Australia: Exchange - International: France

Financial Services Regulation Newsletter - Issue 21
Last Updated: 5 February 2014
Article by Mathias Hanten MBL, Michael McKee and Jeffrey L. Hare


Directive 2011/61/EU of 8 June 2011 on Alternative Investment Fund Managers ("AIFMD") had to be implemented by 22 July 2013 by EU member states. A few days after the deadline, on 25 July 2013, France published their newly adopted acts to implement AIMFD (Ordinance n° 2013-676 of 25 July 2013 and Decree n° 2013-687 of 25 July 2013 amending the legal framework applicable to asset management). In order to avoid any discrepancies with EU law, the AIFMD has been transposed literally into French law.

The French government took the opportunity of this transposition to overhaul the investment funds industry's legal and regulatory framework. Aiming to give fresh impetus and improve the competitiveness of the investment fund industry, the new legislation revamped and clarified the range of existing alternative investment funds vehicles ("AIFs").

  1. Reorganisation of the investment funds vehicles

The section of the French Monetary and Financial Code ("MFC") governing investment funds has been significantly amended. The MFC now makes a clear distinction between:

  • undertakings for collective investment in transferable securities ( UCITS) complying with the UCITS Directive (only such entities are now denominated gUCITSh);
  • AIFs reserved for professional investors; and
  • AIFs reserved for non-professional investors.

Furthermore, a number of regulated investment funds which shared similar characteristics have been merged (for example contractual venture funds and contractual mutual funds are combined in a new category called "professional specialised funds"). This reorganisation corresponds to that adopted at the European level which is structured around the UCITS Directive and AIFMD.

AIFs are now authorised to invest in debt/receivables (limited at 10% of the total assets of the fund for non-professional funds and 50% of the assets for professional funds).

It is worth noting that employee savings funds and securitisation entities fall into the AIF category. However, pursuant to article 2, 3. (g) of AIFMD, most of the new legal and regulatory framework do not apply to securitisation entities. In order to avoid any misuse of this exemption, the French government intends to create an anti-circumvention mechanism (a draft proposal has already been circulated for public consultation).

  1. Transposition of the private placement regime applicable to non-EU AIFMs

AIFMD allows EU member states to provide for a private placement mechanism permitting non-EU AIFMs to market AIFs to professional investors nationally. According to Article 42 of the AIFMD, a non-EU AIMF may be allowed to market AIFs in France without a passport subject to the following conditions:

  • compliance with the disclosure and transparency provisions set forth in the AIFMD;
  • appropriate information exchange agreements must be in place between the competent authorities in each EU Member State where the AIF is to be marketed and the supervisory authority of the non-EU AIFM; and
  • at the time of marketing neither the AIF nor the non-EU AIFM are authorised or registered in a country listed as a gnon-cooperative country and territoryh by the Financial Action Task Force ( FATCA ).

Paragraph 2 of Article 42 of the AIFMD expressly gives discretion to EU member states to impose stricter rules regarding the private placement regime. France implemented the private placement regime, however, in addition to the second and third conditions detailed above, non-EU AIFMs must fully comply with all the requirements established in AIFMD (with the exception of the provisions relating to the appointment and missions of the depositary).

Moreover, supplementary conditions have to be met if the marketed fund is an openended non-EU AIF. In such case, prior authorisation of the French financial markets regulator, the Autorité des marchés financiers, is required. The authorisation should be granted provided that the non-EU AIF is governed by security and transparency rules equal to those applicable in France and that a mutual assistance and information exchange instrument is put in place between the supervisory authority of the non-EU AIF and the Autorité des marchés financiers.

In summary, non-EU AIFMs wishing to market an AIF to professional investors in France will have to comply with all the rules in relation with capital requirements, conflicts of interest, risks and liquidity management, valuation of assets, reporting, leverage limitations, remuneration policies and transparency (marketing of open-ended non-EU AIF are subject to specific rules as detailed above).

The Autorité des marchés financiers already implemented the new rules governing AIFMs and the practical rules in relation to the structure of AIFs and their marketing in its General Regulations.

AIFMs entering into the scope of AIFMD will have to comply with its provisions by 22 July 2014.

© DLA Piper

This publication is intended as a general overview and discussion of the subjects dealt with. It is not intended to be, and should not used as, a substitute for taking legal advice in any specific situation. DLA Piper Australia will accept no responsibility for any actions taken or not taken on the basis of this publication.

DLA Piper Australia is part of DLA Piper, a global law firm, operating through various separate and distinct legal entities. For further information, please refer to

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