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- GR into force from 03/01/2018 to 08/03/2018
General regulation of the AMF into force from 03/01/2018 to 08/03/2018
Information boxes have been inserted within the General Regulation. They allow for a direct access to the relevant European regulations on the subject matter.
The user will be redirected to the European regulations as initially published in the Official Journal of the European Union and to the subsequent corrigenda, if any. The AMF does not guarantee the completeness of the redirections to these European regulations and corrigenda.
The boxes are located at the most relevant level of the GRAMF depending on the provision of the EU regulations to which they refer (Book, Title, Chapter, Section, etc.).
This additional material is provided for information purposes only and does not constitute a regulatory instrument. The AMF shall not be held liable or responsible for any harm resulting directly or indirectly from the provision or the use of these information boxes.
Table of contents
Book I - The Autorité des marchés financiers
The provisions of the Title I of the Book I have been removed and are now available in the internal rules of the Autorité des marches financiers at the following address: https://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000035317699.
Title II - The ruling procedure of the Autorité des marchés financiers (Articles 121-1 à 123-1)
Chapter 1er - Request for ruling (Articles 121-1 à 121-5)
When queried in writing ahead of a transaction about an interpretation of this General Regulation, the AMF issues an opinion in the form of a written ruling (rescrit). This opinion stipulates whether, in light of the elements submitted by the interested party, the transaction contravenes this General Regulation.
All persons referred to in Article L. 621-7 of the Monetary and Financial Code who initiate a transaction are entitled to submit a request for a ruling to the AMF.
A request for a ruling is made in good faith and applies to a specific transaction.
The request shall be made by a person party to the transaction. It shall be submitted by registered letter with return receipt and shall be clearly marked "Ruling Request" (demande de rescrit).
The request shall specify the provisions in this General Regulation for which the interpretation is requested and shall set forth the relevant aspects of the planned transaction.
The request shall be accompanied by a separate document giving the names of the persons concerned by the transaction and, where appropriate, any other elements needed for the AMF's assessment. The AMF shall ensure the confidentiality of this document.
The AMF will dismiss without examination any request that does not meet the conditions set out hereabove. The petitioner will be informed of such dismissal.
Chapter 2 - Examination of the request (Articles 122-1 à 122-3)
The ruling is issued by the AMF within thirty working days of receipt of the request and is conveyed to the petitioner. If the request is imprecise or incomplete, the petitioner may be asked to provide supplemental information. In this case, the thirty-day deadline is suspended until the AMF has received that information.
Where it is unable to assess the true nature of the transaction, or where it considers that the request has not been made in good faith, the AMF duly informs the petitioner, within the time period specified in Article 122-1, of its refusal to issue a ruling.
A ruling is valid solely in respect of the petitioner.
Provided the petitioner complies with the ruling in good faith, the AMF shall not take any enforcement action or inform the judicial authorities as regards the aspects of the transaction addressed by the ruling.
Chapter 3 - Publication of the ruling (Article 123-1)
The ruling and the request are both published in full in the next edition of the AMF's monthly review and on its website.
At the petitioner's request or on its own initiative, however, the AMF may postpone publication for a period of no more than 180 days starting from day the ruling was issued. If the transaction has not been completed by that date, the time period can be extended until the end of the transaction.
Title III - Certification of standard agreements for transactions in financial instruments (Article 131-1)
Pursuant to Article L. 621-18-1 of the Monetary and Financial Code, the AMF can certify standard agreements for transactions in financial instruments, at the reasoned request of one or more investment services providers or a trade association of investment service providers. To that end, it ensures that the provisions of the standard agreement in question are consistent with this General Regulation.
Title IV - Inspections and investigations by the Autorité des marchés financiers (Articles 142-1 à 144-4)
Chapter 2 - Informing the AMF about the net asset values of collective investment schemes (Article 142-1)
The AMF must be informed of the net asset values of collective investment schemes if such values are calculated by the management company or open-ended investment company (SICAV) referred to in Point 7, Section II of the Article L. 621-9 of the Monetary and Financial Code that is responsible for such calculation.
Chapter 3 - Supervision of persons referred to in section II of article L. 621-9 of the Monetary and Financial code (Articles 143-1 à 143-6)
To ensure that the market operates in an orderly manner and that the activity of the entities and persons referred to in Section II of Article L. 621-9 of the Monetary and Financial Code complies with the professional obligations arising from laws and regulations or from the professional rules it has approved, the AMF carries out off-site examinations of records and on-site inspections at the business premises of such entities or persons.
To ensure the proper performance of its supervisory duties, the inspectors may order any of the persons referred to in Section II of Article L. 621-9 of the Monetary and Financial Code to retain information, regardless of the storage medium. Such a measure is confirmed in writing, with details of its duration and the conditions in which it may be renewed.
The Secretary General issues an inspection order to the persons he has placed in charge.
The inspection order indicates, inter alia, the name of the entity or body corporate to be inspected, the identity of the inspector and the purpose of the inspection.
Persons subject to inspection shall cooperate diligently and honestly.
Where the proper performance of an AMF inspection has been hindered, this fact is mentioned in the inspection report or in a special report setting out these difficulties.
Post-inspection reports are transmitted to the inspected entity or body corporate. Transmittal does not take place, however, if the Board, alerted by the Chief Executive, observes that a report describes facts which are capable of being characterised as criminal and deems that such transmittal could interfere with legal proceedings. The entity or body corporate to which a report has been transmitted is requested to submit its observations to the Secretary General of the AMF within a specified period, which cannot be less than ten days. These observations are forwarded to the Board if it when it examines the report in accordance with Section I of Article L. 621-15 of the Monetary and Financial Code.
Having due regard for the conclusions of an inspection report and for any observations that may be submitted, the inspected entity or body corporate is informed by registered letter with return receipt or by hand delivery against receipt of the measures it is required to put in place. The entity or body is requested to forward the report and the aforementioned letter to its board of directors, or executive board and supervisory board, or the equivalent decision-making body, as well as to the statutory auditors.
Where the inspected entity or person is affiliated with a central body, as per Article L. 511-30 of the Monetary and Financial Code, a copy of the report and the letter shall also be sent to that body.
Chapter 4 - Investigations (Articles 144-1 à 144-4)
The General Secretariat of the AMF keeps a register of the authorizations provided for in Article L. 621-9-1 of the Monetary and Financial Code.
If, for the purposes of an investigation, the Secretary General wishes to call on a person that is not authorised to carry out investigations, he issues an authorization that is restricted to the investigation in question.
To ensure that investigations proceed smoothly, investigators may order the retention of information, regardless of the storage medium. Such a measure is confirmed in writing, with details of its duration and the conditions in which it may be renewed.
Before the final investigation report is written up, a detailed letter relating the points of fact and of law noted by the investigators is submitted to the persons likely to be charged subsequently. These persons may submit written observations within a period of no more than one month. These observations are forwarded to the Board when it examines the investigation report in accordance with Section I of Article L. 621-15 of the Monetary and Financial Code.
Where the proper performance of an AMF investigation has been hindered, this fact is mentioned in the investigation report or in a special report setting out these difficulties.
The Board examines the investigation report pursuant to Article L. 621-15 of the Monetary and Financial Code.
Title V - The establishment of procedures to report the failings referred to in article L. 634-1 of the monetary and financial code (Articles 145-1 à 145-4)
Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC
Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories and amending Directives 98/26/EC and 2014/65/EU and Regulation (EU) No 236/2012
Regulation (EU) No 1286/2014 of the European Parliament and of the Council of 26 November 2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs)
Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012
The AMF General Secretary designates the members of his or her staff, specialised in dealing with reports of the failings referred to in Article L. 634-1 of the Monetary and Financial Code, responsible for receiving and monitoring of such reports and relations with the whistleblower. Specialist staff are trained for this purpose.
In a distinct and easily identifiable section of its website, the AMF publishes information concerning the receipt of reports of failings referredto in Article L. 634-1 of the Monetary and Financial Code.
Independent, autonomous and secure communication channels that guarantee confidentiality are established within the AMF for receiving and monitoring reports of failings referred to in Article L. 634-1 of the Monetary and Financial Code.
The AMF maintains a register of all reports of failings referred to in Article L. 634-1 of the Monetary and Financial Code. The register is kept within a secure and confidential system, and the data contained in it shall be accessible only to specialist AMF staff.
The receipt of reports is acknowledged immediately, except upon express request to the contrary from the whistleblower or if there is reason to believe that acknowledgement of receipt could compromise the confidentiality of the whistleblower's identity.
Book II - Issuers and financial disclosure
Title I - Offer of securities to the public or admission of securities to trading on a regulated market (Articles 211-1 à 217-1)
Chapter I - Scope (Articles 211-1 à 211-3)
I. - Persons or entities making a public offer of securities, within the meaning of Article L. 411-1 of the Monetary and Financial Code, or seeking admission to trading on a regulated market of financial securities or equivalent instruments issued under foreign law, shall be subject to Chapter II of this Title.
II. - The provisions of this title shall not apply to the offer or admission to trading on a regulated market of financial securities referred to in point 6 of Article L. 411-3 of the Monetary and Financial Code, the total amount of which in the Union is less than EUR 75,000,000, with this amount being calculated over a twelve-month period.
I. - Within the meaning of Article L. 411-2, I of the Monetary and Financial Code, an offering of financial securities does not constitute a public offer if it presents one of the following characteristics:
The total amount in the Union is less than EUR 100,000 or the foreign currency equivalent thereof;
The total amount in the Union is between EUR 100,000 and EUR 5,000,000 or the foreign currency equivalent thereof and the transaction concerns financial securities accounting for no more than 50% of the capital of the issuer. For financial securities for which admission to trading on a multilateral trading facility within the meaning of Article 524-1 is sought, the maximum total amount in the Union may be lowered to EUR 2,500,000 at the request of the market operator managing it;
It is intended for investors acquiring at least EUR 100,000 worth, or the foreign currency equivalent thereof, per investor and per transaction, of the relevant financial securities;;
It concerns financial securities with a minimum par value of at least EUR 100,000 or the foreign currency equivalent thereof
II. - The total amount of the offer referred to in points I, 1 and 2 and the amount referred to in Article L. 411-2 I bis of the Monetary and Financial Code are calculated over a twelve-month period from the date of the first offer
The person or entity making an offer of the kind specified in Article L. 411-2 of the Monetary and Financial Code shall inform investors participating in the offer that:
The offer does not require a prospectus to be submitted for approval to the AMF;
Persons or entities referred to in Point 2°, Section II of Article L. 411-2 of the Monetary and Financial Code may take part in the offer solely for their own account, as provided in Articles D. 411-1, D. 411-2, D. 734-1, D. 744-1, D. 754-1 and D. 764-1 of the Monetary and Financial Code;
The financial instruments thus acquired cannot be distributed directly or indirectly to the public otherwise than in accordance with Articles L. 411-1, L. 411-2, L. 412-1 and L. 621-8 to L. 621-8-3 of the Monetary and Financial Code.
Chapter II - Information to be disseminated when financial securities are offered to the public or admitted to trading on a regulated market (Articles 212-1 à 212-42)
Section 1 - Prospectus (Articles 212-1 à 212-5)
Commission Regulation (EC) No 809/2004 of 29 April 2004 implementing Directive 2003/71/EC of the European Parliament and of the Council as regards information contained in prospectuses as well as the format, incorporation by reference and publication of such prospectuses and dissemination of advertisements.
Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC.
Before conducting a public offer of securities or seeking admission of securities to trading on a regulated market within the European Economic Area (EEA), persons or entities referred to in Article 211-1 shall prepare a draft prospectus and submit it for approval by the AMF or the competent supervisory authority of another Member State of the European Union or a State party to the EEA agreement.
Sub-section 1 - Competent authority
The draft prospectus shall be submitted to the AMF for prior approval in the following cases:
the issuer has its registered office in France and the public offer or admission to trading on a regulated market involves:
Financial securities referred to in Section I of Article L. 621-8 of the Monetary and Financial Code; or
Financial securities referred to in Section II of the above article, where the issuer has chosen the AMF to approve its prospectus;
The public offer or admission to trading on a regulated market is to be carried out in France and involves:
Financial securities referred to in Section II of the above article, where the issuer has chosen the AMF to approve its prospectus; or
Financial securities referred to in Section IV of the above article;
The issuer has its registered office outside the EEA and the public offer or admission to trading on a regulated market involves financial securities referred to in Section I of the above article, provided that:
The first public offer or admission to trading on a regulated market was carried out in France after 31 December 2003, subject to a subsequent election by the issuer where the offer was not effected by the issuer;
The first public offer was made in a Member State of the European Union or a State party to the EEA agreement, other than France, after 31 December 2003 at the decision of an initiator other than the issuer and the issuer decides to carry out in France its first public offer as initiator.
In cases other than those mentioned in Points 1° to 3°, the AMF may agree to approve the draft prospectus at the request of the competent authority of another Member State of the European Union or a State party to the EEA agreement.
Where the AMF is not the competent authority to approve the prospectus, the supervisory authority that approved the prospectus shall send the AMF, at the request of the persons or entities seeking to offer securities to the public or have securities admitted to trading on a regulated market in France, as provided for in Articles 212-40 to 212-42, the certificate of approval and a copy of the prospectus, together with a French translation of the summary note, where appropriate.
Sub-section 2 - Exemptions
The obligation to publish a prospectus does not apply to public offers of the following financial securities:
Shares issued in substitution for shares of the same class already issued, if the issuing of such new shares does not involve an increase in the issuer's capital;
Financial securities offered in connection with an offre publique d'échange or an equivalent exchange procedure under foreign law, provided that a document, subject to AMF scrutiny and containing information equivalent to that of the prospectus, is made available by the issuer;
Financial securities offered, allotted or to be allotted in connection with a merger, demerger or spin-off, provided that a document, subject to AMF scrutiny and containing information equivalent to that of the prospectus, is made available by the issuer;
Dividends paid out to existing shareholders in the form of shares of the same class as the shares in respect of which such dividends are paid, provided that a document containing information on the number and nature of the financial securities and the reasons for and details of the transaction is made available by the issuer;
Financial securities offered, allotted or to be allotted to directors, to company officers referred to in II of Article L. 225-197-1 of the Commercial Code, or to existing or former employees by their employer or by an affiliate, provided that a document containing information on the number and nature of the securities and the reasons for and details of the offer is made available by the issuer and provided that:
The issuer has its head office or registered office in a European Union Member State;
Or the issuer, if its head office or registered office is in a non-Member State of the European Union, has its financial securities admitted to trading:
either on a regulated market;
or on the market of a third country, provided that adequate information, particularly the aforementioned document, is available in at least one language customary in the sphere of finance and provided that the European Commission has adopted an equivalent decision in relation to the market of the third country in question.
Financial securities for which an approved prospectus is valid under the conditions set out in Article 212-24 and provided that the issuer or the person responsible for preparing said prospectus gives written consent to its use.
Where appropriate, an AMF instruction shall stipulate the nature of the information referred to in this article.
In addition to the first three exemptions from the obligation to publish a prospectus for an admission to trading on a regulated market set out in the first sub-paragraph of Article 1(5) of Regulation (EU) No. 2017/1129 of 14 June 2017, the obligation to publish a prospectus does not apply when the following categories of financial securities are admitted to trading on a regulated market:
[removed by the decree of 14 November 2017];
Shares issued in substitution for shares of the same class already admitted to trading on the same regulated market, if the issuing of the new shares does not involve an increase in the issuer's capital;
Financial securities offered in connection with an offre publique d'échange or an equivalent exchange procedure under foreign law, if a document, subject to AMF scrutiny and containing information equivalent to that of the prospectus, is made available by the issuer;
Financial securities offered, allotted or to be allotted in connection with a merger, demerger or spin-off that has been subject to the procedure in Article 212-34;
Shares offered, allotted or to be allotted free of charge to existing shareholders, and dividends paid out in the form of shares of the same class as the shares in respect of which such dividends are paid, provided that these shares are of the same class as the shares already admitted to trading on the same regulated market and that a document containing information on the number and nature of the securities and the reasons for and details of the admission to trading is made available by the issuer;
Financial securities offered, allotted or to be allotted to directors, to company officers referred to in II of Article L. 225-197-1 of the Commercial Code, or to existing or former employees by their employer or by an affiliate, if these securities are of the same class as those already admitted to trading on the same regulated market, and provided that a document containing information on the number and nature of the securities and the reasons for and details of the admission to trading is made available by the issuer;
Shares resulting from the conversion or exchange of other financial securities or from the exercise of rights conferred by other financial securities, provided that these shares are of the same class as those already admitted to trading on a regulated market and the securities giving access to the shares were issued before 20 July 2017;
Financial securities already admitted to trading on another regulated market, on the following conditions:
These financial securities or other financial securities of the same class have been admitted to trading on that other regulated market for more than 18 months;
For financial securities first admitted to trading on a regulated market after the date of entry into force of this Chapter, the admission to trading on that other regulated market was associated with the approval of a prospectus made available to the public in accordance with Article 14 of Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003;
For financial securities not mentioned in b) and first admitted to trading after 30 June 1983 but before the entry into force of this Chapter, a prospectus has been approved in accordance with the requirements of Directive 80/390/EEC or Directive 2001/34/EC;
The issuer has fulfilled all periodic and ongoing disclosure obligations on that other regulated market;
The person applying for admission prepares a summary note in French that is published and circulated in accordance with Article 212-27. The French translation of the summary note is not needed if the admission concerns the compartment referred to in Article 516-18 or when the prospectus is drafted in a language other than French that is usual for financial matters in accordance with Article 212-12. The summary must also state where the most recent prospectus can be obtained and where the financial information published by the issuer pursuant to d is available.
Where appropriate, an AMF instruction shall stipulate the nature of the information referred to in this article.
Section 2 - Filing, approval and circulation of prospectuses (Articles 212-6 à 212-30)
Sub-section 1 - Filing and approval of the prospectus
Commission Regulation (EC) No 809/2004 of 29 April 2004 implementing Directive 2003/71/EC of the European Parliament and of the Council as regards information contained in prospectuses as well as the format, incorporation by reference and publication of such prospectuses and dissemination of advertisements.
Commission Delegated Regulation (EU) 2016/301 of 30 November 2015 supplementing Directive 2003/71/EC of the European Parliament and of the Council with regard to regulatory technical standards for approval and publication of the prospectus and dissemination of advertisements and amending Commission Regulation (EC) No 809/2004.
Persons or entities mentioned in Article 211-1, or any person or entity acting on their behalf, shall file a draft prospectus with AMF in the format specified in the delegated regulation (EU) 2016/301 of 30 November 2015 relating to the approval and publication of the prospectus and dissemination of advertisements and in an AMF instruction.
Documentation needed to scrutinise the dossier shall be submitted to the AMF when the draft prospectus is filed. The content and submission procedure for such documentation are specified in the delegated regulation (EU) 2016/301 of 30 November 2015 relating to the approval and publication of the prospectus and dissemination of advertisements and in an AMF instruction.
When filing the draft prospectus, the persons or entities referred to in the first paragraph shall specify whether the financial securities concerned are admitted to trading on a regulated market having its registered office in a Member State of the European Union or a State party to the EEA agreement or are admitted to the official list of a foreign exchange and whether a listing application or an issue is pending or planned for other exchanges.
The prospectus shall contain all the information which is necessary, depending on the particular nature of the issuer, particularly if it is a company with a small market capitalisation or a small or medium-sized business, and of the financial securities being offered to the public or for which admission to trading on a regulated market is sought, to enable investors to make an informed assessment of the assets and liabilities, financial position, profit and losses, and prospects of the issuer and of any guarantor of the financial securities being offered to the public or for which admission to trading on a regulated market is sought, as well as the rights attaching to such financial securities and the conditions in which the securities are issued. For companies with a small market capitalisation and small or medium-sized businesses, this information shall be adapted to suit their size and, if necessary, their background.
This information shall be presented in an easily analysable and comprehensible form.
The prospectus shall be drawn up in accordance with one of the formats and modules in Regulation (EC) 809/2004 of
29 April 2004 or one of the combinations provided for the different categories of financial securities. The prospectus shall contain the information specified in the Annexes to the aforementioned Regulation, depending on the type of issuer and the category of financial securities concerned.
Within the meaning of Article 212-7:
Small or medium-sized businesses are those which, according to their most recently published annual or consolidated financial statements, present at least two of the following three characteristics:
An average of fewer than 250 employees for the entire financial year;
A balance sheet total of not more than EUR 43,000,000;
Annual net turnover of not more than EUR 50,000,000;
A company with a small market capitalisation is a company whose financial securities are admitted to trading on a regulated market whose average market capitalisation has been lower than EUR 100,000,000 based on the year-end share prices for the previous three calendar years.
I. - The prospectus shall include a summary note, except where the application for admission to trading on a regulated market concerns debt securities with a minimum denomination of EUR 100,000 or the foreign currency equivalent thereof.
II. - The summary note shall present, in a concise manner and in non-technical language, the key data which, together with the prospectus, provides adequate information on the essential characteristics of the financial securities concerned, in order to help investors considering investing in the said securities. It shall be drawn up in a standard form to make it easier to compare summary notes relating to similar financial securities. The summary note shall be constructed on a modular basis in line with the annexes to Regulation (EC) n° 809/2004 of 29 April 2004.
III. - The summary note shall also contain a warning that:
It should be read as an introduction to the prospectus;
Any decision to invest in the relevant financial securities should be based on consideration of the prospectus as a whole by the investor;
Where a claim relating to the information contained in a prospectus is brought before a court, the plaintiff investor might, under the national legislation of the Member States of the European Union or States party to the EEA agreement, have to bear the costs of translating the prospectus before the legal proceedings are initiated;
Civil liability attaches to the persons who presented the summary note, and any translation thereof, and who requested notification within the meaning of Article 212-41 only if the summary note is misleading, inaccurate or inconsistent when read with other parts of the prospectus or if it does not provide, when read together with the other parts of the prospectus, the essential information to help investors considering investing in the said financial securities.
Within the meaning of Article 212-8, the key information is the essential, appropriately structured information that must be provided to investors in order to enable them to understand the nature of and risks associated with the issuer, the guarantor and the financial securities being offered or being admitted to trading on a regulated market and in order to determine which offers of financial securities it is appropriate to continue considering, without prejudice to an exhaustive examination of the prospectus by investors.
In light of the offer and the financial securities concerned, the key information includes the following elements:
A brief description of the risks associated with the issuer and any guarantors, as well as the essential characteristics of the issuer and of said guarantors, including assets and liabilities and financial position;
A brief description of the risks associated with investment in the financial securities concerned and the essential characteristics of said investment, including any rights attached to the securities;
The general conditions of the offer, particularly an estimate of the expenses borne by the issuer or offeror on the investor's behalf;
The procedure for admission to trading;
The reasons for the offer and the planned use of the funds raised.
I. - The prospectus may be drawn up as a single document or as separate documents.
II. - A prospectus composed of separate documents shall include:
A registration document or, for the first admission to trading of equity securities, a base document containing information about the issuer;
A securities note containing information on the financial instruments being offered to the public or for which admission to trading on a regulated market is sought;
The summary note (summary of the prospectus) mentioned in Article 212-8.
For a public offer of securities or an admission to trading on a regulated market, an issuer that has a registration document registered with or approved by the AMF is required to draw up only a securities note and a summary prospectus for the relevant financial securities.
If there has been a material change or recent development which could affect investors' assessments since the approval of the latest updated registration document or any supplemental note to the prospectus that has been prepared in accordance with Article 212-25, the securities note shall provide information that would normally be provided in the registration document.
The securities note and the summary note shall be submitted for approval by the AMF.
Where an issuer has filed only a registration document without having it approved by the AMF, the entire documentation, including updated information, shall be subject to AMF approval.
In the format specified in the delegated regulation (EU) 2016/301 of 30 November 2015 relating to the approval and publication of the prospectus and dissemination of advertisements, information may be incorporated in the prospectus by reference to one or more previously or simultaneously published documents, referred to in Article 28 of Regulation (EC) no. 809/2004 of 29 April 2004 or in Directive 2004/109/CE, approved by or filed with the AMF. This information shall be the latest available to the issuer. The summary note shall not incorporate information by reference.
When information is incorporated by reference, a cross-reference list must be provided in order to enable investors to easily identify specific items of information.
I. - Where a public offer of financial securities referred to in Sections I and IV of Article L. 621-8 of the Monetary and Financial Code is made only in France or in one or more other Member States of the European Union or States party to the EEA agreement, including France, the prospectus approved by the AMF shall be drawn up in French.
By way of derogation, the prospectus may be drawn up in a language other than French that is customary in the sphere of finance in the following cases:
1° The public offer of financial securities referred to in Sections I and IV of the aforementioned article L. 621-8 is conducted only in France or in one or more other Member States of the European Union, including in France, when these shares are first admitted for trading on a regulated market or on a multilateral trading facility only in France or in one or more other Member States of the European Union or parties to the European Economic Area agreement, including France.
1bis The public offer of financial securities referred to in Sections I and IV of the aforementioned article L. 621-8 is conducted only in France or in one or more other Member States of the European Union or parties to the European Economic Area agreement, including France, by an issuer whose prospectus, prepared when these shares are first admitted for trading on a regulated market or on a multilateral trading facility only in France or in one or more other Member States of the European Union or parties to the European Economic Area agreement, including France, shall be written in a language that is customary in the sphere of finance, other than French.
1ter The public offer involves debt securities referred to in Sections I and II of Article L. 621-8 and takes place only in France or in one or more other Member States of the European Union or States party to the EEA agreement, including France;
2° The issuer has its registered office in a non-EEA State and the prospectus is drawn up for an offer of securities to employees working for affiliates or establishments of the issuer in France.
Where the prospectus is drawn up in a language other than French that is customary in the sphere of finance, the summary note shall be translated into French.
II. - Where admission to trading on a regulated market is planned solely in France or in one or more other Member States of the European Union or States party to the EEA agreement, including France, the prospectus approved by the AMF shall be drawn up in French or in another language customary in the sphere of finance. In the latter case, the summary must be translated into French except when applying for admission to trading on the compartment referred to Article 516-18.
Where admission to trading on a regulated market is planned in France for non-equity securities with a minimum denomination of EUR 100,000 or the foreign currency equivalent thereof, the prospectus approved by the AMF shall be drawn up in French or in another language customary in the sphere of finance.
III. - Where a public offer or admission of securities to trading on a regulated market is planned in one or more Member States of the European Union or States party to the EEA agreement, excluding France, the prospectus approved by the AMF shall be drawn up in French or in another language customary in the sphere of finance.
IV. - Where the AMF is not the competent authority to approve the prospectus and where a public offer or admission to trading on a regulated market is planned solely in France or in one or more other Member States of the European Union or States party to the EEA agreement, including France, the prospectus shall be drawn up and published in French or in another language customary in the sphere of finance. In the latter case, the summary must be translated into French except when applying for admission to trading on the compartment referred to Article 516-18.
I. - All issuers of financial instruments admitted for trading on a regulated market or on an organised multilateral trading facility within the meaning of Article 524-1 may prepare a registration document every year, as specified in an AMF instruction.
This registration document can take the form of an annual report to shareholders. In this case, a table showing the concordance between the headings in the instruction mentioned in the first paragraph and the corresponding headings in the annual report shall be provided.
II. - The registration document shall be filed with the AMF. If the issuer has not previously submitted three consecutive registration documents to the AMF, this document shall be registered by the AMF before it is published.
III. - The registration document shall be made available to the public free of charge on the day after filing, or registration where such is the case. Any person who so requests may view the document at any time at the registered office of the issuer or the offices of the paying agent. A copy of the document must be sent free of charge to any person who requests one.
The electronic version of the registration document shall be sent to the AMF for posting on its website.
IV. - Once the registration document has been filed or recorded, the issuer can make regular updates, which are filed with the AMF in accordance with Point 2°, concerning published accounting data and new factors relating to its organisation, business, risks, financial condition and results.
These successive updates are made available to the public in accordance with Point 3°.
IV bis. - Where an issuer files or registers a registration document with the AMF in French, it may also file or register the document in a language that is customary in the sphere of finance, in accordance with the terms of the instruction. In this case, the successive updates shall be drafted both in French and in the same language customary in the sphere of finance.
V. - Where, in connection with its supervisory duties, the AMF finds an omission or a material inaccuracy in the registration document, it shall inform the issuer, which must amend the document and file the corrections with the AMF.
These corrections shall be made available to the public as soon as possible, in accordance with Point 3°.
Any omission or inaccuracy, with regard to this General Regulation or to AMF instructions, that could manifestly distort an investor's assessment of the organisation, business, risks, financial condition or results of the issuer shall be considered as material.
Any other observations made by the AMF shall be brought to the attention of the issuer, which shall take them into account in the subsequent registration document.
VI. - Where the registration document filed with or registered by the AMF is published within four months of the financial year- end and contains information referred to in a of point 1° of Article 221-1, the issuer is not required to publish this information separately.
VII. - Where an updated registration document is filed within three months of the end of the first half-year and contains the information referred to in b of point 1° of Article 221-1, the issuer is not required to publish this information separately.
VIII. - To qualify for the publication waivers referred to in VI and VII, the issuer shall publish a news release, in accordance with Article 221-3, explaining how the registration document and its updates are to be made available.
The persons responsible shall be clearly identified in the prospectus by their names and functions or, in the case of legal persons, their business names and registered offices.
The signature of the persons or entities responsible for the prospectus or registration document and for the updates and corrections thereto shall be preceded by a declaration confirming that, to the best of their knowledge, the information contained therein is in accordance with the facts and makes no omission likely to affect its import.
This declaration shall also state that the issuer has obtained a completion letter from its statutory auditors confirming that they have applied their professional standard for checking prospectuses, which consists in examining the entire document. Where appropriate, the issuer shall mention any material observations made by the statutory auditors.
The provisions of the third paragraph of this article shall not apply to prospectuses prepared for a public offering or admission of debt securities to trading on a regulated market, provided that the securities do not give holders access to equity, or for admission of financial securities to the compartment referred to in Article 516-18.
I. - The statutory auditors shall state whether the interim, consolidated or annual financial statements that have undergone an audit or a limited review and that are presented in a prospectus, a registration document or, where such is the case, the updates or corrections thereto, give a true and fair view of the issuer. Where the interim financial statements are summary versions, the statutory auditors shall give their opinion on whether those statements comply with generally accepted accounting principles.
They shall declare that any forward-looking information, whether estimated or pro forma, presented in a prospectus, registration document or, where such is the case, the updates or corrections thereto, has been properly prepared in accordance with the indicated basis and that the accounting basis is consistent with the issuer's accounting policies.
II. - They shall examine all the other information in a prospectus, registration document or, where such is the case, the updates or corrections thereto. This overall examination and any special verifications shall be carried out in accordance with a standard issued by the national institute of statutory auditors (Compagnie Nationale des Commissaires aux Comptes) on prospectus verification.
They shall draw up a completion letter for their work on the prospectus, in which they inform the issuer about the reports appearing in the prospectus, registration document or, where such is the case, the updates or corrections thereto. Upon completion of their overall examination and any special verifications that may have been made in accordance with the aforementioned professional standard, they shall state their observations, if any. The issue date of this completion letter must coincide as closely as possible with the date of the expected AMF approval.
The issuer shall forward a copy of the completion letter to the AMF before the AMF issues its approval or before the registration document or the updates and corrections thereto are filed or registered. If the letter contains observations, the AMF shall take appropriate action when scrutinising the prospectus.
In case of difficulty, the statutory auditors of a French issuer can approach the AMF with any questions about financial information in a prospectus, a registration document or, where such is the case, the updates or corrections thereto.
III. - The provisions of Section II shall not apply to prospectuses prepared for a public offering or admission of debt securities to trading on a regulated market, provided that the securities do not give holders access to equity, or for admission of financial securities to the compartment referred to in Article 516-18.
I. -
Where one or more investment service providers take part in the first admission to trading on a regulated market of equity securities, or in any public offer or admission of such securities during the first three years after the first admission of equity securities, such investment service provider(s) shall certify to the AMF that they have exercised customary professional diligence and found no inaccuracies or material omissions likely to mislead investors or affect their judgement.
During the three years following the first admission to trading of an issuer's securities, where the prospectus prepared for the public offer or admission comprises a registration document or a recent prospectus and a securities note, the investment service provider(s) shall certify only the information in the securities note, provided the information in the registration document or recent prospectus has been certified by such provider(s) or another investment service provider, exercising customary professional diligence, before the offer or admission.
After three years, the investment service provider(s) shall certify only the details of the offer or admission and the characteristics of the relevant securities, as described in the prospectus or the securities note, as the case may be.
II. - Where one or more investment service providers take part in any public offer of equity securities that are not admitted to trading on a regulated market, such investment service provider(s) shall certify to the AMF that they have exercised customary professional diligence and found no inaccuracies or material omissions likely to mislead investors or affect their judgement.
III. - Where one or more entities, whether investment service providers or not, are authorised by a market operator or an investment service provider that operates an organised multilateral trading facility (MTF) within the meaning of Article 524-1, take part through that MTF in a public offer of equity securities, such entities shall certify to the AMF that they have exercised customary professional diligence and found no inaccuracies or material omissions likely to mislead investors or affect their judgement.
In the case referred to in the above paragraph, where customary professional diligence is exercised by persons or entities that are not accredited as investment service providers, the investment service providers that are likely to take part in the public offer are not required to certify to the AMF that such diligence has been exercised.
The certification shall be submitted to the AMF before its issues its approval.
IV. - This article does not apply to prospectuses prepared for admission of financial instruments to the compartment referred to Article 516-18.
Where the final offer price and the final quantity of financial securities being offered cannot be included in the prospectus, the issuer shall mention in the prospectus:
The criteria or the conditions in accordance with which the above elements will be established; or
The maximum offer price.
The final offer price and quantity of securities offered shall be filed with the AMF and published in accordance with Article 212-27.
Where one of the elements mentioned in Point 1° or Point 2° is not mentioned in the prospectus, investors must be entitled to withdraw their acceptance of the acquisition or subscription terms for the securities during at least two trading days following the publication of the final price and quantity of the securities concerned.
Under AMF supervision, certain information may be omitted from the prospectus in the following cases:
Disclosure of such information would be contrary to the public interest;
Disclosure of such information would be seriously detrimental to the issuer, provided that the omission would not be likely to mislead the public;
Such information is of minor importance for the offer or admission envisaged and is not such as will influence the assessment of the financial condition and prospects of the issuer of the guarantor, if any, of the financial securities being offered to the public or admitted to trading on a regulated market.
Such information concerns a European Union Member State as the guarantor of the offer of financial securities.
Without prejudice to adequate information of investors, the contents of the prospectus may be adapted, in exceptional circumstances and under AMF supervision, and subject to the inclusion of equivalent information, if some of the items prove to be inappropriate to the nature of the financial securities concerned, to the business or legal form of issuer or to a person or entity that proceeds with a public offer in accordance with the Monetary and Financial Code or that Article L. 411-1 obliges admission to trading on a regulated market. In the absence of equivalent information, the issuer, person or entity that proceeds with a public offer in accordance with the Monetary and Financial Code or admission to trading on a regulated market shall be authorised, under AMF supervision, to omit the items in question from the prospectus.
The list of items of information not included in the prospectus in accordance with Articles 212-18 and 212-19 forms part of the documentation required to scrutinise the dossier mentioned in Article 212-6. The content of this list and the procedure for submitting it to the AMF are determined by delegated regulation (EU) 2016/301 of 30 November 2015 relating to the approval and publication of the prospectus and dissemination of advertisements and by an AMF instruction.
Where the requirements of this Chapter have been met, and particularly where the AMF has received the declarations referred to in Articles 212-14 to 212-16, the AMF shall issue its approval of the prospectus.
Before issuing its approval, the AMF may request additional investigations from the statutory auditors or ask for an audit to be carried out by an external specialist, appointed with its agreement, if it considers that the statutory auditors have not exercised due care.
The documentation needed to scrutinise the dossier shall be submitted to the AMF when the draft prospectus is filed. The content and submission procedure for such documentation are specified in the delegated regulation (EU) 2016/301 of 30 November 2015 relating to the approval and publication of the prospectus and dissemination of advertisements and in an AMF instruction.
The AMF shall acknowledge receipt of the draft prospectus within the period and according to the procedure specified in the delegated regulation (EU) 2016/301 of 30 November 2015 relating to the approval and publication of the prospectus and dissemination of advertisements and in an AMF instruction.
If the dossier is incomplete, the AMF shall so inform the person that filed the draft prospectus within the ten trading days following the date on which the draft prospectus was filed.
The AMF shall announce its approval within ten trading days following the filing date.
For a public offer or admission of financial securities to trading on a regulated market, where the issuer has drawn up a registration document and registered it in accordance with Article 212-13:
Either it shall file a securities note in accordance with an AMF instruction no later than five trading days before the proposed date for obtaining approval for the offer or admission;
Or it may benefit from a simplified authorisation procedure, at the end of which the AMF issues its authorisation within the three trading days following the filing date on condition that:
the authorisation request does not fall within the scope of Book VI of the Commercial Code in respect of companies in difficulty or equivalent provisions in foreign law; and
that the issuer has filed a note relating to financial securities and a summary in accordance with the corresponding securities note template (including the summary) produced by the Association Française des Marchés Financiers (AMAFI) and approved by the AMF.
The filing of a draft prospectus under the simplified authorisation procedure must be accompanied by the submission to the AMF of the supplementary documentation needed for scrutinising the dossier, whose content and submission procedure are specified in the delegated regulation (EU) 2016/301 of 30 November 2015 relating to the approval and publication of the prospectus and dissemination of advertisements and in an AMF instruction.
The AMF shall indicate to the issuer and the investment services provider whether the issuer's request for a simplified authorisation procedure is accepted or refused within two trading days following the filing date. The failure of the AMF to respond within this period may be taken as acceptance of the issuer's request. In the event of refusal, the ten trading days' scrutiny period includes these two trading days.
If, when scrutinising the dossier, the AMF states that the documents are incomplete or that additional information must be incorporated, the ten, five or three trading days mentioned in the fourth and fifth paragraphs shall commence only when the AMF has received the missing or additional information.
Article 212-21 shall not apply to a first public offer or first admission to trading on a regulated market.
The documentation needed to scrutinise the dossier shall be submitted to the AMF when the draft prospectus is filed. The content and submission procedure for such documentation are specified in the delegated regulation (EU) 2016/301 of 30 November 2015 relating to the approval and publication of the prospectus and dissemination of advertisements and in an AMF instruction.
The AMF shall acknowledge receipt of the initial filing of the prospectus within the period and according to the procedure described in an AMF instruction and the delegated regulation (EU) 2016/301 of 30 November 2015 relating to the approval and publication of the prospectus and dissemination of advertisements.
If the dossier is incomplete, the AMF shall so inform the person that filed the draft prospectus, at the earliest opportunity. If the dossier if complete, the AMF shall send the issuer a notice of filing.
The AMF shall announce its approval within twenty trading days of the filing date.
If, when scrutinising the dossier, the AMF states that the documents are incomplete or that additional information must be incorporated, the time limit mentioned in the fifth paragraph shall commence only when the AMF has received the missing or additional information.
For the first admission of equity securities to trading on a regulated market or organised multilateral trading facility referred to in Article 524-1, the issuer shall be authorised to draw up a base document.
The issuer or any person or entity acting on its behalf shall file the draft base document with the AMF at least twenty trading days before the proposed date for obtaining approval for this transaction.
The filing shall be accompanied by the documentation specified in an AMF instruction. If the dossier is incomplete, the AMF shall so inform the issuer at the earliest opportunity. If the dossier if complete, the AMF shall send the issuer a notice of filing.
