FRANCE Law and Practice Contributed by: Arnaud Fromion, Frédéric Guilloux and Pierre-Benoît Pabot du Châtelard, Clifford Chance
tion agreement attaching the terms and condi - tions of the relevant bonds. Another way for private debt funds to participate in financing is to be transferred participations on a secoundary basis. Indeed certain UCITS (OPCVM, organismes de placement de valeurs mobilières ) and AIFs (FIA, fonds d’investissement alternatifs ) under French law (eg, private equity funds, real estate collective investment organi - sations, free partnership companies, specialised professional funds, financing organisations), and similar entities registered outside France, can benefit from a specific exemption to purchase receivables that have not yet matured, whether the relevant transferor is in France or abroad. Regarding collateral, there is no licence or regu - latory approval to take the benefit of security over assets located in France. 2.2 Regulators of Private Credit Funds As mentioned in 1.9 Impending Regulation and Reform , lending is a regulated business and the primary regulator is the French banking super - visor (the Prudential Control and Resolution Authority, ACPR). However, French credit funds are not supervised by the ACPR; they are indi - rectly overseen by the French Financial Market Authority (AMF) through their managers, which are supervised by such authority. 2.3 Restrictions on Foreign Investments To protect the French state’s public security, public order and national defence, the French foreign investment control regime requires prior authorisation for acquisitions of control (or 25% of the voting rights, for non-EU investors) of a French company active in a “sensitive” sector, such as defence, energy, transport, communica - tions, health, food supply, R&D in AI, etc.
Foreign investments in private credit funds which do not hold shares in such “sensitive” compa - nies or assets are not subject to such approval requirement. 2.4 Compliance and Reporting Requirements French private credit funds are subject to the regulatory reporting requirements applicable to AIFs under the AIFMD generally. They are also subject to bespoke reporting requirements to the Club lending by private credit providers should be carefully considered from an antitrust per - spective. Due to multilateral lender discussions, these may be identified as higher risk, especially in smaller, less liquid markets where co-ordina - tion is easier. Additionally, there are concerns about the exchange of competitively sensitive information among lenders, which can be quali - fied as anti-competitive practices. Pre-mandate and post-mandate market soundings need to be carefully managed to avoid such risks. AMF and the French Central Bank. 2.5 Club Lending and Antitrust The financial sector, including private credit, is under constant scrutiny by competition authori - ties (including the European Commission and the French Competition Authority), with no spe - cial exemptions. 3. Structuring and Documentation 3.1 Common Structures The common structure used in private credit transactions involve a French holding compa - ny to which the private credit funds are made available through bonds issued by it and sub - scribed by one or several private credit funds. The borrowing entity then secures the service
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