Support for Applied Research in Smart Specialisation Growth Areas. Chapter 1 General Provisions

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1 Issuer: Minister of Education and Research Type of act: regulation Type of text: original text, consolidated text In force from: In force until: Currently in force Publication citation: RT I, , 38 Support for Applied Research in Smart Specialisation Growth Areas Passed No. 40 The Regulation is established on the basis of 14 of the Structural Assistance Act. 1. Scope Chapter 1 General Provisions (1) The Regulation regulates the conditions and procedure for granting and use of support within the framework of operation Research and development programme in smart specialisation growth areas of measure 4.2 Increasing local socio-economic impact of R&DI system and smart specialisation for development of growth areas of priority axis 4 Growth-capable entrepreneurship and research and development supporting it of the Operational Programme for Cohesion Policy Funds (2) If the support granted for the operations specified in 6 of this Regulation is State aid within the meaning of subsection 30 (1) of the Competition Act, the support shall be granted following Article 25 of Commission Regulation (EU) No. 651/2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty (OJ L 187, , pp. 1-78) (hereinafter the General Block Exemption Regulation) and the provisions of the aforesaid Regulation and of 34 2 of the Competition Act shall apply to it. (3) If the support granted for supporting the operations specified in 6 of this Regulation is de minimis aid, the support shall be granted following Commission Regulation (EU) No. 1407/2013 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid (OJ L 352, , pp. 1-8) (hereinafter: the de Minimis Aid Regulation) and the provisions of the aforesaid Regulation and of 33 of the Competition Act shall apply to it. (4) This Regulation shall not apply to an enterprise that is subject to an outstanding recovery order following a previous Commission decision declaring aid illegal and incompatible with the internal market. (5) Neither shall this Regulation apply, in addition to that specified in subsection (4) of this section, to other cases provided for in Article 1(2), (3), (4) and (5) of the General Block Exemption Regulation and in Article 1(1) of the de Minimis Aid Regulation. (6) An operation of the measure shall be implemented taking into account the objectives of the Estonian Research and Development and Innovation Strategy Knowledge-based Estonia approved by a Resolution of the Riigikogu of 22 January 2014 and National Reform Programme Estonia 2020 approved by Government of the Republic Resolution of 8 May Definitions For the purposes of this Regulation: 1) measure means within the meaning of this Regulation sub-operation Support for applied research in smart specialisation growth areas of operation Research and development programme in smart specialisation growth areas of measure 4.2 Increasing local socio-economic impact of R&DI system and smart specialisation for development of growth areas of priority axis 4 Growth-capable entrepreneurship and research and development supporting it of the Operational Programme for Cohesion Policy Funds ) research and development (hereinafter the R&D) means systematic creative work of a person undertaken by means of scientific research in order to increase the stock of knowledge of man, nature and society and their interaction and implementation of such knowledge; Support for Applied Research in Smart Specialisation Growth Areas Page 1 / 11

2 3) innovation means the utilisation of new ideas and knowledge in order to implement innovative solutions; 4) applied research means, in accordance with the General Block Exemption Regulation, the planned research or critical investigation aimed at the acquisition of new knowledge and skills for developing new products, processes or services or for bringing about a significant improvement in existing products, processes or services. It comprises the creation of components parts of complex systems, and may include the construction of prototypes in a laboratory environment or in an environment with simulated interfaces to existing systems as well as of pilot lines, when necessary for the applied research and notably for generic technology validation. For the purpose of a more detailed specification of applied research, the technology classification of the European Union research and innovation framework programme Horizon 2020 is used. Within the meaning of this Regulation, applied research is deemed to be the research that matches to levels 1-6 of the classification. The research in compliance with the classification levels 7-9 is regarded as product development; 5) product development means, in accordance with the General Block Exemption Regulation, acquiring, combining, shaping and using existing scientific, technological, business and other relevant knowledge and skills with the aim of developing new or improved products, processes or services. This may also include, for example, activities aiming at the conceptual definition, planning and documentation of new products, processes or services. Product development may comprise prototyping, demonstrating, piloting, testing and validation of new or improved products, processes or services in environments representative of real life operating conditions where the primary objective is to make further technical improvements on products, processes or services that are not substantially set. This may include the development of a commercially usable prototype or pilot that is necessarily the final commercial product and that is too expensive to produce for it to be used only for demonstration and validation purposes. Product development does not include routine or periodic changes made to existing products, production lines, manufacturing processes, services and other operations in progress, even if those changes may represent improvements. Product development is implementation or research the result of which places to levels 7-9 of the technology classification of Horizon 2020 ; 6) smart specialisation growth areas (hereinafter the growth areas) means the growth areas determined in the Estonian Research and Development and Innovation Strategy Knowledge-based Estonia where