The AMF shall register the base document, as specified in an AMF instruction. It shall send the issuer a registration notice, which it shall also post on its website.
The issuer shall disseminate the base document as soon as it has been notified of the registration notice as specified in Article 212-27. It may, however, take it upon itself to delay dissemination provided it refrains from disclosing any material information in the base document to persons not subject to a confidentiality or secrecy obligation. Accordingly, online publication of the registration notice, as provided for in Point 4°, shall be delayed for as long as confidentiality is maintained.
In any case, the base document shall be disseminated no later than five trading days before the proposed date for obtaining approval for the offer or admission.
For the admission to trading of financial securities, the issuer shall file a draft securities note no later than five trading days before the proposed date for obtaining approval for the transaction.
If there has been a material change or recent development that could affect investors' assessments since the registration of the base document, the securities note shall provide the information that would normally be provided in the base document.
I. - The prospectus shall be valid for other public offers or admissions to trading on a regulated market for a period of twelve months after approval by the AMF provided it has been completed by the supplements required by Article 212-25.
II. - A previously filed or recorded registration document shall be valid for a period of twelve months provided it has been updated in accordance with Article 212-13.
The registration document accompanied by the securities note, updated as necessary in accordance with Article 212-10, and the summary of the prospectus shall be considered to constitute a valid prospectus.
Commission Delegated Regulation (EU) No 382/2014 of 7 March 2014 supplementing Directive 2003/71/EC of the European Parliament and of the Council with regard to regulatory technical standards for publication of supplements to the prospectus
I. - Every significant new factor, material mistake or inaccuracy relating to the information included in the prospectus that could materially affect the assessment of the financial securities and arises or is noted between the time that approval is obtained and the closing of the offer or, as the case may be, the start of trading on a regulated market, should that event occur later, shall be mentioned on a supplement to the prospectus, which shall be subject to AMF approval.
A non-exhaustive list of situations in which a supplementary note is required is provided in delegated regulation (EU) no. 382/2014 of 7 March 2014 relating to the publication of supplements to the prospectus.
Advertising shall be adapted in accordance with Article 212-29-1.
The AMF shall issue its approval within seven trading days, as specified in Articles 212-20 to 212-23.
The document shall be published and disseminated with the same arrangements as were applied when the initial prospectus was published.
The summary note, and any translation thereof, shall also be supplemented if necessary to take into account the new information included in the supplement.
II. - Investors who have already agreed to purchase or subscribe for financial securities before the supplement is published shall have the right, exercisable within a time limit that shall be no shorter than two trading days after publication of the supplement, to withdraw their acceptance, provided that the new factor, material mistake or inaccuracy referred to in Paragraph I was prior to the final closing of the public offer and delivery of the financial securities. This time limit may be extended by the issuer or the offeror. The date on which this right to withdraw expires must be specified in the supplement.
Sub-section 2 - Dissemination of the prospectus and advertisements
Commission Delegated Regulation (EU) 2016/301 of 30 November 2015 supplementing Directive 2003/71/EC of the European Parliament and of the Council with regard to regulatory technical standards for approval and publication of the prospectus and dissemination of advertisements and amending Commission Regulation (EC) No 809/2004.
Once approval has been issued, the prospectus shall be filed with the AMF and made available to the public by the issuer or the person or entity seeking admission to trading on a regulated market.
The prospectus shall be disseminated to the public as soon as practicable and, in any case, at a reasonable time in advance of and, at the latest, at the beginning of the public offer or the admission to trading on a regulated market.
In the case of a first admission to trading on a regulated market, the prospectus shall be disseminated to the public at least six trading days before the close of the offer.
I. - In practice, the prospectus shall be disseminated in one of the following ways:
By publication in one or more newspapers with nationwide or other wide circulation;
By being made available free of charge in printed form from the issuer at its registered office, from the undertaking that operates the market on which the financial securities are admitted to trading, and from the financial intermediaries placing or trading the securities concerned, including the securities paying agents;
By posting on the website of the issuer and, if applicable, on websites of the financial intermediaries placing or trading the securities concerned, including the securities paying agents:
By posting on the website of the regulated market where the admission to trading is sought.
II. - Issuers that publish their prospectus in accordance with Point 1° or Point 2° of Section I shall also publish it accordance with Point 3° of Section I.
Issuers that publish their prospectus in accordance with Point 2° to Point 4° of Section I shall also publish the summary of the prospectus in accordance with Point 1° of Section I or a news release disseminated in accordance with Article 221-3 that specifies how the prospectus is to be made available.
III. - Where the prospectus is disseminated in accordance with Point 3° or Point 4° of Section I, a copy of the prospectus shall be sent free of charge to any person who requests one.
IV. - The electronic version of the prospectus shall be sent to the AMF for posting on its website.
The prospectus and the supplement published and made available to the public shall always be identical to the original versions approved by the AMF.
I. – Any oral or written advertisement, regardless of form or method of dissemination, that relates to a public offer or an admission to trading on a regulated market shall be communicated to the AMF before being disseminated.
Such advertisements shall:
State that a prospectus has been or will be published and indicate where investors are or will be able to obtain it;
Be clearly recognisable as advertisements;
Contain no false or misleading statements;
Contain information that is consistent with the information in the prospectus, if already published, or with information required to be in the prospectus, if the prospectus is to be published at a later time;
Contain a notice drawing the reader's attention to the section of the prospectus on risk factors;
Where applicable and at the request of the AMF, contain a warning about certain exceptional characteristics of the issuer or the guarantors, if any, or the securities being offered to the public or admitted to trading on a regulated market.
Comply with the delegated regulation (EU) no. 2016/301 relating to the approval and publication of the prospectus and dissemination of advertisements, and notably with the principles stated in points (c) and (d) of Article 12 regarding, respectively, the need for balanced information and the absence of alternative performance indicators concerning the issuer, unless these indicators appear in the prospectus itself.
II. – Where the public offer or request for admission to a regulated market has not given rise to the production of a prospectus in accordance with Articles 212-4 et 212-5, any advertising material shall contain the warning mentioned in Article 211-3 (1°).
All information other than advertising disclosed in oral or written form about a public offer or admission of financial securities to trading on a regulated market shall be consistent with the information in the prospectus and shall comply with delegated regulation (EU) 2016/301 of 30 November 2015 relating to the approval and publication of the prospectus and dissemination of advertisements and notably with the principles stated in points (c) and (d) of Article 12 regarding, respectively, the need for balanced information and the absence of alternative performance indicators concerning the issuer, unless these indicators appear in the prospectus itself.
In the event that a supplement to the prospectus is published after an advertisement has been disseminated, an amended version of the advertising material shall be disseminated according to the format, period and conditions stated in delegated regulation (EU) 2016/301 of 30 November 2015 relating to the approval and publication of the prospectus and dissemination of advertisements. It shall be submitted to the AMF before dissemination and before the authorisation for the supplement is given.
When no prospectus is required pursuant to this Title, material information provided by an issuer and addressed to qualified investors, as defined by Articles D. 411-1, D. 411-2, D. 734-1, D. 744-1, D. 754-1 and D. 764-1 of the Monetary and Financial Code, or to special categories of investors, including information disclosed in the context of meetings relating to the disposal or issuance of financial instruments, shall be disclosed to all qualified investors of special categories of investors to whom the offer is addressed.
Where a prospectus is required to be published, such information shall be included in the prospectus or in a supplement to the prospectus in accordance with Article 212-25.
Section 3 - Special Cases (Articles 212-31 à 212-38-2)
Paragraph 1 - Base prospectus
An offering programme means a programme that permits the issuance of non-equity securities, including warrants in any form and having a similar category, in a continuous or repeated manner during a specified issuing period.
For the types of financial securities listed below, the prospectus may consist of a base prospectus containing all relevant information about the issuer and the securities being offered to the public or admitted to trading on a regulated market:
Debt securities, including debt warrants in any form, issued under an offering programme;
Debt securities issued on a continuous or repeated basis by credit institutions:
where the sums received from issue of the securities are placed in assets that provide sufficient coverage of the liabilities deriving from securities until their maturity date;
where, in the event that the related credit institution is unable to meet its current liabilities, the sums referred to in a) are intended to repay the principal and interest falling due, without prejudice to the provisions of Articles L613-25 to L. 613-31-10 of the Monetary and Financial Code.
The information given in the base prospectus shall be supplemented, if necessary, with updated information on the issuer and on the securities being offered to the public or admitted to trading on a regulated market, in accordance with Article 212-25.
If they are neither included in the base prospectus, nor in a supplement, the final terms of the offer shall be made available to investors and filed with the AMF which communicates them to the competent authority of the host Member State or host Member States at the earliest opportunity following the announcement of the offer and, if possible, before the offer is launched. The AMF shall communicate those final terms to the ESMA. In such case, the provisions of paragraph 1 of Article 212-17 shall apply.
The final terms may only contain information concerning the securities note and may not serve as a supplement to the base prospectus.
The definitive conditions relating to a base prospectus need not necessarily be published in the same way as the prospectus, but the publication method must be one of those listed in Article 212-27.
In the case of an offering programme, the previously filed base prospectus shall be valid for 12 months.
In the case of the financial securities referred to in Point 2° of Article 212-32, the base prospectus shall be valid until no further securities of the same type are being issued on a continuous or repeated basis.
Paragraph 2 - Merger, demerger, partial merger
Commission Delegated Regulation (EU) 2016/301 of 30 November 2015 supplementing Directive 2003/71/EC of the European Parliament and of the Council with regard to regulatory technical standards for approval and publication of the prospectus and dissemination of advertisements and amending Commission Regulation (EC) No 809/2004.
Two months before the scheduled date of an extraordinary general meeting called to authorise an issue of financial securities relating to a merger, demerger or partial merger, the issuer may file with the AMF the document prepared for that meeting. Where the document contains information equivalent to that specified in an AMF instruction, it is registered by the AMF.
The document provided for in Point 1° shall be published and distributed in accordance with Articles 212-26 and 212-27 fifteen days for partial mergers, or one month for mergers and demergers, before the date of the extraordinary general meetings called to authorise the transaction.
Where an application for admission to trading is made more than one year after a merger, demerger or partial merger that entailed the preparation of a document registered by the AMF, the issuer that is to prepare a listing prospectus may refer to the registered document for the description of the merger, demerger or partial merger.
Documents pertaining to a merger, demerger or partial merger are made available free of charge to any person who so requests for viewing at the registered office of the issuer and at the offices of the financial institutions serving as paying agents for the issuer's securities. They shall also be made available on the issuer's website. The electronic version of these documents shall comply with the provisions of delegated regulation (EU) 2016/301 of 30 November 2015 relating to the approval and publication of the prospectus and dissemination of advertisements.
Paragraph 3 - Issuers having their registered office outside the european economic area
Issuers having their registered office in a State not party to the EEA agreement may draw up a prospectus meeting the standards of the International Organisation of Securities Commissions and containing information equivalent to that required under this Title.
[Removed by the decree of 25 August 2016]
In preparation for the first admission to trading on a regulated market of securities from an issuer having its registered office in a State not party to the European Economic Area Agreement, the draft prospectus should be submitted to the AMF with a document containing all of the relevant information that the issuer published or made available to the public over the preceding 12 months in the State where its registered office is located, along with a timetable of upcoming publications and the topics of the issuer's communications over the two months following the draft prospectus submission date.
Paragraph 4 - Public offers unrelated to financial securities
The provisions of this Title apply to public offerings of shares in mutual and cooperative banks. These offerings shall be the subject of a prospectus that describes the characteristics of the issue and of the shares and that includes, inter alia, a presentation of the bank and the mutual network to which it belongs.
The details and content of the prospectus are set forth in an AMF instruction. The formats and modules referred to in the third paragraph of Article 212-7 are optional.
Where information equivalent to that in the registration document referred to in Article 212-13 has been filed with the AMF and posted on the website of the mutual or cooperative bank, it may be incorporated into the prospectus by reference.
Such offerings shall not be the subject of a prospectus if the shares are subscribed or acquired in connection with a product or service supplied by the mutual or cooperative bank.
To implement Points 1° and 2° of Article 211-2, the amount of the offering and the capital percentage shall be assessed for each calendar year at the level of the mutual bank or regional cooperative.
Public offerings of Certificats mutualistes as mentioned in Article L. 322-26-8 of the French insurance code are subject to the provisions of this title. They are subject to a prospectus describing the characteristics of the issue and of the Certificats mutualistes, including notably a presentation of the issuing company and, where necessary, the group to which it belongs.
The process and content of the prospectus are specified in an instruction of the Autorité des Marchés Financiers. The use of the schedules and modules mentioned in the third paragraph of Article 212-7 is optional.
When information equivalent to that included in the reference document mentioned in Article 212-13 has been submitted to the Autorité des Marchés Financiers and published on the website of the issuing company or group to which it belongs, the prospectus can include it by way of reference.
These offerings do not require a prospectus to be produced when the subscription of Certificats mutualistes is conducted at the time of supplying a product or service by the issuing company or the group to which it belongs.
Section 4 - Offers in several member states of the european union or states party to the european economic area agreement (Articles 212-39 à 212-42)
Sub-section 1 - Issuance by the AMF of an approval certificate
Commission Delegated Regulation (EU) 2016/301 of 30 November 2015 supplementing Directive 2003/71/EC of the European Parliament and of the Council with regard to regulatory technical standards for approval and publication of the prospectus and dissemination of advertisements and amending Commission Regulation (EC) No 809/2004
At the request of the issuer or the person responsible for preparing the prospectus, the AMF shall issue the supervisory authorities of the other Member States of the European Union or States party to the EEA agreement with an approval certificate declaring that the prospectus has been drawn up in accordance with Directive 2003/71/EC of 4 November 2003, along with a copy of the said prospectus. This shall be done within three trading days of that request or, if the request is submitted with the draft prospectus and in the format specified in delegated regulation (EU) 2016/301 of 30 November 2015 relating to the approval and publication of the prospectus and dissemination of advertisements, within one trading day of issuance of approval.
The same procedure shall apply to any supplemental note to the prospectus. The approval certificate shall be provided to the issuer or to the person responsible for preparing the prospectus at the same time as it is provided to the competent authority in the host Member State.
Where such is the case, the certificate shall mention and justify the application of Articles 212-18 and 212-19.
Sub-section 2 - Validity of the prospectus approved by the competent supervisory authority of another member state of the European Union or a state party to the European Economic Area agreement
Without prejudice to Article L. 621-8-3 of the Monetary and Financial Code, when a public offer of financial instruments is planned in one or more Member States of the European Union or States party to the EEA agreement, including France, the prospectus approved by the competent supervisory authority of another Member State of the European Union or a State party to the EEA agreement shall be valid for a public offer of securities in France, provided the AMF receives the notification provided for in Article 212-41.
Where the AMF receives notification of a prospectus approved by the competent supervisory authority of another Member State of the European Union or a State party to the EEA agreement, it shall ensure that the prospectus is drawn up in French or another language customary in the sphere of finance and the issuer produces the French translation of the summary note.
If significant new factors, material mistakes or inaccuracies arise after the approval of the prospectus by the competent supervisory authority of another Member State of the European Union or a State party to the EEA agreement, the AMF may draw that authority's attention to the need for new information.
Chapter III - Right of the AMF to suspend or prohibit a public offer or admission of securities to trading on a regulated market and to be informed prior to such admission (Articles 213-1 à 213-3)
The AMF can suspend a public offer or admission to trading on a regulated market for no more than ten consecutive trading days each time that it has reasonable grounds to suspect that the transaction would contravene applicable laws and regulations.
The AMF may prohibit a public offer or admission to trading on a regulated market where:
It has reasonable grounds to suspect that a public offer would contravene applicable laws and regulations;
It observes that a proposed admission to trading on a regulated market would contravene applicable laws and regulations.
[Removed by the decree of 14 September 2016]
Chapter IV - Appointment of a correspondent by persons or entities having their registered office outside France (Article 214-1)
Persons or entities having their registered office outside France and whose financial securities are admitted to trading on a French regulated market shall appoint and elect domicile with a correspondent in France. The correspondent shall be authorised to:
Receive any and all correspondence from the AMF;
Forward to the AMF all documents and information provided for in laws and regulations, or in response to requests for information from the AMF under the powers granted to it by laws and regulations.
This article shall not apply to issuers whose securities are admitted to trading in the compartment referred to Article 516-18.
Chapter V - Designating the AMF as the competent authority to supervise an offer (Article 215-1)
Any company mentioned in Part II of Article L. 433-1 of the Monetary and Financial Code that designates the AMF as the competent authority to supervise a takeover bid must send the AMF a statement to be posted on the AMF's website. This statement must reach the AMF no later than the first day on which the company's securities are admitted to trading on a regulated market.
The statement must follow the standard format set out in an AMF instruction.
Chapter VI - Sounding out the market for financial offerings (Article 216-1)
[Removed by the decree of 14 September 2016]
Chapter VII - Offers made via a website and not subject to a prospectus approved by the AMF (Article 217-1)
In the case of offers made via a website on the terms set out in Article 325-32 and which are not subject to a prospectus approved by the AMF, the issuer shall provide, via said website and prior to any subscription:
A description of its activity and its project, accompanied in particular by its most recent accounts, information on activity forecasts and an organisation chart of its management team and shareholders;
Information on the level of the holding to which the management of the issuer have personally committed within the framework of the proposed offer;
Exhaustive information on all the rights attached to the securities offered within the framework of the proposed offer (voting, financial and disclosure rights);
Exhaustive information on all the rights (voting, financial and disclosure rights) attached to securities and categories of securities not being offered within the framework of the proposed offer, and the categories of beneficiaries of such securities;
A description of any provisions contained in the articles of association or an agreement and organising the liquidity of the securities, or an explicit statement that no such provisions exist;
The conditions under which copies of the entries in the individual accounts of the investors in the records of the issuer, evidencing ownership of their investment, shall be delivered;
A description of the risks specific to the activity and project of the issuer;
A copy of the reports of the corporate bodies to the general meetings of the most recent financial year and the current financial year and, where applicable, of copy of the report(s) of the statutory auditor(s) drawn up in the course of the most recent financial year and the current financial year.
The issuer is responsible for ensuring that the information provided is complete, accurate and balanced.
An AMF instruction shall stipulate the conditions for applying the provisions of this Article.
Title II - Periodic and ongoing disclosure obligations (Articles 221-1 à 223-38)
Chapter I - Common provisions and dissemination of regulated information (Articles 221-1 à 221-6)
Commission Implementing Regulation (EU) 2016/1055 of 29 June 2016 laying down implementing technical standards with regard to the technical means for appropriate public disclosure of inside information and for delaying the public disclosure of inside information in accordance with Regulation (EU) No 596/2014 of the European Parliament and of the Council.
For the purposes of this title:
Where the issuer's financial securities are admitted to trading on a regulated market, "regulated information" means the following documents and information:
The annual financial report referred to in Article 222-3;
The half-yearly financial report referred to in Article 222-4;
The report on payments to governments, provided for in Article L. 225-102-3 of the Commercial Code;
The infomation and reports referred to in Article 222-9 concerning corporate governance;
[Removed by the decree of 27 February 2017];
Information on the total number of voting rights and the number of shares making up the share capital referred to in Article 223-16;
The description of buyback programmes referred to in Article 241-2;
The news release setting out the arrangements for supplying the prospectus referred to in Article 212-27;
The information published pursuant to Article 17 of the market abuse regulation (Regulation (EU) No. 596/2014);
A news release specifying how the information referred to in Article R. 225-83 of the Commercial Code is being made available or may be consulted;
The information published pursuant to Article 223-21.
The statement concerning the competent authority pursuant to Article 222-1;
Information on the crossing of shareholding thresholds to be provided to the AMF pursuant to Article L. 233-7-II of the Commercial Code and the first sub-paragraph of Article 223-14-I.
Where the issuer has requested or approved trading of its financial securities on a multilateral trading facility operating within French territory in the case of a financial security traded exclusively on a multilateral trading facility, or where the issuer has approved trading of its financial securities on an organised trading facility operating within French territory in the case of a financial security traded exclusively on an organised trading facility, "regulated information" means the documents and information referred to in g), h) and i).
The term "person" means an individual or body corporate.
The provisions of this title also apply to the senior managers of the issuer, legal entity or corporate body concerned.
I. - Where the AMF is the competent authority for monitoring compliance with the disclosure requirements provided for in point 1° of Article 221-1, the requisite information shall be drafted in French or in another language customary in the sphere of finance if the financial securities are admitted to trading on a regulated market in France or in a State, other than France, that is party to the European Economic Area agreement.
II. - Where the AMF is not the competent authority for monitoring the information referred to in paragraph I and where the financial securities are admitted to trading on a French regulated market, the information shall be in French or another language customary in the sphere of finance.
I. - The issuer shall ensure that the regulated information defined in Article 221-1 is disseminated effectively and in full, except for the information referred to in m of point 1° of Article 221-1, which is disseminated effectively and in full by the AMF on its website.
II. - The issuer shall post the regulated information on its website as soon as it has been disseminated, except for the information referred to in m of point 1° of Article 221-1, which is disseminated effectively and in full by the AMF on its website.
I. - This article applies to issuers whose financial securities are admitted to trading on a regulated market, issuers who have requested or approved trading of their financial securities on a multilateral trading facility operating within French territory in the case of a security traded exclusively on a multilateral trading facility, and issuers who have approved trading of their financial securities on an organised trading facility operating within French territory in the case of a financial security traded exclusively on an organised trading facility and for which the AMF is the competent authority for controlling regulated information.
II. - Dissemination of regulated information is considered full and effective if it makes it possible to reach the widest possible audience in the shortest possible period of time between its being distributed in France and in the other Member States of the European Union or other States party to the European Economic Area (EEA) agreement.
Where the issuer has requested or approved trading of its financial securities on a multilateral trading facility operating within French territory in the case of a financial security traded exclusively on a multilateral trading facility, or where the issuer has approved trading of its financial securities on an organised trading facility operating within French territory in the case of a financial security traded exclusively on an organised trading facility, the issuer must ensure the full and effective distribution of regulated information as defined in Article 221-1, or of privileged information under the conditions set forth by the market abuse regulation (Regulation (EU) No. 596/2014). The issuer is deemed to have fulfilled this requirement and the AMF filing requirement referred to in Article 221-5 when it transmits regulated information electronically to a primary information provider that follows the dissemination procedures described in the market abuse regulation (Regulation (EU) No. 596/2014) and that is registered on a list published by the AMF.
Regulated information shall be transmitted in full to the media in a way that ensures secure transmission, minimises the risk of data corruption and unauthorised access, and allows total certainty as to the source of the transmitted information.
Regulated information shall be transmitted to the media in a way that clearly identifies the issuer concerned, the purpose of the regulated information and the date and time at which the issuer transmitted it.
The issuer shall rectify as quickly as possible any shortcomings or disruptions in the transmission of regulated information.
The issuer shall not be held liable for systemic defects or malfunctions affecting the media to which the regulated information has been transmitted.
III. - The issuer shall provide the AMF, on request, with the following:
The name of the person that transmitted the regulated information to the media;
Details of the security measures taken;
The date and time at which the information was transmitted to the media;
The means by which the information was transmitted;
Details of any embargo placed on the information by the issuer, where such is the case.
IV. - The issuer is deemed to have fulfilled the requirement referred to in paragraph I of Article 221-3 and the AMF filing requirement referred to in Article 221-5 when it transmits regulated information electronically to a primary information provider that follows the transmission procedures described in paragraph II and that is registered on a list published by the AMF.
V. - For the reports and information referred to in a, b, c and d of point 1° of Article 221-1, the issuer may distribute a news release, in accordance with the procedures provided for in this article, describing how such reports and information are to be made available. In this case, the provisions of paragraph I of Article 221-3 are waived.
VI. - The issuer shall also make a financial disclosure through the print media, at a frequency and in a presentation format that it considers appropriate given the type of financial securities issued, its size and shareholder base, and the circumstances in which its financial securities were admitted to trading in the compartment referred to Article 516-18. This disclosure must not be misleading and must be consistent with the information referred to in paragraph I of Article 221-3.
The regulated information is filed electronically with the AMF by the issuer at the same time as specified in an AMF instruction.
The provisions of Articles 221-3 and 221-4 apply to issuers having financial instruments, as referred to in paragraphs I and II of Article L. 451-1-2 of the Monetary and Financial Code, that are admitted to trading solely on a regulated market, even if the issuer has its registered office outside France and is not subject to the requirements of the above article.
Chapter II - Periodic information (Articles 222-1 à 222-15)
Section 1 - Financial and accounting information (Articles 222-1 à 222-6)
Sub-section 1 - General provisions
The provisions of this section apply to issuers having their registered office in France and referred to in section I of Article L 451-1-2 of the Monetary and Financial Code.
They also apply to issuers referred to in section II of Article L. 451-1-2 ibid if they have chosen the AMF as the competent authority for monitoring compliance with the disclosure requirements stipulated therein. This choice is valid for at least three years for issuers referred to in point 2° of section II of the aforementioned Article L. 451-1-2, unless:
The financial securities are no longer admitted to trading on any market of a Member State of the European Union or a state party to the European Economic Area agreement
The financial securities are no longer admitted to trading on the French regulated market but are admitted to trading in one or more other European Union Member States or states party to the European Economic Area agreement.
This choice takes the form of a statement published in accordance with Article 221-3 and filed with the AMF in accordance with Article 221-5.
Where an issuer chooses the AMF as the competent authority, its choice is made public and disclosed to the competent authority of the Member State of the issuer's registered office and, where appropriate, to the competent authorities of all Member States in the territory where its financial securities are admitted to trading on a regulated market.
Where the issuer's financial securities are no longer admitted to trading on a regulated market of a Member State of the European Union or a state party to the European Economic Area agreement, or where the issuer chooses another competent authority to monitor compliance with the disclosure requirements provided for in Article L. 451-1-2 ibid, it informs the AMF thereof in accordance with the conditions and procedures described in the above sub-paragraph.
If the issuer fails to make public the name of the competent authority chosen to monitor compliance with disclosure requirements within three months of the date on which its financial securities were first admitted to trading on a regulated market, the home Member State shall be the Member State in which the issuer's financial securities are admitted to trading on a regulated market. Where the issuer's financial securities are admitted to trading on a regulated market in several Member States, such States shall be considered as the competent Member States for the issuer until a subsequent choice of a single home Member State has been made and disclosed by the issuer.
For an issuer having financial securities already admitted to trading on a regulated market and failing to publish its choice of competent Member State before 27 November 2015, the three-month deadline shall begin on 27 November 2015.
An issuer having chosen a competent Member State to monitor compliance with its disclosure obligations and having informed the competent authorities concerned before 27 November 2015 shall be exempted from the requirement to publish its choice of competent Member State, unless such issuer chooses another competent Member State after 27 November 2015.
Sub-section 2 - Annual financial reports
I. - The annual financial report referred to in paragraph I of Article L. 451-1-2 of the Monetary and Financial Code shall include:
The annual accounts;
Where applicable, the consolidated accounts prepared in accordance with Regulation (EC) 1606/2002 of 19 July 2002 on the application of international accounting standards;
A management report containing at least the information referred to in I of Article L. 225-100-1 and in the second sub-paragraph of Article L. 225-211 of the Commercial Code and, if the issuer is required to prepare consolidated accounts, in II of Article L. 225-100-1 of that Code;
A statement made by the natural persons taking responsibility for the annual financial report, whose names and functions are clearly indicated, to the effect that, to the best of their knowledge, the accounts are prepared in accordance with the applicable set of accounting standards and give a true and fair view of the assets, liabilities financial position and profit or loss of the issuer and the undertakings in the consolidation taken as a whole, and that the management report includes a fair review of the development and performance of the business, profit or loss and financial position of the issuer and the undertakings in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face;
The report of the statutory auditors on the annual accounts and, where applicable, the consolidated accounts.
II. - The issuer may include in the annual financial report referred to in paragraph I the news release concerning the information and reports referred to in Article 222-9. In this case, they are not required to publish this information separately.
Sub-section 3 - Half-yearly financial reports
The half-yearly financial report referred to in paragraph III of Article L. 451-1-2 of the Monetary and Financial Code shall include:
Complete or condensed accounts for the past half-year, in consolidated form where necessary, prepared either under IAS 34 or in accordance with Article 222-5;
An interim management report;
A statement made by the natural persons taking responsibility for the half-yearly financial report, whose names and functions are clearly indicated, to the effect that, to the best of their knowledge, the accounts are prepared in accordance with the applicable set of accounting standards and give a true and fair view of the assets, liabilities financial position and profit or loss of the issuer and the undertakings in the consolidation taken as a whole, and that the interim management report includes a fair review of the information referred to in Article 222-6;
The statutory auditors' report on the limited review of the aforementioned accounts. Where the legal provisions applicable to the issuer do not require a report from the statutory or regulatory auditors on the interim accounts, the issuer shall mention this in its report.
I. - Where the issuer is not required to prepare consolidated accounts or apply international accounting standards, the interim accounts shall contain at least the following:
Balance sheet;
Income statement;
Statement of changes in equity;
Cash flow statement;
Accounting policies and explanatory notes.
These accounts may be in condensed form and the explanatory notes may contain only a selection of the most material notes.
The condensed balance sheet and the condensed income statement shall show each of the headings and subtotals included in the most recent annual accounts of the issuer. Additional line items shall be included if, as a result of their omission, the half- yearly accounts would give a misleading view of the assets, liabilities, financial position and profit or loss of the issuer.
The explanatory notes shall include at least enough information to ensure the comparability of the condensed half-yearly accounts with the annual accounts, as well as sufficient information and explanations to ensure a reader's proper understanding of any material changes in amounts and of any developments in the half-year period concerned, which are reflected in the balance sheet and the income statement.
II. - For comparability, interim accounts shall contain the following:
The balance sheet as of the end of the interim period in question and the comparative balance sheet as of the end of the immediately preceding financial year;
The income statement cumulatively for the first six months of the current financial year, with a comparative income statement for the comparable period of the immediately previous financial year and the income statement of the immediately previous financial year;
The statement of changes in equity cumulatively for the first six months of the current financial year, with a comparative statement of changes in equity for the immediately preceding financial year;
The cash flow statement cumulatively for the first six months of the current financial year, with a comparative cash flow statement for the immediately preceding financial year.
III. - The interim accounts shall be prepared on a consolidated basis if the accounts for the company's most recent financial were consolidated accounts.
IV. - If the earnings per share amount is published in the accounts for the financial year, it shall also be published in the interim accounts.
I. - As a minimum requirement, the interim management report shall describe the material events that occurred in the first six months of the financial year and their impact on the interim accounts. It shall describe the principal risks and uncertainties for the remaining six months of the year.
II. - For issuers of shares, the half-yearly report shall also disclose, as major related parties' transactions, as a minimum, the following:
Related parties' transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or the performance of the issuer during that period;
Any changes in the related parties' transactions described in the last annual report that could have a material effect on the financial position or performance of the issuer in the first six months of the current financial year.
Where the issuer of shares is not required to prepare consolidated accounts, it shall disclose, as a minimum, the related parties transactions referred to in Point 10 of Article R. 233-14 of the Commercial Code.
Section 2 - Other information (Articles 222-8 à 222-9)
[Removed by the decree of 27 February 2017]
Public limited companies (sociétés anonymes) whose securities are admitted to trading on a regulated market shall publicly disclose, in accordance with Article 221-3, the information and reports mentioned in Articles L. 225-37, L. 225-68 and L. 225-235 of the Commercial Code no later than the day of filing of the report with the clerk of the commercial court mentioned in Article L. 225-100 of the Commercial Code.
Companies organised as partnerships limited by shares (sociétés en commandite par actions) admitted to a regulated market shall publicly disclose the information mentioned in Article L. 226-10-1 of the Commercial Code on the same conditions.
Other French legal persons shall publicly disclose information about the matters mentioned in the first paragraph under the same conditions set forth in the preceding sentence, if they are required to file their financial statements with the clerk of the commercial court. If they are not required to file, they shall make such disclosure once their financial statements for the preceding financial year have been approved.
Whenever an issuer prepares a registration document pursuant to Article 212-13, that document shall include the reports and disclosures mentioned in paragraph I. In such case, the dissemination requirements of that paragraph do not apply.
Section 3 - Equivalence criteria for periodic information for issuers having their registered office outside the European Economic Area (Articles 222-10 à 222-15)
Where the AMF exempts an issuer from the obligations set forth in Article L. 451-1-2, pursuant to Section VIII of Article L. 451-1-2 of the Monetary and Financial Code and Articles 222-11 to 222-16 herein, such issuer shall disseminate, keep and file the information deemed equivalent by the AMF, using the procedures defined in Articles 221-3 to 221-5.
The AMF then informs the European Securities and Markets Authority of the waiver it has granted.
A State that is not party to the European Economic Area (EEA) agreement shall be regarded as setting requirements equivalent to those in Point 3 of I of Article 222-3 where, under the law of that State, the management report is required to include at least the following information:
a fair review of the development and performance of the business and of the position of the issuer, together with a description of the principal risks and uncertainties that it faces, so as to present a balanced and comprehensive analysis consistent with the size and complexity of the business;
An indication of the important events that have occurred since the end of the financial year;
Indications of the issuer's likely future development.
The analysis referred to in Point 1° shall, to the extent necessary for an understanding of the issuer's development, performance or position, include both financial and, where appropriate, non-financial key performance indicators relevant to the issuer's particular business.
A State that is not party to the European Economic Area Agreement shall be regarded as setting requirements equivalent to those in Point 2° of I of Article 222-3 where, under the law of that State, the issuer:
Is not required to provide individual accounts for the parent company;
Is required to provide consolidated financial statements including:
for issuers of shares, dividends computation and ability to pay dividends;
for all issuers, where applicable, minimum capital and equity requirements and liquidity issues.
Must provide the AMF, at its request, with additional audited disclosures giving information on the individual accounts of the issuer as a standalone, relevant to the elements of information referred to under points (a) and (b) of 2°. This information may be drawn up under the accounting standards of the issuer's home country.
A State that is not party to the European Economic Area Agreement shall be regarded as setting requirements equivalent to those in 2° of I of Article 222-3 with regard to individual accounts where, under the law of that State, the issuer is not required to provide consolidated financial statements under international accounting standards deemed to be applicable in the European Union under the terms of Article 3 of Regulation (EC) 1606/2002 and the national accounting standards of the country concerned which are equivalent to such standards.
If such financial information is not in line with those standards, it must be presented in the form of restated financial statements. The individual accounts must be audited independently.
A State that is not party to the European Economic Area Agreement shall be regarded as setting requirements equivalent to those in Article 222-6 where, under the law of that State, the issuer must provide a set of condensed financial statements and an interim management report that includes as a minimum:
A review of the period covered;
Indications of the issuer's likely future development for the remaining six months of the financial year;
For issuers of shares and if already not disclosed on an ongoing basis, major related parties' transactions.
A State that is not party to the European Economic Area agreement shall be regarded as setting requirements equivalent to those in Point 4° of I of Article 222-3 and in Point 3° of Article 222-4 where, under the law of that State, one or more persons within the issuer take responsibility for the annual and half-yearly financial information, and in particular for the following:
1° The compliance of the financial statements with the applicable reporting framework or set of accounting standards ;
2° The fairness of the management review included in the management report.
Chapter III - Ongoing disclosure (Articles 223-1-A à 223-38)
Section 1 - Obligation to inform the public (Articles 223-1-A à 223-10-1)
For the purposes of this section, “issuer” means (i) any issuer who has requested or approved admission of its financial securities to trading on a regulated market operating within French territory, (ii) any issuer who has requested or approved trading of its financial securities on a multilateral trading facility operating within French territory in the case of a financial security traded exclusively on a multilateral trading facility, and (iii) any issuer who has requested trading of its financial securities on an organised trading facility operating within French territory in the case of a financial security traded exclusively on an organised trading facility.
Information provided to the public must be accurate, precise and fairly presented.
Commission Delegated Regulation (EU) 2016/522 of 17 December 2015 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council as regards an exemption for certain third countries public bodies and central banks, the indicators of market manipulation, the disclosure thresholds, the competent authority for notifications of delays, the permission for trading during closed periods and types of notifiable managers' transactions
Commission Implementing Regulation (EU) 2016/1055 of 29 June 2016 laying down implementing technical standards with regard to the technical means for appropriate public disclosure of inside information and for delaying the public disclosure of inside information in accordance with Regulation (EU) No 596/2014 of the European Parliament and of the Council
When an issuer or a participant in the market for emissions allowances defers publication of privileged information under the conditions set out in Article 17 of the market abuse regulation (Regulation (EU) No. 596/2014), the Autorité des marchés financiers may require explanations for this deferred publication. These explanations must be provided without further delay.
[Removed by the decree of 14 September 2016]
[Removed by the decree of 14 September 2016]
Any material change concerning privileged information already made public shall be disclosed promptly, by the same means used for the initial disclosure.
Any person that is preparing a financial transaction liable to have a significant impact in the market price of a financial instrument, or on the financial position and rights of holders of that financial instrument, must disclose the characteristics of the transaction to the public as soon as possible.
If confidentiality is temporarily necessary to carry out the transaction and if the person mentioned in the preceding sentence is able to ensure such confidentiality, he may assume responsibility for deferring disclosure of those characteristics.
Where a person has publicly disclosed his intentions and subsequently his intentions no longer conform to his initial declaration, he is required to inform the public promptly of his new intentions.
All issuers must ensure that the same information disclosed abroad is disclosed simultaneously in France in accordance with the provisions of Article 223-1.
All the information mentioned in Articles 223-2 to 223-8 must be disclosed to the public in the form of a news release distributed in accordance with Article 221-3.
The AMF may request that issuers and persons mentioned in Articles 223-2 to 223-8 publicly disclose, in a timely fashion, information that the AMF deems necessary for investor protection and orderly markets. Failing such publication, the AMF itself may disclose the information.
Issuers must ensure equal and simultaneous access in France to the information sources and channels that the issuer or its advisers make available specifically to investment analysts, particularly with regard to corporate finance transactions.
Notwithstanding the provisions of the first paragraph, when the transaction involves capital securities submitted for the first time to trading on a regulated market or organised multilateral trading facility, the financial analysts appointed by member institutions of the syndicate in charge of performing the transaction, or by the group to which these institutions belong, may receive information prior to its public dissemination subject to compliance with the provisions of article 315-1.
Section 2 - Crossing of shareholding thresholds, declarations of intent and changes of intent (Articles 223-11 à 223-17)
Commission Delegated Regulation (EU) 2015/761 of 17 December 2014 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to certain regulatory technical standards on major holdings
Sub-section 1 - Major shareholdings
I. - The participation thresholds referred to in Article L. 233-7 of the Commercial Code shall be calculated on the basis of the shares and voting rights owned, plus, even if the person concerned does not itself hold shares or voting rights elsewhere, the shares and voting rights treated as if they were owned pursuant to Article L. 233-9 of said code. These are calculated in relation to the total number of shares making up the capital of the company and the total number of voting rights attached to these shares.
The total number of voting rights is calculated on the basis of all the equities to which voting rights are attached, including equities whose voting rights have been suspended.
II. - Pursuant to Point 4°, Section I of Article L. 233-9 of the Commercial Code, the person required to make the notification referred to in Part I shall take account of the maximum number of issued shares that it is entitled to acquire on its own initiative alone, immediately or at the end of a maturity period, under an agreement or a financial instrument, without set-off against the number of shares that said person is entitled to sell under an another agreement or financial instrument. The financial instruments referred to in Point 4°, Section I of said article are, inter alia:
Bonds that are exchangeable or redeemable in shares;
Futures and forward contracts;
Options, whether exercisable immediately or at the end of a maturity period, and regardless of the level of the share price relative to the option strike price.
