Division 4.2.2 Protection measuresF1

In compliance with article 38(7) of the FP7 RP, the Participants' Guarantee Fund (PGF) shall be considered as a sufficient guarantee under the FR. As a consequence, no additional financial guarantee or security (e.g. reduction of pre-financing, trust accounts, blocked accounts, financial guarantees from a bank/financial institution/mother company, etc.) may be requested from the participants or imposed on them.

Notwithstanding the previous paragraph, if the application of protection measures is deemed necessary, one or several protection measures, as listed below, may be implemented:

• A natural person cannot be the coordinator of an indirect action.

• A legal entity with a ‘weak’ financial capacity following a more in-depth analysis based on the 5 financial ratios (Liquidity, Financial Autonomy, Profitability 1, Profitability 2 and Solvency) as described in section 4.2.1 shall not be accepted as a coordinator by the services implementing FP7. This legal entity will nonetheless be able to be a participant.

• For any legal entity and without prejudice to the provisions of the respective Grant Agreement, the services implementing FP7 reserve the right to systematically initiate, during the implementation of the relating FP7 indirect action, a financial audit, which may be accompanied if necessary by a technical audit, carried out by the services implementing FP7 (including OLAF), or its duly authorised representatives, or by the Court of Auditors, if:

  • it is considered as ‘weak’ after a more in-depth financial analysis of its financial viability; or

  • the result of its co-financing capacity check is ‘weak’ (if relevant); or

  • the results obtained through Equity Flag or Financial Exposure Flag are ‘weak’; or

  • an audit report of the accounts has been issued with serious qualification;

  • it has been subject to substantial financial findings relating to its financial capacity following a financial audit carried out by the Commission (including OLAF), the Court of Auditors or their duly authorised representatives within the last 2 years; or

  • if there are findings of serious administrative errors or fraud involving the entity; or the entity is subject to pending legal procedures or judicial proceedings for serious administrative errors or fraud; or the entity is subject to an attachment order or significant recovery order for an outstanding amount issued by the Commission on which the payment is significantly overdue.

• Any legal entity with a ‘weak’ financial capacity will be subject to a reinforced monitoring during the implementation of the project (e.g.: appropriate additional reviews by the services implementing FP7 and/or independent external expert(s), including on the spot check(s)). The authorising officer could always exclude a ‘weak’ entity from being coordinator of an indirect action.

The services implementing FP7 will immediately inform:

• the coordinator of the consortium that, due to its ‘insufficient’ financial capacity, (a) legal entity(ies) involved in the proposal cannot participate in the FP7 indirect action. The coordinator will inform the consortium;

• the relevant applicant(s) of an FP7 indirect action of the results and consequences, especially any necessary protection measure, of the verification of its (their) financial capacity, if the latter is ‘weak’. However, this shall not allow the consortium to exclude this (these) applicant(s) for that single reason.