establishments have higher than the average growth potential and an opportunity to achieve competitive advantage through investments in research and development: information and communication technology (ICT, horizontally through other sectors), health technologies and services, and more effective use of resources. For the purpose of a more detailed specification of the internal subareas of the selected growth areas, the recorded decisions and recommendations of the smart specialisation steering committee formed by Directive No of the Minister of Economic Affairs and Communications of 10 February 2014 shall be taken into account; 7) small enterprise means, in accordance with Article 2 of Annex I to the General Block Exemption Regulation, such a company that employs fewer than 50 persons and whose annual turnover and/or annual balance sheet total does not exceed 10 million euros; 8) medium-sized enterprise means, in accordance with Article 2 of Annex I to the General Block Exemption Regulation, such a company that employs fewer than 250 persons and has an annual turnover not exceeding 50 million euros, and/or an annual balance sheet total not exceeding 43 million euros; 9) large enterprise means an enterprise that is not in compliance with the criteria provided for in Article 2 of Annex I to the General Block Exemption Regulation; 10) measure steering committee means the directing body that is formed by the Ministry of Education and Research for planning, coordination and evaluation of the operations to be implemented under operation Research and development programme in smart specialisation growth areas of the Operational Programme for Cohesion Policy Funds ; 11) smart specialisation steering committee means the assembly established by Directive No of the Minister of Economic Affairs and Communications of 10 February 2014, which consists of representatives of ministries, the Government Office, the Universities Estonia and enterprises. The function of the steering committee is to monitor the fulfilment of and moving towards the established objectives of smart specialisation and, if necessary, make proposals for amendments to measures and operations of the strategies or initiate amendment of the strategies; 12) public research and development institution, i.e. public R&D institution, as defined in the context of this Regulation means the universities, public research and development institutions and research and development institutions founded by the state, institutions of professional higher education of the state and institutions of higher education operating within the composition of foundations established by the state as well as positively evaluated private research and development institutions, except those that have received support on the basis of Regulation No. 89 of the Minister of Foreign Trade and Entrepreneurship of 22 October 2014 Conditions for Support for Technology Development Centres ; 13) partner means an establishment pursuant to subsection 10 (1) that is to be involved in the project and that is itself not an applicant, but participates in ordering applied research or product development to be implemented on the basis of a contract. 3. Objectives and expected results of granting support Support for Applied Research in Smart Specialisation Growth Areas Page 2 / 11

3 (1) The objectives of granting support are, following the Estonian Research and Development and Innovation Strategy Knowledge-based Estonia ,: 1) to contribute to the financing of applied research and product development to be carried out in the interests of enterprises in public R&D institutions; 2) to increase the motivation and readiness of Estonian public R&D institutions for carrying out applied research and product development projects necessary for entrepreneurship in growth areas; 3) to foster knowledge transfer between establishments and Estonian public R&D institutions. (2) As a result of granting support: 1) the Estonian research and development functions in the interests of Estonia s society and economy and the research and development and innovation system supports making the structure of the economy more knowledgeintensive; 2) Estonian public R&D institutions engage in close cooperation with establishments. As a result of implementation of applied research, the number and performance of cooperation projects of R&D institutions and establishments will increase and establishments receive the information, know-how and technological solutions necessary for further development of the product/service. As a result of product development, establishments can have the prototype of their product/service tested in the operational environment, elaborate and qualify systems and test the product/service in the actually existing form in the operational environment. 4. Filing a challenge A challenge proceeding is required to be completed before filing an action with the administrative court upon challenging a decision or act of the implementing body or implementing authority in accordance with 51 of the Structural Assistance Act. If the challenge is filed against an act or decision of the implementing body, the challenge shall be filed through the implementing body with the implementing authority. A challenge shall be adjudicated within 30 calendar days of the filing of the challenge with the authority adjudicating the challenge. The term for adjudicating the challenge may be extended in accordance with the procedure provided for in the Administrative Procedure Act. 5. Management of measure (1) The implementing authority is, in accordance with the list approved by Government of the Republic Order No. 297 of 4 July 2014 Approval of List of Measures of Structural Assistance of the Period , the Ministry of Education and Research (hereinafter the implementing authority). (2) The implementing body is, in accordance with the list approved by Government of the Republic Order No. 557 of 15 December 2014 Approval of List of Measures of Structural Assistance of the Period , Archimedes Foundation (hereinafter the implementing body). (3) For the purpose of counselling the implementing body, evaluating applications, assessing and planning trends and courses of action of the measure, the Estonian Research Council shall form, on the proposal of the implementing authority, the measure steering committee. The