Where the option can be exercised only if the share price reaches a threshold stipulated in the contract, it shall be treated in the same way as a share once this threshold is reached; if not, it is subject to the information requirement mentioned in the third paragraph of Section I of Article L. 233-7 of the Commercial Code.
III. - Pursuant to Point 4° bis of Section I of Article L. 233-9 of the Commercial Code, the person required to make the notification referred to in Part I shall take account of issued shares covered by an agreement or cash-settled financial instrument and having an economic effect for said person that is equivalent to owning said shares, irrespective of whether said agreement or financial instrument carries the right to physical settlement or cash settlement.
This applies in particular to:
Bonds that are exchangeable or redeemable in shares;
Futures and forward contracts;
Options, whether exercisable immediately or at the end of a maturity period, and regardless of the level of the share price relative to the option strike price;
Warrants;
Securities repurchase agreements;
Securities financing agreements;
Contracts for difference;
Equity swaps;
Any financial instrument exposed to a basket of shares or an index. The number of shares or voting rights to be taken into account by the reporting person in the case of financial instruments referenced to a basket of shares or an index shall be calculated based on the relative importance of the share in the basket or the index if one of the following conditions is fulfilled:
the shares represent 1% or more of the same class of shares issued by the issuer;
the shares represent 20% or more of the total value of the securities in the basket or index.
Where a financial instrument is referenced to a series of baskets of shares or indices, the shares and voting rights held through the individual baskets of shares or indices shall not be accumulated for the purpose of calculating the thresholds set out in paragraph 1.
The number of shares or voting rights to be taken into account by the reporting person having an agreement or a financial instrument carrying the right to cash settlement shall be calculated by multiplying the maximum number of shares and voting rights covered by the agreement or financial instrument by the delta of the agreement or instrument.
The delta shall be calculated using a generally accepted standard pricing model. A generally accepted standard pricing model shall be a model that is generally used in the finance industry for that financial instrument and that is sufficiently robust to take into account the elements that are relevant to the valuation of the instrument. The elements that are relevant to the valuation shall include at least all of the following:
interest rate;
dividend payments;
time to maturity;
volatility;
price of underlying share.
When determining delta, the holder of the financial instrument shall ensure all of the following:
that the model used covers the complexity and risk of each financial instrument;
that the same model is used in a consistent manner for the calculation of the number of voting rights to be taken into account by the reporting person.
Information technology systems used to carry out the calculation of delta shall ensure consistent, accurate and timely compliance with the time period stipulated in Article 223-14.
The number of voting rights shall be calculated daily based on the last closing price of the underlying share.
There shall be no set-off with any short position held by the reporting person as a result of another agreement or cash-settled financial instrument.
I. - Where the holder of the agreements or financial instruments referred to in Points 4° or 4° bis of Section I of Article L. 233-9 of the Commercial Code comes into possession of shares covered by said agreements or instruments and in doing so exceeds one of the thresholds referred to in Section I of Article L. 233-7 of said code, whether alone or in concert, these shares shall be subject to a new disclosure, as provided in Article L. 233-7 of the code. The same applies to the voting rights attached to these shares.
II. - Where the same shares and voting rights can be aggregated in accordance with several of the cases referred to in Section I of Article L. 233-9 of the Commercial Code, the person required to make the disclosure provided for in Section I of Article L. 233-7 of the code shall aggregate them only once.
I. - Pursuant to Point 2° of Part II of Article L. 233-9 of the Commercial Code, the following shall not be treated as shares or voting rights held by the person required to provide the notification provided for in Part I of Article L. 233-7 of the aforementioned code: equities held in a portfolio managed by an investment service provider controlled by that person within the meaning of Article L. 233-3 of the Commercial Code in connection with an asset management service, if the provider is able to exercise the voting rights attached to these equities only on the instructions of its client or if it provides assurance that the asset management business is conducted separately from all other activities.
II. - Application of Part I of this Article and Point 1° of Part II of Article L. 233-9 of the Commercial Code shall be subject to the immediate submission of the following information to the AMF by the person required to provide the notification:
The list of the management companies or investment service providers, citing their competent supervisory authorities or, failing that, that no authority is responsible for their supervision, but without mentioning the issuers concerned;
A statement to the effect that the person required to provide the notification complies with the requirements of this article for each management company or investment service provider concerned.
Said person shall keep the list mentioned in Point 1° up to date.
III. - The person mentioned in Part II must be able to prove to the AMF at its demand that:
The person's organisational structures, along with those of the management company or the investment service provider, are set up in such a way that the provider exercises the voting rights independently and that the provider and the person required to provide the notification have established procedures and rules of conduct aimed at preventing the disclosure of information about the exercise of voting rights between said person and the management company or investment service provider;
The persons who set the procedures for exercising voting rights shall act independently;
If the person mentioned in Part II is a customer of the management company or the provider or if said person holds a share of the assets managed by the provider, there shall be a written agency agreement clearly establishing a mutually independent relationship between said person and the management company or the investment service provider.
IV. - The provisions of Article L. 233-9 of the Commercial Code shall not apply if the management company or the investment service provider is able to exercise voting rights only on the direct or indirect instructions of the person required to provide the notification mentioned in Point I the aforementioned Article L. 233-7 or of any other person controlled by that person within the meaning of the aforementioned Article L. 233-3.
For the purposes of this paragraph:
"Direct instruction" shall mean any instruction given by the person required to provide the notification or any person controlled by that person within the meaning of Article L. 233-3 of the Commercial Code, stipulating how the management company or the investment service provider should exercise the voting rights under given circumstances;
"Indirect instruction" shall mean any general or specific instruction given in any form by the person required to provide the notification or any person controlled by that person within the meaning of Article L. 233-3 of the Commercial Code that limits the discretion of the management company or the investment service provider in the exercise of the voting rights in order to serve the commercial interests of the person required to provide the notification or the controlled person.
Point II of Article L. 233-9 of the Commercial Code shall apply to investment providers whose registered offices are not located in States party to the European Economic Area Agreement and which would have been authorised under the terms of Article 5, paragraph 1 of Directive 85/611/EEC, or in the case of asset management, under the terms of Section A, Point 4 of Annex I to Directive 2004/39/EC if their registered offices, or in the case of investment service providers only, their central offices, were located in States party to the European Economic Area Agreement, when under the legislation of those States:
The management company or the investment service provider must be free, under all circumstances, to exercise the voting rights attaching to the assets under its management, independently of the person controlling it;
The management company or the investment service provider must not take into consideration the interest of the person controlling it or any person controlled by that person in the event of a conflict of interest;
The person required to provide the notification shall comply with the provisions of Point 1° of the last paragraph of Part II of Article 223-12 and file a statement with the AMF to the effect that it complies with the requirements stipulated in Points 1° and 2° for each management company or investment service provider concerned.
The person required to provide the notification shall be subject to the provisions of Part III of Article 223-12.
I. - The notification requirements provided for in Parts I, II and III of Article L. 233-7 of the Commercial Code do not apply to equities:
1° Acquired solely for the clearing, settlement or delivery of financial instruments under the short-term settlement cycle lasting no more than three trading days after the transaction;
2° Held by an investment services provider in its trading book within the meaning of Directive 2006/49/EC of the Parliament and of the Council of 14 June 2006 on the capital adequacy of investment firms and credit institutions, provided that:
These equities represent 5% or less of the share capital or voting rights of the issuer;
The voting rights attached to these equities are not exercised nor otherwise used to intervene in the management of the issuer;
The threshold referred to in the previous paragraph shall be calculated on the basis of the shares and voting rights owned, plus the shares and voting rights treated as if they were owned pursuant to Article L. 233-9 of the Commercial Code. These are calculated in relation to the total number of shares making up the capital of the company and the total number of voting rights attached to these shares.
II. - The notification requirements provided for in Parts I, II and III of Article L. 233-7 of the Commercial Code shall not apply to any market maker whose shareholding breaches the threshold of 5% of the share capital or voting rights in connection with market-making activities, provided:
That it does not intervene in the issuer's management;
That it does not exert any influence on the issuer to buy such equities or to support the price of such equities.
III. - A market maker shall notify the AMF within five trading days of starting its activity that it is making or intends to make a market for a given issuer. It shall also notify the AMF within the same period when its stops making a market for the issuer concerned.
This notification shall be made using a standard form to be defined by an AMF Instruction.
IV. - A market maker shall submit to the AMF at its request:
Means of identifying the equities or financial instruments concerned. The market maker shall register them in a separate account, if it cannot identify them by any other means;
Where applicable, any agreements between the market maker and the market undertaking, or the issuer.
I. - The persons required to make the notification referred to in Section I of Article L. 233-7 of the Commercial Code shall file it with the AMF no later than the close of trading on the fourth trading day after the shareholding threshold has been crossed.
For the purposes of the preceding paragraph, the AMF shall post the calendar of trading days on the different regulated markets established or operating in France to its website.
II. - The information mentioned in Part I must include:
The identity of the reporting person;
Where applicable, the identity of the natural person or legal entity entitled to exercise voting rights on behalf of the reporting person;
The date on which the threshold was breached;
The reason why the threshold was breached;
The resulting situation in terms of shares and voting rights;
Where applicable, the type of aggregation with shares and voting rights held by the reporting person under Article L. 233-9 of the Commercial Code and, where appropriate, the main points of the agreement mentioned in Points 4° and 4° bis of Section I of Article L. 233-9 of the aforementioned code;
Where applicable, the chain of undertakings controlled within the meaning of Article L. 233-3 of the Commercial Code through which the shares and voting rights are held;
Where applicable, the number of shares acquired further to a securities financing transaction;
The signature of the person required to provide the notification.
III. - The notification shall also indicate:
The number of securities giving future access to shares to be issued and to the voting rights attached thereto, notably normal warrants and covered warrants, bonds convertible into shares, and bonds convertible into or exchangeable for new or existing shares;
If the conditions set in Point 4°, Section I of Article L. 233-9 of the Commercial Code are not satisfied, the issued shares that the reporting person is entitled to acquire under an agreement or a financial instrument, notably the options referred to in the last paragraph of Section II of Article 223-11, in the cases stipulated therein;
IV. - Where Point 4° of Section I of Article L. 233-9 of the Commercial Code applies or in the cases provided for in Section III, the notification shall also include a description of each type of financial instrument or the agreement, with the following details:
The expiry or maturity date of the instrument or agreement;
Where applicable, the date or the period at which the shares will or can be acquired;
The name of the issuer of the share concerned;
The principal characteristics of this instrument or agreement, in particular:
The conditions in which the instrument or agreement carries the right to acquire shares;
The maximum number of shares to which the instrument or the agreement carries the right or which the holder or beneficiary can acquire, without set-off against the number of shares that this person is entitled to sell pursuant to another financial instrument or another agreement;
V. - Where Point 4° bis of Section I of Article L. 233-9 of the Commercial Code applies, the declaration shall also include a description of each type of agreement or physically settled financial instrument, in accordance with Section IV, as well as a description of each type of agreement or cash-settled financial instrument, with the following details:
The expiry or maturity date of the instrument or agreement;
The name of the issuer of the share concerned;
The principal characteristics of this instrument or agreement, in particular the maximum number of shares to which it is indexed or referenced, without set-off against the number of shares on which the person subject to the notification requirement holds a short position as a result of an agreement or cash-settled financial instrument;
The delta of the instrument or the agreement, which is used to determine the number of shares and voting rights aggregated by the reporting person.
VI. - The notification takes the form of the standard notification provided in an AMF instruction. It is filed with the AMF in accordance with an AMF instruction. It is disclosed to the public by the AMF within three trading days from receipt of the full notification. It shall be drafted in French or another language that is customary in the sphere of finance.
In the case provided for in Point 8° of Part I of Article L. 233-9 of the Commercial Code, the notification mentioned in Article 223-14 may take the form of a single notification, provided that it clearly explains what the situation will be with regard to voting rights when the proxy holder is no longer able to exercise them after the proxy expires. In this case, the proxy holder is no longer required to give notice when its shareholding goes under the thresholds stipulated in Article L. 233-7 of the Commercial Code after the proxy expires.
The provisions of paragraph 1 of this sub-section shall apply to the organised multilateral trading facilities referred to in Article 524-1 when a person comes into possession, under the conditions set forth in Articles L. 233-7 et seq. of the Commercial Code, of more than one-half or nineteen-twentieths of the capital or voting rights.
The provisions of this sub-section shall apply to issuers of financial instruments that have been moved from trading on a regulated market to trading on an organised multilateral trading facility within the meaning of Article 524-1, for a period of three years starting from the admission date, under the terms of Article L. 233-7-1 of the Commercial Code.
Sub-section 2 - Information about the total number of voting rightsand shares making up the share capital
Each month, companies whose shares are admitted to trading on a regulated market in a State party to the European Economic Area Agreement or on an organised multilateral trading facility within the meaning of Article 524-1 shall disclose, in accordance with the procedures set out in Article 221-3, the total number of voting rights, determined according to the stipulations of the second paragraph of Article 223-11, and the number of shares making up their share capital, if these figures have changed relative to previous disclosures.
The provisions of Article 223-16 shall apply when the issuer has its registered office in a State not party to the European Economic Area agreement and comes under AMF jurisdiction for supervision of compliance with the requirement set in Article L. 412-1 of the Monetary and Financial Code.
A third country shall be deemed to set requirements equivalent to those set in Article 223-16 where the issuer is required to disclose to the public the total number of voting rights and capital within thirty calendar days of any change in such total number.
Sub-section 3 - Statements of intent and changes of intent
I - The notification provided for in Section VII of Article L. 233-7 of the Commercial Code shall indicate:
The methods of financing the acquisition and the arrangements therefor: the notifier shall indicate in particular whether the acquisition is being financed with equity or debt, the main features of that debt, and, where applicable, the main guarantees given or received by the notifier. The notifier shall also indicate what portion of its holding, if any, it obtained through securities loans.
If the acquirer is acting alone or in concert;
If it plans to cease or continue its purchases;
If it intends to take control of the company;
The strategy it intends to pursue in relation to the issuer;
The operations for carrying out that strategy:
Any plans for a merger, reorganisation, liquidation, or substantial partial transfer of the assets of the issuer or of any other entity it controls within the meaning of Article L. 233-3 of the Commercial Code;
Any plans to modify the business of the issuer;
Any plans to modify the memorandum and articles of association of the issuer;
Any plans to delist a category of the issuer's financial securities;
Any plans to issue the issuer's financial securities.
Its intentions as regards the unwinding of the agreements and instruments referred to in Points 4° and 4° bis of Section I of Article L. 233-9 of the Commercial Code, if it is party to such agreements or instruments.
Any agreements on a securities financing transaction involving the shares or voting rights of the issuer;
Whether it intends to request its appointment or the appointment of one or more persons as a director on the executive board or supervisory board.
II. - Any person that provides portfolio management services for third parties as a regular business is not required to provide all the information provided for in Section I, on the following conditions:
It crosses the threshold of one-tenth or three-twentieths of the capital or voting rights of the issuer in the normal course of business;
It declares that it does not intend to take control of the company or to request its appointment or the appointment of one or more persons as a director on the executive board or supervisory board;
It carries on its business independently from any other business.
In this case the declaration shall take the form of a standard clause contained in an AMF instruction.
III. - The initiator of a takeover bid that comes into possession of more than one-tenth, three-twentieths, one-fifth or one-quarter of the capital or the voting rights of the target company during the offer period or subsequent to the bid shall be exempt from Section VII of Article L. 233-7 of the Commercial Code if the offer document referred to in Article 231-18 has been disclosed to the public.
IV. - The AMF shall disclose to the public the information referred to in Section VII of Article L. 233-7 of the Commercial Code.
Section 3 - Shareholder agreements (Article 223-18)
The AMF shall publicly disclose the information mentioned in Article L. 233-11 of the Commercial Code. The AMF shall specify in an instruction how such information is to be transmitted to it.
Section 4 - Other information (Articles 223-19 à 223-21)
Sub-section 1 - Information on proposals to amend the articles of association
The issuers referred to in Article 222-1 shall inform both the AMF and the persons that manage the EEA regulated markets to which their shares are admitted to trading of any proposals to amend their articles of association. Such communication shall be made without delay but at the latest on the date of calling the general meeting.
I. - In the event that a company, whose registered office is in France and whose shares are admitted to trading on a French regulated market or for which an application for admission to trading on such a market has been filed, decides to apply or cease applying the provisions set forth in Articles L. 233-35 to L. 233-39 of the Commercial Code, it shall notify the AMF of amendments to its articles of association as soon as these are made, so that the AMF can post this information on its website.
II. - The following are also subject to the provisions of Part I:
Any company whose registered office is in France and whose shares are admitted to trading on a regulated market in a Member State of the European Union or in a State party to the European Economic Area (EEA) Agreement, other than France, or for which an application for admission to trading on such a market has been filed;
Any company whose registered office is in a Member State of the European Union or in a State party to the EEA Agreement, other than France, and whose shares are admitted to trading on a French regulated market or for which an application for admission to trading on such a market has been filed.
Sub-section 2 - Other information
Notwithstanding section 1 of this chapter, the issuers referred to in Article 222-1 shall make public without delay, and in accordance with Article 221-3:
Any change in the rights attaching to the various classes of shares, including changes in the rights attaching to derivative instruments issued by the issuer and giving access to the shares of that issuer;
Any change to the terms and conditions of issuance that may directly affect the rights of holders of financial instruments other than equities;
Section 5 - Transactions in the company's securities by officers and directors and persons referred to in article L. 621-18-2 of the monetary and financial code (Articles 223-22-A à 223-26)
Commission Delegated Regulation (EU) 2016/522 of 17 December 2015 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council as regards an exemption for certain third countries public bodies and central banks, the indicators of market manipulation, the disclosure thresholds, the competent authority for notifications of delays, the permission for trading during closed periods and types of notifiable managers' transactions
Commission Implementing Regulation (EU) 2016/523 of 10 March 2016 laying down implementing technical standards with regard to the format and template for notification and public disclosure of managers' transactions in accordance with Regulation (EU) No 596/2014 of the European Parliament and of the Council.
The provisions of this section apply to French issuers referred to in paragraph I of Article L. 621-18-2 of the Monetary and Financial Code.
They also apply to companies whose financial securities are admitted to trading on an organised multilateral trading facility within the meaning of Article 524-1.
[Removed by the decree of 14 September 2016]
In accordance with the last paragraph of Article L. 621-18-2 of the Monetary and Financial Code, notifications are not required for transactions carried out by a person referred to in the aforementioned article if the total amount of such transactions does not exceed EUR 20,000 in a calendar year.
[Removed by the decree of 14 September 2016]
[Removed by the decree of 14 September 2016]
The management report referred to in Article L. 225-100 of the Commercial Code contains a summary statement of the transactions referred to in Article L. 621-18-2 of the Monetary and Financial Code that have been made during the past financial year.
Section 6 - Lists of insiders (Articles 223-27 à 223-31)
Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC
Commission Implementing Regulation (EU) 2016/347 of 10 March 2016 laying down implementing technical standards with regard to the precise format of insider lists and for updating insider lists in accordance with Regulation (EU) No 596/2014 of the European Parliament and of the Council
[Removed by the decree of 14 September 2016]
[Removed by the decree of 14 September 2016]
[Removed by the decree of 14 September 2016]
[Removed by the decree of 14 September 2016]
[Removed by the decree of 14 September 2016]
Section 7 - Statement of intent in the event of preparations for a takeover bid (Articles 223-32 à 223-35)
Without prejudice to the provisions of Article 223-6, in particular when the market for the financial instruments of an issuer is subject to large price swings or unusual trading volumes, the AMF may require persons to publicly disclose their intentions within a set deadline, where there is reason to believe they are preparing a takeover bid, either alone or in concert with others within the meaning of Article L. 233-10 of the Commercial Code. This shall be the case, for example, in the event of discussions between the issuers concerned or the appointment of advisors with a view to preparing a public offer.
The information is publicly disclosed in a news release submitted in advance to the AMF for approval and in accordance with Article 221-3.
Where the persons mentioned in Article 223-32 state their intention to file a draft offer, the AMF sets the date on which they must publish a release describing the terms of the draft offer, or, depending on the circumstances, file a draft offer.
The news release referred to in the first paragraph should mention the financial terms of the draft offer, any agreements that could affect its execution, the equity interest held in the issuer in question, any conditions that must be satisfied before the draft offer is filed, and the proposed timetable.
The AMF may request any information it deems necessary.
If the terms of the draft offer are not disclosed or if the draft offer is not filed within the deadline mentioned in the first paragraph, the persons in question are deemed not to have the intention of filing a draft offer and are subject to the provisions of Article 223-35.
When a person makes the characteristics of a draft offer public under the terms of Articles 223-6 or 223-33, including the nature of the offer and the planned price or exchange ratio, that person shall immediately notify the AMF and the AMF shall so notify the market by means of a publication. This publication shall mark the beginning of the pre-offer period, as defined in Article 231-2 (5°).
If the person referred to in the first paragraph abandons the planned offer, it shall immediately notify the AMF.
In the circumstances referred to in the previous paragraph, or if a draft offer is not filed within the deadline mentioned in Article 223-33, the AMF shall notify the market by means of a publication.
If the persons mentioned in Article 223-32 indicate that they do not intend to file a draft offer, or if they are deemed not to have such an intention pursuant to the final paragraph of Article 223-33, they may not file a draft offer for a period of six months starting from when they made their statement or from the expiry of the deadline mentioned in the final paragraph of Article 223-33, unless they provide evidence of major changes in the environment, situation or shareholding structure of the persons concerned, including the issuer itself.
During the period mentioned in the first paragraph, these persons may not place themselves in a situation in which they are obliged to file a draft offer. If they increase, by 2% or more, the number of equity securities and securities giving access to capital or voting rights that they hold in the issuer, they must report this immediately and indicate the objectives that they intend to pursue through to the expiry of the period.
The information mentioned in the previous paragraph shall be publicly disclosed according to the conditions and procedures set forth in Article 222-22.
Section 8 - Provisions applying to issuers of financial instruments that are no longer traded on a regulated market (Article 223-36)
When an issuer of financial instruments that are traded on a regulated market plans to apply for admission of its financial instruments to trading on an organised multilateral trading facility within the meaning of Article 524-1, it shall so notify the public at least two months before the planned date for the admission of the financial instruments to trading on the relevant multilateral trading facility under the terms of V of Article L. 421-14 of the Monetary and Financial Code. The notice shall specify the reasons therefor and the consequences for shareholders and the public, following procedures that are identical to those stipulated in Article 221-3. The notice shall also include the timetable for the move.
If the issuer concerned by the first paragraph decides to apply for admission of its financial instruments to trading on an organised multilateral trading facility within the meaning of Article 524-1, after the general meeting stipulated in Article L. 421-14 of the Monetary and Financial Code, it shall immediately notify the public, following procedures that are identical to those stipulated in Article 221-3. The notice shall specify the reasons therefor and the consequences for shareholders and the public. It shall also specify the procedures for the move. The notice shall also include the timetable for the move.
Section 9 - Short positions reporting (Article 223-37)
Regulation 236/2012 of the European Parliament and Council dated 14 March 2012 concerning short selling and certain aspects of contracts for the exchange of credit risk sets out transparency rules applicable to net short positions.
Section 10 - Disclosure of securities financing transactions involving equity securities (Article 223-38)
The information referred to in section I of Article L. 225-126 of the Commercial Code is transmitted electronically to the AMF by the persons referred to in that article in the manner specified in an AMF instruction.
The issuer concerned publishes this information on its website as soon as possible and no later than the business day after it has been received.
Title III - Takeover bids (Articles 231-1 à 238-5)
Chapter I - General rules and common provisions (Articles 231-1 à 231-56)
Section 1 - Scope, definitions and general principles (Articles 231-1 à 231-7)
Sub-section 1 - Scope
This title applies to:
All public offers made to holders of financial instruments traded on a regulated market in a European Union Member State or a State party to the EEA Agreement, including France, where the AMF is the competent authority in the cases provided for in Parts I and II of Article L. 433-1 of the Monetary and Financial Code, by a person acting alone or in concert within the meaning of Articles L. 233-10 and L. 233-10-1 of the Commercial Code, with the aim of acquiring some or all of the financial instruments concerned;
Public offers concerning financial instruments that are admitted to trading on an organised multilateral trading facility within the meaning of Article 524-1, under the conditions provided for by Articles L. 433-1 (IV), L. 433-3 (II) and L. 433-4 (V) of the Monetary and Financial Code;
Buyout offers of financial instruments that are no longer admitted to trading on a regulated market or on an organised multilateral trading facility within the meaning of Article 524-1;
Public offers concerning financial instruments that are no longer admitted to trading on a regulated market in order to be admitted to trading on an organised multilateral trading facility within the meaning of Article 524-1, for a period of three years beginning from said admission, under the conditions provided for by Article L. 433-5 of the Monetary and Financial Code.
The AMF may apply these rules, excepting those governing buyout offers with squeeze-outs, and squeeze-outs, to public offers for financial instruments issued by companies whose registered offices are not in a Member State of the European Union or a State party to the EEA Agreement, where these instruments are admitted to trading on a French regulated market.
For the purposes of this Title, the financial securities are those referred to in Section II of Article L. 211-1 of the Monetary and Financial Code and all equivalent instruments issued under foreign law.
For the purposes of this Title, the direct or indirect holding of a fraction of voting rights is assessed on the total number of voting rights, calculated on the basis of all shares to which voting rights are attached, including shares whose voting rights have been suspended.
Sub-section 2 - Definitions
For the purposes of this Title:
The offeror is any natural or legal person or legal entity that files a draft offer or on whose behalf one or more investment services providers file such draft offer;
The target company is the issuer of the financial instruments to be acquired through the offer;
The persons concerned are the offeror, the target company, and any persons or entities acting in concert with one of the preceding parties;
The service providers concerned are investment services providers or the French or foreign institutions sponsoring the offer or advising the persons concerned by the offer;
The pre-offer period is the period of time between the publication by the AMF for the purposes of the first paragraph of Article 223-34 and the start of the offer period or, if a draft offer is not filed, the publication by the AMF for the purposes of the last paragraph of Article 223-34;
The offer period is the time between the publication by the AMF of the main provisions of the draft offer filed with the AMF, for the purposes of Article 231-14, and the publication of the outcome of the offer, or, where appropriate, the outcome of the re-opening of the offer for the purposes of Article 232-4;
The offer term is the time between the opening and closing dates of the offer as published by the AMF for the purposes of Article 231-32.
Sub-section 3 - General principles
To allow an offer to be conducted in an orderly fashion in the best interests of investors and the market, the parties concerned shall respect the principles of free interplay of offers and counter-offers, equal treatment and information for all holders of the securities of the persons concerned by the offer, market transparency and integrity, and fairness of transactions and competition.
The persons concerned by the offer shall comply with the rules of this title during the offer period.
Once a draft offer has been filed, any restrictive clause agreed by the parties concerned by the offer or their shareholders that could have an impact on the assessment of the offer or its outcome, subject to assessment by the courts of its validity, must be disclosed to the parties concerned by the offer, the AMF and the public. If it was not possible to mention the clause in the offer document(s), because of the date on which the agreement was concluded or for another reason, the signatories shall, as soon as the agreement has been concluded, publish a news release detailing the content of the clause in accordance with Article 221-3.
Save for the exceptions mentioned in Article 233-1, the offer must be for all the equity securities as well as any securities giving access to the capital and voting rights of the target company.
During the public offer period, the offeror and the target company shall ensure that their acts, decisions and declarations do not compromise the corporate interest or the equal treatment and information of holders of the securities of the companies concerned.
If the Board of Directors or the Management Board, after obtaining the authorisation of the Supervisory Board of the companies concerned, should decide to make a decision which is likely to cause the offer to fail, they shall inform the AMF to this effect.
Section 2 - Nature of the offer and conditions precedent (Articles 231-8 à 231-12)
An offer may consist of:
a single offer proposing a purchase of the target securities, an exchange for existing securities or securities to be issued, or a payment in cash and securities;
an alternative offer;
a principal offer with one or more non-severable subordinate options.
Where the securities provided in exchange are not liquid securities admitted to trading on a regulated market in a Member State of the European Union or a State party to the EEA Agreement, the offer must include a cash option.
If, in the twelve months before the offer is filed, the offeror, acting alone or in concert, has purchased, for cash, securities giving it more than 5% of the shares or voting rights of the target company, the offer must include a cash option.
Where the offer consists of an alternative offer or a single offer proposing payment in cash and securities, the AMF shall assess the validity of the offeror's designation of it as a public cash offer or public exchange offer.
The offeror may give holders the option of selling their securities at a later date, provided that the option is exercisable within a reasonable time, that it is subordinate to the principal offer, and that exercise of the option
is unconditionally guaranteed by the institution sponsoring the offer as defined in Article 231-13. Any arrangements that consist in offering payment at a later date of the difference between the future market price and the future offer price must contain guarantees and advantages equivalent to those of a deferred sale.
I. - 1° Any public offer made following the normal procedure referred to in Chapter II of this Title, at the close of which the offeror, acting alone or in concert within the meaning of Article L. 233-10 of the Commercial Code, does not hold a number of shares representing a fraction of more than 50% of the share capital or voting rights, shall be null and void. This threshold shall be determined following the rules set out in Article 234-1.
2° However, when reaching a majority seems impossible or unlikely for reasons unrelated to the characteristics of the offer, the AMF may, at the request of the offeror, authorise this threshold to be waived or lowered to below 50% of the share capital or voting rights, particularly where:
a) the target company is already controlled, within the meaning of Article L. 233-3 of the Commercial Code, by a person other than the offeror, who is not acting in concert with him within the meaning of Article L. 233-10;
b) commitments not to tender to the offer have been given by one or several shareholders of the target company, in particular if the application of the threshold referred to in 1° obliges the offeror to acquire at least two-thirds of the securities likely to be tendered to the offer;
c) there are one or several competing offers;
d) provisions of law, regulation or bylaw prevent any majority control being acquired. The AMF shall rule on the basis of the principles set forth in Article 231-3.
II. - Without prejudice to the provisions referred to in I, where the offer is not subject to the terms of Chapter IV of this title, the offeror may stipulate in its offer that a number of securities must be tendered, expressed as a percentage of the share capital or voting rights, below which it reserves the right to withdraw its offer.
An offeror making draft offers for two or more different companies may stipulate that if the threshold or thresholds set pursuant to Article 231-9 is/are reached in one of the offers, it will declare the offer to have succeeded only if this threshold is reached in the other offer or offers. While the offers are open, the offeror may withdraw this condition or the threshold condition referred to in Article 231-9 II, notably in the case of competing or improved offers on one of the target companies.
If, under competition rules, notice of the draft offer must be given to the European Commission, the Autorité de la concurrence or the competent authority in this regard in another State party to the EEA Agreement or the United States of America, the offeror may stipulate the condition precedent of obtaining the decision provided for in Article 6-1 a) or b) of EC Regulation 139/2004, the authorisation provided for in Article L. 430-5 of the Commercial Code, or any authorisation of the same nature issued by the foreign State.
An offeror that seeks to assert such provisions shall provide the AMF with a copy of the notices to the authorities concerned or any document attesting to the steps taken to inform those authorities and shall keep the AMF informed of the progress of the procedure.
The offer shall lapse if the proposed transaction becomes subject to the procedure of Article 6-1 (c) of EC Regulation 139/2004, or the procedure of Article L. 430-5 (III), point 3, of the Commercial Code, or becomes subject to a similar procedure before the competent authority of a foreign State. The offeror shall disclose whether it is seeking to pursue the intended transaction with the authorities to which the case has been referred.
The provisions of the previous paragraphs also apply to a draft offer of which, under competition rules, notice must be given to a foreign competent authority other than those previously mentioned, if the procedure followed for the purposes of obtaining said authorisation is subject to a time frame compatible with a period of ten weeks beginning from the opening of the offer, unless the AMF agrees to extend the offer timetable. The AMF then rules in light of the principles defined in Article 231-3, after having obtained the opinion of the competent body of the target company.
Where the proposed offer calls for remittal of securities to be issued, the irrevocability of the offeror's commitments entails an obligation to propose a resolution to the general meeting of the issuing company's shareholders authorising issuance of the securities under the conditions and clauses of the proposed offer, as consideration to persons tendering their securities to the offer, unless the company's governing body has already obtain an express delegation of authority to this effect.
Depending on the applicable provisions of law, regulation or bylaw governing the offeror, the AMF may authorise the offeror to make opening of the offer conditional on its being authorised by a general meeting of shareholders, provided that such a meeting has already been called before the draft offer is filed.
Section 3 - Filing of the draft offer, the draft offer documentand the draft reply document (Articles 231-13 à 231-15)
I. - The draft offer shall be filed by one or more investment services providers authorised to act as underwriter(s) and acting on behalf of the offeror(s).
The filing is made by means of a letter addressed to the AMF guaranteeing the tenor and irrevocable nature of the commitments made by the offeror. This letter must be signed by at least one of the sponsoring institutions.
II. - This letter shall stipulate:
1° The aims and intentions of the offeror;
2° The number and type of securities of the target company that the offeror already holds, alone or in concert, or may hold on its own initiative, as well as the date and terms on which such holdings were acquired in the last twelve months or may be acquired in the future;
3° The price or exchange ratio at which the offeror proposes to acquire the target securities, the basis on which such price or ratio was determined, and the proposed conditions of payment or exchange;
4° If applicable, the conditions required pursuant to Articles 231-9 II to 231-12;
4° bis If the withdrawal threshold referred to in 1° of Article 231-9 I is applicable to the offer, the number of shares and voting rights represented by this threshold on the date when the offer was filed and, where appropriate, the reasons for which the offeror has applied to the AMF for application of 2° of Article 231-9 I;
5° The specific procedures by which the financial instruments of the target company will be acquired and, where applicable, the identity of the investment services provider appointed to acquire them on behalf of the offeror.
6° In the cases provided for in Article L. 2323-23-1 of the Labour Code, if the procedure to inform and consult the works council of the target company, referred to in Article L. 2323-23 of the Labour Code began to the announcement of the offer.
III. - The letter shall be accompanied by:
1° The draft offer document drawn up by the offeror, on its own or jointly with the target company. In the cases provided for in Article 261-1, the offeror's draft offer document may not be prepared jointly with the target company, except in the event of a squeeze-out;
2° Copies of any prior notices given to other bodies empowered to authorise the proposed transaction.
IV. - In the case provided for in Part III of Article L. 433-3 of the Monetary and Financial Code, the letter shall also be accompanied by:
1° The filed offer document or a draft of the offer document that will be filed;
2° Any other document constituting a binding commitment proving that an irrevocable and fair draft offer has been or will be filed for all the equity securities and securities giving access to the capital or voting rights of the company of which more than 30% of the shares or voting rights is held, where such holding constitutes an essential part of the target company's assets.
V. - In all cases, an electronic version of the draft offer document must be sent to the AMF for posting on its website.
The AMF shall make public the main provisions of the draft offer. Such publication shall signal the beginning of the offer period.
Once the draft offer has been filed, the Chairman of the AMF may ask the market undertaking that runs the regulated market on which the target company's securities are admitted to trading to halt trading in those securities under the terms of Article L. 421-15 of the Monetary and Financial Code. Under the terms of Articles L. 424-5 and L. 425-3 of the Monetary and Financial Code, the AMF Chairman may also ask the person running a multilateral trading facility to suspend trading in the securities of the target company or a systematic internaliser to suspend its activity with regard to those securities.
Such request may also extend to other securities concerned by the draft offer.
The request shall made to all market undertakings, multilateral trading facility operators and systematic internalisers trading in the target securities, as necessary.
Section 4 - Disclosures to shareholders and the public (Articles 231-16 à 231-17)
I. - Once the offer period begins, the draft offer document shall be made available to the public free of charge at the offices of the offeror and the sponsoring institution(s). Where the offer document has been prepared jointly with the target company, it shall also be made available at the offices of the target company and the organisations engaged as paying agent for the target company's securities.
Where the registered office of the offeror or sponsoring institution is outside France, the offer document must be made available at the offices of an investment services provider in France designated for this purpose by the offeror or sponsoring institution.
The draft offer document shall also be published on the website of the offeror and, if it was prepared jointly with the target company, on the website of the target company, provided that these companies have websites.
II. - In all cases, a copy of the draft offer document must be sent free of charge to any person who requests it.
III. - On or before the date that the draft offer is filed with the AMF, a news release shall be issued. The offeror shall ensure that the release is distributed in accordance with Article 221-3. This news release shall present the main elements of the draft offer document and explain how the document is being made available.
IV. - The draft offer document and the news release mentioned in Part III shall include the words: "This offer and the draft offer document are subject to AMF approval".
The target company may, once the news release mentioned in Part III of Article 231-16 has been published, issue its own news release in accordance with Article 221-3 to inform the public of the opinion of its Board of Directors or Supervisory Board or, in the case of a foreign company, the competent governing body, on the benefits of the offer or the consequences of the offer for the target company, its shareholders and its employees.
Where applicable, the news release shall mention the findings of the report by the independent appraiser appointed pursuant to Article 261-1 and the findings of the company works council opinion referred to in Article L. 2323-23 of the Labour Code. If the news release is published before the appraiser submits his report or the works council of the target company submits the opinion referred to in Article L. 2323-23 of the Labour Code, the target company shall issue another release when the report or the opinion is published, mentioning the appraiser's findings, the reasoned opinion of the governing bodies referred to in the first paragraph and the findings of the works council opinion.
In all cases, if the independent appraiser has not completed his assignment or has not been appointed by the time the offeror files its draft offer document, the target company shall issue a news release to inform the public of the identity of the independent appraiser as soon as the offeror publishes its draft document or as soon as the appraiser is appointed.
The AMF may request any disclosure that it deems necessary.
Section 5 - Contents of the draft offer document and the reply document (Articles 231-18 à 231-19)
The draft offer document prepared by the initiator, which must meet the content requirements specified in an AMF instruction, shall mention:
The identity of the offeror;
The terms of the offer, including in particular:
The proposed price or exchange ratio, based on generally accepted objective valuation criteria, the characteristics of the target company and the market for its securities;
The number and type of securities that it promises to acquire;
The number and type of securities of the target company that the offeror already holds directly, indirectly or in concert, or may hold on its own initiative, as well as the date and terms on which such holdings were acquired in the last twelve months or may be acquired in the future;
Where applicable, the conditions to which the offer is subject pursuant to Articles 231-9 II to 231-12;
The planned timetable for the offer;
Where applicable, the number and type of securities tendered in exchange by the offeror;
The terms of financing for the transaction and the impact of those terms on the assets, activities and financial results of the companies concerned;
If the withdrawal threshold referred to in 1° of Article 231-9 I is applicable to the offer, the number of shares and voting rights represented by this threshold on the date when the offer was filed and, where appropriate, the reasons for which the offeror has applied to the AMF for application of 2° of Article 231-9 I.
