European Commission: No dividends, bonuses for companies tapping into Coronavirus funds
Leaked documents from the European Commission seen by the Guardian show the EU’s executive body is moving to bar companies tapping into the EU share-buying programs during the coronavirus pandemic from paying bonuses, dividends and share buybacks.
Restrictions are expected to be imposed on companies where national governments have taken equity stakes as an emergency measure to stave off bankruptcies. The rule is pending approval from the 27 Member States and would apply to the UK as well under the Brexit transition period.
For the duration of the program, companies benefitting from state aid in the form of equity stakes would equally be barred from “aggressive commercial expansion financed by state aid”, such as embarking on M&As. “Under no circumstances, bonuses, other variable or comparable remuneration elements shall be paid,” the document states.
The document comes from the EU competition commissioner Margrethe Vestager’s office and comes on the back of frantic efforts to amend swathes of EU legislation to permit state-aid during the coronavirus pandemic. Rules on providing financial lifelines to companies, normally seen as in breach of EU competition law, have already been relaxed.
The Temporary State Aid Framework, adopted on March 19th, pledges “full flexibility” on EU state aid rules in order to allow Member States take action and support businesses affected by the pandemic. The first scheme approved by the Commission was drafted by France and are expected to mobilise €300 billion of liquidity support for companies.
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