(Reference for a preliminary ruling– Structural Funds– European Regional Development Fund (ERDF)– Regulation (EU) No1303/2013– Co-financing programme– State aid– Regulation (EU) No651/2014

The Law on the Management of the Funds

19The implementation of EU funds in Latvia is governed by the Eiropas Savienības struktūrfondu un Kohēzijas fonda2014.-2020. gada plānošanas perioda vadības likums (Law on the Management of the European Union Structural Funds and Cohesion Fund for the 2014-2020 Programming Period) (‘Law on the Management of the Funds’). Article21 of that law, entitled ‘Selection of project applications’, provides as follows:

‘(1)Procedures for the selection of project applications shall be:

1)open, where project applicants compete on equal terms for their project applications to be approved and to be granted funding from a European Union fund;…

…

(2)The liaison authority shall select project applications in accordance with the methods for selecting project applications and the regulations on the selection of project applications. The regulations on the selection of project applications shall be drawn up by the liaison authority and approved by it in conjunction with the responsible authority and the managing authority.

…

(5)Project applicants shall prepare and submit their project applications in accordance with the requirements of the regulations on the selection of project applications.

…’

20Article25 of the Law on the Management of the Funds, entitled ‘Approval, conditional approval or rejection of project applications under open procedures for the selection of projects’, provides in paragraphs3 and 4 thereof:

‘(3)A decision to reject a project application shall be made where at least one of the following situations arises:

…

2)The project application does not satisfy the evaluation criteria, and correction of the defects in accordance with paragraph4 of this article would affect the substance of the project application.

…

(4)A decision to grant a project application conditional approval shall be made where the project applicant must take certain actions specified by the liaison authority in order for the project application to satisfy the evaluation criteria in full and for the project to be implemented properly. The decision shall set out the relevant conditions, and compliance with those conditions shall be verified having regard to the regulations on the selection of project applications. If any of the conditions set out in that decision is not satisfied, or is not satisfied within the deadline laid down in the decision, the project application shall be deemed to have been rejected.’

21Article30 of that law, entitled ‘Clarification of project applications’, provides:

‘During the period between the submission of a project application and the decision to approve it, to grant conditional approval or to reject it, no further clarification of the project application may be submitted.’

The Implementing Decree

22The aid measure at issue in the main proceedings is governed by Ministru kabineta noteikumi Nr.612 ‘Darbības programmas “Izaugsme un nodarbinātība”3.1.1. specifiskā atbalsta mērķa “Sekmēt MVK izveidi un attīstību, īpaši apstrādes rūpniecībā un RIS3 prioritārajās nozarēs”3.1.1.5. pasākuma “Atbalsts ieguldījumiem ražošanas telpu un infrastruktūras izveidei vai rekonstrukcijai” otrās projektu iesniegumu atlases kārtas īstenošanas noteikumi’ (Decree No612 of the Council of Ministers laying down the regulations for implementing Phase Two of the project application selection procedure for the ‘Growth and Employment’ operational programme, specific support objective 3.1.1 ‘To promote the creation and development of SMEs, in particular in the manufacturing and [regional Research and Innovation Strategies for Smart Specialisation (RIS3)] priority sectors’, measure 3.1.1.5 ‘Support for investment in the establishment or reconstruction of production premises and infrastructure’) of 25September 2018 (Latvijas Vēstnesis, 2018, No101; ‘the Implementing Decree’). Article7 of the Implementing Decree is worded as follows:

‘Phase Two of the project application selection procedure for the measure shall be implemented by means of an open procedure for the selection of project applications.’

23Under Article15 of the Implementing Decree:

‘A project shall not be eligible for funding where:

…

15.3.The project applicant is classified as an undertaking in difficulty within the meaning of Article2(18) of Commission Regulation No651/2014;

…’

The regulations on the selection of project applications

24The practical aspects of the procedure for the selection of project applications are governed by the regulations on the selection of project applications, drafted by the Centrālā finanšu un līgumu aģentūra (Central Finance and Contracting Agency) (‘the competent national agency’), and by the annexes thereto.

25Paragraph6 of Section II of Annex5 to those regulations, entitled ‘Methodology for applying the project application evaluation criteria’, provides:

‘An “unconditional positive” evaluation will be awarded where the project applicant is not an economic operator in difficulty. The classification [of a project applicant] as an undertaking in difficulty at the time of the decision on the grant of the aid must be made on an objective basis, using verifiable and reliable information about the project applicant and related undertakings:

(a)The information in the most recent publicly available final annual report will be checked.

(b)Where an interim activity report approved by a sworn auditor is submitted, the information in that report will be used as the basis for determining whether the undertaking is in difficulty.

(c)Where the project applicant refers to publicly available ([that is to say], verifiable) information concerning an increase in share capital undertaken after the most recent final annual report, that information will be taken into account where it is accompanied by an interim activity report approved by a sworn auditor.

…

A “conditional positive” evaluation will be awarded where the information submitted is incomplete or not sufficiently precise. The project applicant will be invited to provide further clarification of the information submitted. Clarification is permitted only in respect of technical, arithmetical and drafting issues.…’

The Commercial Code

26Article12 of the Komerclikums (Commercial Code), entitled ‘Disclosure in the register’, states:

‘(1)Entries in the Commercial Register may be relied on as against third parties once they have been disclosed.…

(2)Where information which is required to be entered in the Commercial Register is not entered, or is entered but not disclosed, the information in question may not be relied on as against third parties by the person for whose benefit the information should have been entered, unless the third parties in question had knowledge thereof.

…’

27Article196 of the Commercial Code, entitled ‘Resolutions on alterations to share capital’, provides:

‘(1)Share capital may be increased or reduced only by means of a resolution, passed by a general meeting of the members, setting out the procedure for that increase or reduction.

…

(3)In the event of a resolution that share capital is to be altered, the Articles of Association must also be altered accordingly at the same time.’

28Article202 of that code, entitled ‘Applications to the Commercial Registry concerning increases in share capital’, provides as follows in paragraph3:

‘The increase in share capital shall be deemed to have occurred on the date on which the new share capital figure is entered in the Commercial Register.’