Its intentions for at least the coming twelve months with regard to the industrial and financial strategy of the companies concerned, where applicable, its specific commitments and intentions formalised within the framework of the procedure to inform and consult the works council of the target company, referred to in Article L. 2323-23 of the Labour Code, and continued public trading on a regulated market of the equity securities or securities giving access to the capital of the target company;
Its policy with respect to employment. In particular, the offeror shall indicate, based on the data available to it and its intentions in the matter of industrial and financial strategy as mentioned in Point 3° above, any foreseeable changes in the size and composition of the workforce;
The law applicable to contracts between the offeror and holders of the target company's securities following the offer, and competent jurisdictions;
Agreements relating to the offer to which the offeror is party or of which it is aware, as well as the identity and characteristics of persons with which it is acting in concert or persons acting in concert with the target company within the meaning of Articles L. 233-10 and L. 233-10-1 of the Commercial Code and of which the offeror is aware ;
If relevant, the opinion and the reasons therefor of the Board of Directors or Supervisory Board, or, in the case of a foreign offeror, the competent governing body, regarding the benefits of the offer or the consequences of the offer for the offeror, its shareholders and its employees; and the voting procedures by which this opinion was obtained, with the possibility for dissenting members to request that their identity and position be mentioned;
In the case provided for in Part III of Article L. 433-3 of the Monetary and Financial Code, a commitment to file an irrevocable and fair draft offer for all the equity securities and securities giving access to the capital or voting rights of the company of which more than 30% of the shares or voting rights is held, where such holding constitutes an essential part of the target company's assets;
If relevant, the report by the independent appraiser mentioned in Article 261-3;
Procedures for making available the information mentioned in Article 231-28.
The specific procedures by which the financial instruments of the target company will be acquired and, where applicable, the identity of the investment services provider appointed to acquire them on behalf of the offeror.
The offer document shall bear the signature of the initiator, or of its legal representative, declaring that the information contained therein is accurate.
The offer document shall also include a declaration by the legal representatives of the sponsoring institutions as to the accuracy of the information about the presentation of the offer and the information used to appraise the proposed price or exchange ratio.
The reply document of the target company, which must meet the content requirements specified in an AMF instruction, shall mention:
1° The agreements mentioned in Article 231-5;
2° The information mentioned in Article L. 225-37-5 of the Commercial Code, updated where applicable as at the date of the offer, to the best of the company's knowledge;
3° The independent appraiser's report in the cases provided for in Article 261-1. In order to protect its legitimate interests, the target company may assume responsibility for not disclosing certain information in the independent appraiser's report, provided such non-disclosure is unlikely to mislead the public;
3° bis In the cases provided for in Articles L. 2323-21 to L. 2323-26-1 A of the Labour Code, the opinion of the works council of the target company and, where applicable, the chartered accountant's report prepared on behalf of the works council pursuant to the provisions of Article L. 2323-22-1 of the Labour Code;
4° The reasoned opinion of the Board of Directors or Supervisory Board, or, in the case of a foreign company, the competent governing body, regarding the benefits of the offer or the consequences of the offer for the target company, its shareholders and its employees, and, where applicable, the measures it has implemented or decided to implement that are likely to cause the offer to fail. In the case of any new measures likely to cause the offer to fail, the company shall publish a news release to inform the market to this effect. The voting procedures by which this opinion was obtained are set out, with the possibility for dissenting members to request that their identity and position be mentioned.
5° If they are available and different from the opinion mentioned in Point 4°, comments by the works council, or, failing that, by staff representatives, or, failing that, by staffmembers;
6° Whether members of the governing bodies mentioned in Point 4° intend to tender their shares to the offer, specifying in particular, if the offer has several branches, the branch to which they intend to tender their securities, where such is the case;
7° The procedures for making available the information mentioned in Article 231-28.
The reply document shall bear the signature of the legal representative of the target company, declaring that the information contained therein is accurate.
Section 6 - Review of the draft offer by the amf (Articles 231-20 à 231-26)
I. - The AMF shall have ten trading days from the beginning of the offer period to determine whether the draft offer complies with applicable laws and regulations.
II. - In the cases provided for in Article 261-1 and for offers under the terms of Articles L. 2323-21 to L. 2323-26-1 A of the Labour Code, the statement of compliance shall be issued no earlier than five trading days after the target company has filed its draft reply document.
III. - In all cases, the AMF may request any supporting documentation or guarantees that it deems appropriate, as well as any further information that it needs for its assessment of the draft offer, the draft offer document or the reply document. In this case, the time period is suspended. It resumes once the information requested has been received.
To determine whether the draft offer complies with applicable laws and regulations, the AMF shall examine:
1° The aims and intentions of the offeror.
2° Where applicable, the type and characteristics of and market for any securities proposed in exchange;
3° Any conditions of the offer pursuant to Articles 231-9 and 231-10;
3° bis If the withdrawal threshold referred to in 1° of Article 231-9 I is applicable to the offer, the number of shares and voting rights represented by this threshold on the date when the offer was filed and, where appropriate, the reasons for which the offeror has applied to the AMF for application of 2° of Article 231-9 I;
4° The information in the draft offer document;
5° In the cases provided for in Article 261-1, the financial terms of the offer, notably with respect to the independent appraiser's report and the reasoned opinion of the Board of Directors, the Supervisory Board, or, in the case of a foreign offeror, the competent governing body.
The AMF may ask the offeror to modify the draft offer if the AMF believes that it may contravene the legal and regulatory provisions mentioned in the first paragraph, and notably the principles referred to in Article 231-3.
In the cases and in accordance with the conditions set forth in Section 2 of Chapter II and in Chapters III to VII of this title, the AMF shall assess application of the special provisions governing the proposed price or exchange ratio.
Where the draft offer meets the requirements of Articles 231-21 and 231-22, the AMF shall publish on its website a reasoned statement of compliance that also constitutes an approval of the offer document.
Where the document does not meet the requirements, the AMF shall refuse to issue a statement of compliance for the draft offer and shall publish its decision on its website.
Where appropriate, the AMF shall set a date for resumption of trading in the securities concerned if trading is still suspended and shall so notify the persons referred to in Article 231-15.
In the cases mentioned in Part III of Article L. 433-1 of the Monetary and Financial Code, where the offer concerns equity securities that are also admitted to trading on a market not located in a Member State of the European Union or a State party to the EEA Agreement, whether regulated or not, where the AMF does not claim jurisdiction, and where an offer document has been prepared in compliance with a procedure governed by a competent foreign authority, the AMF may exempt the offeror and the target company from the obligation to prepare an offer document and a reply document, provided that the offeror and the target company publish, jointly or separately, a news release subject to review by the AMF. The release, which must be distributed in accordance with Article 221-3 by the author, shall present the main elements of the offer document. In such cases, only Articles 231-36, 231-46, 231-48, 231-49, 231-51 and 231-52 shall be applicable. The information called for in Articles 231-5, 231-18 and 231-19, if not included in the offer document, must be included in the news release.
Once the offer document has been approved by the competent authority of another Member State of the European Union or a State party to the EEA Agreement, the offeror and the target company are exempt from preparing an offer document and a reply document, provided that their application is accompanied by a copy of the offer document approved by the competent authority and translated in French.
This document should be published in accordance with the procedures provided for in Article 231-27.
I. - 1° No later than five trading days after the AMF has issued its statement of compliance, the target company shall file a draft reply document with the AMF.
2° Exceptionally, if an independent appraiser has been appointed pursuant to Article 261-1, the target company shall file its draft reply document no later than twenty trading days after the beginning of the offer period.
3° For offers in which the works council must be informed and consulted pursuant to the provisions of Articles L. 2323-21 to L. 2323-26-1 A of the Labour Code, the target company shall file a draft reply document by the date of the later of the following two events:
a) where an independent appraiser has been appointed pursuant to Article 261-1, no later than twenty trading days after the beginning of the offer period;
b) in other cases, no later than fifteen trading days after the beginning of the offer period;
In any event, the draft reply document may not be filed before the opinion of the works council of the target company or the date on which the works council is deemed to have been consulted as provided by Article L. 2323-23 of the Labour Code.
II. - The electronic version of the draft reply document shall be sent to the AMF for posting on its website. As soon as it has been filed, the draft reply document shall be made available to the public in accordance with the procedures mentioned in Parts I and II of Article 231-16 and shall contain the wording referred to in Part IV of the said article. No later than when it is filed with the AMF, it shall be the subject of a news release distributed by the target company in accordance with Article 221-3.
This news release presents the main elements of the draft reply document, explains how the document is being made available, and contains the wording referred to in Part IV of Article 231-16.
III. - Except in the cases provided for in Part II of Article 231-20, the AMF shall have five trading days from the filing of the draft reply document to issue its approval in accordance with Article 231-20. During this time, the AMF may request any additional information that it deems necessary for its review. In this case, the time period is suspended. It resumes once the information requested has been received.
Section 7 - Distribution of the offer and reply documents (Article 231-27)
Public distribution of the AMF-approved offer document drawn up by the offeror, alone or jointly with the target company, must occur before the opening date of the offer and no later than the second trading day following issuance of the statement of compliance.
The offer document approved by the AMF must be distributed in one of the following forms:
Publication of the document in at least one daily newspaper with nationwide circulation that covers economic and financial news;
Publication of a summary of the offer document on the same conditions as in a), when the offer document is made available free of charge at the offices of the offeror and the sponsoring institution(s); or publication of a news release, distributed in accordance with Article 221-3 under the offeror's responsibility, specifying that the offer document is available as described above.
Where the registered office of the offeror or sponsoring institution is outside France, the offer document must be made available at the offices of an investment services provider in France designated for this purpose by the offeror or sponsoring institution. Where the offer document has been prepared jointly with the target company, the document shall also be made available free of charge at the offices of the target company and the organisations engaged as paying agent for the target company's securities.
In all cases, a copy of the document must be sent free of charge to any person who requests it, and an electronic version of the offer document must be sent to the AMF for posting on its website
The target company sends its reply document to the offeror as soon as the AMF has issued its approval. The reply document must be distributed in one of the following forms:
Publication of the document in at least one daily newspaper with nationwide circulation that covers economic and financial news;
Publication of a summary of the reply document on the same conditions as in a), when the reply document is made available free of charge at the offices of the target company or the organisations engaged as paying agent for its securities; or publication of a news release, distributed in accordance with Article 221-3 under the offeror's responsibility, specifying that the document is available as described above.
In all cases, a copy of the reply document must be sent free of charge to any person who requests it, and an electronic version must be sent to the AMF for posting on its website.
The approved offer and reply documents published and made available to the public shall always be identical to the original versions approved by the AMF.
Section 8 - Other information (Articles 231-28 à 231-30)
I.- Disclosures about the legal, financial, accounting and other characteristics of the offeror and the target company, which must meet the content requirements specified in an AMF instruction, shall be filed with the AMF and made available to the public no later than the day before the offer opens, in accordance with the procedures referred to in Points 2° and 3° of Article 231-27.
The reports by the statutory auditors of the offeror and the target company must also be filed with the AMF under the same conditions.
II. - Foreign offerors shall appoint, with the assent of the AMF, a statutory auditor that verifies the translation of the financial statements and notes as well as the relevance of any supplements and adaptations thereto. The statutory auditor shall send a letter to the offeror when it completes its work on the translation of these elements and shall state its observations, if any. The offeror shall forward a copy of the completion letter to the AMF. These provisions shall also apply to foreign target companies.
III. - For the waiver provided for in Point 2° of Article 212-4 and Point 3° of Article 212-5 to be effective, the statutory auditors shall declare that any forward-looking information, whether estimated or pro forma, has been properly prepared in accordance with the indicated basis and that the accounting basis is consistent with the offeror's accounting policies.
The offeror's statutory auditors shall examine all the information from the offeror referred to in Part I and, where such is the case, the updates or corrections thereto. This overall examination and any special verifications shall be carried out in accordance with a standard issued by the national institute of statutory auditors (Compagnie Nationale des Commissaires aux Comptes).
They shall draw up a completion letter for their work, in which they inform the offeror about any reports issued. Upon completion of their overall examination and any special verifications that may have been made in accordance with the aforementioned professional standard, they shall state their observations, if any.
The offeror shall forward a copy of the completion letter to the AMF.
IV. - No later than the day before the offer opens, the offeror, the target company and at least one of the sponsoring institutions shall file a declaration certifying that all the information required under this article has been filed and has or will be disseminated within the timeframe stipulated in paragraph I.
If the AMF finds an omission or a material inaccuracy in the content of the information mentioned in Article 231-28, it shall inform the offeror or the target company, as appropriate, of this fact. The offeror or target company is then required to amend the information and file the corrections with the AMF.
Any omission or inaccuracy, with regard to this General Regulation or to AMF instructions, that could manifestly distort an investor's assessment of the proposed transaction shall be considered as material.
These corrections shall be made available to the public as soon as possible, in accordance with Points 2° and 3° of Article 231-27.
The AMF may postpone the closing date of the offer to give holders of securities at least five trading days to respond following publication of the information mentioned in Article 231-29.
Section 9 - Offer timetable (Articles 231-31 à 231-35)
The offer timetable is set based on the distribution date of the joint offer document of the offeror and the target company or the reply document of the target company.
The offer opens on the trading day after the latest of the following events:
Distribution of the approved offer document prepared by the offeror (where applicable, jointly with the target company) or, in the cases provided for by Article 261-1, distribution of the reply document prepared by the target company;
Distribution of the information mentioned in Article 231-28;
Where applicable, receipt by the AMF of any prior authorisations required by law.
The AMF publishes the opening and closing dates of the offer and the release date of the outcome of the offer.
Persons wishing to tender their securities to the offer must send their orders to an authorised provider during the offer period.
At any time during the offer period, the AMF may postpone the closing date of the offer.
The AMF publishes the results of the tender offer, which are transmitted to it by the market operator concerned or by the sponsoring institution, as the case may be.
Section 10 - Obligations of officers and directors, persons concerned by the offer and their advisers (Articles 231-36 à 231-37)
The parties concerned by the offer, their officers and directors and their advisers shall demonstrate particular vigilance in their statements.
Any advertisement, regardless of its form and method of dissemination, shall be communicated to the AMF before being disseminated.
Such advertisements shall:
State that an offer document or reply document has been or will be published and indicate where investors are or will be able to obtain it;
Be clearly recognisable as advertisements;
Contain no information that could mislead the public or discredit the offeror or the target company;
Be consistent with the information contained in the news releases, the offer document and the reply document;
Where applicable and at the request of the AMF, contain a warning about certain exceptional characteristics of the offeror, the target company, or the financial instruments concerned by the offer.
The provisions of this article shall also apply during the pre-offer period.
Any additional information not included in the offer document approved by the AMF must be made public in a news release. The author of the release shall ensure that it is distributed in accordance with Article 221-3.
Section 11 - Trading in the securities concerned by the public offer (Articles 231-38 à 231-43)
Sub-section 1 - Trading by the offeror and persons acting in concert with it
I. - The restrictions on trading in the securities concerned by a public offer do not apply to acquisitions resulting from a voluntary agreement entered into after the beginning of the offer period or the pre-offer period, as applicable.
II. - During the pre-offer period, the offeror and persons acting in concert with it shall not acquire any of the securities of the target company.
III. - During the offer period, the offeror and persons acting in concert with it may not acquire any securities of the target company if the offer is subject to one of the conditions mentioned in Articles 231-10 and 231-11.
IV. - Without prejudice to the provisions of Article 231-41 and of III of this article, the offeror and persons acting in concert with it may acquire the securities of the target company after the start of the offer period and until the opening of the offer.
In the case of a public offer under the terms of Chapter II of this title, such acquisitions shall be made without making the offeror, either alone or in concert, cross the thresholds set out in Articles 234-2 and 234-5.
In the case of a public offer under the terms of Chapters III and VI of this title, such acquisitions shall be limited to 30% of the existing securities targeted by the offer, for each category of shares targeted.
V. - Without prejudice to the provisions of Article 231-41 and of III of this article, the offeror and persons acting in concert with it may acquire the securities of the target company from the opening of the offer until the publication of the outcome.
In the case of a public offer under the terms of Chapter II of this title, such acquisitions shall be made without making the offeror, either alone or in concert, cross the thresholds set out in Articles 234-2 and 234-5.
During the reopening of the offer, the offeror may carry out its offer by acquiring the securities targeted, if the offer is fully settled in cash and provided that at the close of the initial offer period it holds more than 50% of the share capital and voting rights of the target company.
VI - From the closing of the offer until the publication of the outcome, the offeror and the persons acting in concert with it may not sell any securities of the target company.
I. - In the case of a public offer under the terms of Chapter II of this title, if the offeror and the persons acting in concert with it proceed to acquire securities of the target company, any acquisition made at a price higher than the offer price shall automatically cause this price to be raised to at least 102% of the stipulated price and, beyond that, to the price actually paid, regardless of the quantities of securities acquired, and regardless of the price at which they were acquired, and the offeror shall not be able to amend the other terms of the offer.
After the deadline set out in Article 232-6 for submitting an improved offer and until the publication of the outcome of the offer, the offeror and the persons acting in concert with it may not acquire securities of the target company at a price higher than the offer price.
II. - In the case of a public offer under the terms of Chapters III and VI of this title, or the case of the reopening of a public offer under the terms of Chapter II, any trading in the securities of the target company by the offeror and the persons acting in concert with it shall be carried out:
Based on an order drawn up at the offer price, in the case of a market acquisition, or at the offer price and only at that price, in the case of an off-market acquisition, from the beginning of the offer period until the opening of the offer;
At the offer price and only at that price, from the opening of the offer until the publication of the outcome.
Sub-section 2 - Trading by the target company and persons acting in concert with it
I. - During the offer period, the target company, when it is applying the provisions of Article L. 233-33 I or II of the Commercial Code and such provisions are not ruled out pursuant to Article L. 233-33 III of the same Code, and the persons acting in concert with it may not trade in the company's equity securities or securities providing access to the company's equity or financial instruments linked to these securities.
II. - If an offer falls under the terms of Chapter II of this title and is fully settled in cash, the target company when it is applying the provisions of Article L. 233-33 I or II of the Commercial Code may continue to execute a share buy-back programme during the offer period, provided that the general meeting resolution that authorised the programme expressly provided for it and, if it is a measure that may cause the offer to fail, provided that its implementation is subject to approval or confirmation by the general meeting.
III. - The provisions of this article also apply during the pre-offer period.
Sub-section 3 - Trading by persons concerned by a public exchange offer or a public cash and exchange offer
If all or part of the offer is to be settled in securities, the persons concerned by the offer may not, during the offer period, trade in:
The equity securities or securities giving access to the equity of the target company or financial instruments linked to these securities;
The equity securities or securities giving access to the equity of the company issuing the securities offered in exchange or financial instruments linked to these securities.
However, a company issuing the equity securities to pay for a public offer may continue to trade in its own securities as part of a share buy-back programme implemented in accordance with the provisions of Article L. 225-209 of the Commercial Code and of Regulation (EC) 2273/2003 of the European Commission of 22 December 2003, or of an equivalent foreign regulation.
The provisions of this article shall also apply during the pre-offer period.
Sub-section 4 - Trading by the service providers concerned
The provisions of Articles 231-38 to 231-41 shall apply to proprietary trading by any services provider concerned as well as by any company belonging to the same group.
The service providers concerned shall monitor compliance with these restrictions on a daily basis. They shall make the results of their diligence and oversight available to the AMF. In particular, they shall answer any question from the AMF about the trades that they make during an offer period and they shall be capable of demonstrating that they comply with the provisions of this title.
The provisions of this article shall also apply during the pre-offer period.
I. - By way of derogation from the provisions of the first paragraph of Article 231-42, the services provider concerned and any company belonging to the same group are authorised to trade in the securities concerned by the offer or derivatives linked to these securities in transactions for their own account or on behalf of their group under the following conditions:
The trading involves staff members with resources, objectives and responsibilities that are distinct from those involved in the offer and that they are separated by an "information barrier";
The trading is in line with usual practices with regard to risk hedging linked to customer transactions or market making;
The positions and changes in liabilities resulting from proprietary trading do not deviate significantly from the usual pattern;
The service provider has taken all necessary steps to make a prior assessment of the effects of any proprietary trading to avoid influencing the outcome of the offer and unduly influencing the prices of the securities concerned;
The trading complies with the principles set out in Article 231-3.
II. - The service provider concerned shall adapt its internal procedures to the specific characteristics of each offer and to the features of the market for the securities of the target company and, where appropriate, the securities offered in exchange in order to ensure compliance with the provisions of this article. It shall set the requirements for proprietary trading in the financial instruments concerned, if it allows such trading.
III. - The provisions of this article shall also apply if the service provider concerned or a company in its group is the offeror or the target company in a public offer.
Section 12 - Oversight of public offers (Articles 231-44 à 231-52)
The provisions of this section shall apply from the beginning of the pre-offer period until the end of the offer period.
The provisions of Sub-section 1 apply to any person or entity, including the persons concerned by the offer. Investment services providers are subject to the provisions of Sub-section 2.
The fractions of 1%, 2% and 5% referred to in this section are determined in accordance with the assimilation methods provided for by Article L. 233-9 of the Commercial Code, except those provided for in Point 3° of Section II of this article.
Sub-section 1 - General provisions
The offeror shall immediately notify the AMF of the identity of the investment services provider(s) responsible for presenting the draft offer.
The persons concerned by the offer shall immediately notify the AMF of the identity of the investment services providers or institutions advising them.
Any changes in the information referred to in the preceding paragraphs shall be notified to the AMF immediately.
I. - The following persons and entities must report daily to the AMF on the transactions they have carried out resulting in or likely to result in a transfer of ownership in the securities or voting rights targeted by the offer, including any transactions involving financial instruments or agreements that have a similar economic effect to that of owning said securities:
The persons concerned by the offer;
Persons or entities that hold on their own or in concert at least 5% of the share capital or voting rights in the target company;
Persons or entities that hold on their own or in concert at least 5% of the securities other than shares targeted by the offer;
Members of the Boards of Directors, Supervisory Boards or Executive Boards of the persons concerned by the offer;
Persons or entities that have on their own or in concert increased their holding to 1% or more of the equity of the target company, or 1% or more of the total securities other than shares targeted, since the beginning of the offer period or, where appropriate, the pre-offer period, for as long as they hold such a quantity of securities.
The transactions that must be declared include in particular:
The acquisition, sale, subscription, lending or borrowing of the securities targeted by the offer;
The acquisition or sale of any financial instrument or the conclusion of any agreement that has a similar economic effect to that of owning the securities targeted by the offer, regardless of how it is settled;
The exercise of the share allocation right attached to the said financial instruments or the execution of the said agreements.
II. - The reports must specify:
The identity of the person filing the report and the person or entity that controls it within the meaning of the relevant provisions;
The trade date;
The trade execution venue;
The number of securities traded and the trade price;
The number of securities and voting rights held after the trade by the person reporting, acting alone or in concert.
The reports must be filed with the AMF by the next trading day using the form defined in an AMF Instruction. The AMF shall be entitled to ask the reporting entity for any details or further information that it deems necessary.
III. - In the case of a public offer involving settlement in the securities of the offeror, trades in the securities of both the offeror and the target company must be reported under the same conditions and according to the same procedures.
A person or entity required to report transactions relating to one or other of the companies must report its transactions in the securities of both companies.
Without prejudice to Articles L. 233-7 and following of the Commercial Code, any person or entity, with the exception of the offeror, that has increased its holding of shares on its own or in concert by 2% or more of the share capital of the target company or that has increased its holding of shares if it holds over 5% of the share capital and voting rights, since the beginning of the offer period or, as appropriate, the beginning of the pre-offer period, shall be required to report the objectives that it intends to pursue with regard to the ongoing offer to the AMF immediately.
The provisions of the first paragraph shall also apply to securities other than shares targeted by the offer. The report shall stipulate:
whether the person or entity having increased its interest is acting alone or in concert;
the objectives of this person or entity with regard to the offer, especially if it intends to continue making acquisitions and, if the offer has been filed, whether it intends to contribute the securities acquired to the offer.
The AMF shall be entitled to ask the reporting entity for any details or further information that it deems necessary.
The AMF shall publish the reports filed with it under the terms of Articles 231-46 and 231-47.
Exceptionally, the AMF may adapt the format of the publication of the declarations made to it pursuant to Articles 231-46 and 231-47 if the declarant proves that the publication may cause it harm, particularly in the sense that it would give rise to a market risk.
Sub-section 2 - Special provisions for investment services providers
Any investment services provider or custody account keeper involved in transmitting orders shall draw the attention of customers that cross one of the thresholds set in Articles 231-46 and 231-47 to the reporting requirements applying to them.
Without prejudice to the provisions of Article L. 621-18-4 of the Monetary and Financial Code, if the financial instruments of the offeror are not admitted for trading on a regulated market, the service providers concerned shall draw up and keep an up-to-date list of the persons that have been given access to inside information relating to the offer.
The list shall include:
The name or business name of each of the persons;
The reason for their appearing on the list;
The date of their inclusion on the list.
I. - The service providers concerned shall report their position in the securities targeted by the offer to the AMF on a daily basis if they have increased their holding to 1% or more of the share capital of the target company, or 1% or more of the total securities other than shares targeted, since the beginning of the offer period, or the beginning of the pre-offer period, where appropriate, for as long as they hold that quantity of securities.
II. - The reports must specify:
The identity of the person filing the report and the person or entity that controls it within the meaning of the relevant provisions;
The number of securities held by the person reporting;
The number of securities that the service provider concerned shall hold under the terms of any financial instrument or agreement that has a similar economic effect to that of owning the securities targeted by the offer.
The reports must be filed with the AMF by the next trading day using the form defined in an AMF Instruction. The AMF shall be entitled to ask the reporting entity for any details or further information that it deems necessary.
The provisions of Articles 231-46 to 231-48 shall apply to investment services providers other than the service providers concerned, unless:
Their trading is in line with usual practices with regard to arbitrage or hedging of risks associated with customer transactions or market making;
The positions and changes in liabilities resulting from proprietary trading do not deviate significantly from the usual pattern.
In the cases referred to in 1° and 2° above, the provisions of Article 231-51 shall apply.
The criteria set forth in this article are assumed not to be met once the investment services provider comes to hold more than 5% of the capital or voting rights of the target company.
Section 14 - Suspending the effects of restrictions on the exercise of voting rights and extraordinary powers to appoint and dismiss directors, members of the supervisory board, members of the management board, chief executive officers and deputy chief executive officers (Articles 231-54 à 231-56)
The effects of statutory restrictions on the number of votes held by individual shareholders at general meetings, mentioned in the first paragraph of Article L. 225-125 of the Commercial Code, shall be suspended during the first general meeting following the close of the offer where the offeror, acting alone or in concert, has acquired more than two-thirds of the shares or voting rights of the target company.
Where provided for by the articles of association, the effects of statutory restrictions on the exercise of voting rights attached to the equities of the company, and the effects of clauses in agreements concluded after 21 April 2004 providing for restrictions on the exercise of voting rights attached to the equities of the company, shall be suspended during the first general meeting following the close of the offer where the offeror, acting alone or in concert, has acquired more than one-half of the shares or voting rights of the target company.
Where provided for by the articles of association, the extraordinary powers held by certain shareholders to appoint and dismiss directors, members of the Supervisory Board, members of the Management Board, Chief Executive Officers and Deputy Chief Executive Officers shall be suspended during the first general meeting following the close of the offer where the offeror, acting alone or in concert, has acquired more than one-half of the shares or voting rights of the target company.
Chapter II - Standard procedure (Articles 232-1 à 232-13)
Section 1 - General provisions (Articles 232-1 à 232-4)
Where the offeror, acting alone or in concert, holds less than one-half of the shares or voting rights of the target company, only the standard offer procedure shall apply.
The term of the offer is twenty-five trading days. If the draft reply document is filed after the compliance ruling is published, the period starting on the day after the dissemination of reply document and ending with the closing of the offer shall be twenty-five trading days, without exceeding thirty-five trading days from the opening of the offer.
Exceptionally, when the offeror asserts the provisions of Article 231-11, the closing date and timetable of the offer are set after the AMF has received the documents supporting the authorization by the competition authorities mentioned in the first point of Article 231-11.
In agreement with the AMF, the market operator concerned announces the conditions and deadlines for account-keeping institutions to deposit securities tendered to the offer and for delivery and settlement in securities or cash, as well as the date on which the outcome of the offer will be available.
Orders of persons wishing to tender their securities to the offer may be cancelled at any time up to and including the closing date of the offer.
In principle, the outcome of the offer is published no later than nine trading days after the closing date.
If the AMF determines that the offer has succeeded, the market operator announces the terms of settlement and delivery for the securities acquired by the offeror. If the AMF determines that the offer has not succeeded, the market operator announces the date on which the target securities will be returned to the account-keeping institutions.
If the offer is subject to an acceptance threshold or a withdrawal threshold, the AMF publishes a provisional result as soon as the market operator notifies it of the total number of securities tendered for centralisation by authorised intermediaries.
Unless it is unsuccessful, any offer made following the normal procedure shall be re-opened within ten trading days of publication of the final outcome.
The guarantee of the irrevocability of the offeror's commitments referred to in Article 231-13, shall also concern the re-opening of the offer.
The AMF shall publish the timetable for the re-opened offer, which must last ten or more trading days.
However, if the offeror proceeds directly to a squeeze-out in accordance with Articles 237-14 et seq., the initial offer need not be re-opened, on condition that a squeeze-out was mentioned in the offeror's statement of intentions and that it is filed no later than ten trading days after publication of the outcome of the offer.
Section 2 - Competing and improved offers (Articles 232-5 à 232-13)
At any time after the opening of the offer but no later than five trading days before it closes, a competing proposed offer on the securities of the target company or one of the target companies may be filed with the AMF.
An offeror may improve upon the terms of its original offer or the most recent competing offer until no later than five trading days before the offer closes.
To be declared compliant, a competing public cash offer or an improved cash offer must be at least 2% higher than the price stated in the public cash offer or the previous improved cash offer.
In all other cases, the AMF declares compliant any competing draft offer or improved offer which, assessed in the light of Articles 231-21 and 231-22, significantly improves upon the terms offered to holders of the target securities.
However, a competing or improved offer may be declared compliant if, without modifying the terms of its previous offer, the offeror removes or lowers the acceptance threshold below which the offer will not be declared successful.
Where the AMF declares an improved offer to be compliant, it determines whether to postpone the closing date of the offer(s) and to void orders tendering securities to the earlier offer(s).
Except when the terms of its offer are raised automatically, an offeror that raises its preceding offer must prepare an additional document to supplement the offer document submitted for AMF review in accordance with Article 231-20.
This supplemental document specifies how the terms of the new offer are improved relative to those of the preceding offer, indicating the changes of the various items required by Article 231-18.
The opinion and reasons therefor of the Board of Directors or Supervisory Board or, in the case of a foreign company, the competent governing body of the target company, including the information specified in Article 231-19, are communicated to the AMF. This information is made public as specified in Article 231-37.
A competing offer is opened in accordance with the provisions of Article 231-32. Where the AMF determines the timetable for the competing offer, it aligns the closing dates of all competing bids on the furthermost date, without prejudice to the provisions of Article 231-34.
Where a competing offer is opened, all orders to tender securities to the earlier offer shall be null and void.
The offeror may withdraw its offer within five trading days of publication of the timetable for a competing offer or improved competing offer. If it does so, it must inform the AMF of its decision, which is made public.
The offeror may also withdraw an offer if it is frustrated or if the target company adopts measures that modify its substance, either during the offer or in the event that the offer is successful, or if the measures taken by the company make the offer more costly for the offeror. He can only use this option with the prior authorization of the AMF, which shall rule on the basis of the principles set forth in Article 231-3.
When a period of more than ten weeks has elapsed since the public announcement of the opening of an offer, the AMF may, with a view to expediting comparison of competing offers and with due observance of the order of their filing, set deadlines for filing each successive improved offer.
The AMF announces its decision and specifies the implementation procedures. The deadline may not be less than three trading days from the publication of the AMF's decision on each improved offer.
When a period of more than ten weeks has elapsed since the opening of an offer, the AMF may, with a view to hastening the outcome of the outstanding offers, decide to use a cut-off bid procedure.
The AMF sets a date by which each of the offerors must either inform the AMF that its offer is maintained on the same terms or file a final improved offer.
Where applicable, the AMF rules on the compliance of the improved offer(s) and sets the final offer closing date.
In such case, notwithstanding Article 232-6, no improved offer may be filed unless a new competing offer has been filed, declared compliant and opened.
Chapter III - Simplified procedure (Articles 233-1 à 233-5)
The simplified offer procedure may be used in the following cases:
an offer by a shareholder that already holds directly or indirectly, alone or in concert within the meaning of Article L. 233-10 of the Commercial Code, one-half or more of the target company's equity and voting rights;
an offer by a shareholder that, following an acquisition, holds directly or indirectly, alone or in concert within the meaning of Article L. 233-10 of the Commercial Code, one-half or more of the target company's equity and voting rights;
an offer for no more than 10% of the voting equity securities or voting rights of the target company, taking into account the voting equity securities and voting rights that the offeror already holds, directly or indirectly;
an offer by a person, acting alone or in concert within the meaning of Article L. 233-10 of the Commercial Code, for preference shares, investment certificates or voting rights certificates;
an offer by a company to buy back its own shares, pursuant to Article 225-207 of the Commercial Code;
an offer by a company to buy back its own shares, pursuant to Article 225-209 of the Commercial Code;
an offer by the issuing company for securities giving access to its equity;
an offer by the issuing company to exchange debt securities that do not give access to capital for equity securities or securities that do give access to its capital.
The simplified public cash offer shall be carried out by purchasing securities on the terms and following the procedures stipulated at the opening of the offer.
In the case of a limited offer referred to in points 3°, 5° and 6° of Article 233-1 and in Articles 233-4 and 233-5, or in the case of simplified exchange offer, or if the circumstances and the procedures of the transaction warrant it, the offer shall be centralised by the market undertaking concerned or by the sponsor institution under the supervision of the market undertaking.
The offer period for a simplified offer may be limited to ten trading days in the case of a cash offer and to fifteen trading days in other cases, with the exception of a buyback offer pursuant to Article L. 225-207 of the Commercial Code.
In the case of a cash offer under the terms of Point 1° of Article 233-1 and subject to the provisions of Articles 231-21 and 231- 22, the price stipulated by the offeror may not, unless the AMF gives its consent, be lower than the price determined by calculating the average stock market prices, weighted by trading volume for sixty trading days prior to the publication of the notice referred to in the first paragraph of Articles 223-34 or, failing that, prior to publication of the notice of filing of the draft offer referred to in Article 231-14.
For the purposes of this calculation, the prices and volumes used shall be the ones on the regulated market where the shares of the target company are most liquid.
In the case of an offer for investment certificates or voting rights certificates, the offeror may limit itself to acquiring a quantity of voting rights certificates or investment certificates equivalent to the number of such investment certificates or voting rights certificates, respectively, that it already holds.
If the person making a simplified offer has been authorised to reserve the right to scale down the sale or exchange orders made in response to its offer, the scaling-down is done on a proportional basis, subject to any necessary adjustments.
Orders made in response to a buyback offer filed pursuant to Point 5° of Article 233-1 are scaled down in accordance with the provisions of the Commercial Code.
In such cases, the offeror may not trade in the securities concerned.
Chapter IV - Mandatory filing of a draft offer (Articles 234-1 à 234-11)
For the purposes of this Chapter, equity securities shall mean voting securities if a company's equity capital consists partly of non-voting securities.
The fractions of capital or voting rights referred to in this Chapter are determined in accordance with the threshold calculation methods set by Articles L. 233-7 and L. 233-9 of the Commercial Code.
The agreements and instruments referred to in Points 4° and 4° bis of Section I of Article L. 233-9 of the Commercial Code are not taken into account when determining the fractions of capital or voting rights referred to in this Chapter
The financial instruments to be taken into account pursuant to point 4° of section I of Article L. 233-9 of the Commercial Code are:
Bonds exchangeable for shares;
Futures;
Options, whether exercisable immediately or at a future date, regardless of the level of the share price relative to the exercise price of the option; where the option can be exercised only on condition that the share price reaches a level specified in the contract, it is counted as a share once that level is reached.
The agreements to be taken into account are those referred to in point 4° of section I of Article L. 233-9 of the Commercial Code; where the agreement can be exercised only on condition that the share price reaches a level specified in the contract, the shares covered by the agreement are counted once that level is reached.
Where a natural or legal person, acting alone or in concert within the meaning of Article 233-10 of the Commercial Code, comes to hold more than 30% of a company's equity securities or voting rights, such person is required, on its own initiative, to inform the AMF immediately thereof and to file a proposed offer for all the company's equity securities, as well as any securities giving access to its capital or voting rights, on terms that can be declared compliant by the AMF.
The provisions of Chapter I and, as appropriate, Chapters II or III of this Title are applicable to mandatory tender offers.
Natural or legal persons acting alone or in concert within the meaning of Article 233-10 of the Commercial Code are subject to the requirements of the first paragraph when, as a result of a merger or an asset contribution, they come to hold more than 30% of a company's capital or voting rights.
Where an offer under the terms of this chapter has become null and void pursuant to Article 231-9 I, the offeror is deprived of the voting rights attached to the shares it holds in the target company on the terms set out in Part II of Article L. 433-1-2 of the Monetary and Financial Code.
The AMF may authorise, under terms that are made public, a temporary breach of the thresholds referred to in Articles 234-2 and 234-5 if the breach results from a transaction that is not intended to gain or increase control of the company, within the meaning of Article L. 233-2 of the Commercial Code, and if it lasts no longer than six months. The person(s) concerned shall undertake not to exercise the corresponding voting rights during the period of resale of the securities.
The provisions of Article 234-2 apply to natural or legal persons, acting alone or in concert, who directly or indirectly hold between 30% and one-half of the total number of equity securities or voting rights of a company and who, within a period of less than twelve consecutive months, increase such holding by at least 1% of the company's total equity securities or voting rights.
The provisions of Article 234-2 apply to natural or legal persons, acting alone or in concert, who directly or indirectly hold between 30% and one-half of the total number of equity securities or voting rights of a company, whose offer has become null and void pursuant to Article 231-9 I and who increase this holding in the share capital or voting rights.
Persons who, alone or in concert, hold directly or indirectly between 30% and one-half of a company's capital or voting rights must keep the AMF informed of any change in such holdings. The AMF shall make these disclosures public.
When a proposed offer is filed pursuant to Articles 234-2 and 234-5, the proposed price must be at least equivalent to the highest price paid by the offeror, acting alone or in concert within the meaning of Article 233-10 of the Commercial Code, in the twelve-month period preceding the event that gave rise to the obligation to file a proposed offer.
The AMF may request or authorise a price modification if this is warranted by a manifest change in the characteristics of the target company or in the market for its securities, and notably in the following cases:
if events liable to materially alter the value of the securities concerned occurred in the twelve-month period before the draft offer was filed;
if the target company is in recognised financial difficulty;
if the price mentioned in the first paragraph results from a transaction that includes related items involving the offeror, acting alone or in concert, and the seller of the securities acquired by the offeror over the last twelve months.
In these cases, or in the absence of transactions by the offeror, acting alone or in concert, in the securities of the target company over the twelve-month period referred to in the first paragraph, the price is determined based on generally accepted objective valuation criteria, the characteristics of the target company and the market for its securities.
The AMF may determine that there is no requirement to file a proposed offer if the thresholds referred to in Articles 234-2 and 234-5 are breached by one or more persons as a result of their having declared themselves to be acting in concert with:
one or more shareholders who already held, alone or in concert, the majority of a company's equity or voting rights, provided such shareholders remain predominant;
One or more shareholders that already held, alone or in concert, between 30% and one-half of a company's equity or voting rights, provided that such shareholders maintain a larger holding and that, upon the formation of this concert party, they do not exceed one of the thresholds referred to in Articles 234-2 and 234-5.