steering committee shall consist of representatives of the Ministry of Education and Research, the Estonian Research Council and Enterprise Estonia, experts of science and the area of entrepreneurship and a representative of the implementing body as the observer. (4) The measure steering committee shall: 1) give advice to the implementing body and implementing authority for planning, coordinating and evaluating the operations to be implemented; 2) look through the application forms of the open call for applications, the evaluation guide and other documents prior to approval thereof by the implementing body and make its proposals to the implementing body; 3) make proposals to the implementing body for approving the results of evaluation of reports; 4) make proposals to the implementing body for the financing, partial financing or financing with secondary conditions or non-financing of projects; 5) analyse the success and quality of the projects and make, in justified cases, proposals to the implementing authority and implementing body for amending the objectives, action plan or budget of the projects; 6) make proposals, if necessary, to the implementing authority and implementing body for amending the focuses of targeted thematic calls for applications and/or calls; 7) take part in the interim evaluation of the measure after three years have passed from the launching of the measure and in the final evaluation upon end of the operations of the measure and submit the evaluation results along with its proposals to the implementing authority and implementing body. Chapter 2 Operations Supported, Eligibility of Costs and Support Intensity Support for Applied Research in Smart Specialisation Growth Areas Page 3 / 11

4 6. Operations supported (1) Following from the objective and expected results of an operation of the measure, establishments shall be supported upon financing of the carrying out of applied research that is carried out in growth areas in their interests and takes place in public R&D institutions. (2) In growth areas establishments shall be supported upon financing of the carrying out of product development in their interests that takes place in public R&D institutions. (3) The financing for carrying out only such applied research and product development shall be supported where the applicant participates in the project with their own monetary contribution. (4) Applied research or product development shall not be financed in such public R&D institutions that have a holding or rights of a founder or member in the company that applies for the support or in a partner thereof or whom it finances to a significant extent. (5) No support shall be granted to a project within the framework of which the operations specified in subsection (1) or (2) of this section have been started before the submission of an application. (6) If support is granted as de minimis aid, the requirement for the submission of an application before the commencement of operations shall not apply. 7. Eligibility of costs (1) Eligible costs are deemed to include: 1) the costs of the investigations, technical information and outsourced or licensed patent services ordered from public R&D institutions and necessary for the implementation of the operations specified in 6 of this Regulation; 2) costs of using the infrastructure, instruments and devices of the applicant and partner and costs of the materials, accessories, chemicals, etc. attaching to the use of the devices that are directly related to the project within up to 10% of the amount of the support according to their period of use in the project and useful life in compliance with the accounting principles generally accepted in Estonia. The cost of using the devices and infrastructure shall be accounted for on the basis of the depreciation accounting provided for in the accounting policies and procedures of the beneficiary or partner or the amount of rent agreed on with the lessor. (2) In addition to the ineligible costs listed in 4 of Government of the Republic Regulation No. 143 of 1 September 2014 Conditions and Procedure for Deeming Costs to Be Compensated for out of Structural Assistance of the Period as Eligible, Payment of Support and Making Financial Corrections (hereinafter the Single Regulation), all the costs not listed in subsections (1) and (2) shall be ineligible within the framework of the Regulation. (3) The ineligible costs specified in subsection (1) shall be in compliance with 2 and 5 of the Single Regulation, the conditions provided for in this Regulation and the decision to approve an application. Net revenue in terms of operations supported shall be calculated following Article 61(3)(b) of Regulation (EU) No. 1303/2013 of the European Parliament and of the Council. 8. Project eligibility period (1) The start date of the project eligibility period may not be earlier than the date of submission of an application and the end date of the project eligibility period shall be 31 August (2) The project eligibility period shall be provided for in the decision to approve an application. The term of the eligibility period may not be longer than 3 years of the date of making a decision to approve an application. 9. Support limits and intensity (1) The maximum amount of the support to be applied for shall be 2 million euros per project. (2) The minimum amount of the support to be applied for shall be 20,000 euros per project. (3) The maximum limit of the support upon applying for support for applied research shall be: 1) 70% of the value of eligible costs and the rate of self-financing shall be at least 30% of the eligible costs of the project if the applicant for the support is a small enterprise; 2) 60% of the value of eligible costs and the rate of self-financing shall be at least 40% of the eligible costs of the project if the applicant for the support is a medium-sized enterprise; 3) 50% of the value of eligible costs and the rate of self-financing shall be at least 50% of the eligible costs of the project if the applicant for the support is a large enterprise. (4) The maximum limit of the support upon applying for support for product development shall be: 1) 45% of the value of eligible costs and the rate of self-financing shall be at least 55% of the eligible costs of the project if the applicant for the support is a small enterprise; Support for Applied Research in Smart Specialisation Growth Areas Page 4 / 11

