Your organisation:

legal status and financial capacity

Elena SIMOVAHead of Sector REA C3.002

Financial Validation of Participants

Coordinators’ Day on Grant Agreement

Preparation

19 September 2019

REA Validation Services (REA VS)

• Verifies the legal existence and the legal status of the participants.

• Validates the Legal Entity Appointed Representatives (LEAR).

• Prepares the Financial Capacity Assessment.

• Validates legal changes of validated participants requested by LEARs.

• Performs ex-post status verifications (e.g. SME checks).

• Assesses Universal Takeovers of validated participants.

• Creates Legal Entities and Bank Account Files in cooperation with DG BUDG.

Registration of an organization (at proposal stage)

Search a registered

organization New registration

Identification (duplicate check)

Organisation data

Contact info

(e.g. Legal name, VAT number)

(e.g. Legal form, legal address)

(e.g. Name, address, phone of the “self-registrant”

New Participant Identification Code (PIC) in a “declared” status

How to register a participant

Registration completed

Registration data are verified by REA Validation Servicesbefore the signature of the Grant Agreement or theContract.

The Legal Validation of a Participant in the SingleElectronic Data Interchange Area (SEDIA) is done once,when the entity has to sign its first contract or grantagreement.

It is reused for future participations in EU grant andprocurement actions.

Legal Validation

• Validation is always performed on the basis ofsupporting documents, in accordance to EU Financialregulation and the Rules on Legal Entity Validation, LEARAppointment and Financial Capacity Assessment for EUGrants and Tenders.

• In H2020 Validation is required for all beneficiaries andlinked third parties. PICs of third parties, frequentlyincluded in the consortium during the GAP, must beintroduced in the Participant Portal Grant ManagementService (PPGMS).

Validation Rules

Supporting documents

• Official: delivered by official national authorities. They can

NOT be replaced by self-declarations or by sworn or solemn statements before a judicial or administrative authorities, notaries or public officers

Certain documents (e.g. registration extract, VAT extract) must be not older than 6 months

Uploaded by the participant (as scanned versions) via the Participant Register

In any of the official EU languages. Free translation in English is required for non EU languages

•

‘Legal entity’ means any natural or legal person created andrecognised as such under national law or international law, that haslegal personality and that may, acting in its own name, exercise rightsand be subject to obligations.

If the organisation does not have legal personality, it is validatedonly if:

has representatives who have the capacity to undertake legalobligations on its behalf and

can offer guarantees for protecting the EU’s financial interestsequivalent to those offered by legal persons.

If the organisation does not have its own independent legal personalityand does not meet the above criteria, it must use the PIC of the legalentity to which it is associated (e.g. University Department, Branch ofa multinational company).

Legal Entity existence and independence

Supporting documents define the legal status of theapplicant. Why is legal status important ?

o Programmes may have differences in terms of fundingrates (e.g. non-profit entities)

o programmes/calls may establish specific eligibilitycriteria (e.g. SME)

o 'public bodies', 'international organisations' are bydefault exempted from the Financial CapacityAssessment. 'Secondary and/or higher educationestablishments' are also exempted in H2020.

Legal Status

Legal entities form (template to be completed, dated, stamped and signed)

VAT extract (< 6 months)

If not registered for VAT – proof of VAT exemption

Registration extract (<6 months) – for private law bodies

Law/decree/decision – for public law bodies

Treaty – for international organisations

Statutes – for non-profit organisations

Legal Validation Documents

In the Single Electronic Data Interchange Area, the appointment of the Legal Entity Appointed Representative (LEAR) is mandatory.

The LEAR:

• Notifies the EU of changes in legal data/status;

• Submits legal and financial documents if required;

• Nominates 'Account Administrators' and individualsauthorised to sign:

Contracts/grant agreements and their amendments (Legal signatories i.e. LSIGN)

Financial statements (Financial signatories, i.e. FSIGN)

• Informs own staff about the organisation's PIC

LEAR role and duties

All communications to -and from- participants is exclusively managed through the Participant Register.

