The EU Commission extends its COVID-19 State aid rules to recapitalisation and subordinated debt measure

In anticipation of the wave of requests from stricken companies due to the COVID-19 outbreak for more long-term State support, on 8 May, the Commission extended the scope of its State aid Temporary Framework to allow Member States to take stakes in non-financial companies affected by the outbreak by means of recapitalisation or subordinated debt instruments, in order to prevent their market exit. The amendments are largely seen as loosening the State aid rules to allow Member States more flexibility in the range of options available to address the outbreak, although they come with strings attached. Recapitalisation measures will entail bans on dividends and bonuses for beneficiary companies, and a new obligation on Member States to ensure that the aid measures are consistent with the EU