Private Sector

Within this area two projects will be implemented (designated in the resticted call for proposals):

• Iindividual project of the National Capital Fund Plc. regarding support of venture capital funds
• Individual project regarding institutional and regulatory capacity building for corporate sector financial reporting and auditing at the national level 

Individual project of the National Capital Fund Plc. regarding support of venture capital funds

Objective:

Increase of the access to external sources of financing the investment implemented by small and medium-sized enterprises at early stage of growth, what will contribute to the increase in an innovation level and thus, will enhance competitive standpoint of Polish enterprises and economy as a whole. 

Total allocation: up to 53 mio Swiss francs 

Obligatory project value: Individual project amounting to 53 mio Swiss francs
 
Application procedure: Restricted call for proposal
 
Executing Agency: The National Capital Fund plc. (NCF)

Final beneficiaries:
- venture capital funds or entities managing funds,
- small and medium-sized enterprises.

Description of eligible project:
Within the relevant focus area the National Capital Fund will implement individual project concerning support of venture capital funds investing in Polish small and medium-sized enterprises (SMEs) of innovative character at early stage of growth.

Background for the implementation of the above undertaking is linked with significant difficulties in an acquisition of capital from external sources faced by SMEs in Poland. It is of utmost importance in case of highly innovative enterprises at early stages of growth. Existing capital gap observed in the financing of such initiatives derives, among others, from: lack of economic and financial history of a company (no bill history nor required collateral), restrictive requirements with regard to acquisition of a bank loan, as well as quite often lack of awareness among entrepreneurs of alternative (as compared to bank loans) means of capital acquisition. Moreover, venture capital funds operating on the market, very seldom invest in innovative undertakings of relatively low value, due to the fact that constant project management costs (incl. preparation and monitoring of a project) are high – comparable to costs appearing in case of large buy–out investments burdened with relatively lower risk of failure (profitability of large projects is relatively higher). Statistical data show small amount of venture capital funds investing in Poland in the area of above-mentioned capital gap. Such a state of play constitutes a barrier in a development of new, highly innovative enterprises, in particular those at early stage of growth. Due to the presence of market imperfections, there is justified need of public intervention, in the result of which the investors will be more eager to perform capital investments of relatively low value with regard to enterprises at early stage of growth. As a consequence, it will make it possible to increase level of investments in innovative solutions both technologic and organisational.

Project implementation scheme:

Project will be implemented on II levels:

• I level – individual project of the NCF concerning support of venture capital funds investing in SMEs.
• II level – projects prepared by the venture capital funds, submitted to the NCF  concerning support of small and medium-sized enterprises.

Due to unique character of the National Capital Fund plc. in relation to support of a venture capital type in Poland, this institution will act as a sole Executing Agency within a given activity in the priority “private sector”. The NCF will conduct selection procedure of venture capital funds in a form of an open call for bids. Having concluded verification of bids and selection of best of them, the NCF will conduct negotiations and in the next step, signature of investment contacts with the venture capital funds. After the choice of SMEs’ projects to be financed, the funds will enter with their capital into selected enterprises.

Financial resources disbursed by the NCF will be dedicated to:

1) investments in capital, quasi-capital and debt instruments of the venture capital funds, set up with a view to investing in the SMEs, in particular in SMEs at early stages of growth,

2) reimbursement of partial management costs of the venture capital funds (employment of personnel and experts as well as costs of preparation and monitoring of investment, in particular costs of analysis, due dilligence of investments, market research, etc.).

Assistance granted by the venture capital funds will be assigned for investments and management of portfolio of micro, small and medium-sized enterprises, in particular of innovative character, at early stage of growth.

In the next phase of the Project implementation, the NCF will conduct monitoring of among others, due execution of investment contracts and results of activity  of venture capital funds.
After realisation of investment strategy by the funds, there will be process of so called exit from investments.

Grant awarding procedure:

The National Capital Fund - NCF (as Executing Agency) prepared the Project outline, according to the rules and procedures set out in the Framework Agreement between the Government of the Republic of Poland and the Swiss Federal Council. The application was submitted directly to the National Co-ordination Unit (NCU) - the Ministry of Regional Development of Poland. After execution of formal and content-related appraisal of the Project outline, the NCU transmitted it along with recommendations to the Swiss side for its further appraisal. After positive decision on the Project outline, the NCF prepared the Final Project Proposal, according to the requirements indicated above and for the complete application. At this stage, the Project was a subject to appraisal by the NCU and the Swiss side.

Final decision on the grant award was taken by the donor side institutions. On May 13th, 2009 the Swiss Federal Council approved the credit for the project of the National Capital Fund. The project is the first one approved by the Polish and the Swiss sides, and it is also the biggest project within the whole Programme - it amounts to CHF 53 Mio.

Signing of project agreements and planned call for proposals

On December 16th, 2009 a ceremony of signing the project agreement with the Swiss side took place. On January 20th, 2010 the Ministry of Regional Development (acting as the National Coordination Unit) signed on its basis with a National Capital Fund relevant Project Implementation Agreement.

