Investment Funds Update - Europe: Legal and regulatory updates for the funds industry from the key asset management centres and primary European fund domiciles: April 2016 - Issue 4: France

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Direct Lending by French Funds 

The Autorité des Marchés Financiers (the French financial markets regulator, the “AMF”) has published on 1 April 2016 the results from the public consultation organized at the end of last year with respect to direct fund lending in France, following the entry into force of the ELTIF Regulations. In these results, the AMF contemplates authorizing a limited number of French funds (i.e., specialised professional funds (fonds professionnels spécialisés), securitisation vehicles (organismes de titrisation) and professional private equity funds (fonds professionnels de capital investissement)) to make direct loans to borrowers, provided that certain criteria be met. Such criteria include, among others: constraints on fund leverage (30%, not for the purposes of making loans), no loans to financial companies, loans should be limited in duration by the funds’ term and the selling of loans should be limited. Furthermore, the management companies managing such funds shall have a specific programme of operations allowing for the possibility to grant loans. The French government will publish in the coming weeks a decree detailing the requirements to be met by such funds in France for direct lending.

Read AMF's press release from April 2016 "The AMF publishes the results of work on the possibility of investment funds granting loans".

Directive "UCITS V" Implementation

Ordinance n°2016-312 dated 17 March 2016 has transposed the Directive 2014/91/UE dated 23 July 2014 (“UCITS V Directive”). The main points implemented by the Ordinance under French law are with respect to (i) requirements for custodians and (ii) remuneration policy for management companies. The market abuse provisions of the UCITS V Directive will be implemented in French law through another text. The AMF General Regulations, as well as several AMF instructions, will be updated in the coming months to prepare for the entry into force of the UCITS V Directive. On 16 April 2016, the AMF has published a revised version of the AMF Instruction n° 2011-19 which indicates the information to be included in the French UCITS’ annual report with respect to the remuneration policies.

Read Ordinance n°2016-312 dated 17 March 2016 (in French).

Read the revised version of the AMF Instruction n° 2011-19 (in French).

AMF Training Day for French Management Companies' Compliance Officers

The AMF hosted on 22 March 2016 its training day for French compliance officers. Several issues have been discussed, including the UCITS V Directive implementation, the ELTIF Regulations, the 4th AML Directive, MiFID II. The slides of the presentations are available on the AMF website.

Update of the AMF General Regulations

An Arrêté dated 6 April 2016 and published on 16 April 2016 in the French Journal Officiel implements an update of the AMF General Regulations. This update aims at including several new provisions in the AMF General Regulations, including, among others:

  • UCITS V Directive: pursuant to the implementation under French law of the UCITS V Directive (see above), the AMF General Regulations now include revised provisions with respect to the role of the custodian of UCITS funds and detail the requirements with respect to the remuneration policies to implement for management companies;
  • ELTIF Regulations: as authorized in the ELTIF Regulations, ELTIFs can now be marketed to retail investors;
  • Capital requirements for French management companies: the General Regulations now explicitly refers to the EU Regulations n° 241/2014 (Capital Requirements Regulations) for French management companies’ own funds (see March 2016 update). The final version of the Position 2012-19 detailing the AMF’s requirements with respect to management companies’ own funds will be amended shortly to reflect these softened rules.

Read the Arrêté in full (in French).

 

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