refinancing), where proof of export orientation and export is considered to be proof of export share as referred to in paragraph 1 (b), and proof of maintenance of business and of lack of liquidity shall be considered to be an honest declaration by the beneficiary of credit under point (a) (2);
(d) the purpose of the loan granted by the lending bank shall be demonstrated to the lending bank in accordance with the usual procedures of the lending banks, with the exception of supporting the maintenance of business and liquidity shortages referred to in (c) (2);
(e) the total amount of all guarantees guaranteed by the Export Insurance Corporation secured by outstanding credit principal provided to the recipient of the credit does not exceed CZK 2 000 000 000 per beneficiary or an economically linked group (1) of the recipient of the credit, if he is a member thereof,
(f) the lending bank has committed the borrower in the credit agreement to fulfil the following obligations, which it will control during the duration of the loan within the deadlines set by the credit agreement,
1. the proper and timely payment of obligations to suppliers; payment shall be deemed to have been made properly and in a timely manner within 30 days of the due date, provided that such late payment does not exceed 10% of the balance of all liabilities due at the end of the calendar month;
2. the proper and timely payment of wages to employees;
3. the limitation of the payment of dividends or other profit participation, the prohibition on the sale of equity shares and the sale of all tangible and intangible assets in the long term or the burden on third parties' rights, without the consent of the lending bank, for the period for which the guarantee is granted;
4. other obligations necessary for the proper issue of guarantees required by the Export Insurance Corporation;
(g) the lending bank undertakes not to transfer the right of guarantee and the right of performance from the guarantee to another person and to apply the procedures laid down in Article 6 (2).
(1) The period for which the loan and guarantee are granted may amount to a maximum of six years.
(2) Before the expiry of the period referred to in paragraph 1, the lending bank may not, without the consent of the Export Insurance Corporation, apply for early repayment of the loan or make a payment of the loan guaranteed by the guarantee, or submit a proposal to initiate insolvency proceedings or join such a proposal. The beneficiary of the loan may at any time repay the loan at any time earlier, without paying any fees and costs associated with it.
(3) The Export Insurance Corporation will, on request, inform the lending banks of the use of the limit under Section 3 (2) (e).
(1) As an exhibition, the Export Insurance Corporation guarantees the fulfilment of the commitments of the beneficiaries of the credit up to the amount and under the conditions specified in the guarantee note. The recipient of the credit shall replace the export insurance company with what it has carried out under the guarantee provided.
(2) The lending bank will pay the Export Insurance Corporation a remuneration for the granting of the guarantee, the amount of which will be determined by multiplying the total amount of the credit principal granted by the credit or the total outstanding credit principal, if the credit is being repaid on an ongoing basis, and the following remuneration rates corresponding to the degree of internal rating of the beneficiary of the credit established by the Export Insurance Corporation and the corresponding year of validity of the guarantee. The remuneration rates take into account the credit quality of the borrower and the minimum rates set by the Communication from the European Commission2), which are based on the calculation of the cost of the risk to be taken. The remuneration rates correspond to the amount of the coverage of the outstanding loan principal under Section 6.
| Interní rating exportní pojišťovny | Sazba odměny za 1. rok (p.a.) | Sazba odměny za 2. a 3. rok (p.a.) | Sazba odměny za 4. až 6. rok (p.a.) |
|---|---|---|---|
| do B+ | 0,50 % | 1,00 % | 2,00 % |
| B | 0,68 % | 1,35 % | 2,00 % |
| B- | 1,30 % | 2,00 % | 2,25 % |
(3) The remuneration referred to in paragraph 2 shall be fixed for the period of validity of the guarantee, with the possibility of repayment in each year of the guarantee. If the export insurance company is to comply with the guarantee, the remuneration of the lending bank will be paid in proportion to the amount of the guarantee. If the guarantee is terminated prematurely at the request of the lending bank, the remuneration shall be determined only for the actual duration of the guarantee.
The amount of cover for outstanding credit principal
(1) A guarantee may be granted up to 90% of the credit principal if the credit rating of the credit provider by the internal rating of the Export Insurance Corporation is better than the level B-. In the case of an assessment by an internal rating of an export insurance company corresponding to grade B-, the guarantee may be provided only up to 80% of the credit principal. In the part of the loan principal for which the guarantee is not granted, the lending bank bears the credit risk.
(2) In the case of the performance of the guarantee provided, the lending bank is obliged, on the basis of the requirement of the Export Insurance Corporation to recover the credit beneficiary and the claim of the Export Insurance Corporation for compensation or in connection with the performance of the guarantee. The lending bank and the borrower are obliged to negotiate any further collateral for repayment of the credit principal in such a way as to guarantee the future claim of the Export Insurance Corporation on compensation or in connection with the performance of the guarantee. The lending bank shall provide the Export Insurance Corporation with a share of all the proceeds of further securing the repayment of the credit principal for which the Export Insurance Corporation has provided a guarantee in proportion to the risk sharing with the Export Insurance Corporation.
Procedure for the disbursement of all funds from the State Budget to the Export Insurance Corporation for the provision of guarantees, the way in which the Fund is created to cover the commitments of the guarantees provided and the way in which the fund's available balance is managed
(1) The guarantee cover fund (hereinafter referred to as "the Fund") consists of funds provided by the State budget to the Export Insurance Corporation on the basis of a government decision, revenue accruing from the guarantees issued and interest income from the investments of the Fund.
