AMF : Glossary

Lexique

List of words for this letter B

Bearer shareholder

Shareholder who is registered in an account held by a financial intermediary and who is unknown to the company that issued the shares.

Body of bondholders

The holders of bonds in a given issue. It has legal personality and is represented by at least one but not more than three representatives elected by the meeting of bondholders. These representatives have, in principle, the power to act in the name of the meeting of bondholders to carry out management measures required to defend the common interests of bondholders. They are not entitled to be involved in company matters. They may attend the general meeting of shareholders as non-voting observers.

Bond

Interest-bearing debt security issued by a company and redeemable at a given date and for a predetermined amount. Other types of debt security with specific characteristics also exist.

Buyout offer

Transaction whereby one or more shareholders holding more than 95% of the voting rights of a listed company make public their intention to buy the remaining securities that they do not own. In this case, the minority shareholder has the option of tendering its shares to the majority shareholder but is not obliged to do so. A minority shareholder may also ask the AMF to require the majority shareholder to file a draft buyout offer if it holds 95% or more of the company’s voting rights.

List of words for this letter C

Capital gain

Gain resulting from the difference between the price at which a security is sold (less exit fees) and the purchase or subscription price (plus entry fees).

Capital loss

Loss resulting from the difference between the price at which a security is sold and its purchase or subscription price.

Circular

Document made available to the public during a public offering. It contains all the information relating to the offer, including price, financing details and the independent appraisal. The circular is approved once the AMF has given an opinion on the offer’s compliance.

Collective investment scheme (CIS)

Portfolio of securities, such as shares or bonds, managed by a professional (management company) and collectively owned by individual or institutional investors. In France, there are two types of collective investment scheme: SICAVs (open-ended investment companies) and FCPs (common funds).

Collective investment scheme subject to streamlined investment rules (ARIA fund)

Collective investment scheme subject to less stringent rules in terms of investments and strategy. This category includes: Authorised standard ARIA funds, which are allowed an exemption from the normal risk-spreading rules; Authorised leveraged ARIA funds, which are allowed an exemption from the normal risk-spreading rules and may use leverage; Authorised ARIA funds of alternative funds, which are allowed to implement alternative strategies through investments in other French or foreign collective investment schemes or investment funds. Terms of access and minimum investment thresholds for this type of collective investment scheme are regulated.

Combined public offer

Transaction whereby a person makes an irrevocable public offer to the shareholders of a listed company (the target) to acquire their securities. Payment is made partly in shares and partly in cash.

Contract for difference (CFD)

An over-the-counter financial instrument giving the investor the right to receive the difference between the price of an underlying asset on the date on which the contract is entered into and its price on the exercise date.

Coupon

Income earned by a bondholder.

Custody fee

Fee charged by a financial intermediary for keeping a securities account.

List of words for this letter D

Depositary

Service provider responsible for safeguarding securities and ensuring the compliance of management decisions taken on behalf of collective investment schemes. A depositary may agree to delegate some of its duties to another institution with the capacity to act as custody account keeper (notably, it may ask a custodian to provide custody services). But it may not delegate the task of overseeing the compliance of decisions taken by the management company of a collective investment scheme.

Direct marketing

Direct marketing, or promotion, of banking or financial products and services means contacting a person on an unsolicited basis, by whatever means, to propose: Transactions in financial instruments; Banking or ancillary transactions; Transactions in miscellaneous assets; Investment or ancillary services; Investment advice; A payment service. Banking or financial promotion also occurs when a person is contacted at their home, place of work, or any other place not intended for the marketing of financial products, instruments or services, regardless of which party initiated the process (i.e. the direct marketer or the person contacted). For example, if a person is approached at a shopping centre, then this qualifies as direct marketing

Dividend

Income from an investment in equity securities, such as shares or investment certificates. Dividends are usually paid yearly and vary according to the company’s profits.

List of words for this letter E

Entry fee

An amount, usually expressed as a percentage, that is added to the net asset value of a collective investment scheme and that the investor has to pay when buying units or shares in the scheme. Also called the subscription fee.

Exit fee

An amount, usually expressed as a percentage, that is added to the net asset value of a collective investment scheme and that the investor must pay when selling units or shares in the scheme. Also called the redemption fee.

Extraordinary general meeting of shareholders

The main purpose of an extraordinary general meeting is to allow shareholders to vote on special resolutions concerning matters such as a change to the company’s bylaws, authorisations to issue shares, bonds or other financial instruments, and grants of stock options or bonus shares to employees and/or senior managers.