Where more than 30% of the capital or voting rights of a company whose equity securities are admitted to trading on a regulated market in a Member State of the European Union or a State party to the EEA agreement, including France, is held by another company and constitutes one of its essential assets, the AMF may determine that a proposed public offer need not be filed when a group of persons acting in concert acquires control of that other company, within the meaning of laws and regulations applicable to it, provided that one or more members of the concert party already had such control and remain predominant.
In all the above cases, as long as the balance of shareholdings within a concert party is not altered significantly relative to the situation at the time of the initial declaration, there is no need to make a public offer.
The AMF may waive the mandatory filing of a tender offer if the person(s) concerned demonstrate to it that one of the conditions listed in Article 234-9 is met.
The AMF rules after examining the circumstances in which the threshold(s) have been or will be breached, the structure of ownership of the equity and voting rights and, where applicable, the conditions on which the transaction has been or will be approved by a general meeting of the target company's shareholders.
The cases in which the AMF may grant a waiver are as follows:
1° Transmission by way of gift between natural persons, or distribution of assets by a legal person in proportion to the rights of its members.
2° Subscription to a capital increase by a company in recognised financial difficulty, subject to the approval of a general meeting of its shareholders.
3° Merger or asset contribution subject to the approval of a general meeting of shareholders.
4° Merger or asset contribution subject to the approval of a general meeting of shareholders, combined with an agreement between shareholders of the companies concerned establishing a concert party.
5° Reduction in the total number of equity securities or voting rights in the target company.
6° Holding of a majority of the company's voting rights by the applicant or by a third party, acting alone or in concert.
6° bis Holding of a majority of the company's share capital by the applicant or by a third party, acting alone or in concert, further to an offer made following the normal procedure referred to in Chapter II of this Title.
7° Resale or other comparable disposal of equity securities or voting rights between companies or persons belonging to the same group.
8° Without prejudice to section III of Article L. 433-3 of the Monetary and Financial Code, acquisition of control, within the meaning of applicable laws and regulations, of a company which directly or indirectly holds more than 30% of the capital or voting rights of another company whose equity securities are admitted to trading on a regulated market in a Member State of the European Union or a State party to the EEA agreement, including France, and which does not constitute an essential asset of the company over which control has been acquired.
9° Merger or contribution of a company which directly or indirectly holds more than 30% of the capital or voting rights of a company under French law whose equity securities are admitted to trading on a regulated market in a Member State of the European Union or a State party to the EEA agreement, including France, and which does not constitute an essential asset of the merged or contributed company.
10° Allocation of double voting rights between 3 April 2014 and 31 December 2018 under the conditions set out in Article 7, V of Act 2014-384 of 29 March 2014, as amended by Article 194 of Act 2015-990 of 6 August 2015.
In the case of transactions subject to the approval of the target company's shareholders, the AMF may rule on a waiver application before a general meeting is held, provided it has precise information about the intended transaction.
In the other cases mentioned in Article 234-9 and in the situations referred to in Articles 234-4 and 234-7, the AMF may make its ruling before the relevant transaction is carried out, based on the nature, circumstances and timetable of the transaction as well as the supporting documents provided by the person(s) concerned.
The AMF is to be kept informed of the course of events and, if the transaction is not carried out according to the initial terms, may declare its previous decision to be null and void.
Where it grants a waiver or determines that there is no requirement to file an offer, the AMF publishes its decision on its website and discloses any commitments made by the applicant(s).
For the application of the provisions of this chapter, the one-third threshold that applied before 1 February 2011 to holdings of capital and voting rights shall apply in place of the 30% threshold to any person, acting alone or in concert within the meaning of Article L. 233-10 of the Commercial Code, who on 1 January 2010 directly or indirectly held between 30% and one-third of the capital or voting rights, and shall continue to apply as long as the holding remains between these two thresholds.
The same applies to any person, acting alone or in concert within the meaning of Article L. 233-10 of the Commercial Code, who, after 1 January 2010, directly or indirectly held between 30% and one-third of the capital or voting rights as a result of a binding commitment entered into before 1 January 2010, and shall continue to apply as long as the holding remains between these two thresholds.
Persons acting alone or in concert within the meaning of Article L. 233-10 of the Commercial Code who on 1 February 2011 directly or indirectly held between 30% and one-third of the capital or voting rights and who are not covered by the foregoing paragraphs must reduce their holding below 30% of the capital and voting rights before 1 February 2012. If they fail to do so, they will be subject to the provisions of Articles 234-1 to 234-10.
All natural or legal persons concerned by these provisions shall report their holdings of capital and voting rights to the AMF without delay. The AMF publishes the list of persons who have made such declarations.
Chapter V - Public offers for financial instruments admitted to trading on an organised multilateral trading facility (Articles 235-1 à 235-3)
Without prejudice to the provisions of Article 231-1 (4°), the provisions of this chapter apply exclusively to companies whose equity securities are admitted to trading on an organised multilateral trading facility within the meaning of Article 524-1.
The provisions of Articles 234-5, 234-7 (2°), 234-7, paragraph 4, and 234-11 are not applicable.
The provisions of Chapter IV, with the exception of those mentioned above, apply with a threshold of 50% instead of 30%. The provisions of Articles 236-5 and 236-6 are not applicable.
In addition to the cases referred to in Article 234-9, the AMF may also grant a waiver from the obligation to file a draft public offer in the following cases:
Subscription to a reserved capital increase, subject to the approval of the general meeting of shareholders;
Exercise of the share allocation right attached to securities giving access to the share capital if the reserved issue of such securities has previously been subjected to the approval of the general meeting of shareholders.
Chapter VI - Buyout offers with squeeze-out (Articles 236-1 à 236-7)
Where the majority shareholder(s) hold, in concert within the meaning of Article 233-10 of the Commercial Code, 95 % or more of the voting rights of a company whose shares are or were admitted to trading on a regulated market in a Member State of the European Union or in a State party to the EEA Agreement, including France, any holder of voting equity securities who is not part of the majority group may apply to the AMF to require the majority shareholder(s) to file a draft buyout offer.
Once the AMF has made the necessary verifications, it rules on such application in the light of, inter alia, the state of the market for the securities concerned and the information provided by the applicant.
If the AMF declares the application to be acceptable, it notifies the majority shareholder(s), which must then file a draft buyout offer, within a time limit set by the AMF and drawn up in terms that can be deemed compliant by it.
Where the majority shareholder(s) hold, in concert within the meaning of Article 233-10 of the Commercial Code, 95% or more of the voting rights of a company whose investment certificates and, if applicable, voting rights certificates, are or were admitted to trading on a regulated market in a Member State of the European Union or in a State party to the EEA Agreement, including France, any holder of such certificates who is not part of the majority group may apply to the AMF to require the majority shareholder(s) to file a buyout offer for those securities.
Once it has made the necessary verifications, the AMF rules on such application in the light of, inter alia, the state of the market for the securities concerned and the information provided by the applicant.
If the AMF declares the application to be acceptable, it notifies the majority shareholder(s), which must then file a draft buyout offer, within a time limit set by the AMF and drawn up in terms that can be deemed compliant by it.
The majority shareholder(s) holding, in concert within the meaning of Article 233-10 of the Commercial Code, 95% or more of the voting rights of a company whose shares are or were admitted to trading on a regulated market in a Member State of the European Union or in a State party to the EEA Agreement, including France, may file with the AMF a draft buyout offer for the equity securities, and any other securities giving access to the capital or voting rights in the company, that they do not already hold.
The majority shareholder(s) holding, in concert within the meaning of Article 233-10 of the Commercial Code, 95 % or more of the voting rights of a company whose investment certificates and, if applicable, voting rights certificates are or were admitted to trading on a regulated market in a Member State of the European Union or in a State party to the EEA Agreement, including France, may file with the AMF a draft buyout offer for those securities.
Where a public limited company (société anonyme) whose equity securities are admitted to trading on a regulated market is converted to a limited partnership with shares (société en commandite par actions), the person(s) that controlled it prior to conversion, or the active partners in the limited partnership with shares, are required to file a draft buyout offer once a resolution regarding the conversion has been adopted at a general meeting of shareholders. The draft offer cannot include a minimum acceptance condition and must be drawn up in terms that can be declared compliant by the AMF.
The offeror informs the AMF whether it reserves the right, depending on the result of the offer, to request that all equity securities and securities giving access to the capital and voting rights of the company be delisted from the regulated market on which they are traded.
The natural or legal persons that control a company within the meaning of Article L. 233-3 of the Commercial Code must inform the AMF:
When they intend to ask an extraordinary general meeting of shareholders to approve one or more significant amendments to the company's articles or bylaws, in particular the provisions concerning the company's legal form or disposal and transfer of equity securities or the rights pertaining thereto;
When they decide in principle to proceed with the merger of that company into the company that controls it or with another company controlled by the latter; to sell or contribute all or most of the company's assets to another company; to reorient the company's business; or to suspend dividends for a period of several financial years.
The AMF evaluates the consequences of the proposed changes in the light of the rights and interests of the holders of the company's equity securities or voting rights and decides whether a buyout offer should be made.
The draft offer cannot include a minimum acceptance condition and must be drawn up in terms that can be declared compliant by the AMF.
The public buyout offer shall be carried out by purchasing securities on the terms and following the procedures stipulated at the opening of the offer during ten or more trading days, or if the circumstances and the procedures of the transaction warrant it, the offer shall be centralised by the market undertaking concerned or by the sponsor institution under the supervision of the market undertaking.
If the public buyout offer includes a securities settled leg and a cash settled leg, with no reduction in orders, the offeror may acquire the securities targeted under the terms and conditions stipulated in the cash settled leg, in derogation to the provisions of Article 231-41.
Chapter VII - Squeeze-outs (Articles 237-1 à 237-19)
Section 1 - Squeeze-out following a buyout offer (Articles 237-1 à 237-13)
At the close of a buyout offer carried out in accordance with Articles 236-1, 236-2, 236-3 or 236-4, securities not tendered by minority shareholders or holders of investment certificates or voting rights certificates may be transferred to the majority shareholder or group, provided that they represent not more than 5% of the shares or voting rights, in return for compensation.
Similarly, securities that give or could give access to capital may be transferred to the majority shareholder or group, provided that the equity securities that could potentially be created, through conversion, subscription, exchange, redemption or any other means, from untendered securities that give or could give access to the company's capital, plus existing but untendered equity securities, do not represent more than 5% of all the equity securities that exist and that could be created.
Where a buyout offer is filed, the offeror informs the AMF whether it reserves the right to apply for a compulsory buyout once the offer has closed and the result is known, or whether it requests that a compulsory buyout be implemented once the buyout offer has closed.
In support of its proposed buyout offer, the offeror provides the AMF with a valuation of the securities of the target company, carried out using the objective methods applied in cases of asset disposals, that takes into account the value of the company's assets, its past earnings, its market value, its subsidiaries, if any, and its business prospects, according to a weighting appropriate to each case.
The AMF examines the draft offer in accordance with the provisions of Articles 231-21 and 231-22.
Where the AMF declares a proposed buyout offer followed by a squeeze-out to be acceptable, the majority shareholder or group shall place a notice informing the public of the squeeze-out procedure in a newspaper carrying legal notices published in the vicinity of its registered office.
The offeror designates a custody account-keeper to take charge of centralising the compensation payments (hereinafter "the centraliser").
The offeror requesting the squeeze-out deposits the amount corresponding to the compensation for securities not tendered to the public buyout offer in a reserved account with the centraliser.
Compensation is calculated net of all expenses.
Unallocated funds are held by the centraliser for ten years and paid to Caisse des Dépôts et Consignations at the end of this period. These funds are at the disposal of the legal beneficiaries, but revert to the French State after thirty years.
The centraliser, acting on behalf of the majority shareholder or group and throughout the entire period during which it holds the funds, places an annual notice in a newspaper of national circulation inviting former shareholders who have not been compensated to exercise their rights.
Where the centraliser has paid out all frozen funds corresponding to compensation payable to securities holders that did not respond to the public buyout offer, it places an appropriate announcement in a newspaper of national circulation. It is then no longer required to place the annual notice mentioned above.
If, when filing the public buyout offer, the offeror reserved the right to proceed with a squeeze-out after the offer, it informs the AMF within ten trading days of the close of the offer whether it intends so to proceed or waives that right. The offeror's decision is made public by the AMF.
If the offeror decides to proceed with a squeeze-out, it informs the AMF of the price it proposes to pay as compensation. This price cannot be lower than that of the buyout offer, and it shall be higher when events liable to alter the value of the securities concerned have occurred after the offer was declared compliant.
The AMF shall make the mandatory buyout public and specify the terms for implementing it, including the date on which it becomes effective. The time between the decision and the execution of the buyout cannot be less than the time referred to in Article R. 621-44 of the Monetary and Financial Code. This decision shall result in the delisting of the relevant securities from the regulated market where they had been traded.
Custody account-keeping institutions transfer any securities not tendered to the buyout offer into the name of the majority shareholder or group, which pays the corresponding compensation into a reserved account opened for this purpose in accordance with the provisions of Article 237-9.
Where the offeror has chosen to proceed with a squeeze-out in accordance with the provisions of Article 237-8, the freezing of funds and crediting of compensation to holders that have not tendered their securities to the public buyout offer takes place at the date on which the AMF's decision becomes enforceable.
If, when filing the public buyout offer, the offeror applies to the AMF for a squeeze-out to be implemented as soon as the offer closes, regardless of result, the notice published by the market operator to announce the opening of the buyout offer stipulates the conditions applying to the squeeze-out procedure, and in particular the date on which it takes effect.
As soon as the public buyout offer closes, the securities securities concerned shall be delisted from the regulated market(s) on which they are traded and, where appropriate, from the multilateral trading facilities where they were traded. At the same date, the custody account-keeping institutions transfer any securities not tendered to the buyout offer into the name of the majority shareholder or group, which pays the corresponding compensation into a reserved account opened for this purpose in accordance with the provisions of Article 237-11.
Where the offeror requested a squeeze-out at the time the proposed buyout offer was filed, the funds are frozen the day after the offer closes.
At the date the funds are frozen, the custody account-keeper credits the accounts of securities holders affected by the squeeze- out with the compensation that is due them.
During the offer period of a public buyout offer prior to a squeeze-out, only the investment service provider(s) designated by the offeror are authorised to acquire the securities concerned on the offeror's behalf.
Persons seeking to acquire securities subject to a public buyout offer followed by a squeeze-out must obtain them solely from the investment service provider(s) designated by the offeror.
The sole beneficiaries of the facility whereby the offeror covers brokerage commissions up to an amount set by it, including, where applicable, stamp duty, shall be those sellers whose securities were registered on their account prior to the opening of:
a simplified tender offer in which the offeror has explicitly declared its intention, if it obtains 95% of the voting rights of the target company, to request initiation of a public buyout offer followed by a squeeze-out; or
a public buyout offer followed by a squeeze-out.
To this end, and in connection with the simplified tender offer referred to in Point 1°, the market operator concerned puts in place a procedure for centralising orders placed in response to such offer.
Requests for refunds must be accompanied by documentary evidence of the sellers' rights.
Section 2 - Squeeze-out following any public offer (Articles 237-14 à 237-19)
Without prejudice to the provisions of Article 237-1, following any public offer and within three months of the close of the offer, securities not tendered by minority shareholders may be transferred to the offeror, provided that they represent not more than 5% of the shares or voting rights, in return for compensation.
Similarly, securities that give or could give access to capital may be transferred to the offeror, provided that the equity securities that could potentially be created, through conversion, subscription, exchange, redemption or any other means, from untendered securities that give or could give access to the company's capital, plus existing but untendered equity securities, do not represent more than 5% of all the equity securities that exist and that could be created.
Implementation of the squeeze-out procedure provided for in this article is subject to the provisions of Articles 237-4 to 237-7 and to the following provisions.
When it files the draft offer, the offeror informs the AMF whether it reserves the right, depending on the result of the offer, to implement a squeeze-out.
I. - The AMF rules on whether the proposed squeeze-out is compliant, in accordance with Articles 231-21 and 231-22, except in one of the following two cases and provided that the squeeze-out includes the cash settlement proposed in the last offer:
The squeeze-out follows a public offer subject to the provisions of Chapter II;
The squeeze-out follows a public offer for which the AMF has the valuation mentioned in Part II of Article L. 433-4 of the Monetary and Financial Code and the report by the independent appraiser mentioned in Article 261-1.
II. - Where the AMF rules on whether the squeeze-out is compliant, the offeror provides, in support of its proposed squeeze-out, a valuation of the securities of the target company, carried out using the objective methods applied in cases of asset disposals, that takes into account the value of the company's assets, its past earnings, its market value, its subsidiaries, if any, and its business prospects, according to a weighting appropriate to each case.
Where a squeeze-out is to be implemented, the parties concerned must draw up a draft squeeze-out document in accordance with the conditions and procedures set out in Articles 231-16 to 231-20, except for the description of the offeror's intentions for the next twelve months. The squeeze-out document(s) are submitted to the AMF for approval in accordance with Articles 231-20 and 231-26 and made available to the public in accordance with Article 231-27.
Disclosures providing information on the legal, financial, accounting and other characteristics of the target company are filed with the AMF and made publicly available in accordance with the conditions and procedures set out in Articles 231-28 to 231-30. Content requirements for these disclosures are stipulated in an AMF instruction.
III. - Where the AMF does not rule on whether the squeeze-out is compliant, the offeror informs the AMF of its intention to implement the squeeze-out. The AMF publishes the implementation date for the squeeze-out. The offeror publishes a news release in accordance with Article 221-3 and is responsible for its distribution. Content requirements for these news releases are stipulated in an AMF instruction.
Where the AMF declares a draft squeeze-out to be compliant or where the AMF does not rule on whether the squeeze-out is compliant when the majority shareholder or group informs the AMF of its intention to proceed with a squeeze-out, the shareholder or group shall place a notice informing the public of the squeeze-out in a newspaper carrying legal notices published in the vicinity of its registered office.
The statement of compliance shall specify the date on which it becomes enforceable. The time period between the release and the enforcement of the statement cannot be less than the time period referred to in Article R. 621-44 of the Monetary and Financial Code.
The statement shall result in the delisting of the relevant securities from the regulated market where they are traded. The freezing of funds and crediting of compensation to holders that have not tendered their securities to the public offer takes place at the date on which the AMF's statement becomes enforceable.
Where the AMF does not rule on whether the squeeze-out is compliant, the provisions of the preceding paragraph shall apply as from implementation of the squeeze-out.
Custody account-keeping institutions transfer any securities not tendered to the last offer into the name of the majority shareholder or group, which pays the corresponding compensation into a reserved account opened for this purpose in accordance with the provisions of Article 237-5.
As soon as the statement of compliance becomes enforceable, or, if the AMF does not rule on compliance, as soon as the squeeze-out is implemented, the relevant securities shall be delisted from the regulated market(s) where they were traded and, where appropriate, from the multilateral trading facilities where they were traded. At the same date, the custody account-keeping institutions transfer any securities not tendered to the buyout offer into the name of the majority shareholder or group, which pays the corresponding compensation into a reserved account opened for this purpose in accordance with the provisions of Article 237-11.
Chapter VIII - Disclosure and procedure for orderly acquisition of debt securities that do not give access to equity (Articles 238-1 à 238-5)
This chapter applies to the acquisition of debt securities that do not give access to equity and are admitted to trading on a French regulated market or an organised multilateral trading facility.
Section 1 - Disclosure of acquisitions of debt securities that do not give access to equity (Articles 238-2 à 238-2-1)
Where an issuer has acquired more than 10% of the securities representing a single bond issue on or off the market in one or more transactions, it shall so notify the market within four trading days by means of a news release to be disseminated in accordance with the procedures stipulated in Article 221-4. Further acquisitions of the same bond issue are subject to the same disclosure requirement for each additional 10% of the securities acquired in one or more transactions. The 10% threshold shall be calculated on the basis of the number of securities issued, including any subsequent issues granting identical rights to the holders. The number of securities used for calculating whether a threshold has been crossed is the number of securities bought less the number of securities sold.
Issuers of debt securities that have bought back securities during the past half-year shall, within ten trading days after the close of the half-yearly or annual accounts, publish the number of securities remaining in circulation and the number of securities they hold in accordance with Article L. 213-1 A of the Monetary and Financial Code, for each of their bond issues. This information is to be posted on their website or disseminated in accordance with section II of Article 221-4.
Section 2 - Procedure for orderly acquisition of debt securities that do not give access to equity (Articles 238-3 à 238-5)
The orderly acquisition procedure shall be defined as an initiative by the issuer, its agent or a third party to set up a centralised facility that enables the issuer to offer all holders of a single issue the option of selling or exchanging some or all of the debt securities that they hold, while ensuring equal treatment of all holders.
The procedure for orderly acquisition of debt securities shall be announced by means of a news release disseminated in accordance with the procedures stipulated in Article 221-4 and shall comply with the relevant market abuse rules defined by the market abuse directive (regulation no. 596/2014/ EU).
An AMF Instruction shall stipulate the information to be included in the news release mentioned in Article 238-4 when the orderly acquisition procedure involves debt securities sold through a public offering in France.
Title IV - Buyback programmes for shares and transaction reporting (Articles 241-1 à 241-7)
Section 1 - General provisions (Articles 241-1 à 241-5)
Commission Delegated Regulation (EU) 2016/1052 of 8 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the conditions applicable to buy-back programmes and stabilisation measures
The provisions of this title shall apply to companies whose equity securities are listed on a regulated market or are the subject of a request for admission to a regulated market and to companies whose equity securities are traded on a multilateral trading facility or are the subject of a request for admission to a multilateral trading facility, and that carry out share buybacks in accordance with Articles L. 225-209, L. 225-209-2 and L. 225-217 of the Commercial Code.
They shall also apply to all issuers of securities equivalent to those mentioned above, issued under foreign law and either listed on a regulated market or on an organised multilateral trading facility or the subject of a request for admission to a regulated market or to a multilateral trading facility.
I. - Before engaging in a share buyback programme, issuers must publish a description of the programme in accordance with Article 221-3 that includes:
The date of the shareholders' meeting that authorised or has been called to authorise the programme;
The allotment by objective of shares held as of the date of the publication of the programme description;
The objective(s) of the share buyback programme;
The maximum amount allocated to share buyback programmes, the maximum number of shares and the characteristics of the shares that the issuer intends to buy back, along with the maximum purchase price;
The term of the share buyback programme;
II. - During the term of the share buyback programme, any material change to any of the information specified in Section I must be made public as soon as possible in accordance with Article 221-3.
The issuer shall not be required to publish the programme description if the annual financial report referred to in paragraph I of Article L. 451-1-2 of the Monetary and Financial Code, the reference document, or the base document includes all of the information that must appear in the programme description pursuant to Article 241-2.
In accordance with Article 221-3, the issuer shall disseminate a statement explaining the way it intends to make this information available.
I.- Any issuer carrying out transactions in its own shares in the context of a buyback programme under the terms of Article 5 of the market abuse regulation (regulation no. 596/2014/EU) shall declare such transactions to the AMF electronically and according to the procedure defined in an AMF instruction. These declarations shall be disseminated fully and effectively in accordance with Article 221-3.
II.- Any issuer carrying out transactions in its own shares in the context of a buyback programme shall declare such transactions monthly to the AMF electronically and according to the procedure and format defined in an AMF instruction.
Persons holding more than 10% of the issuer's share capital, as well as the issuer's directors, must report the number of securities that they have sold to the issuer.
Section 2 - Provisions complementing accepted market practices (Articles 241-6 à 241-7)
Any issuer benefitting from an accepted market practice shall comply with the requirements arising from the AMF decision to incorporate that market practice in accordance with Article 13 of the market abuse regulation (regulation no. 596/2014/EU).
By derogation from paragraph I of Article 241-4, any issuer carrying out transactions in its own shares in the context of a market practice accepted by the AMF shall declare such transactions to the AMF and publish them within the terms of the accepted market practice concerned and according to the procedure and format defined in an AMF instruction.
Title V - Marketing in France of financial instruments traded on a recognised foreign market or a regulated market of the European Economic Area (EEA) (Articles 251-1 à 251-7)
Information provided to the public, regardless of the medium, with a view to trading in financial instruments on a recognised foreign market or regulated market of the European Economic Area must be accurate, precise and truthful. It must contain no false or deceptive statement that could mislead the client.
Products proposed through an act of solicitation shall be suitable to the members of the public being solicited.
If there is no adequate assurance that clients are being informed of the associated risks, the AMF may order the interested party or any other person taking part in the distribution of such products, in any way, to halt the marketing or trading thereof.
Before any transaction on a recognised foreign market in financial instruments, the market operator that runs that market shall draw up a disclosure document in the market itself and the various financial instruments that it proposes. This disclosure document, in French, must be made available to financial intermediaries by the market operator. It shall state or describe the following:
the foreign market is recognised by the Minister for the Economy, under the terms of Article D. 423-1 of the Monetary and Financial Code.
The various ways in which orders are placed and executed, when these have consequences for the person initiating the order.
The legal nature of the products, the technical characteristics thereof and, if applicable, the evidence supporting the advertised risks and returns.
The validity date of the aforementioned information.
This disclosure document must be provided by the financial intermediary to each prospective client, or transmitted to him electronically, before the placing of the client's first order to buy or sell a financial instrument admitted to trading on the recognised foreign market.
For transactions on a market in derivative financial instruments, if the client does not trade on that market in the ordinary course of business, this document must be sent by registered letter with return receipt, or via the Internet, with the financial intermediary recording the date on which the client viewed or downloaded it.
No one may receive, directly or indirectly, orders or funds from the client until seven days after the date that the disclosure document was delivered, viewed onscreen or downloaded, or before the financial intermediary has received a certification
bearing the handwritten or electronic signature of the client and stating, "I have read the disclosure document relating to {name of the recognised market}, transactions on that market, and the commitments that I will take on by virtue of my participation in such transactions." This waiting period applies only to the first order, however.
Before any transaction on a regulated market in derivative financial instruments in the European Economic Area, and in compliance with the obligations of Section 3 of Chapter I of Title 2 of Book III, the financial intermediary shall provide or transmit electronically to each client the following information:
A statement that the regulated market in derivative financial instruments appears on the list of regulated markets of the European Economic Area published in the Official Journal of the European Union.
The various ways in which orders are placed and executed, when these have consequences for the client.
The legal nature of the products, the technical characteristics thereof and, if applicable, the evidence supporting the announced risks and returns.
If the client does not trade in the market in question in the ordinary course of business, no one may receive orders or funds from him, directly or indirectly, before the financial intermediary has received a certification bearing his signature and stating, "I have read the disclosure document relating to {name of the EEA regulated market in derivative financial instruments}, transactions on that market, and the commitments that I will take on by virtue of my participation in such transactions." This certification is needed only for the first order.
Any advertisement or message disseminated by the foreign market must include the information that it has been recognised by the Minister for the Economy, under the terms of Article D. 423-1 of the Monetary and Financial Code, or that it is on the list of regulated markets in the European Economic Area published in the Official Journal of the European Union.
All advertisements or messages disseminated by the financial intermediary with a view to trading in financial instruments on a recognised foreign market must contain the following information:
Name, address, legal form of the person referred to in Article D. 423-3 of the Monetary and Financial Code, making a public offering;
Name and address of that person's correspondent in France, if applicable.
The identity of the foreign authority that has authorised that person to conduct a financial activity.
A statement that the foreign market has been recognised by the economy minister of France pursuant to Article 1 of the aforementioned Decree.
The minimum term, if any, of the recommended investments.
The law that will apply in the event of a dispute, and the courts competent to hear such dispute.
The availability of an arbitration procedure, if applicable.
All advertisements or messages disseminated by the financial intermediary with a view to trading on a regulated market in derivative financial instruments of the European Economic Area must mention that the market appears on the list of such markets published in the Official Journal of the European Union.
The AMF:
Shall receive, for information, the disclosure document drawn up by the market operator that runs the recognised foreign market.
Shall request that all recognised foreign markets keep it informed of any substantial changes in the way they operate and send it data on their activities in French territory, as specified in an AMF instruction.
May require the market operator that runs a recognised foreign market to make available to the AMF all information needed to support the claims or statements appearing in the disclosure document provided for in Article 251-3 and, if need be, may request modification thereof.
May require any person referred to in Article D. 423-3 of the Monetary and Financial Code to produce any elements likely to support the claims or representations made in the advertisements or messages referred to in Article 251-4, and to require their amendment, as needed.
Only Articles 251-1, 251-2, 251-4 and 251-5 apply to recognised markets in derivative financial instruments on commodities in the European Economic Area, when such market is operated by a market operator that also runs a regulated market in the derivative financial instruments appearing on the list of such markets published in the Official Journal of the European Union.
Title VI - Fairness opinions (Articles 261-1 à 263-8)
Chapter I - Appointing an independent appraiser (Articles 261-1 à 261-4)
I. - The target company of a takeover bid shall appoint an independent appraiser if the transaction is likely to cause conflicts of interest within its Board of Directors, Supervisory Board or governing body that could impair the objectivity of the reasoned opinion mentioned in Article 231-19 or jeopardise the fair treatment of shareholders or bearers of the financial instruments targeted by the bid.
The situations described below, in particular, constitute such cases:
if the target company is already controlled by the offeror, within the meaning of Article L. 233-3 of the Commercial Code, before the bid is launched;
if the senior managers of the target company or the persons that control it, within the meaning of Article L. 233-3 of the Commercial Code, have entered into an agreement with the offeror that could compromise their independence;
if the controlling shareholder, within the meaning of Article L. 233-3 of the Commercial Code, does not tender its securities to a buyback offer launched by the company for its own securities;
if the offer is related to one or more transactions that could have a significant impact on the price or exchange ratio of the proposed offer;
if the offer pertains to financial instruments in multiple categories and is priced in a way that could jeopardise the fair treatment of shareholders or bearers of the financial instruments targeted by the bid;
if the non-equity financial instruments mentioned in Point 1° of Part II of Article L. 211-1 of the Monetary and Financial Code that give or could give direct or indirect access to the capital or voting rights of the offeror or of a company belonging to the offeror's group are provided as consideration for the takeover of the target company.
II. - The target company shall also appoint an independent appraiser before implementing a squeeze-out, subject to the provisions of Article 237-16.
Any issuer that carries out a reserved capital increase at a discount to the market price greater than the maximum discount authorised for capital increases without pre-emptive subscription rights and giving a shareholder, acting alone or in concert within the meaning of Article L. 233-10 of the Commercial Code, control over the issuer within the meaning of Article L. 233-3 of the aforementioned code, shall appoint an independent appraiser who will apply the provisions of this title.
Any issuer or offeror carrying out a takeover bid may appoint an independent appraiser who will apply the provisions of this title.
I. - The independent appraiser must not be placed in a conflict of interest in relation to the parties concerned by the public offer or transaction and their advisors. An AMF instruction shall describe situations in which the independent appraiser is considered to be placed in a conflict of interest, although this shall not constitute an exhaustive list.
The independent appraiser shall not work repeatedly with the same sponsoring institution(s) or within the same group if the regular nature of such work could compromise his independence.
II. - The appraiser shall prepare a statement certifying that there are no known past, present or future ties between him and the parties concerned by the offer or transaction and their advisors that could compromise his independence or impair the objectivity of his assessment when carrying out the appraisal.
If there is the risk of a conflict of interest but the appraiser deems this unlikely to compromise his independence or impair the objectivity of his assessment, he shall mention this risk in his statement, including relevant supporting information.
Chapter II - Appraisal report (Articles 262-1 à 262-2)
I. - The independent appraiser prepares a report on the financial terms of the offer or transaction. Content requirements for the report are set out in an AMF instruction. In particular, the report contains the statement of independence mentioned in Part II of Article 261-4, a description of the verifications performed and a valuation of the company in question. The report's conclusion takes the form of a fairness opinion.
No other type of opinion shall count as a fairness opinion.
II. - Once appointed, the appraiser must have sufficient time to prepare the report mentioned in Part I, taking into account the complexity of the transaction and the quality of the information provided to him. The appraiser shall have at least fifteen trading days to prepare his report.
I. - In the cases provided for in Article 261-2, the issuer shall distribute the report by the independent appraiser at least ten trading days before the general meeting convened to authorise the transaction, or, where the meeting has exercised its powers of delegation, as soon as possible after the decision by the Board of Directors or Management Board. The report shall be distributed by:
making it available free of charge at the issuer's registered office;
publishing a news release in accordance with Article 221-3;
publishing it on the issuer's website.
II. - An issuer that appoints an independent appraiser pursuant to Article 261-3 shall follow the procedures set forth in Part I when publishing the appraiser's report.
Chapter III - Recognition of professional associations (Articles 263-1 à 263-8)
Section 1 - Requirements for AMF recognition (Articles 263-1 à 263-3)
A professional association of independent appraisers may be recognised, at its request, by the AMF.
I.- The professional association shall draw up a code of conduct setting out the basic principles with which its members must comply.
Members of the association may adapt these principles to reflect their size and organisation. II. - The code of conduct shall set out, inter alia:
the principles governing the independence of appraisers;
the expertise and resources that appraisers must have;
the rules of confidentiality to which they are subject;
procedures for taking on and carrying out appraisals and quality controls to verify work done by association members.
III. The code of conduct shall detail the disciplinary action applicable in the event of breaches.
IV. - The code of conduct may be consulted at any time at the association's registered office by any person who so requests. The code shall also be published on the association's website provided the association has such a site.
The association must have the staff and technical resources needed to carry out its mission on an ongoing basis.
The technical resources shall include, inter alia, a data storage facility for the retention of documents, in particular reports by independent appraisers belonging to the association, for at least five years.
Section 2 - Recognition procedure (Articles 263-4 à 263-5)
Recognition of a professional association shall be subject to prior filing of an application with the AMF containing:
the articles (statuts) of the association;
a curriculum vitae and an extract from the judicial record (casier judiciaire) for each of the association's legal representatives;
a three-year projected budget for the association;
a draft code of conduct;
a description of the human and technical resources that will enable the association to meet its obligations under this chapter.
In deciding whether to recognise an association, the AMF shall review the application mentioned in Article 263-4 to assess whether the association, based on its filing, fulfils the conditions set forth in Articles 263-2 and 263-3. The AMF may ask the association to provide any further information it considers necessary to reach its decision.
Section 3 - Reporting to the AMF (Articles 263-6 à 263-8)
The association shall inform the AMF promptly of any changes in key items in the initial application for recognition, notably concerning its senior management, organisation or supervision.
The association shall inform the AMF promptly of disciplinary action taken against any of its members and shall make available to the AMF the minutes of meetings by the management bodies and general meetings of shareholders.
I. - The AMF may revoke its recognition of an association if said association no longer meets the conditions of its initial recognition.
When the AMF is considering revocation, it shall so inform the association and shall tell it the reasons therefor. The association shall have one month from receipt of such notification to submit any observations it may have.
II. - When the AMF decides to revoke its recognition, the association shall be notified of this by registered letter with return receipt. The AMF shall inform the public of the revocation by means of a news release posted on its website.
The decision shall specify the timetable and method for implementing the revocation. The association must inform its members that its authorisation has been revoked.
Book III - Service providers
Title I - Investment services providers (Articles 311-0 à 315-26)
In this Book III, “financial instrument” means financial instruments as defined by Article L. 211-1 of the Monetary and Financial Code and the units referred to in Article L. 229-7 of the Environmental Code.
Unless otherwise provided, the present Title is applicable:
I.- To investment services providers.
For the purposes of this Title, the term "investment service provider" shall designate investment services providers other than asset management companies.
II. - To the branches of a person that is authorised in a country that is party to the Agreement on the European Economic Area other than France to provide the investment services referred to in Article L. 532-18-1 of the Monetary and Financial Code, in accordance with sub-paragraph 2 of Article L. 532-18-1 and Article L. 532-18-2 of the said Code;
III. - To the branches of companies of third countries that are authorised to provide the investment services referred to in Article L. 532-48 of the Monetary and Financial Code, or to the branches of credit institutions referred to in I of Article L. 511-10 of said Code when they provide investment services, in accordance with II of Article L. 532-50;
IV. - To the relevant persons defined in paragraph 1 of Article 2 of Commission Delegated Regulation (EU) No. 2017/565 of 25 April 2016 for the provisions of Chapters II, III, IV and V of the present Title. For the above-mentioned persons, these constitute a professional obligation.
The provisions of Chapters IV and V of this Title shall apply under the same conditions to the relevant persons referred to in IV within the branches referred to II and III above.
Chapter I - Procedures for authorisation and programme of operations (Articles 311-2 à 311-3)
Commission Delegated Regulation (EU) 2017/565 of 25 April 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
Commission Delegated Regulation (EU) 2017/592 of 1 December 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards for the criteria to establish when an activity is considered to be ancillary to the main business
Commission Delegated Regulation (EU) 2017/1018 of 29 June 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council on markets in financial instruments with regard to regulatory technical standards specifying information to be notified by investment firms, market operators and credit institutions
Commission Delegated Regulation (EU) 2017/1943 of 14 July 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards on information and requirements for the authorisation of investment firms
Commission Delegated Regulation (EU) 2017/1946 of 11 July 2017 supplementing Directives 2004/39/EC and 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards for an exhaustive list of information to be included by proposed acquirers in the notification of a proposed acquisition of a qualifying holding in an investment firm
Commission Implementing Regulation (EU) 2017/1945 of 19 June 2017 laying down implementing technical standards with regard to notifications by and to applicant and authorised investment firms according to Directive 2014/65/EU of the European Parliament and of the Council
Section single - Approval of the programme of operations (Articles 311-2 à 311-3)
I. – When the applicant plans to provide an investment service or an activity referred to in Article R. 532-2 of the Monetary and Financial Code, its programme of operations shall be presented in accordance with Article R. 532-1 of said Code.
II.- When an investment services provider plans to modify its authorisation relating to an investment service or activity referred to in Article R. 532-2 of the Monetary and Financial Code in accordance with Article L. 532-3-1 of said Code, the AMF will notify its decision regarding the programme of operations within the time period indicated in II of Article R. 532-6 of this same Code.
III. – As part of the procedure for authorisation of the branches of investment companies of third countries referred to in III of Article 311-1 by the French Prudential Supervision and Resolution Authority (Autorité de contrôle prudentiel et de résolution), set out in Article L. 532-48 of the Monetary and Financial Code, and prior to the granting of this authorisation, the AMF will notify its decision regarding the programme of operations of the applicant in accordance with Article R. 532-4 of said Code.
If the AMF finds that an investment services provider no longer meets the conditions for the approval of its programme of operations, it shall so inform the Prudential Supervision and Resolution Authority.
Chapter II - Organisational rules (Articles 312-1 à 312-42)
Commission Delegated Regulation (EU) 2017/565 of 25 April 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
Commission Delegated Regulation (EU) 2017/578 of 13 June 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council on markets in financial instruments with regard to regulatory technical standards specifying the requirements on market making agreements and schemes
Commission Delegated Regulation (EU) 2017/589 of 19 July 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards specifying the organisational requirements of investment firms engaged in algorithmic trading
Section 1 - Compliance system (Articles 312-1 à 312-2)
To ensure compliance with all of the professional obligations referred to in II of Article L. 621-15 of the Monetary and Financial Code, the investment services provider shall implement the compliance policy and the procedures relative to the responsibilities of the management body laid down in Articles 22 and 25 of Commission Delegated Regulation 2017/565 of 25 April 2016.