5 2) 35% of the value of eligible costs and the rate of self-financing shall be at least 65% of the eligible costs of the project if the applicant for the support is a medium-sized enterprise; 3) 25% of the value of eligible costs and the rate of self-financing shall be at least 75% of the eligible costs of the project if the applicant for the support is a large enterprise. (5) The rate of self-financing shall cover the part of the eligible costs not covered by the support. (6) If the value of the project increases, the part of the appreciation of the project shall be covered by the beneficiary. The amount of the support set out in the decision to approve an application shall not be increased. (7) In the case of State aid, the eligible costs of the operations specified in 6 of this Regulation and the maximum amount of the aid per beneficiary shall comply with the conditions set out in Article 25 of the General Block Exemption Regulation. (8) The rates of cost-sharing by an applicant and partner shall depend on the size/turnover of the applicant or partner and have been determined in accordance with Article 2 of Annex I to Commission Regulation (EU) No. 651/2014 of 17 June Chapter 3 Requirements for Applicant, Partner and Application 10. Requirements for applicant and partner (1) An application for support may be the following private legal entity or company entered in the commercial register of Estonia: 1) a small enterprise; 2) a medium-sized enterprise; 3) a large enterprise. (2) An applicant may involve partners in the project. (3) An applicant for support and partner shall comply with the requirements set in 2 and subsections 3 (1) and (2) of Government of the Republic Regulation No. 133 of 21 August 2014 Requirements and Conditions for Applying for and Processing Applications for Structural Assistance of the Period for Establishment of Regulation on Conditions for Granting Support (hereinafter the Regulation on Processing Applications). (4) The de minimis aid granted to an applicant and partner along with the de minimis aid to be applied for within the framework of this Regulation and the de minimis aid granted in accordance with other de minimis aid regulations of the European Commission not specified in this Regulation may not exceed 200,000 euros in total within the current financial year or two previous financial years. (5) If an applicant or partner has received de minimis aid on the basis of the Commission Regulation on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid granted to undertakings providing services of general economic interest (OJ L 114, , pp. 8-13), the de minimis aid granted to them on the basis of the aforesaid Regulation and the de Minimis Aid Regulation within this and the two previous financial years along with the support to be applied for from this measure may not exceed 500,000 euros. (6) An applicant shall be obliged to: 1) certify that the information set out in the application is in compliance with the requirements and conditions provided for in this Regulation; 2) submit, at the request of the implementing body, additional information or additional documents in the required form and within the required term; 3) certify, at the request of the implementing body, their capacity to pay the self-financing and ineligible costs of the project; 4) make it possible to verify the compliance of the applicant, application and partner with the requirements, including to carry out an on-the-spot verification; 5) inform the implementing body immediately of the changes in the data set out in the application or of the circumstances that have become evident and may have an impact on making a decision on the application; 6) perform other obligations provided for in legislation. 11. Requirements for application (1) An application shall, in addition to that provided for in subsections 4 (1) and (2) of the Regulation on Processing Applications, include at least the following data, confirmations or documents: 1) general data about the applicant and partner; 2) the place of carrying out the project; Support for Applied Research in Smart Specialisation Growth Areas Page 5 / 11

6 3) the development plan of the applicant that provides an overview of the volume and content of the applied research and/or product development to be ordered. The development plan shall include an action plan that describes the primary objectives of the applied research or product development, the scientific novelty of the research, main methods, expected results and implementation thereof. The development plan shall include information about the research group or researchers of the public R&D institution or that carry/carries out the research and the added value arising from the cooperation; 4) the business plan of the applicant about using the results of the applied research or product development; 5) the anticipated schedule of project operations; 6) the total budget of the project, including the amounts of support to be applied for in terms of operations; 7) upon involvement of other partners, the name of the partner and their confirmation of participation; 8) a written confirmation of the monetary contribution of the applicant and partner; 9) a power of attorney if the person provided with the right to represent the applicant acts on the basis of a power of attorney; 10) the applicant s confirmation of the accuracy of the submitted data; 11) respective information if the applicant has applied for support for the project or for some operations of the project from several measures or other state budget, European Union or other foreign aid funds at the same time. (2) If the amount of the application is higher than 100,000 euros, the data, confirmations and documents specified in clauses (1) 1), 2), 3), 5) and 6) shall be submitted in English. 