List of words for this letter F

Financial intermediary

Professional that investors must go through to buy or sell on the financial market. Banks, investment firms, online brokers and other firms may act as financial intermediaries. Depending on its status, an intermediary may perform order reception/transmission, account keeping/custody, trading or other services.

Financial investment adviser (FIA)

Person who provides the following advisory services in the regular course of business: investment advice on financial instruments, including shares, bonds and investment fund units; advice on the provision of investment services, including advice about whether to use the services of an investment management company; advice on the execution of transactions in miscellaneous assets, ranging from artworks to solar panels, but only under certain conditions.

Fonds commun de placement (FCP)

Common fund. Type of collective investment scheme without legal personality that issues units. An investor who buys units has shared ownership of the securities but does not have voting rights and is not a shareholder. An FCP is represented and managed, from an administrative, financial and accounting standpoint, by a single management company, which is allowed to delegate these tasks.

Fonds commun de placement à risques (FCPR)

Venture capital fund. At least 50% of the fund’s assets must be made up of the securities of unlisted companies or ownership units in limited liability companies.

Fonds commun de placement d’entreprise (FCPE)

Employee savings fund. A specialised collective investment scheme reserved for company employees and intended to be invested in securities. There are three types of FCPE – individual, group individual, and multi-company – classified according to the party that establishes them and the target investors.

Fonds commun de placement dans l’innovation (FCPI)

Innovation fund. A type of fund belonging to the venture capital fund category. Innovation funds are designed to strengthen the equity of innovative small- and medium-sized French businesses.

Fonds d’investissement de proximité (FIP)

Local investment fund. A type of fund belonging to the venture capital fund category. Local investment funds are designed to promote the development of regional small- and medium-sized businesses.

Fonds de placement immobilier (FPI)

Property investment fund. A type of fund belonging to the real estate collective investment scheme category. Intended to be invested in property assets.

Forward contract

Firm commitment between two persons relating to a given quantity of underlying assets at a specified price and with a predetermined settlement time and venue.

List of words for this letter I

ISIN code

International Securities Identification Number (ISIN), a code used to identify a security such as a share, bond or collective investment scheme. Euroclear, the company that acts as central securities depositary in France, assigns ISINs to collective investment schemes and listed companies.

Interest

Income derived from an investment in debt securities. Interest is paid according to a predetermined schedule and is known at issuance. Interest rates may be fixed or variable.

Investment management company

Investment services provider whose primary business is to manage investments for third parties (individual through management mandates, collective through collective investment schemes). Must be authorised by the AMF.

Investment services

There are nine investment services that an investment services provider (ISP) may perform after receiving authorisation: order reception and transmission; order execution for third parties; proprietary trading; portfolio management for third parties; investment; advice; underwriting; guaranteed placement; non-guaranteed placement; operation of a multilateral trading facility.

Investment services provider (ISP)

Investment firm or credit institution that has been authorised to provide investment services. There are nine different investment services. To provide these services, authorisation must be given by the AMF or the ACP.

List of words for this letter K

Key investor information document (KIID)

Information document provided to investors wishing to place savings in a collective investment scheme or real estate collective investment scheme. Standardised across Europe, the KIID provides clear, summarised information that allows investors to compare French and European collective investment schemes and real estate collective investment schemes.

List of words for this letter L

Leverage

Measure of the risk incurred through the use of derivative financial instruments or debt. Leverage measures the capacity of a fund to magnify market movements. If markets rise, the fund’s value may rise even faster. Conversely, if they fall, the fund’s value could also fall even faster.

Limit order

Order in which the customer specifies the maximum price (buy order) or minimum price (sell order).

Liquidity

The degree to which an asset or security can be bought or sold in the market without affecting the price. Liquidity is characterised by a high level of trading activity. Assets that can be easily bought or sold are known as liquid assets.

List of words for this letter M

Market capitalisation

Value of a company on the stock market at a given point in time, equal to the number of outstanding shares of a company multiplied by the share price.

Market to limit order

Type of order with no price specification. At opening, it is converted into a limit order with the opening price as the limit. During the trading session, it becomes a limit order whose limit is set to the best ask (buy order) or bid (sell order) price.

Multilateral trading facility

A facility that, while not a regulated market, brings together multiple third-party buying and selling interests in financial instruments – within the system and in accordance with rules – with a view to conducting trades in these instruments. A multilateral trading facility may be managed by an authorised investment services provider or by a market operator.