The compliance officer referred to in Paragraph 3 of Article 22 of Commission Delegated Regulation (EU) 2017/565 of 25 April 2016 shall hold a professional license issued under the conditions defined in Section 4 of this Chapter.
Senior management shall apprise the investment services provider's board of directors, its supervisory board or, failing that, its body responsible for supervision, if such a body exists, of the appointment of the compliance officer.
Section 2 - Verification of the knowledge of specified persons (Articles 312-3 à 312-5)
I.- The investment services provider shall ensure that natural persons acting on its behalf have the minimum qualification as well as a sufficient level of knowledge.
II. - It verifies that the persons carrying out one of the following functions can prove they have the minimum level of knowledge set forth in Point 1° of II of Article 312-5:
a) asset manager, within the meaning of Article 312-4;
b) head of financial instrument clearing, within the meaning of Article 312-4;
c) head of post trade services, within the meaning of Article 312-4;
d) persons referred to in Article 312-21.
III. - The investment services provider shall not carry out the verification provided for in II with regard to persons employed as at 1 July 2010. Persons having passed one of the examinations referred to in Point 3° of II of Article 312-5 shall be deemed to have the minimum knowledge required to perform their duties.
IV. - To conduct the verification referred to in II, the investment services provider has six months from the date on which the employee starts to perform one of the above functions. However, where the employee has been taken on under a work/study contract, as provided in Articles L. 6222-1 and L. 6325-1 of the labour code, the investment services provider may not conduct such verification. If it decides to hire the employee when his or her training period finishes, the investment services provider shall ensure that he or she has the minimum qualification as well as a sufficient level of knowledge as referred to in I, at the latest by the end of the contract training period.
The investment services provider shall ensure that any employee whose minimum knowledge has not yet been verified is appropriately supervised.
An asset manager is any person authorised to take investment decisions in connection with an individual investment mandate;
A head of financial instrument clearing is a natural person representing the clearing member before the clearing house with respect to transaction registration, risk organisation and supervision, and the related financial instrument clearing functions;
A head of post-trade services is a person who assumes direct responsibility for custody account keeping, settlement, depositary functions, securities administration or securities services for issuers.
I. - The AMF has formed a Financial Skills Certification Board.
The Financial Skills Certification Board issues opinions at the request of the AMF concerning certification of the professional knowledge of natural persons acting under the authority or on behalf of an investment services provider and performing one of the functions referred to in Articles 312-3 (II), 314-9 and 314-10;
When rendering opinions, the Financial Skills Certification Board considers the possibility of establishing equivalencies with similar schemes abroad.
II. - Further to an opinion of the Financial Skills Certification Board, the AMF:
Determines the content of the minimum knowledge to be acquired by natural persons acting under the authority or on behalf of an investment services provider and performing one of the functions referred to in Articles 312-3 (II), 314-9 and 314-10. It shall publish that content;
Sees to it that the minimum knowledge content is updated;
Determines and verifies the arrangements for the examinations that validate acquisition of the minimum knowledge;
Certifies examinations for a two-year period within three months of the filing of applications. This deadline shall be extended as necessary until requests for further information are met. Certification can be renewed for a three-year period.
The AMF shall charge an application fee when applications for certification are filed. The AMF shall determine the amount of this fee.
III. - The Financial Skills Certification Board has at least seven members:
One AMF representative;
At least four members named by the AMF on the basis of their professional skills, after consulting with the main professional associations representing investment services providers;
Two independent persons named by the AMF and skilled in the fields of education or vocational training in finance.
The Financial Skills Certification Board chooses one of its members as chairman.
The members of the Financial Skills Certification Board are appointed for a renewable three-year term. The AMF publishes the list of members.
IV. - The Financial Skills Certification Board shall draw up bylaws, approved by the AMF.
V. - Members are of the Financial Skills Certification Board receive no remuneration.
Section 3 - Safeguarding client assets (Articles 312-6 à 312-19)
The investment services provider shall comply with the following obligations to safeguard its clients' rights in relation to the financial instruments belonging to them:
It must keep such records and accounts as are necessary to enable them at any time and immediately to distinguish assets held for one client from assets held for other clients, and from its own financial instruments.
It must maintain its records and accounts in a way that ensures their accuracy, and in particular, their correspondence to the financial instruments held by clients, and that enables them to be used as an audit trail;
It must conduct periodic reconciliations between its internal accounts and records and those of the third parties with whom the clients' financial instruments are held.
It must take the necessary steps to ensure that any client financial instruments deposited with a third party can be identified separately from the financial instruments belonging to the third party and from the financial instruments belonging to the investment services provider by means of differently titled accounts on the books of the third party or other equivalent measures that achieve the same level of protection;
If the law applicable in the territory in which the third party holds the financial instruments prevents that party from complying with the previous subparagraph, the third party shall inform affected clients that they are not covered by this protection.
It must introduce adequate organisational arrangements to minimise the risk of loss or diminution of clients' assets or of rights in connection with those financial instruments resulting from misuse of the financial instruments, fraud, poor administration, incorrect record-keeping or negligence.
The investment services provider shall ensure that the statutory auditor makes a report at least every year to the AMF on the adequacy of the arrangements made by the service provider, pursuant to points of Article II 7° and 9° L. 533-10 of the Monetary and Financial Code and this sub-section.
The investment services provider using a third party to hold its clients' financial instruments shall exercise all due skill, care and diligence in the selection, appointment and periodic review of the third party and of the arrangements made by said party for the holding of those financial instruments.
The investment services provider shall take into account the expertise and market reputation of the third party, as well as any legal or regulatory requirements or market practices related to the holding of those financial instruments that could adversely affect clients' rights.
If the investment services provider propose to use a third party to hold its clients' financial instruments then this investment services provider shall choose a third party that is located in a country that has specific regulations and supervision regarding the holding of financial instruments on behalf of a client, and shall select that third party from among those subject to the specific regulations and supervision and do so in accordance with the provisions of Article 312-8.
The investment services provider may not use a third party to hold its clients' financial instruments if that third party is located in a State that is not party to the European Economic Area agreement and that does not regulate the holding of financial instruments on behalf of another person, unless one of the following conditions is met:
The nature of the financial instruments or of the investment services connected with those instruments requires them to be deposited with a third party in the State that is not party to the European Economic Area agreement.
If the financial instruments are held on behalf of a professional client, that client makes a written request to the investment services provider to have them held with a third party in the State that is not party to the European Economic Area agreement.
The requirements set forth in Articles 312-9 and 312-10 shall also apply if the third party uses another third party to perform one of its functions in the areas of holding or custody of financial instruments.
I.- The investment services provider may not enter into securities financing transactions in respect of financial instruments held by it on behalf of a client or otherwise use such financial instruments for its own account, for the account of another person or for the account of one of its other clients, unless the client has given his prior express consent for the use of the instruments on specified terms, as evidenced by his signature or an equivalent alternative mechanism.
The use of that client's financial instruments must be restricted to the specified terms to which the client has consented.
II. - The investment services provider may not enter into securities financing transactions in respect of financial instruments held by it on behalf of a client in an omnibus account maintained by a third party, or otherwise use financial instruments held in such an account for its own account or for the account of another person unless at least one of the following conditions is met:
Each client whose financial instruments are held on an omnibus account must have given consent in accordance with I.
The investment services provider must have systems and controls to ensure that only financial instruments belonging to clients who have given prior consent in accordance with I are so used.
The investment services provider' records shall include data on the client on whose instructions the financial instruments have been used and on the number of financial instruments used belonging to each client who has given his consent, so as to enable the correct allocation of any loss of financial instruments.
III. – A “securities financing transaction” means a transaction as defined by Article 3 (11) of Regulation (EU) 2015/2365 of 25 November 2005 on transparency of securities financing transactions and of reuse.
Security interests, liens or rights of set-off over client financial instruments enabling a third party to dispose of client's financial instruments in order to recover debts that do not relate to the client or provision of services to the client are not permitted except where this is required by applicable law in a third country jurisdiction in which the client financial instruments are held.
If the investment services provider is obliged to create such security interests, liens or rights of set-off, it must disclose that information to its clients indicating to them the risks associated with those arrangements.
Where security interests, liens or rights of set-off are established by the service provider in respect of client financial instruments, or where the service provider has been informed that they are established, they shall be recorded in client contracts and the service provider's own accounts to ensure that these financial instruments are clearly identified as belonging to the client, particularly in the event of an insolvency.
I.- The investment services provider shall make information pertaining to clients' financial instruments readily available to the following persons or entities:
the AMF;
the mandataire judiciaire, administrateur judiciaire, liquidateur and commissaire à l'exécution du plan referred to in Annex B of Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings;
the Resolution College of the Autorité de contrôle prudentiel et de résolution.
II.- The information to be made available shall include:
related internal accounts and records that readily identify the balances of financial instruments held for each client;
the place where financial instruments are held by the service provider as well as details on the accounts opened with third parties and on agreements entered into with such entities;
details of any outsourced tasks relating to the holding of financial instruments and details of third parties carrying out such tasks;
key individuals of the service provider involved in related processes, including those responsible for oversight of the service provider's requirements in relation to the safeguarding of client financial instruments; and
agreements making it possible to establish client ownership over financial instruments.
The investment services provider shall take appropriate measures to prevent the unauthorised use of client financial instruments for its own account or the account of any other person, such as:
the conclusion of agreements with clients on measures to be taken by the investment services provider in case the client does not have provision on its account at the settlement date, such as the borrowing of the corresponding financial instruments on behalf of the client or unwinding the position;
the close monitoring by the service provider of its projected ability to deliver on the settlement date and the putting in place of remedial measures if this cannot be done; and
the close monitoring and prompt requesting of undelivered financial instruments outstanding on the settlement day.
Where the investment services provider has taken part in a securities financing transaction, it shall adopt specific arrangements for every client to ensure that, in the event that a client loans financial securities, the borrower provides appropriate collateral. The service provider shall monitor the continued appropriateness of such collateral and take the necessary steps to maintain the balance with the value of client financial instruments.
The investment services provider shall not enter into arrangements which are prohibited under Article L. 533-10 (II) (9) of the Monetary and Financial Code.
I.- The investment services provider should consider the appropriateness of title transfer collateral arrangements used with professional clients and eligible counterparties with regard to the relationship between the client's obligations to the provider and the client financial instruments and funds subject to the abovementioned arrangements.
At the request of the AMF, the service provider must be able to demonstrate, by any means, that it has undertaken these steps.
II.- When considering the appropriateness of using title transfer collateral arrangements pursuant to I, the investment services provider shall take into account all of the following factors:
there is a sufficiently strong present or future connection between the client's obligations towards the service provider and the use of title transfer collateral arrangements;
the amount of financial instruments and funds subject to the title transfer collateral arrangement does not substantially exceed the client's obligations, or is not unlimited, and whether the client has an obligation of any kind towards the service provider; and
if all client financial instruments and funds are subject to title transfer collateral arrangements, irrespective of the respective obligations of each client towards the service provider.
III.- When using title transfer collateral arrangements pursuant to I, the investment services provider should warn professional clients and eligible counterparties about the risks incurred and about the effects of title transfer collateral arrangements on the client's financial instruments and funds.
The investment services provider should appoint a single officer who shall possess the requisite skills and authority and be placed specifically in charge of issues relating to the service provider's compliance with its obligations in terms of safeguarding client financial instruments and funds.
The investment services provider may decide, while taking care to ensure compliance with this sub-section, whether the single officer shall be devoted solely to this assignment or whether the officer can discharge these duties effectively while also carrying out other duties.
Section 4 - Professional licences (Articles 312-20 à 312-38)
Sub-section 1 - General provisions
The following relevant persons must hold a professional license issued by the AMF or the investment services provider under the terms of Articles 312-29 and 312-36:
Traders of financial instruments;
Clearers of financial instruments;
Compliance officers for investment services;
Investment analysts.
1° Traders of financial instruments are natural persons empowered to commit the person under whose responsibility or on whose behalf they are acting in transactions in financial instruments for its own account or for a third party.
2° Clearers of financial instruments are natural persons empowered to commit a clearing-house member vis-à-vis the clearing house.
3° Compliance officers for investment services are the persons referred to in Article 312-2.
4° Investment analysts are the relevant persons defined in Paragraph 2 of Article 2 of Regulation (EU) 2017/565 of 25 April 2016.
A natural person may perform one of the functions referred to in Article 312-20 on a trial basis or temporarily, without holding the required professional licence, for a maximum period of six months that can be renewed once.
Use of this exception by an investment services provider for traders, clearers and investment analysts shall require the prior consent of the compliance officer for investment services.
The function of compliance officer for investment services may only be performed on a trial basis or temporarily with the prior consent of the AMF.
Issuance of a professional license shall require the applicant to compile an request for authorisation, which shall be submitted to the investment services provider issuing the license or to the AMF.
The request for authorisation shall include the items stipulated in an AMF instruction.
The request for authorisation shall be retained by the investment services provider that issues the licence or by the AMF for ten years after the licensee has ceased to perform the functions that gave rise to the issuance of the professional licence.
Where a person provisionally ceases to perform the activity that required a professional licence, such interruption shall not result in withdrawal of the licence.
The person shall be deemed to have permanently ceased engaging in the activity that gave rise to the issuance of the license when the interruption lasts longer than one year, unless the AMF grants an exception.
When a person definitively ceases to perform the function for which a professional licence was issued, the licence shall be withdrawn. The license shall be withdrawn by the investment services provider that issued it or by the AMF, as the case may be.
If a professional license has been issued by the AMF, the investment services provider on whose behalf the license-holder is acting shall notify the AMF immediately upon the definitive cessation of activity referred to in the preceding paragraph.
Whenever an investment services provider takes disciplinary measures against a person holding a professional licence because of a breach of the professional obligations, it shall so notify the AMF within one month.
The AMF shall keep a register of professional licences.
For this purpose, the person issuing or revoking the professional license referred to in 1°, 2°, 3° and 4° of Article 312 20 shall notify the AMF of the identities of the persons whose licenses are issued or revoked within one month.
The AMF shall be notified of the appointments of the compliance officers referred to in 3° of Article 312-20.
The information in the register of professional licences shall be retained for ten years after licences have been revoked.
Sub-section 2 - Professional licences issued by the AMF
The AMF shall issue the professional licenses of the persons performing the functions of compliance officers for investment services. For this purpose, the AMF shall organise a professional examination under the terms referred to in Articles 312-33 to 312-35.
However, where investment services providers appoint one of their senior managers to the function of compliance officer, that person shall hold the relevant professional license. He shall not be required to pass the examination provided for in the first paragraph.
Before issuing the professional license, the AMF shall verify:
that the relevant natural person is fit and proper, that he is familiar with the professional requirements and capable of performing the functions of a compliance officer for investment services.
that pursuant to II of Article 312-3, the investment services provider has conducted an internal verification or an examination as stipulated in 3° of II of Article 312-5 to ensure that the relevant person has the minimum knowledge mentioned in 1° of II of Article 312-5.
that the investment services provider complies with the provisions of Paragraph 3 of Article 22 of Commission Delegated Regulation (EU) 2017/565 of 25 April 2016.
The AMF may waive the examination requirement for a person who has performed comparable functions with another investment services provider with equivalent business activities and organisational structures, provided that person has already passed the examination and the investment services provider planning to appoint him has already presented a candidate who passed the examination.
If an investment services provider requires professional licenses for several compliance officers for investment services, the AMF shall ensure that the number of license holders is proportionate to the nature and the risks of the investment services provider's business activities, scale and organisational structure.
Investment services providers shall provide precise written definitions of the attributions of each professional license holder.
The examination shall consist of interviews of professional license applicants by a jury. The applicants shall be presented by the investment services providers on whose behalf they are to perform their functions.
The AMF shall hold the examinations at least twice a year. It shall decide who sits on the jury, set the examination dates and determine the amount of examination fees. This information shall be made known to investment services providers.
The AMF shall collect the examination fees from the investment services providers presenting applicants.
The members of the jury referred to in the first paragraph of Article 312-33 shall be:
An active compliance officer, chair;
The head of an operational function with an investment services provider;
A member of the AMF's staff.
If an applicant feels that a member of the jury has a conflict of interest with regard to him, he may ask the AMF to be examined by another jury.
If it deems that the conditions referred to in Article 312-30 have been met, the jury shall propose that the AMF issue a professional license.
However, if the jury deems that the applicant has the necessary qualities to perform the function of compliance officer for investment services but that the investment services provider does not grant him proper independence or does not provide him with adequate resources, the jury may propose that the issuance of a professional license be subject to the condition that the investment services provider remedies the situation and notifies the AMF of the measures taken for this purpose.
If outsourcing of the function of compliance officer for investment services is planned, the jury may be asked for its opinion.
Sub-section 3 - Professional licenses issued by investment services providers
Professional licences referred to in 1°, 2°, 3° and 4° of Article 312-20 shall be issued by the investment services providers under whose authority or on whose behalf the professional license holders are acting.
Before any of the professional licences referred to in Article 312-36 are issued, the compliance officer for investment services shall ensure that the applicant is fit and proper, that it has met the procedural requirements established by the investment services provider to ascertain that applicants are cognisant of their professional obligations, and that it meets the conditions set forth in Article 312-3.
The compliance officer may obtain from AMF, upon request made by registered or hand-delivered letter with acknowledgment of receipt, a record of any disciplinary actions that the AMF has taken against the applicant during the previous five years.
Investment services providers shall notify the AMF of the issuance of the professional licenses referred to in 1°, 2°, 3° and 4° of Article 312-20 within one month.
The AMF may ask the investment services provider to forward a copy of the license application.
Any person to whom a professional licence is issued shall be personally informed of that fact.
Section 5 - Record keeping (Articles 312-39 à 312-41)
If the investment services provider's authorisation is revoked, the AMF may require said provider to retain all the relevant records for the five-year period stipulated in Article L. 533-10 (III) of the Monetary and Financial Code.
The AMF may, in exceptional circumstances, require investment services providers to retain any or all those records for the seven year period stipulated in Article L. 533-10 (III) of the Monetary and Financial Code, to the extent justified by the nature of the instrument or transaction, if that is necessary to enable it to exercise its supervisory functions.
The compliance officer may listen to the recordings of telephone conversations made pursuant to Article 76 of Commission Delegated Regulation (EU) 2017/565 of 25 April 2016. If the compliance officer does not himself listen to the recording, it may not be listened to without his agreement or the agreement of a person designated by him.
Investment services providers shall retain information about the monitoring and assessments referred to in Point a) of Paragraph 2 of Article 76 of Commission Delegated Regulation (EU) 2017/565 of 25 April 2016 in accordance with the requirements referred to in Article 76 of the same Regulation.
Section 6 - Annual data sheet (Article 312-42)
Within four-and-a-half months of the end of the financial year, the investment services provider providing portfolio management services for third parties shall send the AMF the information specified on the annual data sheet.
Chapter III - Financial instrument governance requirements (Articles 313-1 à 313-27)
In this Chapter, any person or entity referred to in Article L. 533-24 of the Monetary and Financial Code that designs or manufactures a financial instrument, which encompasses the creation, development, issuance and design of financial instruments, shall be, as the case may be:
I.- A person or entity referred to in Article 311-1 (I to III).
II.- A person or entity authorised to provide one or several investment services in a State party to the European Economic Area agreement other than France, equivalent to that referred to in I.
III.- A person other than those referred to in I or II above.
Unless otherwise specified, in this Chapter, “manufacturer” means the persons and entities referred to in I.
The provisions of section 2 of this Chapter are applicable to the distributors referred to in Article L. 533-24-1 of the Monetary and Financial Code and Article 311-1 (I to III).
Section 1 - Financial instrument governance obligations for manufacturers (Articles 313-3 à 313-17)
The manufacturer shall comply with the provisions of this section when it manufactures financial instruments.
It shall comply, in a way that is appropriate and proportionate, with the provisions of Articles 313-4 to 313-17, taking into account the nature of the financial instrument, the investment service and the target market for the financial instrument.
The manufacturer shall establish, implement and maintain procedures and measures to ensure the manufacturing of financial instruments complies with the provisions on proper management of conflicts of interest, including remuneration.
In particular, the manufacturer shall ensure that the manufacturing of the financial instrument, including its features, does not adversely affect end clients or does not lead to problems with market integrity by enabling it to mitigate or transfer its own risks or exposure to any underlying assets of the financial instrument that it already holds on own account.
The manufacturer must analyse potential conflicts of interest each time a financial instrument is manufactured.
In particular, it shall assess whether the financial instrument creates a situation where end clients may be adversely affected if they take, by investing in, buying, selling or establishing such an instrument:
an exposure opposite to the one held by the manufacturer before investing in, purchasing or establishing the financial instrument; or
an exposure opposite to the one that the manufacturer wants to hold after investing in, selling or establishing the financial instrument.
The manufacturer should consider whether the financial instrument may represent a threat to the orderly functioning or to the stability of financial markets before deciding to proceed with the launch of the financial instrument.
The manufacturer shall ensure that relevant staff involved in the manufacturing of financial instruments possess the necessary expertise to understand the characteristics and risks of these financial instruments.
The manufacturer shall ensure that senior managers mentioned as applicable in points 1° and 2° of Articles L. 533-25 and L. 511 51 of the Monetary and Financial Code or in Article R. 123-40 of the Commercial Code have effective control over the financial instrument governance process.
It shall ensure that compliance reports to the senior managers mentioned in the previous subparagraph include information about the financial instruments manufactured by it, including information on the distribution strategy for these instruments.
It shall make the reports available to the AMF on request.
The manufacturer shall ensure that the compliance function checks and monitors the development and periodic review of financial instrument governance arrangements in order to detect any risk of failure by it to comply with the obligations set out in this section.
Where several manufacturers or one or several manufacturers and one or several other persons referred to in Article 313-1 (II) or (III) collaborate to develop, issue or design a financial instrument, these persons shall outline their mutual responsibilities under this collaboration in a written agreement.
The manufacturer shall identify at a sufficiently granular level the potential target market for each financial instrument and specify the type(s) of client for whose needs, characteristics and objectives the financial instrument is compatible.
As part of this process, it shall identify any group(s) of clients for whose needs, characteristics and objectives the financial instrument is not compatible.
Where manufacturers or one manufacturer and one or several other persons referred to in Article 313-1 (II) collaborate to manufacture a financial instrument, only one target market needs to be identified.
Where the manufacturer is not also the distributor of a financial instrument, and where the financial instrument is distributed through one or several distributors, the manufacturer shall determine the financial instrument's compatibility with the needs and characteristics of clients based on:
their theoretical knowledge of and past experience with:
the financial instrument or similar financial instruments; and
financial markets; and
the needs, characteristics and objectives of potential end clients.
I.- The manufacturer shall undertake an analysis for each financial instrument that it manufactures to assess:
the risks of poor outcomes for end clients posed by the financial instrument; and
in which circumstances these outcomes may occur.
II.- It shall assess the financial instrument under negative conditions covering what would happen if, for example:
the market environment deteriorates;
the manufacturer or a third party involved in manufacturing and or functioning of the financial instrument experiences financial difficulties or other counterparty risk materialises for the manufacturer or the third party;
the financial instrument fails to become commercially viable; or
demand for the financial instrument is much higher than anticipated, compromising its financial position or disrupting the market of the underlying assets.
The manufacturer shall determine whether a financial instrument meets the identified needs, characteristics and objectives of the target market, including by examining the following elements:
the financial instrument's risk/reward profile is consistent with the target market; and
financial instrument design is driven by features that are in the client's interest and not by a business model that relies on poor client outcomes if the instrument is to be profitable for the manufacturer.
The manufacturer shall consider the charging structure proposed for the financial instrument, including by examining the following:
financial instrument's costs and charges are compatible with the needs, objectives and characteristics of the target market;
costs and charges do not undermine the financial instrument's return expectations, such as where the costs or charges equal, exceed or remove almost all the expected tax advantages linked to a financial instrument; and
the charging structure of the financial instrument is appropriately transparent for the target market, and does not disguise charges or make them too complex to understand.
The manufacturer shall ensure that the provision of information to distributors includes information about the appropriate channels for distribution of the financial instrument, the financial instrument approval process and the target market assessment and is of an adequate standard to enable distributors to understand and recommend or sell the financial instrument properly.
The manufacturer shall review the financial instruments it manufactures on a regular basis, taking into account any event that could materially affect the potential risk to the identified target market.
It shall consider if the financial instrument remains consistent with the needs, characteristics and objectives of the target market and if it is being distributed to the target market, or is reaching clients for whose needs, characteristics and objectives the financial instrument is not compatible.
I.- The manufacturer shall:
review, if it is aware of any event that could materially affect the potential risk to investors, any financial instrument prior to:
any further issue of financial instruments with similar characteristics;
any issue of a financial instrument that is fungible with a previously issued financial instrument; or
any new financial contract; and
conduct reviews at regular intervals to assess whether the financial instrument functions as intended.
II.- It shall determine how regularly to review manufactured financial instruments based on relevant factors, including factors linked to the complexity or the innovative nature of the investment strategies pursued.
III.- It shall also identify crucial events that would affect the potential risk or return expectations of the financial instrument, such as:
the crossing of a threshold that will affect the return profile of the financial instrument; or
the solvency of certain issuers whose securities or guarantees may impact the performance of the financial instrument.
IV.- When such events occur, it shall take appropriate action which may consist in:
providing relevant information on the event and its consequences on the financial instrument to the clients or the distributors of the financial instrument if the manufacturer does not offer or sell the financial instrument directly;
changing the financial instrument approval process;
stopping further issuance of the financial instrument;
changing the financial instrument's contractual stipulations to avoid any unfair terms;
considering whether the sales channels through which the financial instruments are distributed are appropriate where it becomes aware that the financial instrument is not being sold as envisaged;
contacting the distributor to discuss a modification of the distribution process;
terminating the relationship with the distributor; or
informing the AMF.
Section 2 - Financial instrument governance obligations for distributors (Articles 313-18 à 313-27)
The distributor, when deciding the range of financial instruments manufactured by itself or other persons and services it intends to offer or recommend to clients, shall comply, in a way that is appropriate and proportionate, with the requirements laid down in Articles 313-19 to 313-27, taking into account the nature of the financial instrument, the investment service and the target market for the financial instrument.
Distributors shall also comply with the provisions of this section when offering or recommending financial instruments manufactured by a manufacturer referred to in Article 313-1 (III).
It shall have in place effective arrangements to ensure that it obtains sufficient information about these financial instruments from the person mentioned in the previous subparagraph.
It shall determine the target market for each financial instrument, even if the target market was not defined by the manufacturer referred to in Article 313-1 (I to III).
The distributor shall have in place adequate financial instrument governance arrangements to ensure that financial instruments and services it intends to offer or recommend are compatible with the needs, characteristics, and objectives of an identified target market and that the intended distribution strategy is consistent with the identified target market.
It shall identify and assess the circumstances and needs of the clients it intends to focus on, so as to ensure that clients' interests are not compromised as a result of commercial or funding pressures.
As part of this process, it shall identify any group(s) of clients for whose needs, characteristics and objectives the financial instrument or service is not compatible.
The distributor shall obtain from the manufacturer or the person referred to in Article 313-1 (II) information to gain the necessary understanding and knowledge of the financial instruments its intend to recommend or sell in order to ensure that these instruments will be distributed in accordance with the needs, characteristics and objectives of the identified target market.
The distributor shall also take all reasonable steps to ensure it also obtains adequate and reliable information from any person referred to in Article 313-1 (III) to ensure that financial instruments will be distributed in accordance with the characteristics, objectives and needs of the target market.
Where relevant information is not publicly available, the distributor shall take the necessary steps to obtain such relevant information from the person referred to in Article 313-1 (III) or from anyone acting on that person's behalf.
Acceptable publicly available information is information which is clear, reliable and produced to meet legal or regulatory requirements, such as investor disclosure requirements under Directive 2003/71/EC of 4 November 2003 or Directive 2004/109/EC of 15 December 2004.
This obligation applies to products sold on primary and secondary markets and shall apply in a proportionate manner, depending on the degree to which publicly available information is obtainable and the complexity of the product.
The distributor shall use the information obtained from the persons referred to Article 313-1 (I to III) and information on its own clients to identify the target market and distribution strategy.
When a distributor acts both as a manufacturer and a distributor, only one target market assessment shall be required.
When deciding the range of instruments and services that it offers or recommends and the respective target markets, the distributor shall establish and maintain procedures and measures to ensure compliance with all applicable provisions under Directive 2014/65/EU of 15 May 2014 including those relating to client disclosure, assessment of suitability or appropriateness of the financial instrument for the client, inducements and proper management of conflicts of interest.
Particular care shall be taken when it intends to offer or recommend new financial instruments or there are variations to the services it provides.
The distributor shall periodically review and update its financial instrument governance arrangements in order to ensure that they remain robust and fit for their purpose, and take appropriate actions where necessary.
The distributor shall review the financial instruments it distributes and the services it provides on a regular basis, taking into account any event that could materially affect the potential risk to the identified target market.
It shall assess whether the instrument or service remains consistent with the needs, characteristics and objectives of the identified target market and whether the intended distribution strategy remains appropriate.
It shall modify the identified target market and if necessary update the product governance arrangements if it becomes aware that it has wrongly identified the target market for a specific financial instrument or service or that the instrument or service no longer meets the expectations of the identified target market, and notably if the financial instrument becomes illiquid or very volatile due to market changes.
The distributor shall ensure that its compliance function checks the conditions and procedures for the development and periodic review of financial instrument governance arrangements in order to detect any risk of failure to comply with the obligations set out in this section.
The distributor shall ensure that relevant persons possess the necessary expertise to understand the characteristics and risks of the financial instruments that it intends to distribute and the services provided as well as the needs, characteristics and objectives of the identified target market.
The distributor shall ensure that senior managers mentioned as applicable in points 1° and 2° of Articles L. 533-25 and L. 511-51 of the Monetary and Financial Code or in Article R. 123-40 of the Commercial Code or the management body of an asset management company have effective control over the financial instrument governance process to determine the range of financial instruments that it distributes and the services provided to the target markets.
It shall ensure that the compliance reports referred to in Article 22(2)(c) of Commission Delegated Regulation (EU) 2017/565 of 25 April 2016 provided to the senior managers mentioned in the previous subparagraph include information about the financial instruments distributed and the services provided. The compliance reports shall be made available to the AMF on request.
The distributor shall provide to the relevant manufacturer or person referred to in Article 313-1 (II) with information on sales and, where appropriate, information on the reviews that it has conducted pursuant to Articles 313-21 to 313-23 to support the manufacturer or person referred to in Article 313-1 (II) when it carries out the reviews referred to in Articles 313-9, 313-16 and 313 17.
Where different distributors work together in the distribution of a financial instrument or service, any distributor with a direct client relationship has ultimate responsibility to meet the product governance obligations set out in this section.
A distributor acting as an intermediary shall:
ensure that relevant information about the financial instrument obtained from the manufacturer or person referred to in Article 313-1 (II) is passed to the final distributor in the chain;
take the necessary measures to enable the manufacturer or the person referred to in Article 313-1 (II) who requests information on sales of a financial instrument to obtain that information in order to comply with their own financial instrument governance obligations; and
apply the financial instrument governance obligations for manufacturers, as relevant, within the framework of the services that it provides.
Chapter IV - Conduct of business rules (Articles 314-1 à 314-31)
Commission delegated regulation (EU) 2017/565 of 25 April 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
Section 1 - General provisions (Articles 314-1 à 314-4)
The provisions of this Chapter shall not apply to branches established in other States party to the European Economic Area agreement by investment services providers authorised in France.
Investment services providers shall ensure that relevant persons are reminded that they are bound by the obligation of professional confidentiality, subject to the terms and penalties prescribed by law.
For the purposes of this Chapter, the term "client" shall designate existing and potential clients.
Sub-section 1 - Approval of codes of conduct
Where a professional organisation draws up a code of conduct applicable to investment services, the AMF shall verify whether the code's provisions are consistent with this General Regulation.
The professional organisation may ask the AMF to approve all or part of the code as professional standards.
If, having sought the opinion of the Association Française des Etablissements de Crédit et des Entreprises d'Investissement (AFECEI), the AMF considers that some or all the provisions of such code should be recommended to investment services providers, the AMF shall announce its decision by publishing it on its website.
Sub-section 2 - Primacy of the client's interest and market integrity
Investment services providers shall act honestly, fairly and professionally, with due skill, care and diligence, in the best interests of clients and the integrity of the market. More specifically, they shall comply with all the rules pertaining to the organisation and operation of trading platforms that they use.
Sub-section 3 - Client categories
In application of the provisions of 2° of Article D. 533-12 of the Monetary and Financial Code, a transaction in financial instruments is considered to be of significant size when its gross amount exceeds EUR600.
Section 2 - Information to customers (Articles 314-5 à 314-7)
Sub-section 1 - Information media
A durable medium is any instrument which enables a client to store information addressed personally to that client in a way that affords easy access for future reference for a period of time adequate for the purposes of the information and which allows the unchanged reproduction of the information stored.
Sub-section 2 - Marketing communications
The AMF may require investment services providers to submit to it their marketing communications for the investment services that they provide and the financial instruments that they offer prior to publication, distribution or broadcast.
It may require changes to the presentation or the content to ensure that the information is accurate, clear and not misleading.
Article L. 533-12-7 of the Monetary and Financial Code applies to categories of financial contracts with any of the following characteristics:
depending on whether a condition specified in the contract is met or not, they give rise upon the contract's expiry either to the payment of a predetermined gain or the partial or total loss of the amount invested;
they give rise to the payment of a positive or negative differential between the price of an underlying asset or basket of assets at the time the contract has been entered into and the price at which the position is closed out, and can oblige the client to pay an amount greater than the amount invested at the time the contract has been entered into;
their underlying asset is a currency or basket of currencies.
Section 3 - Assessment of the suitability and appropriateness of the service to be provided (Article 314-8)
For the purposes of 2° of III of Article L. 533-13 of the Monetary and Financial Code, a service may be deemed to have been provided at the client's initiative if the client requests it following any communication containing a promotion or offer of financial instruments made by any means and which is nature a general communication addressed to the public or a broader group or category of clients.
A service may not be deemed to have been provided at the client's initiative if the client requests it following a personalised communication addressed to him by the investment services provider or in its name that invites the client, or attempts to invite the client, to take an interest in a given financial instrument or transaction.
Section 4 - Verification of the level of knowledge and assessment of the knowledge and skills of the persons providing investment advice or information (Articles 314-9 à 314-10)
I.- The investment services provider shall ensure that natural persons acting on its behalf as sales personnel have the minimum qualification as well as a sufficient level of knowledge.
Sales personnel shall mean any natural person responsible for providing investment advices or informations on financial instruments, investment or ancillary services, to the clients of the investment services provider on whose behalf he is acting;
II. - It verifies that the sales personnel can prove they have the minimum level of knowledge set forth in Point 1° of II of Article 312-5:
III. - The investment services provider shall not carry out the verification provided for in II with regard to persons employed as at 1 July 2010. Persons having passed one of the examinations referred to in Point 3° of II of Article 312-5 shall be deemed to have the minimum knowledge required to perform their duties.
IV. - To conduct the verification referred to in II, the investment services provider has six months from the date on which the employee starts to perform one of the above functions. However, where the employee has been taken on under a work/study contract, as provided in Articles L. 6222-1 and L. 6325-1 of the labour code, the investment services provider may not conduct such verification. If it decides to hire the employee when his or her training period finishes, the investment services provider shall ensure that he or she has the minimum qualification as well as a sufficient level of knowledge as referred to in I, at the latest by the end of the contract training period.
The investment services provider shall ensure that any employee whose minimum knowledge has not yet been verified is appropriately supervised.
When an investment services provider ensures that the persons who provide investment advice or information on financial instruments, investment services or ancillary services to clients, on its behalf, possess the necessary knowledge and competence in accordance with Article L. 533-12-6 of the Monetary and Financial Code, it may consider that it has fulfilled its obligations in terms of the verification of the minimum knowledge levels provided for in II of Article 314-9, subject to the regular update of their skills and knowledge.
An investment services provider shall ensure that the persons referred to in the first paragraph, when they do not yet possess an appropriate level of knowledge and competence, acquire them within a period of six months full-time equivalent from the date on which they took on their functions. During this period, these persons shall be supervised by one or more member(s) of the staff of the investment services provider who possess the adequate qualifications and experience.
Section 5 - Clients agreements (Articles 314-10-1 à 314-11)
Sub-section 1 - Changes to agreements entered into before 3 January 2018
Without prejudice to the provisions of Article 314-26, an investment services provider that concluded an agreement with a client before 3 January 2018 shall inform the client before that date of any changes made to comply with the obligations with respect to information to clients that were introduced by the provisions of the Monetary and Financial Code transposing Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and the European regulations completing this Directive and those introduced by the present Book.
If no objection has been expressed by the client within a period of two months following this communication, this implies acceptance of said changes.
Sub-section 2 - Agreements entered into retail clients
Without prejudice to the provisions of Article 58 of the Commission Delegated Regulation 2017/565 of 25 April 2016, agreements concluded between the investment services provider and non-professional clients shall contain specific stipulations concerning the detailed information to these clients about the characteristics and modalities of the investment service provided and on the rights and obligations of the parties.
Section 6 - Order handling and execution when providing the portfolio management service (Article 314-12)
Commission delegated regulation (EU) 2017/565 of 25 April 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
Commission delegated regulation (EU) 2017/575 of 8 June 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council on markets in financial instruments with regard to regulatory technical standards concerning the data to be published by execution venues on the quality of execution of transactions
Commission delegated regulation (EU) 2017/576 of 8 June 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards for the annual publication by investment firms of information on the identity of execution venues and on the quality of execution
Investment services providers providing portfolio management services shall define the planned allocation of the orders they give beforehand. As soon as they learn that they orders have been executed, they shall transmit to the account keeper exact instructions for the allocation of the orders executed to the beneficiaries. This allocation shall be final.
Section 7 - Inducements and fees (Articles 314-13 à 314-30)
Sub-section 1 - General provisions relating to inducements
Where the investment services provider pays or is paid any fee or commission or provides or is provided with any non-monetary benefit in connection with the provision of an investment service or ancillary service to the client, it shall ensure that all the conditions set out in Article L. 533-12-4 of the Monetary and Financial Code and the requirements set out in Articles 314-14 to 314-17 are met at all times.
A fee, commission or non-monetary benefit shall be considered to be designed to enhance the quality of the relevant service to the client if all of the following conditions are met:
it is justified by the provision of an additional or higher level service to the relevant client, proportional to the level of inducements received, such as:
the provision of non-independent investment advice on and access to a wide range of suitable financial instruments including an appropriate number of instruments from third party product manufacturers having no close links with the service provider;
the provision of non-independent investment advice combined with either:
an offer to the client, at least on an annual basis, to assess the continuing suitability of the financial instruments in which the client has invested; or
another ongoing service that is likely to be of value to the client such as advice about the suggested optimal asset allocation of the client;
the provision of access, at a competitive price, to a wide range of financial instruments that are likely to meet the needs of the client, including an appropriate number of instruments from third party manufacturers having no close links with the service provider, together with:
either the provision of added-value tools, such as objective information tools helping the relevant client to take investment decisions or enabling the relevant client to monitor, model and adjust the range of financial instruments in which it has invested; or
the provision of periodic reports of the performance and costs and charges associated with the financial instruments;
it does not directly benefit the recipient service provider, its shareholders or employees without tangible benefit to the relevant client;
it is justified by the provision of an ongoing benefit to the relevant client in relation to an ongoing inducement.
A fee, commission, or non-monetary benefit shall not be considered acceptable if the provision of relevant services to the client is biased or distorted as a result of the fee, commission or non-monetary benefit.
