FRANCE Law and Practice Contributed by: Rima Maitrehenry, Fabrice Rymarz, Charles-Xavier Vincenti and Stein Mpassi Loufouma, Racine
tually agreed upon between the fund manager and the AIF’s investors. Per se AIFs are subject to certain investment limitations depending on their respective invest - ment strategy. For example, an FIVG used for generic alternative investment strategies cannot invest more than 10% of its assets in unlisted companies. Meanwhile, an FPCI or an FCPR dedicated to investments in unlisted securities is required to invest at least 50% of its assets in equity/equity-like securities issued by unlisted companies. Additional restrictions apply to FCPI and FIP (both vehicles are dedicated to retail investors), for which, in addition to this invest - ment quota of 50%, a specific investment quota of 70% in certain types of unlisted investments is required. Per se AIFs dedicated to retail investors are subject to diversification rules that are not appli - cable to per se AIFs dedicated to professional investors. For example, an FCPR cannot invest more than 10% of its assets in a single issuer, whereas such limitation is not available for FPCI. Lastly, OFS, FPS and SLP are generally the only per se AIFs that do not have investment limi - tations, other than those contractually agreed upon between the fund manager and the AIF’s investors. 2.3.2 Requirements for Non-Local Service Providers In addition to a regulated portfolio management company and/or AIFM, French AIFs require a custodian and a statutory auditor. Unlike the AIFM – which could be based in another EU member state yet nonetheless be able to manage a French AIF on a cross-border basis through the management passport under the
AIFMD – custodian and statutory auditors must be based in France. The custodian is subject to regulation/registra - tion requirements. It is usually a banking/credit institution. Statutory auditors must be registered with the Compagnie nationale des commissaires aux comptes (CNCC), the national regulatory body for statutory auditors in France. The fund administration of French AIFs is gener - ally handled by their respective portfolio man - agement company and/or AIFM, but can also be delegated or outsourced to third parties. In this case, such delegation or outsourcing must com - ply with delegation/outsourcing requirements as set forth in the AIFMD and in French regu - lations. In particular, the AIFM should define in its programme of operations the essential tasks and functions for which it intends to outsource/ delegate. It must also formalise the process of selecting and monitoring the service provider on the basis of appropriate criteria, and must retain the ability to evaluate the service provided in order to be able to control it. 2.3.3 Local Regulatory Requirements for Non- Local Managers As already indicated (see 2.2.1 Types of Inves- tors in Alternative Funds ), per se AIFs and Other AIFs must be managed by a portfolio manage - ment company regulated by the AMF, or must otherwise be authorised to operate in France as an AIFM. A fund manager located in another EU member state could manage a French AIF on a cross- border basis through the management passport under the AIFMD. However, since this manage - ment passport is only available for AIFs invested
148 CHAMBERS.COM
Powered by FlippingBook