12. Opening the call for applications Chapter 4 Applying for Support (1) Support may be applied for on a current basis or by calls. (2) Applying for support shall be announced by the implementing body on the proposal of the implementing authority. (3) The implementing body shall involve the measure steering committee in substantial evaluation and monitoring of applications. (4) Applying for support shall generally take place on a current basis and it shall end when the budget has run out or on the proposal of the measure steering committee. (5) The implementing body may, on the proposal of the smart specialisation steering committee or the measure steering committee, organise targeted calls for applications. (6) The need for the organisation of calls for applications shall be decided by the implementing authority on the proposal of the measure steering committee. (7) The implementing body shall inform of commencing or suspending the receipt of applications and of the deadlines for the call for applications in at least one national daily newspaper and on its website. 13. Deadline for applying for support and submission of application An application shall be submitted on the application form approved by the implementing body electronically through the Estonian Research Portal within the term specified upon announcement of the call for applications. Chapter 5 Processing, Evaluation and Approval of Application 14. Processing an application (1) Processing an application shall consist of its registration, initial review, acceptance for processing or refusal to accept for processing, verification of compliance of the application, applicant and partner with the requirements, asking for explanations and additional information or modifications and amendments to the application, evaluation of the applications and making a decision to approve or reject the application. (2) The implementing body may require from the applicant, in the course of processing an application, explanations and additional documents about the data set out in the application or modification or amendment of the application if it finds that the application is not sufficiently clear or contains shortcomings, by also indicating which circumstances need supplementary explanation, modification or additional information. Upon asking for additional information or for eliminating shortcomings in the application, the implementing body shall set a term of up to 10 working days by which the term of processing the application shall extend. If the shortcoming is eliminated, the requirement related to the shortcoming shall be deemed as fulfilled. Support for Applied Research in Smart Specialisation Growth Areas Page 6 / 11

7 (3) The term of processing an application shall be up to 60 working days of the submission of the application to the implementing body and it shall extend by the time set for asking for additional information or for eliminating shortcomings. The time of processing an application may, with a basis, also be extended in other cases. 15. Declaration of compliance of applicant, partner and application with requirements (1) The implementing body shall declare an applicant and partner to be compliant if they comply with the requirements provided for in 10 of this Regulation. (2) The implementing body shall declare an application to be in compliance with the requirements if all the requirements provided for an application in 11 of this Regulation have been fulfilled. (3) An application shall not be declared to be in compliance with the requirements if at least one of the following circumstances exists: 1) the application is not in compliance with the requirements provided for in 11 of this Regulation and the applicant has not eliminated the shortcomings in the application within the set term; 2) the applicant or partner does not make it possible to carry out the verification provided for in subsection 21 (7) of the Structural Assistance Act in the registered office of the applicant or partner and in the location of implementation of the planned operations; 3) the public R&D institution is a founder or member of the management board of the applicant or partner or has a holding therein or is a significant financier of the applicant or partner. (4) Upon declaring the applicant, partner and application to be not in compliance with the requirements, the implementing body shall make a decision to reject the application without substantial evaluation of the application. 16. Evaluation of applications, selection criteria and selection procedure (1) Only applications that have been declared to be in compliance with the requirements shall be subject to evaluation. (2) The evaluation shall be carried out by the measure steering committee in accordance with the evaluation and selection procedure guide approved by the implementing body. The implementing body shall draw up the evaluation and selection procedure guide in accordance with the selection criteria specified in subsection (4) of this section. (3) In order to evaluate the applications that have been declared to be in compliance with the requirements, the measure steering committee shall involve evaluation experts. The implementing body shall approve the rules of procedure of the measure steering committee and the guide for the procedures for evaluation and selection of applications in agreement with the implementing authority and publish it on its website no later than on the day of announcement of the call for applications. (4) The members of the measure steering committee and evaluation experts who participate in the evaluation shall be in compliance with the conditions provided for in subsection 21 (4) of the Structural Assistance Act. (5) Applications shall be evaluated on the basis of the following selection criteria, whose percentages of the total score are as follows: 1) the impact of the project on the achievement of the objectives of the measure (incl. contribution to cooperation between public R&D institutions and establishments, matching to smart specialisation growth areas): 30% of the total score; 2) the economic impact and efficiency of the project (incl. compliance with the needs of the applicant and partners, relevance of the business plan and the capability of the applicant and partners to implement the business plan and the substantiation of the project budget): 30% of the total score; 3) the substantiation and feasibility of the project (incl. the scientific quality and methods of the development plan, the level and experience of the persons who carry out the research, the description and schedule of the operations to be carried out): 30% of the total score; 4) the impact of the project on the horizontal themes (incl. relatedness to the Estonian economy, regional development, environmental