FRANCE Trends and Developments Contributed by: Rima Maitrehenry, Racine
mercial trade register as an SLP. SLPS basically share the same functions and flexibility as SLP. New structuring options for French investment funds The new structuring options introduced by the Ordinance are directed both to French invest - ment funds dedicated to professional investors and to those dedicated to retail investors. New structuring options for French investment funds dedicated to professional investors French investment vehicles dedicated to profes - sional investors (see the MiFID definition), and commonly used for investing in unlisted assets, include FPS, FPCI, SLP, SLPS and OFS. The Ordinance extended the possibility of issu - ing debt instruments to certain French pro - fessional funds. Prior to the reform, only OFS benefited from this possibility. According to the Ordinance, FPS, SLP and SLPS can issue debt instruments (bonds, convertible bonds). The introduction of this structuring option is intended to make French investment funds more attrac - tive to international institutional investors who are subject to specific constraints (particularly with regard to the application of the Solvency II Directive) and who wish to structure their invest - ments in the form of debt securities rather than units, equity or shares. This could open up new opportunities for fund financing (such as NAV financing or hybrid financing). The Ordinance enables FPS, SLP and OFS to create units, shares or debt instruments, giv - ing rise to different rights on all or part of the fund’s assets or its proceeds. This means that these funds may issue tracking units, shares or debt securities reflecting the economic perfor -
mance of a given asset or category of assets of the fund’s portfolio. However, this differentiation must not constitute a securitisation transaction within the meaning of Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 (the “Securitisation Regu - lation”). This could open up new opportunities for tailor-made investment solutions for certain investors that are in line with their own con - straints (excuse rights, preferential exposure to certain assets, etc). The Ordinance removes from Article L 214-154 of the FMFC two of the three previous eligibility criteria for “assets” into which an FPS (including an SLP) may invest, and relating to the absence of collateral, the valuation of the asset and its liquidity. This gives greater freedom in composi - tion of assets, and ensures compatibility with the ELTIF Regulation. All that remains is the condi - tion relating to proof of ownership of the asset. New structuring options for French investment funds dedicated to retail investors The fonds commun de placement à risque , or FCPR, is a French alternative investment fund dedicated to retail investors and is commonly used to invest in unlisted assets. At least 50% of an FCPR’s assets must comply with the eli - gibility requirements set forth in Article L 214- 28 of the FMFC (this covers unlisted equity and equity-like securities issued by companies and under certain conditions, shareholder loans and unlisted debt instruments). Among these crite - ria, the FCPR’s eligible assets may also include rights representing a financial investment issued on the basis of French or foreign law in an enti - ty whose main purpose is to invest, directly or indirectly, in companies whose equity securities are not admitted to trading on a market. These rights were included in the fund’s 50% invest - ment quota only up to the percentage of direct
165 CHAMBERS.COM
Powered by FlippingBook