(1)

Managers of qualifying social entrepreneurship funds should adopt procedures and measures to ensure that persons engaged in such business activities carry out those activities in the best interests of the qualifying social entrepreneurship funds and their investors. To achieve a harmonised level of investor protection in the Union, and to enable those managers to adopt and follow a consistent and effective practice to prevent, monitor and manage conflicts of interest, a minimum set of steps should be listed in their conflicts of interest policy. To avoid unnecessary administrative burdens while ensuring an appropriate level of investor protection, the conflicts of interest policies should be adapted to the nature, scale and complexity of the managers' businesses.

(2)

The procedures and measures set out in the conflicts of interest policies may be insufficient to protect the interests of the qualifying social entrepreneurship fund or its investors, in which case managers of qualifying social entrepreneurship funds should take necessary additional steps to protect those interests. Those steps should include informing the senior management or other competent internal body of the qualifying social entrepreneurship fund, and taking the necessary decisions or actions to act in the best interest of the qualifying social entrepreneurship fund or its investors.

(3)

Managers of qualifying social entrepreneurship funds may be active in the management of companies in which the qualifying social entrepreneurship funds invest. To prevent conflicts of interest and to ensure that those managers' voting rights are exercised for the benefit of both the qualifying social entrepreneurship fund concerned and its investors, it is necessary to specify detailed requirements in relation to the exercise of those voting rights. To ensure a sufficient standard of investor protection, managers of qualifying social entrepreneurship funds should develop adequate and effective strategies in that respect and provide upon request a summary of those strategies and the actions they have taken.

(4)

To secure the effectiveness of the disclosure of conflicts of interest, the information provided should be regularly updated. Given the inherent risks of using a website as a tool to disclose conflicts of interest, it is necessary to lay down criteria for the publication of that information.

(5)

To ensure a consistent approach as regards procedures used by managers of qualifying social entrepreneurship funds to measure the achievement of positive social impact by the qualifying portfolio undertakings, specific elements should be incorporated in those procedures. The resources used by the qualifying portfolio undertakings as well as the products and services made available by those undertakings are key indicators of positive social impact, which should therefore form an integral part of those procedures. To distinguish social enterprises from undertakings that achieve social objectives only incidentally, an evaluation of the outcomes generated by the qualifying portfolio undertakings should also form part of those procedures.

(6)

It should be ensured that the pre-contractual information provided to investors contains sufficient details about the qualifying social entrepreneurship fund. The description of the investment strategy and objectives of the qualifying social entrepreneurship fund should therefore contain descriptions of the social sectors, the geographical areas and the legal forms of the qualifying portfolio undertakings in which the qualifying social entrepreneurship fund intends to invest, as well as information on the distribution of those undertakings' profits.

(7)

Investors should be provided with the information necessary to assess the underlying methodologies used by the manager of the qualifying social entrepreneurship fund to measure social impact. The pre-contractual information should therefore specify whether the manager of the qualifying social entrepreneurship relied upon internal methodologies, or used generally accepted methodologies. Pre-contractual information should also contain a description of the main features of the methodologies, including the screening criteria, the relevant indicators and an explanation of how the manager of the qualifying social entrepreneurship fund ensures compliance with those methodologies.

(8)

Investors should be able to verify whether the manager of the qualifying social entrepreneurship fund follows the investment policy when selecting non-qualifying assets. The pre-contractual information should therefore include information about the types of non-qualifying assets in which the qualifying social entrepreneurship fund invests, investment techniques, relevant restrictions, and the sector of activity and the geographical area in which those investments are made.

(9)

In the interest of transparency, investors should be provided with the information necessary to assess the nature and extent of the business support services and the other support activities the manager of a qualifying social entrepreneurship fund is providing or arranging through third parties. Pre-contractual information on business support services and the other support activities should therefore describe the types of the services and activities it provides.

(10)

To enable managers of qualifying social entrepreneurship funds to adapt to the new requirements, the date of application of this Regulation should be deferred by six months,