List of words for this letter N

Net asset value

Price of an FCP unit or SICAV share.

Nominal value of a share

This is the issue price selected for shares when a company is formed. The nominal value is obtained by dividing the total issue amount by the number of shares issued. This value is therefore different from the share’s market price. Also known as par or face value.

List of words for this letter O

Offer document

Document prepared by a company in the event of a merger, demerger or partial asset transfer. It contains the rationale for and objectives of the transaction, valuations of contributions, the selected exchange ratio and its determining factors, the effects of the merger or contributions on the beneficiary company, reports by the expert appraiser and legal authorisations.

Ordinary general meeting of shareholders

Gathering of the shareholders and directors of an incorporated firm, required by law to be held every calendar year. This is an important event for shareholders, who learn about the company’s position and have a say on management. The main purpose of an ordinary general meeting is to approve the annual financial statements presented by the board of directors or management board, as well as information about the consolidated financial statements, where applicable, and the appointment or replacement of members of the company’s governing and supervisory bodies.

List of words for this letter P

Plan d'épargne d'entreprise (PEE)

Company savings plan. A collective savings plan that allows the employees of a company or group of companies to establish a block of savings invested in securities, potentially with employer contributions. This plan enjoys special tax treatment in return for tying up the funds for a certain length of time, usually five years.

Plan d'épargne de groupe (PEG)

Group savings plan. Collective savings plan that allows the employees of a group of companies to establish a block of savings invested in securities, potentially with employer contributions. This plan enjoys special tax treatment in return for tying up the funds for a certain length of time, usually five years.

Plan d'épargne inter-entreprise (PEI)

Intercompany savings plan. Collective savings plan established through an agreement by several companies, or at a sector or regional level. This type of plan meets two goals by making it easier for very small, small and mid-sized companies to access employee savings plans and by enabling them to share the related costs.

Plan d'épargne pour la retraite collectif (PERCO) Collective retirement savings plan

Collective savings plan that allows the employees of a company or group of companies to establish a block of savings invested in securities, potentially with employer contributions. This plan enjoys special tax treatment in return for tying up the funds for a certain length of time, usually until retirement.

Promoter

Banking or financial distribution network offering the opportunity to invest in collective investment schemes. May involve entities such as credit institutions, investment firms, insurers, online brokers or financial advisers.

Prospectus

Document prepared by a company for an initial public offering, any capital increases or the issue or admission of financial securities. A prospectus must receive prior approval from the AMF. It contains information about the company and the proposed transaction.

Public exchange offer

Transaction whereby a person makes an irrevocable public offer to the shareholders of a listed company (the target) to acquire their securities. Existing securities or securities to be issued in the future are offered in return for the acquisition.

Pure market order

Type of order that consists in selling or buying without a price limit for an unlimited amount. It takes priority over other types of orders and is executed immediately, provided a buyer or seller can be found. Orders placed before 9 am are executed at the opening price.

List of words for this letter R

Real estate collective investment scheme

Real estate funds derived from real estate investment companies and similar to collective investment schemes. These are collective investment products specialising in real estate investments.

Real estate investment company (SCPI)

Company whose sole objective is to acquire and manage real estate assets.

Registered shareholder

Shareholder registered in an account held by the company that issued the shares. There are two types of registered shares: pure registered: the shares are recorded only in accounts held by the company; administered registered: the shares are also recorded with a financial intermediary.

Registration document

Official document that provides investors with complete, current information about a company’s financial statements, governance, oversight and legal characteristics. The company has sole responsibility for this document, which is registered or filed with the AMF. The AMF reviews registration documents, particularly in the case of corporate finance transactions. The aim of the registration document is to disseminate high-quality information to a broad audience.

Regulated market

Multilateral system that brings together multiple third-party buying and selling interests in financial instruments within the system and in accordance with rules. A regulated market is managed by a market operator.

Rolling spot forex

Type of forex transaction that may in principle be settled at the end of the day but that can be tacitly rolled over from day to day, as long as losses do not use up guarantee deposits or margins.

List of words for this letter S

SICAV d'actionnariat salarié (SICAVAS)

Open-ended investment company for employee savings. A SICAV set up to manage a portfolio of securities issued by a company for its employees.

Security

Instrument issued by a public or private legal entity that may be transferred by book entry or delivery and that confers identical rights by category and gives direct or indirect access to a portion of the capital of the issuing entity or a general claim on its assets. FCP and FCC units are also securities.