The investment services provider shall fulfil the obligations set out in Article 314-14 as long as it continues to pay or receive the fee, commission or non-monetary benefit.
The investment services provider shall hold evidence that any fees, commissions or non-monetary benefits paid or received by it are designed to enhance the quality of the relevant service to the client:
by keeping an internal list of all fees, commissions and non-monetary benefits received from a third party in relation to the provision of investment or ancillary services; and
by recording:
how the fees, commissions and non-monetary benefits paid or received by it, or that it intends to use, enhance the quality of the services provided to the relevant clients; and
the steps taken in order to comply with its duty to act honestly, fairly and professionally in accordance with the best interests of the client.
As regards any payment or benefit received from or paid or provided to third parties the investment services provider shall disclose to the client the following information:
prior to the provision of the relevant investment or ancillary service, information on the payment or benefit concerned in accordance with the second subparagraph of Article L. 533-12-4 of the Monetary and Financial Code.
Minor non-monetary benefits may be described in a generic way.
Other non-monetary benefits provided or received in connection with the investment service provided to the client shall be priced and disclosed separately.
prior to the provision of an investment or ancillary service to a client, where it was unable to ascertain the amount of any payment or benefit to be received or paid, it shall disclose to the client the method of calculating that amount. In this case, after providing the service, it shall provide its clients with information of the exact amount of the payment or benefit received or paid; and
at least once a year, as long as ongoing fees, commissions or benefits are received by it in relation to the investment or ancillary services provided to the relevant clients, it shall inform its clients on an individual basis about the actual amount of payments or benefits received, paid or provided.
Minor non-monetary benefits may be described in a generic way.
Where the investment services provider implements the obligations mentioned in this article, it shall take into account the provisions on costs and charges set out in Article D. 533-15 (3) of the Monetary and Financial Code and in Article 50 of Commission Delegated Regulation (EU) 2017/565 of 25 April 2016.
When more firms are involved in a distribution channel, each investment service provider providing an investment or ancillary service shall comply with its obligations to make disclosures to its clients.
Sub-section 2 - Inducements in respect of investment advice on an independent basis or portfolio management services for third parties
Where the investment services provider provides investment advice on an independent basis or portfolio management services for third parties, it shall return to its client any fees, commissions or any monetary benefits paid or provided by a third party or anyone acting on behalf of a third party in relation to the services provided to that client as soon as reasonably possible after receipt.
All fees, commissions or monetary benefits received from third parties in relation to the provision of independent investment advice or portfolio management services for third parties shall be transferred in full to the client.
It shall set up and implement a policy to ensure that any fees, commissions or any monetary benefits paid or provided by a third party or anyone acting on behalf of a third party in relation to the provision of independent investment advice or portfolio management services for third parties are allocated and transferred to each individual client.
It shall inform clients about the fees, commissions or any monetary benefits transferred to it, such as through the periodic reporting statements provided to the client.
Where the investment services provider provides investment advice on an independent basis or portfolio management services for third parties, it shall not accept non-monetary benefits that do not qualify as acceptable minor non-monetary benefits in accordance with Article 314-20.
Only the following benefits shall qualify as acceptable minor non-monetary benefits:
information or documentation relating to a financial instrument or an investment service, which is generic in nature or personalised to reflect the circumstances of an individual client;
written material from a third party:
a) that is commissioned and paid for by a corporate issuer or potential issuer to promote a new issuance by the company; or
b) where the third party firm is contractually engaged and paid by the issuer to produce such material on an ongoing basis;
provided that the material:
a) clearly discloses the relationship between the issuer and the third party; and
b) is made available at the same time to any investment services provider wishing to receive it or to the general public;
participation in conferences, seminars and other training or information events on the benefits and features of a specific financial instrument or an investment service;
hospitality of a reasonable de minimis value, such as food and drink during a business meeting or a conference, seminar or other training or information events mentioned under point 3° of this article; and
other minor non-monetary benefits which the AMF deems:
a) capable of enhancing the quality of service provided to a client; and
b) having regard to the total level of benefits provided by one entity or group of entities, to be of a scale and nature that are unlikely to impair compliance with the service provider's duty to act in the best interest of the client.
Acceptable minor non-monetary benefits shall be reasonable and proportionate and of such a scale that they are unlikely to influence the service provider's behaviour in any way that is detrimental to the interests of the relevant client.
Disclosure of minor non-monetary benefits shall be made prior to the provision of the relevant investment or ancillary services to clients.
In accordance with Article 314-17(1), minor non-monetary benefits may be described in a generic way.
Sub-section 3 - Provisions concerning inducements in relation to research
In this paragraph, “research” means research material or services concerning:
one or several financial instruments or other assets; or
the issuers or potential issuers of financial instruments; or
a specific industry or market;
such that it informs views on financial instruments, assets or issuers within that sector or market.
That type of material or services:
explicitly or implicitly recommends or suggests an investment strategy and provides a substantiated opinion as to the present or future value or price of such instruments or assets; or
contains analysis and original insights and reaches conclusions based on new or existing information that could be used to inform an investment strategy and be relevant and capable of adding value to the decisions by the investment services provider on behalf of clients being charged for that research.
I.- The provision of research by third parties to investment services providers other than asset management companies that provide portfolio management or other investment or ancillary services to clients shall not be regarded as an inducement if it is received in return for either of the following:
Direct payments by the service provider out of its own resources;
Payments from a separate research payment account controlled by the investment service provider, provided the following conditions relating to the operation of the account are met:
the research payment account is funded by a specific research charge to the client;
as part of establishing a research payment account and agreeing the research charge with clients, the investment service provider shall set and regularly assess a research budget as an internal administrative measure;
the investment service provider is held responsible for the research payment account;
the investment service provider regularly assesses the quality of the research purchased based on robust quality criteria and its ability to contribute to better investment decisions.
II.- Where an investment services provider makes use of the research payment account, it shall provide the following information to clients:
before the provision of an investment service to clients, information about the budgeted amount for research and the amount of the estimated research charge for each of them;
annual information on the total costs that each of them has incurred for third party research.
The investment services provider that operates a research payment account shall also be required, upon request by its clients or by the AMF, to provide a document indicating:
the providers paid from this account;
the total amount they were paid over a defined period;
the benefits and services received by it; and
how the total amount spent from the account compares to the budget set by the service provider for that period, noting any rebate or carry-over if residual funds remain in the account.
For the purposes of Article 314-22 (I)(2)(a), the specific research charge shall:
only be based on a research budget set by the investment service provider based on the need for third party research estimated to be necessary in order to provide investment services to clients; and
not be linked to the volume or value of transactions executed on behalf of the clients.
If research charges are included alongside a transaction commission and cannot be collected separately, the operational arrangement for the collection of client research charges shall enable these research charges to be separately identified and must comply with the conditions set out in Article 314-22 (I)(2) and (II).
The total amount of research charges received may not exceed the research budget.
The investment services provider shall agree with clients, in the portfolio management agreement or general terms of the service delivery contract:
the research charge set out in its estimated budget; and
the frequency with which the specific research charge will be charged to the budget over the period.
Clients shall be informed clearly and in advance of any increase in the estimated research budget.
If there is a surplus in the research payment account at the end of a period, the investment service provider should implement arrangements to rebate those funds to the client or to allocate them to the research budget for the following period.
After the client has been informed and given the opportunity to express its disagreement, where applicable, the client agreement referred to in the first subparagraph shall be deemed to be obtained where:
the planned research charge budget for a given period does not result in an increase in the total charges paid by the client compared with the previous equivalent period; and
the frequency with which the investment service provider plans to charge specific research charges to the client over a given period is equivalent to that planned for the previous period for other charges.
For the purposes of applying Article 314-22 (I)(2)(b), the research budget shall be managed solely by the investment service provider.
This budget shall be based on a reasonable assessment of the need for third party research.
The allocation of the research budget to purchase third party research shall be subject to appropriate controls and oversight by the management body to ensure it is managed and used in the best interests of the investment service provider's clients.
Those controls include a clear audit trail of payments made to research providers and may be used to check that the amounts paid were determined with reference to the quality criteria referred to in Article 314-22 (I)(2)(d).
The investment services provider shall not use the research budget and research payment account to fund internal research.
For the purposes of applying Article 314-22 (I)(2)(c), the investment services provider may delegate the administration of the research payment account to a third party, provided that the arrangement facilitates the purchase of third party research and payments to research providers in the name of the service provider without any undue delay in accordance with the investment services provider's instruction.
For the purposes of applying Article 314-22 (I)(2)(d), the investment services provider shall establish a written policy and provide it to its clients.
This policy shall also identify situations in which the investment service provider considers that research purchased through the research payment account may benefit clients' portfolios, including, where relevant, by taking into account investment strategies applicable to various types of portfolios, and the approach the investment services provider will take to allocate such costs fairly to the various clients' portfolios.
Where the investment services provider provides execution services, it shall identify separate charges for these services that only reflect the cost of executing the transaction.
Charges relating to the provision of any other benefit or service by an investment services provider to another investment services provider established in a State party to the European Economic Area agreement shall be separately identified.
The supply of benefits or services and charges for those benefits or services shall not be influenced or conditioned by levels of payment for execution services.
Sub-section 4 - Portfolio management services' trading costs
All fees and commissions paid by clients for transactions in portfolios under management, with the exception of subscription and redemption transactions relating to collective investment schemes or investment funds of third countries, shall be trading costs. They include:
Intermediation costs, taxes and duties included, charged directly or indirectly by third parties that provide:
Order reception and transmission services and order execution services on behalf of third parties referred to in Article L. 321-1 of the Monetary and Financial Code;
Services referred to in Article L. 321-2 (4) of the Monetary and Financial Code charged under the conditions set out in Article 314-24 and order execution services specified in an AMF Instruction;
If applicable, a turnover commission.
Section 8 - Obligations in the case of offers of financial securities or minibons via a website (Article 314-31)
I. – Investment services providers making offers of financial securities or minibons described in Article L. 223-6 of the Monetary and Financial Code via a website on the terms set out in Article 325-32 must, for each project and prior to any subscription, provide the client with the information supplied by the issuer pursuant to Article 217-1 unless a prospectus has been drafted and approved by the AMF. In the latter case, the prospectus is sent to the client.
II. – These items shall be completed by information on:
The terms for collecting subscription applications and transmitting them to the issuer, and the rules applied in the event of oversubscription;
Detail of the fees charged to the investor and the possibility of obtaining, on request, a description of the services provided to the issuer of the securities to which subscription is being considered, and the related fees;
The risks inherent to the project and, in particular, the risk of total or partial loss of the capital, illiquidity risk and the risk of an absence of valuation.
If the issuer is not the company carrying out the project, investment services providers must provide the client, via their website and prior to any subscription, with the information referred to in Article 217-1 pertaining to the company carrying out the project and, where applicable, to those companies intervening between the company carrying out the project and that making the offer. Information must be provided on any contractual agreements between the above mentioned companies, whenever such agreements exist.
Investment services providers are responsible for checking the consistency, clarity and balance of this information.
To make this information easily accessible, all these items must be written in non-technical language.
III. – All marketing information must contain prominent and easily-accessible reference to the risks inherent to the proposed investments and, in particular, the risk of total or partial loss of capital and illiquidity risk.
IV. – The investment services provider shall ensure that the articles of the company carrying out the project presented to investors comply with the laws and regulations on companies making offers that are not subject to publication of a prospectus and are made via a website.
This provision is applicable to companies intervening between the company carrying out the project and that making the offer.
V. – The provisions of 3° of Article 325-35, the final paragraph of Article 325-36 and the second to last paragraph of Article 325-41 shall apply to investment services providers offering the minibons mentioned in Article L. 223-6 of the Monetary and Financial Code via a website, under the conditions stated in Article 325-32.
Chapter V - Other provisions (Articles 315-1 à 315-23)
Commission delegated regulation (EU) 2017/567 of 18 May 2016 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council with regard to definitions, transparency, portfolio compression and supervisory measures on product intervention and positions
Commission delegated regulation (EU) 2017/582 of 29 June 2016 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council with regard to regulatory technical standards specifying the obligation to clear derivatives traded on regulated markets and timing of acceptance for clearing
Commission delegated regulation (EU) 2017/591 of 1 December 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards for the application of position limits to commodity derivatives
Commission implementing regulation (EU) 2017/1093 of 20 June 2017 laying down implementing technical standards with regard to the format of position reports by investment firms and market operators
Commission implementing regulation (EU) 2017/953 of 6 June 2017 laying down implementing technical standards with regard to the format and the timing of position reports by investment firms and market operators of trading venues pursuant to Directive 2014/65/EU of the European Parliament and of the Council on markets in financial instruments.
Commission delegated regulation (EU) 2017/2417 of 17 November 2017 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council on markets in financial instruments with regard to regulatory technical standards on the trading obligation for certain derivatives.
Section 1 - Management of inside information and restrictions to be applied within authorised investment services providers (Articles 315-1 à 315-6)
Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC.
Sub-section 1 - Rules to prevent undue circulation of inside information
Investment services providers shall establish and maintain effective and adequate procedures to control the circulation and use of inside information, as defined in Article 7 of Regulation (EU) n° 596/2014 of the European Parliament and of the Council of 16 April 2014, with the exception of paragraph 1.c of that same Article, taking into account the activities conducted (same Regulation) by the group to which the investment services provider belongs and the organisation adopted by that group. These procedures, called "information barriers", shall provide for:
Identification of business segments, divisions, departments or any other entities likely to possess inside information;
Organisation, in particular physical organisation, so as to separate entities within which the relevant persons referred to in Paragraph 1 of Article 2 of Delegated Regulation (EU) n° 2017/565 are likely to possess inside information;
Prohibition of disclosure of inside information by the persons possessing it to other persons, except as provided for in Article 10 of Regulation (EU) n° 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse and after informing the compliance officer;
The conditions in which the investment service provider may authorise a relevant person assigned to a given entity to provide assistance to another entity, whenever one of the two entities is likely to possess inside information. The compliance officer shall be informed whenever the relevant person assists the entity possessing inside information;
The manner in which the relevant person benefiting from the authorisation provided for in 4° is informed of the temporary consequences thereof on the performance of his regular duties.
The compliance officer shall be informed when this person returns to his regular duties.
Sub-section 2 - Watch list
To ensure compliance with the abstention requirement set forth in Articles 8, 10 and 14 of Regulation (EU) n° 596/2014 of the European Parliament and of the Council of 16 April 2014, investment services providers shall establish and maintain an appropriate procedure for monitoring the issuers and financial instruments on which they have inside information. Such monitoring shall cover:
Transactions in financial instruments by the investment services provider for its own account;
Personal transactions, as defined in Article of Regulation (EU) n° 596/2014 of the European Parliament and of the Council of 16 April 2014, made by or on behalf of the relevant persons referred to in Paragraph 1 of Article 29 of the same Regulation;
Investment recommendations, within the meaning of Point 35 of Paragraph 1 of Article 3 of Regulation (EU) n° 596/2014 of the European Parliament and of the Council of 16 April 2014, disseminated by the investment services provider.
To this end, the compliance officer shall draw up a watch list of the issuers and financial instruments on which the investment services provider has inside information.
The relevant entities shall inform the compliance officer at once when they believe they possess inside information.
In such case, the issuer or the financial instruments to which the inside information pertains shall be put on the watch list, under the supervision of the compliance officer.
The watch list shall indicate the reason for adding an issuer or financial instrument to the list and the names of the persons who have access to the inside information about it.
The provisions of the foregoing subparagraph shall not apply where the investment services provider, in its capacity as issuer of financial instruments, maintains the list provided for in Article 18 of Regulation (EU) no. 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse.
The relevant entities shall inform the compliance officer when they believe that information they had previously reported pursuant to the sixth subparagraph has ceased to be inside information.
The contents of the watch list are confidential. Dissemination of items on the watch list is restricted to the persons designated by name in the procedures referred to in the first subparagraph of Article 315-1.
The investment services provider shall exercise supervision in accordance with the procedures set forth in Article 315-2. It shall take appropriate measures if it detects an anomaly.
The investment services provider shall keep a record on a durable medium of the measures it has taken in the event of an anomaly or, if it takes no measures, of the reasons for so doing.
Sub-section 3 - Restricted list
I. – Investment services providers shall establish and maintain an appropriate procedure for monitoring compliance with any restrictions that apply to:
Transactions in financial instruments by the investment services provider for its own account;
Personal transactions, as defined in Article 28 of Commission Delegated Regulation (EU) 2017/565 of 25 April 2016, made by or on behalf of the relevant persons referred to in Paragraph 1 of Article 29 of the same Regulation;
Investment recommendations, within the meaning of Point 35 of Paragraph 1 of Article 3 of Regulation (EU) n° 596/2014 of the European Parliament and of the Council of 16 April 2014, disseminated by the investment services provider.
II. - To this end, the compliance officer shall establish a restricted list. This list includes those issuers or financial instruments in which the investment services provider must restrict its activities, or the activities of relevant persons, because of:
Legal or regulatory provisions to which the investment services provider is subject other than those resulting from the abstention requirements set forth in Articles 8, 10 and 14 of Regulation (EU) n° 596/2014 of the European Parliament and of the Council of 16 April 2014;
Undertakings made on the occasion of a financial offering.
When an investment services provider deems it necessary to prohibit or restrict the performance of an investment service, an investment activity or an ancillary service in respect of certain issuers or financial instruments, those issuers and financial instruments shall also be included on the restricted list.
Investment services providers shall determine, based on the restricted list, which entities are subject to the restrictions referred to in Article 315-4 and how those restrictions shall apply.
They shall inform the relevant persons affected by the restrictions of the list and the nature of the restrictions.
Sub-section 4 - Listing of a company's securities on a regulated market in financial instruments
In allotting securities, the lead manager, in cooperation with the company concerned, ensures that the various categories of investors, other than those connected with the issuer (e.g. suppliers, clients, shareholders, senior managers, employees or third parties whom such persons are authorised to represent), are treated fairly. When several allotment procedures intended specifically for individual investors are applied concurrently, the lead manager shall ensure that the allotment percentages resulting therefrom are substantially equivalent.
The lead manager shall make its best efforts to satisfy demand for the securities from individual investors to a meaningful extent. This objective is deemed to have been met when there is a procedure, centralised by the market operator and characterised by an allotment proportional to applications submitted, under which at least 10% of the overall offering amount is put on the market and made accessible to individual investors.
The lead manager shall endeavour to avoid an obvious imbalance, to the detriment of individual investors, between the allotment for such investors and the allotment for institutional investors. Thus, when a placing procedure intended specifically for institutional investors coexists with one or more procedures intended specifically for individual investors, the lead manager shall endeavour to provide for a transfer mechanism to avoid an imbalance of the kind mentioned above.
Section 2 - Derogations to the publication of transactions (Article 315-7)
Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation
Commission Delegated Regulation (EU) 2017/583 of 14 July 2016 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council on markets in financial instruments with regard to regulatory technical standards on transparency requirements for trading venues and investment firms in respect of bonds, structured finance products, emission allowances and derivatives
Commission Delegated Regulation (EU) 2017/590 of 28 July 2016 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the reporting of transactions to competent authorities
Commission Delegated Regulation (EU) 2017/587 of 14 July 2016 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council on markets in financial instruments with regard to regulatory technical standards on transparency requirements for trading venues and investment firms in respect of shares, depositary receipts, exchange-traded funds, certificates and other similar financial instruments and on transaction execution obligations in respect of certain shares on a trading venue or by a systematic internaliser
The AMF may authorise an investment services provider to defer the publication of transactions in the financial instruments referred to in paragraph 1 of Article 21 of Regulation (EU) No 600/2014 of 15 May 2014 in the cases described in paragraph 4 of this same Article.
Section 3 - Obligations of investment services providers relating to the prevention of money laundering and terrorist financing (Article 315-8)
Investment services providers shall have organisational structures and procedures that enable them to comply with the vigilance and disclosure requirements provided for in Title VI of Book V of the Monetary and Financial Code relating to the fight against money laundering and terrorist financing.
Section 4 - Handling and monitoring of subscription applications and book entry (Article 315-9)
When it makes offers of financial securities via a website on the terms set out in Article 325-32, the investment services provider may provide a subscription application handling and monitoring service that includes the registration of financial securities in a securities account.
This service shall be formalised in an agreement between the investment services provider and the mandating issuer setting out in particular the obligations of the investment services provider and the fees charged. For this purpose, it shall collect notably the personal data of subscribers and transmit it to the issuer for registration in the records of the latter.
The investment services provider shall implement a procedure setting out:
1° The terms for handling and monitoring subscription applications, notably in the event of oversubscription.
2° The procedure for registering financial securities in a securities account.
This procedure shall provide for time stamping of the subscription applications on receipt.
The investment services provider shall act with diligence and professionalism when processing subscription applications and registering financial securities in a securities account.
It shall keep a record of the service provided on a durable medium.
If the offer is cancelled, it shall inform the client promptly.
Section 5 - Accepted market practices (Article 315-10)
Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC
Commission Delegated Regulation (EU) 2016/908 of 26 February 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council laying down regulatory technical standards on the criteria, the procedure and the requirements for establishing an accepted market practice and the requirements for maintaining it, terminating it or modifying the conditions for its acceptance
Any investment services provider resorting to an accepted market practice shall comply with the requirements arising from the AMF decision to incorporate that market practice in accordance with Article 13 of the Regulation (EU) no. 596/2014 of the European Parliament and of the Council of 16 April 2014.
Section 6 - Provisions for orders with instructions for deferred settlement and delivery and derivatives markets (Articles 315-11 à 315-23)
Sub-section 1 - Orders with instructions for deferred settlement and delivery
The provisions of Articles 315-12 to 315-22 shall apply to authorised investment services providers receiving orders for deferred settlement and delivery as well as to custody account keepers.
Where the market rules provide for the possibility referred to in the first paragraph of Article 516-1, an investment services provider who receives an order for deferred settlement or delivery shall not accept it unless the investor remits a margin deposit, either in the provider's books or in the books of the custody account keeper if the provider does not perform that function.
An investment services provider who does not keep his client's account cannot consent to transmit or execute an order for deferred settlement and delivery unless it is able, under an agreement with the client's custody account keeper, to ascertain that the necessary margin has been duly deposited with the custody account keeper before it transmits or executes that order.
The investment services provider who keeps the client's account shall be subject to the provisions of this section.
The investment services provider shall be subject to the rules governing the posting and composition of clients' mandatory margin deposits.
Margin is calculated as a percentage of the position and according to the type of assets pursuant to the following indications:
cash (euros and other currencies in circulation in the European Union), Treasury bills, units or shares of “short-term money market” or “money market” UCITS: 20%;
debt instruments admitted for trading on a regulated market of a State that is party to the Agreement on the European Economic Area, negotiable debt securities and other debt instruments of States party to the Agreement on the European Economic Area, units or shares of UCITS classified as “bonds and other debt securities in euros”, units or shares of UCITS classified as “international bonds and other debt securities”: 25%;
equity instruments admitted for trading on a regulated market of a State that is party to the Agreement on the European Economic Area, units or shares of UCITS classified as “French equities”, units or shares of UCITS classified as “eurozone equities”, units or shares of UCITS classified as “equities of European Union countries”, units or shares of UCITS classified as “international equities”: 40%.
Should a client fail, within the required time period, to remit or top up the margin deposit or to fulfil the commitments arising from the order executed on his behalf, the investment services provider shall liquidate some or all of the client's commitments or positions.
The AMF can, where necessary, set more stringent margin deposit rules for a given financial instrument or market, either temporarily or permanently.
Where a margin deposit consists of financial instruments, the investment services provider can legally refuse any such instrument that:
it considers he would be unable to realise at any time or on his own initiative;
it deems will not provide adequate collateral, having regard to the type of position to be collateralised.
In any event, long positions in a given financial instrument cannot be collateralised with the same financial instrument.
Cheques cannot be accepted as margin until they have been cashed.
An investment services provider must be able to inform his client, upon request, of the value of the margin deposited under the three categories set forth in an AMF instruction and, pursuant to the same article, of the position that may be taken or the increase in an existing position that may be realised.
The AMF can increase the minimum margin rates provided for in Article 315-13 for one or more designated financial instruments, as specified in that article. The new rates cannot come into force for at least two trading days after they have been published.
Initial margin deposits are readjusted, if need be, in view of the daily marking to market of the position and the assets accepted as collateral therefor, so that the deposits comply at all times with the minimum regulatory requirement.
The investment services provider shall order the client, by any and all means, to top up or restore its collateral within one trading day.
If the collateral is not topped up or restored in due time, the investment services provider shall take the necessary measures so that the client's position is once again collateralised. Unless the provider and the client have agreed on a different procedure, the investment services provider shall begin by reducing the position before realising some or all of the collateral.
Absent a contractual agreement, an investment services provider who wishes to increase the collateral on a client's position by higher rates than those provided for in an AMF instruction shall warn the client of the new rates by registered letter with return receipt. That letter shall be sent at least eight calendar days before the effective date of the increase.
Where an investment services provider reduces a client's position or realises some or all of its collateral, pursuant to the third paragraph of Article 315-19, it shall send the corresponding trade confirmations and account statements to the client by registered letter with return receipt.
Notwithstanding the first paragraph of Article 315-12, a member of a regulated market who does not hold the account of a client is not required to ascertain that margin has been deposited if the order is sent to it by an investment services provider acting as an order receiver-transmitter.
Sub-section 2 - Derivatives markets
An investment services provider who receives an order for execution on a regulated market in derivative financial instruments shall not accept such order unless the client remits a margin deposit, either in the provider's books or in the books of the custody account keeper if the provider does not perform that function.
By way of derogation from the first paragraph, where the client is a professional client or an eligible counterparty within the meaning of Articles D. 533-11 and D. 533-13 of the Monetary and Financial Code, the investment services provider may grant it a period of time in which to remit the margin. Such period may not exceed the period granted by the clearing house to the clearing member with whom the positions are recorded.
The margin referred to in the first paragraph shall be equal to or greater than that required by the market rules, if called from market members, or that required by the clearing house rules, if called from clearing house members. Since the aforementioned margin levels are minimum requirements, the investment services provider may, upon receiving the orders and at any time, call additional margin from the client.
If, in light of market conditions, the margin posted by the client falls below the amount required under the third paragraph, additional margin shall be deposited in the same conditions and time limits as those specified in the second and third paragraphs.
Should a client fail to post margin or remit additional margin within the above time limits, the investment services provider shall liquidate some or all of the client's commitments or positions.
Chapter VI - Systematic internalisers (Articles 315-24 à 315-26)
Regulation (EU) no 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012
Commission Delegated Regulation (EU) 2017/565 of 25 April 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
Commission Delegated Regulation (EU) 2017/567 of 18 May 2016 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council with regard to definitions, transparency, portfolio compression and supervisory measures on product intervention and positions
Commission Delegated Regulation (EU) 2017/575 of 8 June 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council on markets in financial instruments with regard to regulatory technical standards concerning the data to be published by execution venues on the quality of execution of transactions
Commission Delegated Regulation (EU) 2017/576 of 8 June 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards for the annual publication by investment firms of information on the identity of execution venues and on the quality of execution
Commission Delegated Regulation (EU) 2017/583 of 14 July 2016 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council on markets in financial instruments with regard to regulatory technical standards on transparency requirements for trading venues and investment firms in respect of bonds, structured finance products, emission allowances and derivatives
Commission Delegated Regulation (EU) 2017/585 of 14 July 2016 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the data standards and formats for financial instrument reference data and technical measures in relation to arrangements to be made by the European Securities and Markets Authority and competent authorities
Commission Delegated Regulation (EU) 2017/587 of 14 July 2016 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council on markets in financial instruments with regard to regulatory technical standards on transparency requirements for trading venues and investment firms in respect of shares, depositary receipts, exchange-traded funds, certificates and other similar financial instruments and on transaction execution obligations in respect of certain shares on a trading venue or by a systematic internaliser
Commission Delegated Regulation (EU) 2017/590 of 28 July 2016 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the reporting of transactions to competent authorities
Section 1 - Informing the AMF (Article 315-24)
A systematic internaliser within the meaning of Article L. 533-32 of the Monetary and Financial Code shall inform the AMF when it acts as a systematic internaliser for one of the categories of financial instruments mentioned in paragraph 1 of Articles 14 and 18 of Regulation (EU) No. 600/2014 of 15 May 2014 and when it ceases to act as a systematic internaliser for this category.
Section 2 - Derogations to the publication of transactions (Articles 315-25 à 315-26)
A systematic internaliser may, in accordance with paragraph 2 of Article 18 of Regulation (EU) No 600/2014, be waived from pre-trade disclosure requirements in the cases described in paragraph 1 of Article 9 of said Regulation, following notification to the AMF of its request(s) for a waiver for each financial instrument concerned.
The AMF may authorise systematic internalisers to defer publication of transactions in the financial instruments referred to in Article 21, paragraph 1 of Regulation (EU) No 600/2014 of 15 May 2014 in the cases described in paragraph 4 of said Article.
Title I bis - Asset management companies of AIFs (Articles 316-1 à 320-25)
For the application of this Title:
The term "asset management company" shall mean a French asset management company;
The term "management company" shall mean a company established in another Member State of the European Union;
The term "manager" shall mean a manager established in a third country.
I. - This Title is applicable:
To asset management companies managing AIFs whose assets exceed the thresholds set out in Article R. 532-12-1 of the Monetary and Financial Code;
To asset management companies managing the "Other AIFs" referred to in Article L. 214-24, III, 1 of the Monetary and Financial Code;
To asset management companies or legal entities managing AIFs whose assets are below the thresholds set out in Article R. 532-12-1 of the Monetary and Financial Code or the "Other AIFs" referred to in Article L. 214-24, III, 2 and 3 of the Monetary and Financial Code or, in the case referred to in the last paragraph of the same Article L. 214-24, III, when these asset management companies or legal entities have chosen to submit these AIFs or "Other AIFs" to the present title.
II. - Unless otherwise provided, asset management companies authorised under Directive 2009/65/EC of the European Parliament and Council of 13 July 2009 and authorised under Directive 2011/61/EU of the European Parliament and Council of 8 June 2011 must apply Titles I ter and I bis of the present Book cumulatively.
III. - An asset management company may apply for authorisation to provide investment services comprising the reception and transmission of orders on behalf of a third party, portfolio management or investment advice referred to in 1, 4 and 5 of Article L. 321-1 of the Monetary and Financial Code.
IV. - When an asset management company is authorised to provide one or more of the investment services referred to in III or when it markets units or shares of AIFs or UCITS in France in accordance with Article 421-26 and Article 411-129, to perform these activities it shall comply with the provisions of this Title as well as the provisions applicable to investment services providers contained in Title I.
V. - When an asset management company markets financial instruments in France in accordance with Article L. 533-24-1 of the Monetary and Financial Code, it shall comply with section 2 of Chapter III of Title I.
Chapter I - Procedures for authorisation, programme of operations and passport (Articles 316-3 à 316-14)
Commission Implementing Regulation (EU) No 447/2013 of 15 May 2013 establishing the procedure for AIFMs which choose to opt in under Directive 2011/61/EU of the European Parliament and of the Council
Section 1 - Authorisation and programme of operations (Articles 316-3 à 316-9)
Sub-section 1 - Authorisation
The authorisation of asset management companies referred to in Article L. 532-9 of the Monetary and Financial Code requires submission to the AMF of an application specifying the scope of the authorisation, together with a file complying with the model provided for in Article R. 532-10 of the said Code.
The application file must contain the following information:
Information on the persons who effectively manage the activities of the asset management company;
Information on the identity of the shareholders or members, either direct or indirect, of the asset management company who have qualifying holdings, and the amounts of such holdings;
A programme of operations for each of the services that the asset management company intends to provide, specifying the conditions in which it expects to provide those services and indicating the type of transactions envisaged and its organisational structure. This programme of operations is completed, as appropriate, by any additional information corresponding to the assets used by the asset management company;
Information about remuneration policies and practices;
Information on the terms it has defined for delegating or sub-delegating its asset management company functions to third parties;
Information about each AIF it manages or intends to manage;
The rules or instruments of incorporation of each AIF it intends to manage;
Information on the arrangements made for the appointment of the depositary for each AIF it intends to manage;
All or any addition information provided for in the third paragraph of Article L. 214-24-19 of the Monetary and Financial Code for each AIF it manages or intends to manage.
If the asset management company is already authorised by the AMF under Directive 2009/65/ CE of the European Parliament and Council of 13 July 2009, it is not required to provide the AMF again with the information or documents it already supplied to it in its authorisation application under the said directive, provided that this information and these documents are up to date.
The AMF shall issue an acknowledgement of receipt when it receives this file.
In deciding whether to grant authorisation to an asset management company, the AMF shall review the items in the file referred to in Article 316-3, along with the items set out in Chapter II of this Title. The AMF may require the applicant to produce any additional information it needs to make its decision.
It may restrict the scope of the authorisation, notably relating to the investment strategies of the AIFs the applicant shall be authorised to manage.
The AMF rules on the authorisation application within a period of three months as of submission of the full file.
It may extend this period by up to an additional three months if it deems necessary on account of the specific circumstances of the case at hand and after informing the applicant to this effect.
For the purposes of the present article, an application is deemed to be complete when the applicant's file contains at least the information referred to in points 1 to 4 and 6 of Article 316-3.
The applicant may commence its AIF management activity as soon as it receives its authorisation, but no earlier than one month after submitting all the missing information referred to in points 5 and 7 to 9 of Article 316-3.
The procedure and the terms and conditions of authorisation are set out in an AMF instruction.
The AMF informs the European Authority on a quarterly basis of the authorisations it has granted under the terms of the present Chapter.
Any changes to the information contained in the authorisation file of the asset management company shall require, as applicable, a declaration, a notification or an application for prior approval to be made to the AMF.
On receiving the declaration, notification or application for prior approval from the asset management company, the AMF shall issue a receipt.
Pursuant to Article L. 532-9-1, II of the Monetary and Financial Code, when the asset management company submits an application for prior approval of a material change to the information contained in its authorisation file, the AMF shall have one month to inform it of its refusal or of any restrictions placed upon its application.
The AMF may, if the particular circumstances of the case at hand so justify, inform the asset management company of an extension of this deadline by a period of as much as one month.
The changes are implemented after the one-month assessment period as extended, if appropriate.
Sub-section 2 - Withdrawal of authorisation and deregistration
Except in cases where the company requests withdrawal, the AMF, whenever it envisages withdrawing an asset management company's authorisation pursuant to Article L. 532-10 of the Monetary and Financial Code, shall so inform the company, specifying the reasons for which such decision is envisaged. The company shall have one month from receipt of such notification to submit any observations it may have.
When the AMF decides to withdraw an authorisation, the company concerned shall be notified of the AMF's decision by registered letter with acknowledgement of receipt. The AMF shall inform the public of the withdrawal by inserting notices in newspapers or other publications of its choosing.
The decision shall specify the timetable and method for carrying out the withdrawal. During this period, the company shall be put under the supervision of an administrator appointed by the AMF on the basis of his or her skills. The administrator shall be bound by the obligation of professional secrecy. If he or she manages another company, said company may not acquire the clientele directly or indirectly.
During this period, the company may make only such transactions as are strictly necessary to protect the interests of the unit or shareholders of the AIFs. It shall inform the depositary or depositaries of the withdrawal. For common funds (FCPs), the AMF shall invite the depositaries to appoint another asset management company. For employee investment funds (FCPEs), this appointment shall be subject to ratification by the supervisory board of each fund.
The AMF informs the European Securities and Markets Authority on a quarterly basis of the authorisations it has withdrawn under the terms of the present article.
When the AMF pronounces a deregistration pursuant to Article L. 532-12 of the Monetary and Financial Code, the AMF shall notify the company of its decision with the conditions stipulated in Article 316-7. The AMF shall inform the public by inserting notices in newspapers or other publications of its choosing.
Sub-section 3 - Resignations
When it is considering demanding the resignation of a company from its capacity as the asset management company of an AIF pursuant to Article L. 621-13-4 of the Monetary and Financial Code, the AMF informs the company to this effect, specifying the reasons for which such decision is envisaged. The company shall have one month from receipt of such notification to submit any observations it may have.
When it decides to demand the resignation of a company from its capacity as the asset management company of an AIF, the AMF shall inform the company of its decision by registered letter with acknowledgement of receipt. The AMF shall inform the public of its decision by inserting notices in newspapers or other publications of its choosing.
The decision shall specify the terms and implementation timeframe for the resignation. During this period, the AIF in question shall be placed under the supervision of an administrator appointed by the AMF on the basis of his or her skills. The administrator shall be bound by the obligation of professional secrecy. If he or she manages another company, said company may not take over the management of the AIF in question directly or indirectly.
During this period, the asset management company may make only such transactions as are strictly necessary to protect the interests of the unit or shareholders of the AIF in question. It shall inform the unit or shareholders and depositary of the AIF in question of the AMF decision. The AMF shall invite the depositary of the AIF in question to appoint another asset management company.
The units or shares in the AIF in question must no longer be marketed in France or, as applicable, in the other Member States of the European Union.
Where necessary, the AMF informs the competent authorities of the host Member States of the asset management company of its decision immediately.
Section 2 - Passport for asset management companies seeking to manage aifs or provide investment services in the other member states of the european union (Article 316-10)
An asset management company seeking to create and manage an AIF or provide investment services in another State of the European Union, under the freedom to provide services or under the right of establishment, shall notify the AMF of its plans in accordance with Articles R. 532-25-1 et R. 532-30 of the Monetary and Financial Code.
Section 3 - Specific rules on the authorisation of managers seeking to manage european union aifs or to market aifs of the european union or third countries under their management in the european union with a passport (Articles 316-11 à 316-14)
Commission Implementing Regulation (EU) No 448/2013 of 15 May 2013 establishing a procedure for determining the Member State of reference of a non-EU AIFM pursuant to Directive 2011/61/EU of the European Parliament and of the Council
The date of entry into force of the present Section is set in accordance with the provisions of the European Commission delegated act provided for in Paragraph 6 of Article 67 of Directive 2011/61/EU of the European Parliament and Council of 8 June 2011.
Without prejudice to Article L. 532-9 of the Monetary and Financial Code, no authorisation shall be granted unless the following additional conditions are fulfilled:
The manager appoints France as its reference Member States in accordance with the criteria set out in Article R. 532-31 of the same Code and the appointment is backed up by the disclosure of its marketing strategy;
The manager has appointed a legal representative established in France;
The legal representative is, with the manager, the contact point of the manager for holders of units or shares in the AIFs in question, for the European Securities and Markets Authority and for the AMF and the competent authorities concerning the activities for which the manager is authorised in the European Union and shall be equipped to perform its compliance function by virtue of the legislative and regulatory provisions applicable to asset management companies;
There are appropriate cooperation arrangements in place between France, the competent authorities of the Member State of reference of the European Union AIFs concerned and the supervisory authorities of the third country where the manager is established in order to ensure an efficient exchange of information that allows the AMF and the competent authorities to carry out the duties incumbent upon them;
The third country where the manager is established is not listed as a Non-Cooperative Country and Territory by FATF;
The third country where the manager is established has signed an agreement with France, which fully complies with the standards laid down in Article 26 of the OECD Model Tax Convention on Income and on Capital and ensures an effective exchange of information in tax matters, including any multilateral tax agreements;
The effective exercise by the AMF of its supervisory functions is neither prevented by the laws, regulations or administrative provisions of the third country governing the manager, nor by limitations in the supervisory and investigatory powers of that third country's supervisory authorities.