protection, development of civil society, gender equality and ensuring equal opportunities, common public governance, promotion of information society): 10% of the total score. (6) Applications shall be evaluated in terms of the selection criteria specified in subsection (5) of this section on a scale of 1 (non-satisfactory) to 5 (excellent) points. Grades may be given at intervals of 0.5 points. (7) If the grade of the evaluation criterion specified in clause (5) 1) of this section is below 3 or the grade of the evaluation criterion specified in clauses (2) to (4) is below 2.5 points, the steering committee shall make a proposal to the implementing body for rejecting the application and the evaluation of the application shall not be completed. (8) The total score of the application shall be decided by the evaluation committee, taking into account the grades given on the basis of the evaluation criteria listed in subsection (5) of this section. (9) The measure steering committee shall make, according to the results evolved upon the implementation of the principles described in subsections (4) to (6), a proposal to the implementing body concerning the approval of the Support for Applied Research in Smart Specialisation Growth Areas Page 7 / 11

8 applications and, if necessary, a motivated proposal for holding negotiations with applicants over more detailed conditions for financing. The measure steering committee may make a proposal to an applicant for holding negotiations over the size of the support and the content of the application. (10) The measure steering committee shall make a summary proposal based on the total score evolved upon the implementation of the principles described in subsections (5) to (9) and an evaluation report about each application with a motivated proposal to either approve the application in the requested volume, approve the application in smaller volume than that applied for or reject the application. The measure steering committee may thereby make a proposal to establish additional conditions for projects. (11) More detailed organisation of evaluation shall be regulated in the evaluation guide. 17. Approval and rejection of application (1) On the basis of the proposal of the measure steering committee, the implementing body shall make a decision to: 1) approve the application in the requested volume; 2) approve the application in part or with secondary conditions; 3) reject the application. (2) The implementing body shall make a decision to reject an application if the application is not in compliance with the requirements or if at least one of the following circumstances exists: 1) inaccurate or incomplete information has intentionally been given in the application; 2) the applicant or partner attempts to influence making a decision through fraud or threats or in any other unlawful manner; 3) the applicant or partner does not make it possible to verify the compliance of the application with the requirements; 4) the measure steering committee has made a proposal to the implementing body for rejecting the application; 5) other requirements set in this Regulation are not fulfilled. (3) Processing an application shall be terminated if the applicant has submitted a petition for terminating processing the application before a decision to approve the application has been made. (4) In addition to the information provided for in subsection 8 (4) of the Regulation on Processing Applications, the deadlines for the submission of reports and conditions for the submission of payment applications shall be set out in the decision to approve an application. (5) An application shall be rejected in the cases specified in subsections 8 (2) and (3) of the Regulation on Processing Applications. (6) A decision to reject an application shall be made on the basis of clause 8 (2) 5) of the Regulation on Processing Applications about the applications subject to processing whose monetary volume exceeds the available balance of the budget of the call for applications and that cannot be approved in part in accordance with that provided for in subsection 9 (1) of the Regulation on Processing Applications. (7) A decision to reject an application shall set out the information provided for in subsection 8 (5) of the Regulation on Processing Applications. (8) A decision to approve or reject an application shall be sent to the applicant within 10 working days of making the decision. 18. Partial approval of application or approval of application with secondary conditions (1) An application may be approved in part in accordance with that provided for in subsection 9 (1) of the Regulation on Processing Applications and, in addition, if: 1) support has been applied for operations or as a cover for costs that are not eligible or not justified from the point of view of the objectives, results or outputs of the project; 2) the payment of the part of self-financing within the budget volume set out in the application is not realistic; 3) the objectives, results or outputs of the project can also be achieved with support of a smaller volume than that applied for. (2) An application may be approved in part pursuant to subsection 9 (1) of the Regulation on Processing Applications provided that the applicant agrees to the proposal of the implementing body for reducing the amount of support applied for. If the applicant does not agree to the proposal of the implementing body, the implementing body shall make a decision to reject the application. (3) A decision to approve an application may be made with secondary conditions in accordance with that provided for in subsections 9 (2) and (3) of the Regulation on Processing Applications. (4) Upon approval of an application with secondary conditions, the beneficiary shall not gain an immediate right to payments, incl. prepayments, of the support. The right to payments, incl. prepayments, related to the support shall Support for Applied Research in Smart Specialisation Growth Areas Page 8 / 11