Share

Certificate evidencing ownership of a fraction of the capital of the company that issued it. Shares may pay dividends and entitle the holder to vote at general meetings. They may be listed on a stock exchange. Also known as a stock or equity.

Shareholders’ agreement

Agreement between some or all shareholders of a company governing their relations and ownership structure.

Short sale

Activity whereby an investor speculates on a decline in a security’s price by placing an order to sell securities that it does not hold in hopes of making a capital gain.

Société anonyme à capital variable (SICAV)

Open-ended investment company. Share-issuing collective investment scheme with legal personality (a company), in contrast with an FCP, which does not have legal personality and which issues units. An investor becomes a shareholder and gets a say at general meetings. A SICAV may manage itself or entrust this task to a French investment management company, which may in turn delegate (subject to AMF approval) financial or administrative management to a specialised French or foreign management company.

Société d'épargne forestière (SEF)

Investment company whose primary objective is to acquire and manage forestry assets.

Société de placement à prépondérance immobilière à capital variable (SPPICAV)

Open-ended real estate investment company. A SPPICAV is a share-issuing real estate collective investment scheme with legal personality. Management is usually delegated to an investment management company.

Société pour le financement de l'industrie cinématographie et audiovisuelle (SOFICA)

Company whose objective is to provide financing to the film and audiovisual sector (to help produce works such as cartoons, films, feature films and documentaries).

Société pour le financement de la pêche artisanale (Sofipêche)

Company set up to finance non-industrial fishing. The sole objective of this type of company is to purchase under joint ownership arrangements fishing boats that are operated directly and continuously by non-industrial fishermen or fishing companies that meet certain criteria.

Spread

The difference between the actuarial rate of return on a bond and that on a risk-free loan with the same duration. It shows the risk premium that the issuer must offer the investor to compensate for the risk incurred by investing in the security. The riskier the investment, the higher the risk premium that must be offered.

Squeeze-out

Following a public offering, such as a takeover bid, exchange offer or buyout, if the securities not tendered to the offer account for less than 5% of the capital and voting rights, the majority shareholder may carry out a squeeze-out on these securities. The securities held by minority shareholders are then automatically transferred to the majority shareholder against compensation.

Stock exchange

Financial market where financial instruments such as shares and bonds are traded. The stock exchange is one of the economy’s key sources of financing. It enables private and public companies, local authorities and central government to raise funds to finance their investments.

Stock index

Average price of a representative sample of securities for a market, sector, etc. and showing the general price trend. Euronext Paris SA computes several indices, including the SBF 120 and the CAC 40.

Stop order

Type of order that allows the investor to set a price level beyond which a purchase or sale is triggered. There are two types of stop orders: stop loss order: a market purchase or sale is triggered when the threshold set by the investor is reached; stop limit order: a buy or sell limit order is triggered when a maximum or minimum threshold set by the investor is reached. Two prices must therefore be specified for this type of order: a stop price and a limit price.

Switching

Transaction consisting in selling units or shares in a collective investment scheme to purchase those of another scheme. The transaction is conducted transparently and is similar to a transfer of assets between different investment vehicles.

List of words for this letter T

Takeover bid

Transaction whereby a person makes an irrevocable public offer to the shareholders of a listed company (the target) to acquire their securities. A cash amount is offered in return for the acquisition.

Tracker (fund)

Category of collective investment scheme that is linked to or based on an index quoted on a regulated market. Designed to replicate the movements of an index or to move according to a predetermined formula based on a given index, these types of funds may be bought and sold on the stock market throughout the trading day just like shares. Also known as an exchange-traded fund (ETF).

Trade confirmation slip

Document sent by a financial intermediary to a client confirming that a buy or sell transaction has been executed. The slip contains information about the type of order, the amount, the execution date and any associated charges, including brokerage fees and tax.

Turnover commission

Fee charged to a collective investment scheme for portfolio transactions such as purchases and sales of shares. The full prospectus gives details of these fees.

List of words for this letter V

Venture capital

Investment that consists in acquiring equity interests in start-up or high-tech companies. As the name suggests, this type of investment is risky but may also generate substantial gains.

Volatility

Measure of the variation in a security, fund, market or index over a given period.

List of words for this letter W

Warrant

A speculative instrument issued by credit institutions that can be used to buy (call warrant) or sell (put warrant) a security, such as a share, bond or index, a given price and time.

Legal information
Head of publications: Florence Gaubert, Executive Director of AMF Communication Directorate.
Contact: Communication Directorate – Autorité des marches financiers 17 place de la Bourse – 75082 Paris cedex 02