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1. On behalf of the Union, the Commission shall conclude External Action Guarantee agreements with the eligible counterparts selected pursuant to Article 35. Those agreements may be concluded with a consortium of two or more eligible counterparts. In compliance with Article 219(1) of the Financial Regulation, budgetary guarantees shall be irrevocable, unconditional and on demand for the types of operations covered under the External Action Guarantee. When concluding External Action Guarantee agreements, the Commission shall take due account of the advice and guidance of the boards and of the technical risk assessment group.

2. One or more External Action Guarantee agreements shall be concluded for each investment window between the Commission and the eligible counterpart or eligible counterparts selected. In addition, in order to address specific needs, the External Action Guarantee may be granted for individual financing or investment operations.

The European Parliament and the Council shall be notified of the signature of all External Action Guarantee agreements. Upon their request, those agreements shall be made available to the European Parliament and the Council, taking into account the protection of confidential and commercially sensitive information.

3. External Action Guarantee agreements shall contain, in particular:

(a) detailed rules on the coverage, requirements, eligibility, eligible counterparts, and procedures;

(b) detailed rules on the provision of the External Action Guarantee, including its arrangements on the coverage and its defined coverage of portfolios and of projects of specific types of instruments, as well as a risk analysis of projects and project portfolios, including at sectoral, regional, and national levels;

(c) a reference to the objectives and purpose of the Instrument, an assessment of the needs and an indication of the expected results, taking into account the promotion of corporate social responsibility and responsible business conduct, including in particular by the respect of internationally agreed guidelines, principles and conventions on investment referred to in point (f) of Article 35(2);

(d) the remuneration of the External Action Guarantee, which is to reflect the risk level, and the possibility for the remuneration to be partly subsidised in order to give more concessional terms in duly justified cases; and, in particular to countries experiencing fragility or conflict, LDCs and heavily indebted poor countries;

(e) requirements for the use of the External Action Guarantee, including payment conditions, such as specific time frames, interest to be paid on due amounts, expenses and recovery costs and possibly necessary liquidity arrangements;

(f) claims procedures, including, but not limited to, triggering events and waiting periods, and procedures regarding the recovery of claims;

(g) monitoring, reporting, transparency and evaluation obligations;

(h) clear and accessible complaints procedures for third parties that could be affected by the implementation of projects supported by the External Action Guarantee.

4. The eligible counterpart shall approve financing and investment operations in accordance with its own rules and procedures and in compliance with the External Action Guarantee agreement.

5. The External Action Guarantee may cover:

(a) for debt instruments, the principal and all interests and amounts due to the selected eligible counterpart, but not received by it in accordance with the terms of the financing operations after an event of default has occurred;

(b) for equity investments, the amounts invested and their associated financing costs;

(c) for other financing and investment operations referred to in Article 35(2), the amounts used and their associated funding costs;

(d) all relevant expenses and recovery costs related to an event of default, unless deducted from recovery proceeds.

6. For the purposes of the Commission’s accounting and its reporting of the risks covered by the External Action Guarantee, and in accordance with Article 209(4) of the Financial Regulation, eligible counterparts with which an External Action Guarantee agreement has been concluded shall provide the Commission and the Court of Auditors annually with the financial reports on financing and investment operations covered by this Regulation, audited by an independent external auditor, containing, inter alia, information on:

(a) the risk assessment of financing and investment operations of the eligible counterparts, including information on Union liabilities measured in compliance with the accounting rules referred to in Article 80 of the Financial Regulation and International Public Sector Accounting Standards;

(b) the outstanding financial obligation for the Union arising from the EFSD+ operations provided to the eligible counterparts and their financing and investment operations, broken down by individual operation.

7. The eligible counterparts shall, upon request, provide the Commission with any additional information necessary to fulfil the Commission’s obligations pursuant to this Regulation, in particular with regard to the selection criteria set out in Article 35, including compliance with human rights, and social, labour and environment standards.

8. The Commission shall submit an annual report to the EFSD+ strategic board, to regional operational boards, to the European Parliament and to the Council on financial instruments, budgetary guarantees, including those implemented by the EIB, financial assistance in accordance with Article 41(4) and (5) of this Regulation and Articles 241 and 250 of the Financial Regulation. ◄ For that purpose, the eligible counterparts shall provide annually the information necessary to allow the Commission to comply with those reporting obligations.