9 arise for the beneficiary after the implementing body has established the arrival or fulfilment of the condition on the basis of the information submitted by the beneficiary, except if the implementing body can establish the information in an information system or other register or source of information. (5) A decision to approve an application in part or with secondary conditions shall be formalised in accordance with subsection 19 (5) of this Regulation. Chapter 6 Amendment and Revocation of Decision to Approve Application 19. Amendment of decision to approve application (1) A decision to approve an application shall be amended on the initiative of the implementing body or on the basis of a respective written petition of the beneficiary under the conditions and in accordance with the procedure provided for in 10 and 11 of the Regulation on Processing Applications, except upon appreciation of the project as described in subsection 9 (10) of this Regulation. (2) The beneficiary may amend the budget approved by a decision to approve an application without submitting a petition for amending the decision to approve the application if the amendment is less than 10,000 euros, the amendments are related to budget lines and the beneficiary approves the respective amendment with the implementing body. In the case of amendments made by the applicant, the amount of the eligible costs or the amount of support of the project may not change. (3) If the action plan approved by a decision to approve an application changes to a significant extent or the amendment to be made to the total budget is more than 10,000 euros, the beneficiary shall submit to the implementing body an application for amending the decision. (4) If the circumstances specified in clauses 10 (2) 1) to 3) of the Regulation on Processing Applications change in the decision to approve an application, the relevance and necessity of the amendments shall be verified before making a decision and, if it is necessary, also on the basis of the selection criteria of the projects provided for in subsection 16 (4) of this Regulation, by involving experts or the steering committee, if needed. (5) The implementing body shall have the right to refuse to amend a decision to approve an application or, in the case specified in subsection (2) of this section, to refuse to accept amendments if the requested amendment casts suspicion on the achievement of the expected results of the project or the completion of the project operations during the eligibility period. (6) The implementing body shall decide on amending the decision to approve an application within 10 working days of the receipt of a corresponding petition. (7) A decision to approve an application may be amended retroactively if this contributes to the achievement of the results of the project and the amendment is justified. 20. Revocation of decision to approve application (1) A decision to approve an application shall be revoked in part or in full in accordance with subsection 22 (3) of the Structural Assistance Act or subsection 47 (3) of the same Act. (2) The beneficiary shall refund the received support in accordance with the decision of subsection (1) of this section. 21. Submission of reports related to use of support Chapter 7 Submission of Reports (1) In addition to the payment applications to be submitted regularly, the beneficiary shall submit to the implementing body reports, depending on the length of the project, via the Estonian Research Portal at least every 6 months. The report form shall be approved by the implementing body in agreement with the measure steering committee. (2) Upon processing reports, the implementing body shall: 1) verify, within 10 working days of the receipt of a report, whether the report has been drawn up in accordance with the standard format and has been filled in as required; 2) in the case of any shortcomings in the report, grant the beneficiary at least 10 working days for eliminating the shortcomings; Support for Applied Research in Smart Specialisation Growth Areas Page 9 / 11

10 3) if the report does not contain any shortcomings, send it, within 5 working days, to the measure steering committee who shall evaluate the content of the reports by involving experts, if necessary, and make a proposal, within 30 working days, to the implementing body for continuing financing, conditional financing or terminating financing of the projects; 4) make an amendment, on the basis of a proposal of the measure steering committee, to an administrative decision within 5 working days. (3) At the end of a project, the applicant shall send to the implementing body a final report via the Estonian Research Portal. The final report form shall be approved by the implementing body in agreement with the measure steering committee. The final report shall include, inter alia, information about the use of intellectual property, patent applications and publications. (4) Upon processing the final report, the implementing body shall: 1) verify, within 10 working days of the receipt of the final report, whether the report has been drawn up in accordance with the standard format and has been filled in as required; 2) in the case of any shortcomings in the final report, grant the beneficiary at least 10 working days for eliminating the shortcomings; 3) if the final report does not contain any shortcomings, send it, within 5 working days, to the measure steering committee who shall evaluate the content of the final report by involving experts, if necessary, and make a proposal, within 30 working days, to the implementing body for approving the results of the project and for final payment of the support. (5) If the period between the submission of a report and the final report is less than six months, only the final report shall be submitted. 