Communication(e.g. Request to submit documents or to appoint a LEAR)

Messages are notified via e-mail to the contact person (i.e. self-registrant or the appointed LEAR)

How to appoint a LEAR

EU Login

Request to appoint a LEAR

Message in the activity log

LEAR key info

Name and email shall match name and email of the linked EU Login account

New LEAR or new email = new EU Login account

LEAR data

Mobile phone number to receive PIN code

PIN code sent by service-desk via postal mail

Urgent request for PIN code:

• send an email to EC-SEDIA-

SUPPORT@ec.europa.eu OR

• Provide phone number (used only for PIN code)

1. LEAR appointment letter (duly signed by both the legalrepresentative and the LEAR).

2. Declaration of Consent to the use and the terms of theFunding and Tenders Portal (duly signed by legalrepresentative)

3. Official proof of identity (ID-card, passport, with photo andsignature) of the legal representative and the LEAR

4. Proof of empowerment of the legal representative

Scanned version of these documents shall be uploadedin the Participant Register.

Originals of 1 and 2 must be kept in the entity's premises.

LEAR appointment documents

• In general, under H2020, the financial capacity ischecked if:

The beneficiary is a coordinator, and

The requested EU funding for the project is ≥ € 500000

• Applicants for mono-beneficiary grants are notconsidered as 'coordinators'

• A Financial Capacity Assessment can be performed onother beneficiaries at the request of the EU service incharge of the project

Financial Capacity Assessment

• At proposal stage, coordinators are asked to self-declare theirfinancial capacity. A self-check tool available in the PP embedsthe same calculations of the formal FCA. Those results are notbinding for EU services and, if needed, a FCA will be performed bythe REA VS against supporting documents

• For H2020, 5* Ratios are displayed online (Liquidity, FinancialAutonomy, Profitability (2), Solvency) with a specific (0-2) andglobal (0-10) score and result (Insufficient, Weak, Acceptable,Good).

• Final decision on the participation of an applicant with a 'weak'FCA result (based on the ratios) is taken by the EU servicesresponsible for each individual project.

* Only two ratios are applicable for natural persons

FCA assessment

FCA Supporting documents

Balance sheet

Profit and loss account

Explanatory notes and/or annexes that form part of the above financial statements (if available).

External audit report if requested EU-contribution exceeds € 750.000

For the last 2 available financial years (dated and signed)

Once completed, the assessment remains valid for 18 months

Validation StartsREA VS requestsValidation documents

Submission of documents is complete?

Legal Validation + LEAR Extended Mandate +

FCA preparation

REA VS requests missing supporting documents

Participant replies?

REA VS sends reminders to the Participant

Yes

If the participant is non responsive the PIC is set to "sleeping" status in the Participant Register and REA VS informs the Operational Unit (POs)

POs contact the Participant to request documents' upload

YesNo

No

Validation Services Workflows

• If needed, during the Grant Agreement Preparation,Participant can search for available bank account(s) inPPGMS. If no account exists, PPGMS displays anexplanatory message on how to request the validation of aBA.

• Coordinator contact shall inform the LEAR to start BA entry request (upload of documents via the Participant Register).

• REA VS will launch BA entry creation and informs LEAR when the Bank Account File is completed

Bank Accounts

• Rules on Legal Validation, LEAR appointment and financial capacity assessment http://ec.europa.eu/research/participants/data/ref/h2020/grants_manual/lev/h2020-rules-lev-lear-fvc_en.pdf

• Online Manual, IT How to, IT and RES Helpdesk and specific FAQs on the Funding and Tender Portal

https://ec.europa.eu/info/funding-tenders/opportunities/portal/screen/support/support

Guidance Documents

0

1-5

6-10

11-25

26-50

51-100

101-250

>250

~7500 Entities validated in 143 countries

2018 Validation Map

Thank you for your attention!

Questions?