Publication of decrees amending the regime of French direct lending funds

The Ordinance n° 2017-1432 of 4 October 2017 introduced the possibility for "financing vehicles" (organismes de financement, OF) to grant loans. The OF are a category of investment funds which includes “securitization vehicles” (organismes de titrisation, OT) and the newly created “specialized financing vehicles” (organismes de financement spécialisé, OFS). Two decrees implementing this Ordinance have been published on 21 and 22 November 2018:

• The decree n° 2018-1004, inter alia, (i) amends the conditions under which the fonds professionnels spécialisés (professional specialized funds, FPS) can grant loans, (ii) provides that these conditions apply, for the most part, to OF, (iii) details the assets eligible for of the OF, (iv) authorizes redemption requests from investors in OFS and (v) imposes management companies of loan origination funds to implement specific stress tests ensuring the liquidity of their loans. 
• The decree n° 2018-1008 provides further details concerning the conditions under which an OF can originate loans and details the conditions under which they can acquire and transfer receivables.

Read: The decrees here and here

Amendment to the AMF General Regulation: CSD Regulation

The French Arrêté of 23 October 2018 amended the General Regulation of the Autorité des Marchés Financiers (the French financial markets regulator, AMF) to comply with the Regulation (EU) n° 909/2014 of 24 July 2014 (the Central Securities Depositories Regulation, “CSDR”). In particular the changes include: (i) the implementation of specific rules applying to depositories authorized under CSDR, (ii) the adaptation of the transfer of ownership rules applying to securities, and (iii) the removal or adaptation of the matters now addressed by CSDR or the AMF. 

Read: The regulation

Information regarding the tax treatment of retrocessions of monetary benefits received by management companies

Under Article 24 (8) of MiFID 2 and Article L. 533-12-3 of the CMF, asset management companies shall retrocede to its investors any fee, commission or monetary benefit received when providing the portfolio management investment service. The Tax Administration (Direction de la Législation Fiscale) has indicated that these retrocessions will be treated as revenus de capitaux mobiliers and therefore be subject to the “flat tax” of 30% (covering taxes and social security contributions). 

Read: The full update (AFG login required)