(2) The initial cash contribution to the fund amounts to CZK 4,000,000. The government shall decide on its provision from the state budget.
(3) The Government shall decide on the further provision of funds from the State Budget to the Fund on the basis of material processed by the Ministry of Industry and Trade in cooperation with the Ministry of Finance following the request of the Export Insurance Corporation to supplement the Fund submitted to the Ministry of Industry and Trade and the Ministry of Finance.
(4) The Export Insurance Corporation will submit a request for the addition of the Fund to the Ministry of Industry and Trade and to the Ministry of Finance in the event that the funds of the Fund have fallen below the amount calculated in accordance with Section 9, or within the following 6 months.
(5) In the application to supplement the Fund, the Export Insurance Corporation will justify the amount of the required funds from the State Budget by qualified estimates of expected losses from the provision of guarantees. When estimating expected losses from the provision of guarantees, the Export Insurance Corporation shall, in particular, take into account the impact of the proceeds from the guarantees issued, the interest income from the investment in the funds and the costs borne by the Fund. The costs borne by the Fund are the costs of the guarantee, the proportion of the operating costs of the Export Insurance Corporation and the costs of the investments of the Fund's funds.
(6) By 30 June each year, the Export Insurance Corporation shall inform the Ministry of Industry and Trade and the Ministry of Finance of the available balance of the Fund, which may be used to supplement other funds or share capital of the Export Insurance Corporation or to transfer it back to the State budget.
(7) The Government may decide, in the context of existing State export aid or in the context of exceptional State aid measures for exporters, producers and export oriented undertakings, on the basis of a joint proposal from the Ministry of Industry and Trade and the Ministry of Finance to supplement other funds or share capital of the Export Insurance Corporation by transferring part or all of the fund's available balance.
(8) The joint proposal shall include a detailed statement of the export insurance undertaking justifying the proposed procedure referred to in paragraph 7.
(9) The government may also decide to return some or all of the fund's available balance to the State budget.
Part of insurance capacity attributable to guarantees granted
(1) Part of the insurance capacity of the Export Insurance Corporation for 2020 for the provision of guarantees is CZK 142 000 000 000 000.
(2) Part of the insurance capacity of the Export Insurance Corporation for 2021 for the provision of guarantees is CZK 142 000 000 000 000.
(3) The part of the insurance capacity of the Export Insurance Corporation for the provision of guarantees after the expiry of the period referred to in Article 2 (3), for each subsequent year, the duration of the obligations of the Export Insurance Corporation for the provision of guarantees, is equivalent to an estimate of the amount of outstanding credit guarantees covered by guarantees already provided on 1 January of the year for which the draft State budget is submitted. The Export Insurance Corporation shall inform the Ministry of Finance, on the basis of its call, of the estimate of the amount of the part of the insurance capacity for the provision of guarantees for the year for which the draft State Budget is submitted and for the relevant medium-term perspective.
The ratio between the Fund to cover guarantee commitments and total guarantee commitments
The amount of the Fund to cover the guarantee commitments shall not fall below 8% of the total guarantee commitments.
Notification obligation
The obligation to notify the institutions of the European Union shall be fulfilled by the Ministry of Industry and Trade in accordance with the rules laid down for State aid in the form of guarantees.
Efficacy
This Regulation shall enter into force on the day of its publication.
Prime Minister:
Ing. Babiš v. r.
Deputy Prime Minister, Minister of Industry and Trade and Minister of Transport:
Doc.
(1) Regulation (EU) No 575 / 2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648 / 2012.
(2) Communication from the Commission Temporary Framework for State aid measures to support the economy in the current spread of COVID-19 (2020 / C 91 I / 01). Commission Communication amending the Temporary Framework for State aid measures to support the economy in the current spread of Coronavirus disease COVID-19 (2020 / C 112 I / 01). Commission communication amending the Temporary Framework for State aid measures to support the economy in the current spread of Coronavirus disease COVID-19 (2020 / C 164 / 03). Commission communication Third amendment of the Temporary Framework for State aid measures to support the economy in the current spread of Coronavirus disease COVID-19 (2020 / C 218 / 03). Commission communication Fourth amendment of the Temporary Framework for State aid measures to support the economy in the current spread of Coronavirus disease COVID-19 and amendment of the Annex to the Commission Communication to Member States on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to short-term export credit insurance (2020 / C 340 I / 01). Commission Communication Fifth amendment of the Temporary Framework for State aid measures to support the economy in the current spread of Coronavirus disease COVID-19 and amendment of the Annex to the Commission Communication to Member States on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to short-term export credit insurance (2021 / C 34 / 06).
(3) Commission Regulation (EU) No 651 / 2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in accordance with Articles 107 and 108 of the Treaty. Commission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises (notified under document number C (2003) 1422) (2003 / 361 / EC).
4) Act No. 90 / 2012 Coll., on Companies and Cooperatives (Act on Commercial Corporations), as amended.
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Regulation Information
| Citation | Government Decree No. 215 / 2020 Coll., on the implementation of certain provisions of the Act on Insurance and Financing of Exports with State Aid |
|---|---|
| Regulation Type | Regulation |
| Author | - |
| Collection | Code of Laws |
| Date of Promulgation | 29.04.2020 |
|---|---|
| Effective from | 29.04.2020 |
| Effective until | - |
| Status | Valid |
The regulation text is for informational purposes only.
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