22. Payment of support Chapter 8 Payment of Support (1) Payments of the support shall be made in accordance with 28 and 29 of the Structural Assistance Act, and of the Single Regulation and the specifying conditions and procedure for making payments as provided for in the Regulation and the decision to approve an application. (2) Support shall be paid on the basis of actual costs in accordance with clause 14 (1) 1) of the Single Regulation or as a prepayment in accordance with of the Single Regulation. (3) The beneficiary shall submit a payment application to the implementing body on the developed form. The beneficiary shall submit a payment application once a quarter. (4) Prepayments may be made to the beneficiary in justified cases under the conditions and pursuant to the procedure set out in of the Single Regulation. The possibility of making a prepayment shall be provided for in the decision to approve an application. (5) Following the receipt of a payment application, the implementing body shall verify the eligibility of the costs set out in the payment application and the proper performance of the obligations of the beneficiary for no longer than 60 working days. (6) The implementing body may suspend processing a payment application and a report for using a prepayment in part or in full in the case provided for in subsection 30 (1) of the Structural Assistance Act. (7) If, upon processing a payment application, a shortcoming becomes evident in the payment application that can be eliminated within the set term, the implementing body may set a term for eliminating the shortcoming in accordance with subsection 30 (2) of the Structural Assistance Act. (8) Final payment shall be made following the certification of the implementation of the project operations and achievement of the results thereof, eligibility and payment of project costs and approval of the final report. Until approval of the final report, up to 80% of the amount of the support allocated to the project by the decision to approve the application shall be paid out. Chapter 9 Rights and Obligations of Beneficiary, Partner and Implementing Body and Financial Corrections 23. Rights and obligations of beneficiary and partner Support for Applied Research in Smart Specialisation Growth Areas Page 10 / 11

11 (1) The beneficiary shall have the right to obtain from the implementing body information and advice related to the requirements provided for in legislation and obligations of the beneficiary. The beneficiary shall be given an opportunity to state their opinions in the cases provided for in subsection 23 (2) of the Structural Assistance Act and within the framework of eliminating shortcomings. (2) The beneficiary shall ensure the performance of the obligations provided for in 24 and 26 of the Structural Assistance Act and successful implementation of the project in accordance with the terms and conditions set out in the decision to approve an application and: 1) submit to the implementing body a contract that has been entered into with a public R&D institution and partners and provides the mutual rights and obligations of the parties, incl. the holders and division of the economic rights of intellectual property arising in the course of the applied research or product development to be supported, no later than within 30 working days of receiving from the implementing body a decision to approve the application; 2) ensure the existence of the permits and approvals necessary for the implementation of the project and prescribed in legislation; 3) ensure, in accordance with the procedure provided for in legislation, the recognition of the property created or acquired with the help of the support and registration thereof into the ownership of the beneficiary as well as payment of all the encumbrances in public law related to the creation of ownership and performance of other obligations arising from legislation. (3) A partner shall perform the obligations specified in 25 of the Structural Assistance Act. 24. Rights and obligations of implementing body (1) The implementing body shall have the right to: 1) verify, within the framework of the exercise of supervision of the fulfilment of a project, the fulfilment of the conditions of use of the support, including to stay on the premises and in the territory of the beneficiary and partner and verify the data, documents and other materials related to the use of the support; 2) refuse to pay the support if the economic situation of the beneficiary has deteriorated so that the use of the support or the implementation of the action plan is endangered or if the beneficiary violates the conditions provided for in the Structural Assistance Act or legislation issued on the basis thereof; 3) reduce the amount of the support to be paid out proportionally if the self-financing of the beneficiary decreases to below the rate provided for in the decision to approve an application; 4) examine the documents to be drawn up in the course of preparation of the project and performance of the work; 5) initiate, if necessary, amendment of the decision to approve an application by informing the beneficiary thereof in writing in advance; 6) perform other acts provided for in the Structural Assistance Act and legislation issued on the basis thereof and this Regulation. (2) The implementing body shall be obliged, in addition to the functions listed in subsection 8 (2) of the Structural Assistance Act, to 1) organise the conduct of calls for applications, incl. draw up the required guides, forms, rules of procedure, etc.; 2) enter the application or project monitoring and other data in the structural assistance register; 3) monitor the monetary balances of an operation of the measure and submit, if necessary, to the measure steering committee and the implementing authority overviews about that; 4) consult, if necessary, the managing authority and implementing authority upon approval of procurement documents; 5) process the reporting of use of the support, incl. review the project reports drawn up by the beneficiary, modify and approve these, if necessary, with the beneficiary and send approved reports to the measure steering committee for information; 6) draw up and publish on its website overviews of granting and use of the support; 7) inform the implementing authority and the measure steering committee of any interferences with use of the support; 8) carry out verifications at the beneficiary in accordance with subsection 40 (2) and 42 of the Structural Assistance Act; 9) preserve documents related to granting State aid and de minimis aid for 10 years from the day when the last single aid was granted on the basis of the measure; 10) perform other acts provided for in the Structural Assistance Act and legislation issued on the basis thereof and this Regulation. 25. Financial corrections (1) The bases for and extent of a financial correction have been provided for in 45 and 46 of the Structural Assistance Act. (2) The refund of the support shall take place in accordance with 48 and 49 of the Structural Assistance Act. Support for Applied Research in Smart Specialisation Growth Areas Page 11 / 11

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