Individual project regarding institutional and regulatory capacity bulding for corporate sector financial reporting and auditing at the national level

Objective:

Institutional and regulatory capacity building for corporate sector financial reporting and auditing at the national level.

Total allocation: up to 10 000 000 Swiss francs

Obligatory project value: Individual project amounting to 10 000 000 Swiss francs

Application procedure: Restricted call for proposal

Grant awarding procedure:

The project has been a subject to appraisal by the Intermediate Body (the Ministry of Finance), the National Co-ordination Unit (NCU) and institutions on the Swiss side. On March 19th, 2009 the Project Outline, after formal and content-related appraisal, was forwarded by the Ministry of Finance to the National Co-ordination Unit. On April 2nd the NCU forwarded the recommended Project Outline to the Swiss side. After positive decision of the Swiss side concerning the Project Outline, the Final Project Proposal was prepared. It has been accepted conditionally by the Polish side and forwarded to the Swiss side on July 6th. The final decision was dependent on presenting by the Executive Agency modified version of objective indicators. On  July 14th the donor state accepted the project conditionally. The Executive Agency fulfilled above mentioned conditions on July 23rd. Due to the value of the project, it was also required to be accepted by the Swiss Federal Council. On September 1st, 2009 Swiss side accepted the Final Project Proposal.

On December 11th, 2009 in the Ministry of Finance a ceremony of signing the project agreement, along with the press briefing, took place. Inauguration conference concerning the presentation of the project took place the same day.


Final Beneficiaries:
- ccountants, certified auditors and their labour organisations,
- public administration responsible for balance law enforcement and its application while interact with the private sector entities,
- private companies obliged to implement balance law

Description of eligible project:
Within the relevant focus area the Execution Agency will implement individual project regarding support for accountants, certified auditors and their labour organisation as well as relevant institutions of the public administration responsible for corporate sector accounting and auditing.

Background for the implementation of the above undertaking is linked with the challenges for financial reporting and review sector in Poland, among which the most crucial are as follows:
- obligation to comply with requirements of the Directive 2006/43/WE (including implementation of public surveillance system regarding activity of certified auditors),
- planned incorporation of International Standards for the Financial Review to the EU legal system,
- growing significance and scope of the application of International Standards for the Financial Reporting.

It should be underlined that reliability and quality of financial reports elaborated by private entities are of crucial importance and quite often constitute basic condition for the acquisition of additional financial resources (simplifications in the acquisition of loans or attraction of potential investors), necessary for the performance and expansion of economic activity. 

Activities within the project:

1. Implementation of the Public Oversight System – seed funding for the Audit Oversight Commission (AOC), trainings for the AOC members and inspectors, apprenticeships, study visits and workshops hold on a regular basis on the functioning of the public oversight systems in chosen European countries (Great Britain, Germany, Switzerland itc.)
2. Modernization of the Quality Assurance System – IT system supporting inspections in audit companies, preparation of inspections methodology, apprenticeships, study visits and workshops for inspectors, peer reviewers and members of the National Supervisory Commission in the National Chamber of Statutory Auditors – supported by the community of practice and cooperation of the auditors’ professional bodies at the international level.
3. Tax and accounting –  report identifying the fields where it is possible to unify tax and accounting law in order to reduce the administrative burdens for entrepreneurs followed by the training for the tax inspectors on International Financial Reporting Standards in order to promote the use of the financial statements in their work.
4. Institutional capacity building within the financial reporting framework – trainings on International Financial Reporting Standards for accountants (recruited in cooperation with the Association of Accountants in Poland)  statutory auditors (recruited in cooperation with the National Chamber of Statutory Auditors)  and representatives of the public administration. The project comprises comprehensive trainings on all IFRS and advanced trainings on selected issues regulated by IFRS.
5. Enhancing of the regulatory capacity building - analysis and reports on the accounting and auditing markets aimed at providing data for better regulation and adjusting of the accounting and auditing law to the needs of entities applying those regulations as well as trainings on legislative techniques for public administration and the employees of the  National Chamber of Statutory Auditors and the Association of Accountants in Poland  aimed at improvement of the law drafting capacities.
6. Accounting and Auditing ROSC reports – reports based on the World Bank studies on Polish accounting and auditing system, showing qualitative changes within that framework connected with the Project implementation and with the other undertaken activities.
7. English courses for accounting and auditing experts – courses aimed at increasing the possibilities for Polish experts to take part in works of the international organizations engaged in accounting and auditing law creation and to analyze the standards issued by those organizations.
8. Implementation of the International Standards on Auditing – courses on ISA for all practicing statutory auditors and IT system for small auditing companies helping them to conduct the audit in line with ISA regulations.
9. Enhancing of the continuous professional development for accounting and auditing professionals -  help for the National Chamber of Statutory Auditors and the Association of Accountants in Poland in developing CPD’s  training curricula and e-learning systems.