The authorisation of the AIF manager shall be granted in accordance with Article L. 532-36 of the Monetary and Financial Code, subject to the following criteria:
The information referred to in Article L. 532-9 of the same code is supplemented by:
A justification by the manager of its assessment regarding the Member State of reference in accordance with the criteria set out in Article R. 532-31 of the same code with information on the marketing strategy;
A list of the legislative and regulatory provisions applicable to asset management companies of AIFs for which compliance by the manager is impossible, as compliance by the manager with those provisions is incompatible with compliance with a mandatory provision in the law to which the manager established in a third country or the third-country AIF marketed in the Union is subject;
Written evidence based on the regulatory technical standards developed by ESMA that the relevant third-country law in question provides for a rule equivalent to the provisions for which compliance is impossible, which has the same regulatory purpose and offers the same level of protection to the investors of the relevant AIFs and that the manager complies with that equivalent rule. Such written evidence shall be supported by a legal opinion on the existence of the relevant incompatible mandatory provision in the law of the third country and including a description of the regulatory purpose and the nature of the investor protection pursued by it;
The name of the legal representative of the manager and the place where it is established;
The information referred to in Article 316-3, Points 1 to 6 may be limited to the EU AIFs the manager intends to manage and to those AIFs it manages and intends to market in the European Union with a passport;
The second paragraph of Article L. 532-9, II of the Monetary and Financial Code is without prejudice to Article L. 532- 31 of the same code;
Point 1 of Article L. 532-9, II of the Monetary and Financial Code is not applicable;
The fifth paragraph of Article 316-4 shall be understood as including a reference to the "information referred to in Article L. 532-37 of the Monetary and Financial Code".
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Chapter II - Authorisation requirements for aif asset management companies and for acquiring or increasing an equity interest in an aif asset management company (Articles 317-1 à 317-14)
Section 1 - Authorisation requirements (Articles 317-1 à 317-6)
Articles 12 to 15 of the Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012 supplementing Directive 2011/61/EU of the European Parliament and of the Council with regard to exemptions, general operating conditions, depositaries, leverage, transparency and supervision
The asset management company shall have its registered office in France. It may be incorporated in any form, subject to a review of the compatibility of its instruments of incorporation with the laws and regulations applicable to it, and provided that its accounts are subject to a statutory audit.
I. - The share capital of asset management companies shall be equal to a minimum of EUR 125,000 and must be fully paid in cash at least to this minimum amount.
II. - When authorisation is granted and in subsequent financial years, the asset management company must be able to prove at any time that its level of own funds is at least equal to the higher of the two amounts referred to in Points 1 and 2 below:
EUR 125,000 plus an amount equal to 0.02 % of the amount by which the assets under management by the asset management company exceeds EUR 250 million.
The total own funds requirement shall not exceed EUR 10 million.
The assets included in the calculation of the additional own funds requirement referred to in the third paragraph are:
French or foreign AIFs in corporate form that have globally delegated management of their portfolio to the asset management company;
French or foreign AIFs in fund form managed by the asset management company, including portfolios for which it has delegated management but excluding portfolios that it manages on a delegated basis.
Up to 50% of the additional own funds requirement may be met by a guarantee given by a credit institution or insurance undertaking having its registered office in a State that is a party to the European Economic Area agreement, or in another State, provided the guarantor is subject to prudential rules considered by the AMF to be equivalent to those applicable to credit institutions and insurance undertakings having their registered offices in States that are parties to the European Economic Area agreement.
One-quarter of general operating expenses for the previous financial year calculated in accordance with Articles 34 ter to 34 quinter of Commission Regulation (EU) No 241/2014 of 7 January 2014.
III. - The own funds requirement at the time of authorisation shall be calculated on the basis of forecast data.
For subsequent years, the amount of general operating expenses and the total value of portfolio assets used to determine the own funds requirement shall be calculated on the basis of the most recent of the following asset management company documents: financial statements for the previous financial year, interim statement of financial position certified by the statutory auditor or the data sheet referred to in Article 318-37.
IV. - To cover any potential professional liability risks resulting from AIF management activities, the asset management company must:
Either have additional own funds of an amount sufficient to cover potential liability risks arising from professional negligence;
Or hold a professional indemnity insurance against liability arising from professional negligence which is appropriate to the risks covered.
V. - When the asset management company is also authorised by the AMF by the terms of Directive 2009/65/EC of the European Parliament and Council of 13 July 2009, it is not subject to points I, II and III the present Article.
I. The asset management company's own funds, including any additional own funds, must be invested in liquid assets or assets that can easily be converted into cash in the short term and that do not include speculative positions.
II. However, if own funds exceed 130 % at least of the regulatory own funds mentioned in Article 317-2, the excess portion of this amount may be invested in assets that do not meet the requirements of I, provided that these assets do not create a material risk for the company's regulatory own funds.
The asset management company shall disclose the identities of legal entities or individuals who are direct or indirect shareholders with qualifying holdings as well as the amounts of their holdings. The AMF shall assess the quality of the company's shareholders having regard to the need for sound and prudent management and proper performance of its own supervisory responsibilities. It shall make the same assessment of partners and members in an economic interest grouping.
The asset management company shall be effectively directed by at least two persons of sufficiently good repute and sufficient experience for their duties, so as to ensure sound and prudent management.
The directors must, among other things, be sufficiently experienced as regards the investment strategies pursued by the AIFs managed by the asset management company.
At least one of these two persons must be a company officer with the power to represent the company in its dealings with third parties.
The other person may be the chairman of the board of directors or a person specifically empowered by the company's governing bodies or instruments of incorporation to direct the company and determine its policies.
The persons effectively managing the asset management company as defined in Article 317-5 undertake to inform the AMF promptly of any modification of their situation as declared at the time of their appointment.
Section 2 - Content of the programme of operations (Articles 317-7 à 317-9)
The asset management company shall have a programme of operations in accordance with Chapter III.
The programme of operations also contains information on the remuneration policies and practices implemented pursuant to Article L. 533-22-2 of the Monetary and Financial Code, and information concerning the AIFs the asset management company intends to manage:
Information about the investment strategies, including the types of underlying funds if the AIF is a fund of funds, and the manager's policy as regards the use of leverage, and the risk profiles and other characteristics of the AIFs it manages or intends to manage, including information about the Member States or third countries in which such AIFs are established or are expected to be established;
Information on where the master AIF is established if the AIF is a feeder AIF;
The rules or instruments of incorporation of each AIF the asset management company intends to manage;
Information on the arrangements made for the appointment of the depositary for each AIF in question;
For each AIF the asset management company manages or intends to manage, any additional information disclosed to investors pursuant to the third paragraph of Article L. 214-24-19 of the Monetary and Financial Code
The asset management company may also hold equity interests in companies set up for purposes that represent an extension of its own activities. These holdings must be compatible with the provisions the asset management company is required to implement to detect and prevent or manage any conflicts of interest likely to arise from these holdings.
If an AIF is split pursuant to the second paragraph of Article L. 214-24-33 or the second paragraph of Article L. 214-24-41 of the Monetary and Financial Code, the authorisation granted to the asset management company managing the AIF in question permits it to manage the contractual scheme that has been created by the split in order to house the assets whose disposal would not be in the best interests of the holders of shares or units in the AIF that has been split.
Section 3 - Requirements for acquiring or increasing an equity interest in an asset management company (Articles 317-10 à 317-14)
The AMF shall be notified of any transaction that enables a person acting alone or in concert with other persons, within the meaning of Article L. 233-10 of the Commercial Code, to acquire, increase or decrease or cease owning, directly or indirectly, a qualifying holding in an asset management company. The notice must be given to the AMF by the person or persons concerned before the transaction is executed, if one of the following conditions is met:
The capital or voting rights held by the person(s) exceed or fall below one-tenth, one-fifth, one-third or one-half of the capital or voting rights;
The asset management company becomes or stops being a subsidiary of the person(s) concerned;
The person or persons gain or lose significant influence over management of the management company as a result of the transaction.
For the purposes of this Chapter:
A “qualifying holding” means, pursuant to sub-paragraph h of Article 4(1) of Directive 2011/61/EU of 8 June 2011, “a direct or indirect holding in a management company which represents 10% or more of the capital or of the voting rights or which makes it possible to exercise a significant influence over the management of the management company in which that holding subsists”;
Voting rights are calculated in accordance with the provisions of Article L. 233-4, points I and IV of Article L. 233-7 and Article L. 233-9 of the Commercial Code;
The capital holding is calculated by adding up, as applicable, the direct holding and any indirect holdings in the capital of the asset management company. Indirect holdings are calculated by multiplying together the fractions held in the capital of each intermediate entity and in the capital of the asset management company;
The fraction of capital or voting rights held by investment firms or credit institutions as a result of underwriting or guaranteed placement of financial instruments, within the meaning of 6-1 or 6-2 of Article D. 321-1 of the Monetary and Financial Code, shall not be counted, as long as these rights are not exercised or used in any other way to influence the issuer's management and provided that they are sold within one year of acquisition;
In the case of an indirect holding, any person likely to acquire, sell or lose a qualifying holding must notify the AMF of this.
However, without prejudice to the obligations of the direct holder, the final holder may make notifications for and on behalf of the entities under its control, provided it includes the relevant information on these entities.
Transactions to acquire or increase qualifying holdings are subject to prior authorisation by the AMF under the following conditions:
Within two trading days of receipt of the notice and all the documents required, the AMF shall provide the applicant with written acknowledgement of receipt.
The AMF shall have up to sixty trading days, starting from the date of the written acknowledgement of receipt of the notice, in which to assess the transaction. The written acknowledgement of receipt shall specify the expiry date of the assessment period.
During the assessment period and by the fiftieth trading day thereof at the latest, the AMF may request any further information to complete the assessment. This request shall be made in writing and shall specify additional necessary information. Within two trading days of receipt of the further information, the AMF shall send the applicant a written acknowledgement of receipt.
The assessment period shall be suspended from the date of the AMF's request for further information until the receipt of the applicant's response to this request. The suspension shall not last more than twenty trading days. The AMF may make further requests for more information or clarifications, but these requests shall not suspend the assessment period.
The AMF may extend the suspension referred to in the previous paragraph to thirty trading days, if the applicant:
Is established outside the European Union or is governed by non-European Union regulations;
or is a person who is not subject to monitoring under the terms of European Directives 2013/36/EU, 2009/65/EC, 2009/138/EC or 2014/65/EU.
If, after the assessment, the AMF decides to object to a planned acquisition it shall give written notice of its decision to the applicant within two trading days and before the end of the assessment period, giving the grounds for its decision. The asset management company shall also be notified.
At the request of the applicant, the AMF shall publish the grounds for its decision on the website referred to in Article R. 532-15-2 of the Monetary and Financial Code.
If the AMF has not made a written objection to the planned acquisition by the end of the assessment period, the acquisition shall be deemed to be approved.
The AMF may set a deadline for completing the planned acquisition and may extend this deadline, if appropriate.
If the AMF receives several notifications under the terms of Article L. 532-9-1 of the Monetary and Financial Code concerning the same asset management company, it shall examine them jointly in such a way as to ensure equal treatment of the applicants.
Notwithstanding the preceding provisions, the AMF shall be notified only of transactions that occur between companies directly or indirectly owned and controlled by the same company and that change the structure of ownership among the existing shareholders of the asset management company, unless such transactions result in the transfer of control or ownership of some or all of the abovementioned rights to persons that are not subject to the laws of a State party to the European Economic Area agreement.
When the number or distribution of voting rights is restricted in relation to the number or distribution of the relevant shares or units under the provisions of legislation or the instruments of incorporation, the percentages stipulated in this Chapter and in Article 317-11 shall be calculated and implemented in terms of shares or units respectively.
Transactions involving the sale or decrease qualifying holdings in an asset management company mentioned in Article 317-10 shall entail a re-examination of the authorisation in view of the need to ensure sound and prudent management.
The AMF may ask asset management companies for the identity of partners or shareholders who report holdings of less than one twentieth, but more than 0.5%, or the relevant figure set by the instruments of incorporation for the purposes of Article L. 233-7 of the Commercial Code.
Chapter III - Organisational rules (Articles 318-1 à 318-62)
The asset management company shall use, at all times, adequate and appropriate human and technical resources that are necessary for the proper management of AIFs.
Given the nature of the AIFs it manages, it shall have sound administrative and accounting procedures, control and safeguard arrangements for electronic data processing and adequate internal control mechanisms including, in particular, rules for personal transactions by its employees or for the holding or management of investments in order to invest on its own account and ensuring, at least, that each transaction involving the AIFs may be reconstructed according to its origin, the parties to it, its nature, and the time and place at which it was effected and that the assets of the AIFs managed by the AIFM are invested in accordance with the AIF rules or instruments of incorporation and the legal provisions in force.
The annual financial statements of the asset management company shall be certified by a statutory auditor. Within six months of the end of the financial year, asset management companies shall file copies of their balance sheet, income statement and the notes to the financial statements, along with their annual management reports and notes, the statutory auditors' general and special reports with the AMF. If applicable, the companies shall also produce consolidated financial statements.
Section 1 - Organisational rules (Article 318-3)
Articles 57 to 59 of the Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012 supplementing Directive 2011/61/EU of the European Parliament and of the Council with regard to exemptions, general operating conditions, depositaries, leverage, transparency and supervision
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Section 2 - Compliance system (Articles 318-4 à 318-5)
Articles 61 and 62 of the Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012 supplementing Directive 2011/61/EU of the European Parliament and of the Council with regard to exemptions, general operating conditions, depositaries, leverage, transparency and supervision
Asset management companies shall apply the compliance policy provided for in Article 61 of Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012 as well as the provisions relating to the responsibilities of the management body referred to in Article 60 of the same Regulation, to the professional obligations referred to in II of Article L. 621-15 of the Monetary and Financial Code that do not fall under the scope of application of the Articles of that Regulation.
The compliance officer referred to in Article 61, 3, b of Commission Delegated Regulation (EU) n° 231/2013 of 19 December 2012 shall hold a professional licence issued on the terms defined in Section 8 of this Chapter.
Section 3 - Responsibilities of senior management and supervisory bodies (Article 318-6)
In application of Article L. 621-8-4 of the Monetary and Financial Code, the effective managers within the meaning of Article L. 532-9, II, 4 of said Code shall immediately inform the AMF of any incidents that could lead to a loss or gain for the asset management company, a cost linked to its civil or criminal liability, an administrative sanction or reputational damage and resulting from non-compliance with Articles 57 to 59 of Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012, of an amount that exceeds 5% of its regulatory capital. Under the same conditions, they shall inform the AMF of any event preventing the asset management company from meeting the requirements of its authorisation. They shall provide the AMF with an incident report indicating the nature of the incident, the measures implemented after it happened and the initiatives taken to prevent similar incidents from taking place in the future.
Section 4 - Verification of the knowledge of specified persons (Articles 318-7 à 318-9)
I.- The asset management company shall ensure that natural persons acting on its behalf have the minimum qualification as well as a sufficient level of knowledge.
II. - It verifies that the persons carrying out one of the following functions can prove they have the minimum level of knowledge set forth in Point 1° of II of Article 318-9:
a) Asset manager within the meaning of Article 318-8;
b) Compliance and internal control officer within the meaning of Article 318-21.
III. - The asset management company shall not carry out the verification provided for in II with regard to persons employed at 1st July 2010. Persons having passed one of the examinations referred to in Article 38-9, II, 3° shall be deemed to have the minimum knowledge required to perform their duties.
IV. - To conduct the verification referred to in II, the asset management company shall have six months from the date on which the employee starts to perform one of the above functions.
However, when the employee has been taken on under a work/study contract, as provided in Articles L. 6222-1 and L. 6325-1 of the Labour Code, the asset management company may choose not to perform any such verification. If it decides to hire the employee when his or her training period finishes, the asset management company shall ensure that he or she has the minimum qualification as well as a sufficient level of knowledge, as referred to in I, at the latest by the end of the contract training period.
The asset management company shall ensure that any employee whose minimum knowledge has not yet been verified is appropriately supervised.
An asset manager is any person authorised to take investment decisions within the framework of the management of one or several AIFs.
I. - The AMF has formed a Financial Skills Certification Board.
The Financial Skills Certification Board issues opinions at the request of the AMF concerning certification of the professional knowledge of natural persons acting under the authority or on behalf of asset management companies and performing one of the functions referred to in II of Article 318-7;
When rendering opinions, the Financial Skills Certification Board considers the possibility of establishing equivalencies with similar schemes abroad.
II. - Further to an opinion of the Financial Skills Certification Board, the AMF:
Determines the content of the minimum knowledge to be acquired by natural persons acting under the authority or on behalf of an asset management company and performing one of the functions referred to in II of Article 318-7. It shall publish that content;
Sees to it that the minimum knowledge content is updated;
Determines and verifies the arrangements for the examinations that validate acquisition of the minimum knowledge;
Certifies examinations for a two-year period within three months of the filing of applications. This deadline shall be extended as necessary until requests for further information are met. Certification can be renewed for a three-year period.
The AMF shall charge an application fee when applications for certification are filed. The AMF shall determine the amount of this fee.
III. - The Financial Skills Certification Board has at least seven members:
One AMF representative;
At least four members named by the AMF on the basis of their professional skills, after consulting with the main professional associations representing investment services providers;
Two independent persons named by the AMF and skilled in the fields of education or vocational training in finance.
The Financial Skills Certification Board chooses one of its members as chairman.
The members of the Financial Skills Certification Board are appointed for a renewable three-year term.
The AMF publishes the list of members.
IV. - The Financial Skills Certification Board shall draw up bylaws, approved by the AMF.
V. - Members are of the Financial Skills Certification Board receive no remuneration.
Section 5 - Complaint handling (Articles 318-10 à 318-10-1)
The asset management company shall establish and maintain operational an effective and transparent procedure for reasonable and prompt handling of complaints received from all holders of units or shares in AIFs, when no investment service is provided to them upon subscription.
Holders of units or shares may file complaints free of charge with the asset management company.
The asset management company shall respond to the complaint within a maximum of two months as of the date of receipt of the said complaint, except in duly justified special circumstances.
They shall implement a system enabling fair and consistent handling of complaints from the holders of units or shares. This system shall be allocated the necessary resources and expertise.
It shall record each complaint and the measures taken to handle it. It shall also implement a complaint monitoring system enabling it, among other things, to identify problems and implement appropriate corrective measures.
Information on the complaint handling procedure shall be made available free of charge to the holders of units or shares.
The complaint handling procedure shall be proportionate to the size and structure of the asset management company.
The asset management company shall establish appropriate procedures and arrangements to ensure that it deals properly with complaints from AIF unit or shareholders and that there are no restrictions on these persons exercising their rights if they reside in another European Union Member State. These measures shall allow AIF unit or shareholders to send a complaint in the official language or one of the official languages of the Member State in which the AIF is marketed and to receive a response in the same language.
The asset management company shall also establish appropriate procedures and arrangements to supply information, at the request of the public.
These provisions shall apply if no investment service is provided upon subscription.
Section 6 - Personal transactions (Article 318-11)
Article 63 of the Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012 supplementing Directive 2011/61/EU of the European Parliament and of the Council with regard to exemptions, general operating conditions, depositaries, leverage, transparency and supervision
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Section 7 - Conflicts of interest (Articles 318-12 à 318-19)
Articles 30 to 36 of the Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012 supplementing Directive 2011/61/EU of the European Parliament and of the Council with regard to exemptions, general operating conditions, depositaries, leverage, transparency and supervision
This Section is applicable to management of French AIFs by asset management companies except, for branches established in other European Union Member States, for AIFs they manage in that Member State.
It is also applicable to branches established in France by management companies or managers.
I. - The asset management company shall take all reasonable steps to identify conflicts of interest that arise in the course of managing AIFs between:
The asset management company, including its managers, employees or any person directly or indirectly linked to the asset management company by control, and the AIF managed by the asset management company or the unit or shareholders in that AIF;
The AIF or the unit or shareholders in that AIF, and another AIF or the unit or shareholders in that other AIF;
The AIF or the unit or shareholders in that AIF, and another client of the asset management company;
The AIF or the unit or shareholders in that AIF, and a UCITS managed by the asset management company or the unit or shareholders in that UCITS; or
Two clients of the asset management company.
The asset management company shall maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps designed to identify, prevent, manage and monitor conflicts of interest in order to prevent them from adversely affecting the interests of the AIFs and their unit or shareholders.
The asset management company shall segregate, within its own operating environment, tasks and responsibilities which may be regarded as incompatible with each other or which may potentially generate systematic conflicts of interest. It shall assess whether their operating conditions may involve any other material conflicts of interest and disclose them to the unit or shareholders of the AIFs.
II. - Where organisational arrangements made by an asset management company to identify, prevent, manage and monitor conflicts of interest are not sufficient to ensure, with reasonable confidence, that risks of damage to the interests of unit or shareholders will be prevented, the asset management company shall clearly disclose the general nature or sources of conflicts of interest to such holders before undertaking business on their behalf, and develop appropriate policies and procedures.
III. - Where the asset management company, on behalf of an AIF, uses the services of a prime broker, the terms shall be set out in a written contract. In particular any possibility of transfer and reuse of AIF assets shall be provided for in that contract and shall comply with the AIF rules or instruments of incorporation. The contract shall provide that the depositary be informed of the contract.
The asset management company shall exercise due skill, care and diligence in the selection and appointment of prime brokers with whom a contract is to be concluded.
When collective investment scheme or investment funds managed by the asset management company or a related company are acquired or subscribed on behalf of an AIF, the investor information document of that AIF must make provision for such a possibility.
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Section 8 - Professional licences (Articles 318-20 à 318-35)
Paragraph 1 - General provisions
The compliance and internal control officer must hold a professional licence issued by the AMF, pursuant to Article 318-29.
The persons referred to in Article 318-56 shall fulfill the function of compliance and internal control officer.
A natural person may perform the function of compliance and internal control officer, on a probationary or temporary basis, without holding the required professional licence, for a maximum period of six months, that can be renewable once.
The function of compliance and internal control officer may only be performed on a probationary or temporary basis with the prior consent of the AMF.
Issuance of a professional license shall require the applicant to compile an application for authorisation, which shall be submitted to the AMF.
The application for authorisation shall be kept on file by the AMF for ten years after the licensee has ceased to perform the functions that gave rise to the issuance of the professional licence.
Where a person provisionally ceases to perform the activity that required a professional licence, such interruption shall not result in withdrawal of the licence.
The person shall be deemed to have permanently ceased to perform the activity that gave rise to the issuance of the license when the interruption exceeds twelve months, except in exceptional cases as assesses by the AMF.
When a person definitively ceases to perform the function for which a professional licence was issued, the licence shall be withdrawn. This withdrawal is performed by the AMF.
The asset management company on behalf of which the licensee is acting informs the AMF promptly when a person definitively ceases the activity as referred to in the previous paragraph.
Whenever an asset management company takes disciplinary measures against a person holding a professional licence because of a breach of their professional obligations, it shall notify the AMF to this effect within one month.
The AMF shall keep a register of professional licences.
It is kept informed of the appointment of the compliance and internal control officer.
The information in the register of professional licences shall be kept on file for ten years after the professional licence has been withdrawn.
Paragraph 2 - Compliance and internal control officer professional licence issuance
The AMF shall issue compliance and internal control officer professional licenses to the persons performing such functions. For this purpose, the AMF shall organise a professional examination under the terms referred to in Articles 318-33 to 318-35.
However, where asset management companies appoint one of their effective managers within the meaning of Article L. 532-9, II, 4° of the Monetary and Financial Code to the function of compliance and internal officer, that person shall hold the relevant professional license. He or she shall not be required to take the examination provided for in the first paragraph.
Before issuing the professional license, the AMF shall verify:
That the relevant natural person is fit and proper, that he is familiar with the professional requirements and capable of performing the functions of compliance and internal control officer.
That pursuant to Article 318-7, II, the asset management company has conducted an internal verification or an examination as provided for in Article 318-9, II, 3 to ensure that the person in question has the minimum knowledge referred to in Article 318-9, II, 1.
That the asset management company complies with Article 318-4.
The AMF may waive the examination requirement for a person who has performed comparable functions with another asset management company having equivalent business activities and organisational structures, provided that person has already passed the examination and that the asset management company planning to appoint him or her has already presented a candidate who passed the examination.
If an asset management company requires compliance and internal control officer professional licenses to be issued to several persons, the AMF shall ensure that the number of license holders is proportionate to the nature and risks of the asset management company's business activities, size and organisational structure.
Asset management companies shall provide precise written definitions of the attributions of each professional license holder.
The examination shall consist of an interview of the professional license applicant by a jury. The applicants shall be presented by the asset management companies on whose behalf they are to perform their functions.
The AMF shall hold the examinations at least twice a year. It shall decide who sits on the jury, set the examination dates and determine the amount of examination fees. This information shall be made known to asset management companies.
The AMF shall collect the examination fees from the asset management companies presenting applicants.
The members of the jury referred to in the first paragraph of Article 318-33 shall be:
A serving compliance officer, chair;
A person holding an operational function in an asset management company;
A member of the AMF staff.
If an applicant considers that a member of the jury has a conflict of interest with regard to him, he or she may ask the AMF to be examined by another jury.
If the jury deems that the conditions referred to in Article 318-30 have been met, it shall propose that the AMF issue a professional license.
However, if the jury considers that the applicant has the necessary qualities to perform the function of compliance and internal control officer, but that the asset management company does not allow him proper independence or does not provide him with adequate resources, the jury may propose that issuance of a professional license be subject to the condition that the asset management company remedies the situation and notifies the AMF of the measures taken to this effect.
If outsourcing of the compliance and internal control officer function is being considered, the jury may be asked for its opinion.
Section 9 - Record keeping (Article 318-36)
Articles 64 to 66 of the Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012 supplementing Directive 2011/61/EU of the European Parliament and of the Council with regard to exemptions, general operating conditions, depositaries, leverage, transparency and supervision
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Section 10 - Annual data sheet (Article 318-37)
Within four and a half months of the close of the financial year, asset management companies shall send the AMF the information specified on a data sheet.
Section 11 - Risk management (Articles 318-38 à 318-43)
Articles 38 to 45 of the Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012 supplementing Directive 2011/61/EU of the European Parliament and of the Council with regard to exemptions, general operating conditions, depositaries, leverage, transparency and supervision
Asset management companies shall functionally and hierarchically separate the functions of risk management from the operating units, including from the functions of portfolio management.
The functional and hierarchical separation of the functions of risk management, pursuant to Article 318-38, shall be examined in accordance with the principle of proportionality, on the understanding that the asset management company shall, in any event, be able to demonstrate that specific safeguards against conflicts of interest allow for the independent performance of risk management activities and that the risk management process satisfies the requirements of this Article and is consistently effective.
The asset management company shall implement adequate risk management systems in order to identify, measure, manage and monitor appropriately all risks relevant to each AIF investment strategy and to which each AIF is or may be exposed.
In particular, the asset management company shall not make exclusive or mechanical use of credit ratings issued by credit ratings agencies within the meaning of Article 3, Paragraph 1, point b of Regulation (EC) n° 1060/2009 of the European Parliament and Council of 16 September 2009 on credit ratings agencies, to assess the creditworthiness of AIF assets.
The asset management company examines the risk management systems, at appropriate intervals and at least once a year, and adapts them if necessary.
Asset management companies shall at least:
Implement an appropriate, documented and regularly updated due diligence process when investing on behalf of the AIF, according to the investment strategy, objectives and risk profile of the AIF;
Ensure that the risks associated with each investment position of the AIF and their overall effect on the AIF's portfolio can be properly identified, measured, managed and monitored on an ongoing basis, including through the use of appropriate stress testing procedures;
Ensure that the risk profile of the AIF shall correspond to the size, portfolio structure and investment strategies and objectives of the AIF as laid down in the AIF rules or instruments of incorporation, prospectus and offering documents.
The asset management company shall set a maximum level of leverage which they may employ on behalf of each AIF they manage as well as the extent of the right to reuse collateral or any guarantee that could be granted under the leveraging arrangement, taking into account, inter alia:
The type of the AIF;
The investment strategy of the AIF;
The sources of leverage of the AIF;
Any other interlinkage or relevant relationships with other financial services institutions, which could pose systemic risk;
The need to limit the exposure to any single counterparty;
The extent to which the leverage is collateralised;
The asset-liability ratio;
The scale, nature and extent of the activity of the asset management company on the markets concerned.
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Section 12 - Liquidity management (Articles 318-44 à 318-46)
Articles 46 to 49 of the Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012 supplementing Directive 2011/61/EU of the European Parliament and of the Council with regard to exemptions, general operating conditions, depositaries, leverage, transparency and supervision
Asset management companies shall, for each AIF that they manage which is not an unleveraged closed-ended AIF, employ an appropriate liquidity management system and adopt procedures which enable them to monitor the liquidity risk of the AIF and to ensure that the liquidity profile of the investments of the AIF complies with its underlying obligations.
Asset management companies shall regularly conduct stress tests, under normal and exceptional liquidity conditions, which enable them to assess the liquidity risk of the AIFs and monitor the liquidity risk of the AIFs accordingly.
Asset management companies shall ensure that, for each AIF that they manage, the investment strategy, liquidity profile and redemption policy are consistent.
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Section 13 - Information transmission on financial contracts (Article 318-47)
Asset management companies shall, for each AIF they manage, send the AMF and update at least once a year, information providing a true image of the types of financial contracts, underlying risks, quantitative limits and methods chosen to estimate the risks related to operations on financial contracts.
The AMF may check that this information is regular and exhaustive and ask for explanations relating to it.
Section 14 - Internal audit (Article 318-48)
Article 62 of the Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012 supplementing Directive 2011/61/EU of the European Parliament and of the Council with regard to exemptions, general operating conditions, depositaries, leverage, transparency and supervision
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Section 15 - Organisation of compliance and internal control functions (Articles 318-49 à 318-57)
Sub-section 1 - Compliance and internal control systems
The compliance and internal control system includes monitoring described in Article 318-50, internal audits and consulting and assistance assignments.
Monitoring includes the compliance function referred to in of Article 61, 2, a of Commission Delegated Regulation (EU) n° 231/2013 of 19 December 2012, the control system referred to in Article 57, 6 of the same Regulation and the control system for compliance with the professional obligations referred to in Article L. 621-15, II of the Monetary and Financial Code and the risk control system provided for in Section 11 of this Chapter.
First-level control shall be exercised by persons in operational functions.
Monitoring shall be conducted through second-level controls to ensure proper execution of first-level controls.
Monitoring shall be performed exclusively, subject to the provisions of Article 318-55, by staff appointed solely to that function.
Sub-section 2 - Compliance and internal control officers
Compliance and internal control officers shall be responsible for the compliance function referred to in Article 61, 2 of Commission Delegated Regulation n° 231/2013 of 19 December 2012, for the monitoring referred to in Article 318-50 and for the internal audits referred to in Article 62 of the same Delegated Regulation.
If an asset management company establishes a separate and independent internal audit function, that function shall be performed by an internal audit manager who is not the same person as the compliance and continuing monitoring officer.
Asset management companies may give responsibility for monitoring, other than compliance monitoring, and responsibility for compliance monitoring to two different people.
When the manager carries out the function of compliance and internal control officer, he or she shall also be responsible for internal audit and monitoring, other than compliance monitoring.
The following persons shall hold professional licenses:
The officer referred to in Article 318-52;
The compliance and monitoring officer referred to in Article 318-53;
The officer for monitoring, other than compliance monitoring, referred to in Article 318-54 and the compliance officer referred to in the said Article, if the two functions are separate.
Employees of asset management companies or employees of other entities in their group may hold professional licenses if the asset management companies present them for the examination.
The AMF shall ensure that the number of professional license holders is proportionate to the nature and the risks of the asset management company's business activities, scale and organisational structure.
The internal audit officer referred to in Article 318-53 shall not hold a professional license.
Asset management companies shall establish a procedure that enables all their employees and all natural persons acting on their behalf to discuss questions they might have about deficiencies they have noted in the actual implementation of compliance obligations with the compliance and internal control officer.
Section 16 - Outsourcing (Articles 318-58 à 318-61)
If asset management companies outsource the execution of critical operational tasks and functions or tasks and functions that are important for the provision of a service or the conduct of business, they shall take reasonable measures to prevent an undue exacerbation of operating risk.
Outsourcing of critical or important operational tasks or functions must not be done in such a way that it materially impairs the quality of internal control and prevents the AMF from verifying that the asset management company complies with all its obligations.
Outsourcing to an extent that makes the asset management company into a letter box entity must be deemed to be in violation of the requirements that the asset management company must comply with to obtain and keep its authorisation.
Outsourcing shall consist of any agreement, in any form, between an asset management company and a service provider under which the service provider takes over a process, service or activity that otherwise would have been performed by the asset management company itself.
I. An operational task or function shall be regarded as critical or important if a defect or failure in its performance would materially impair the asset management company's capacity for continuing compliance with the conditions and obligations of its authorisation or its professional obligations referred to in II of Article L. 621-15 of the Monetary and Financial Code, or its financial performance, or the continuity of its business.
II. - Without prejudice to the status of any other task or function, the following tasks or functions shall not be considered as critical or important:
The provision to the asset management company of advisory services, and other services which do not form part of the investment services of the firm, including the provision of legal advice, the training of personnel, billing services and the security of the asset management company's premises and personnel;
The purchase of standard services, including market information services and the provision of price feeds.
I. - Asset management companies that outsource an operational task or function shall remain fully responsible for complying with all their professional obligations referred to in II of Article L. 621-15 of the Monetary and Financial Code and complying, in particular, with the following conditions:
Outsourcing must not result in the delegation by senior management of its responsibility.
The relationship and obligations of the asset management company towards its clients must not be altered.
The conditions or commitments with which the company must comply in order to be authorised must not be undermined.
II. - Asset management companies shall exercise due skill, care and diligence when entering into, managing or terminating an outsourcing contract for critical or important operational tasks or functions.
In particular, asset management companies must take the necessary steps to ensure that the following conditions are satisfied:
The service provider must have the ability, capacity, and any authorisation required to perform the outsourced tasks or functions reliably and professionally.
The service provider must carry out the outsourced services effectively. To this end, the asset management company must establish methods for assessing the standard of performance of the service provider.
The service provider must properly supervise the carrying out of the outsourced tasks or functions, and adequately manage the risks stemming from outsourcing.
Asset management companies must take appropriate action if it appears that the service provider may not be carrying out the functions effectively and in compliance with the professional obligations referred to in II of Article L. 621-15 of the Monetary and Financial Code applying to them.
Asset management companies must retain the necessary expertise to supervise the outsourced tasks or functions effectively and manage the risks stemming from outsourcing and must supervise those tasks and manage those risks.
The service provider must disclose to the asset management company any development that may have a material impact on its ability to carry out the outsourced tasks or functions effectively and in compliance with the professional obligations referred to in II of Article L. 621-15 of the Monetary and Financial Code applying to them.
The procedures for terminating outsourcing contracts at the initiative of either party must ensure the continuity and the quality of the activities carried out.
The service provider must cooperate with the AMF in connection with the outsourced tasks or functions.
The asset management company, its auditors and the relevant competent authorities must have effective access to data related to the outsourced tasks or functions, as well as to the business premises of the service provider.
The service provider must protect any confidential information relating to the asset management company and its clients.
The asset management company and the service provider must establish and maintain an effective contingency plan for disaster recovery and periodic testing of backup facilities, where that is necessary having regard to the nature of the outsourced task or function.
III. - The respective rights and obligations of asset management companies and service providers shall be clearly defined in a contract.
IV. - Where the asset management company and the service provider are members of the same group, the asset management company may, for the purposes of determining how this Article shall apply, take into account the extent to which it controls the service provider or has the ability to influence its actions.
V. - Asset management companies must provide the AMF, at its request, all information necessary to enable it to supervise the compliance of the performance of the outsourced tasks or functions with the requirements of this Book.
Section 17 - Delegation of AIF management (Article 318-62)
Articles 75 to 82 of the Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012 supplementing Directive 2011/61/EU of the European Parliament and of the Council with regard to exemptions, general operating conditions, depositaries, leverage, transparency and supervision
I. - When an asset management company delegates the management of an AIF, the following conditions shall be met:
It shall notify the AMF of the delegation before the delegation arrangements become effective;
It must be able to justify its entire delegation structure on objective reasons;
The delegate must dispose of sufficient resources to perform the respective tasks and the persons who effectively conduct the business of the delegate must be of sufficiently good repute and sufficiently experienced;
Where the delegation concerns asset management or risk management, it may be conferred only on a person authorised for the purposes of asset management and subject to supervision within the meaning of and as set forth under Article 78 of the Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012 or, if those conditions cannot be met subject to prior approval by the AMF;
Where the delegation concerns asset management or risk management of an AIF that is open to professional investors and is conferred upon a third country undertaking, under the conditions specified in point 4°, cooperation between the AMF and the supervisory authority of the undertaking must be ensured;
The delegation must not prevent the effectiveness of supervision of the asset management company, and, in particular, must not prevent the asset management company from acting, or the AIF from being managed, in the best interests of its unit or shareholders;
The asset management company must be able to demonstrate that the delegate is qualified and capable of undertaking the functions in question, that it was selected with all due care and that the asset management company is in a position to monitor effectively at any time the delegated activity, to give at any time further instructions to the delegate and to withdraw the delegation with immediate effect when this is in the interest of the unit or shareholders of the AIF.
The asset management company shall review the services provided by each delegate on an ongoing basis.
II. - No delegation of portfolio management or risk management shall be conferred upon:
The depositary or a delegate of the depositary;
Any other entity whose interests may conflict with those of the asset management company or the unit or shareholders of the AIF, unless such entity has functionally and hierarchically separated the performance of its portfolio management or risk management tasks from its other potentially conflicting tasks, and the potential conflicts of interest are properly identified, managed, monitored and disclosed to the unit and shareholders of the AIF.
III. - The liability of the asset management company towards the AIF and its unit or shareholders shall not be affected by the fact that it has delegated functions to a third party, or by any further sub-delegation. The asset management company shall not delegate its functions to the extent that it becomes a letter-box entity.
IV. - The delegate may sub-delegate any of the functions delegated to it, provided that the following conditions are met:
The delegating asset management company consented prior to the sub-delegation;
The delegating asset management company notified the AMF before the sub-delegation arrangements become effective;
The conditions set out in Paragraph I are met, on the understanding that all references to the "delegate" are read as references to the "sub-delegate".
V. - No sub-delegation of portfolio management or risk management shall be conferred upon entities referred to in Paragraph II. The relevant delegate shall review the services provided by each sub-delegate on an ongoing basis.
VI. - Where the sub-delegate further delegates any of the functions delegated to it, the conditions set out in Paragraph 4 shall apply mutatis mutandis.
Chapter IV - Conduct of business rules (Articles 319-1 à 319-27)
Section 1 - General provisions (Articles 319-1 à 319-8)
This Chapter shall apply to management of AIFs by asset management companies, except, for branches established in other European Union Member States, for the AIFs they manage in that State.
Pursuant to Article L. 532-21-3 of the Monetary and Financial Code, this Chapter shall also apply to management of French AIFs by branches established in France by management companies.
Pursuant to Article L. 532-30 of the Monetary and Financial Code, this Chapter shall also apply to management of AIFs by branches established in France by managers.
Asset management companies shall ensure that the relevant persons are reminded that they are bound by the obligation of professional confidentiality, subject to the terms and penalties prescribed by law.
For the application of this Chapter, the term "client" shall designate existing and potential clients, including, where relevant, AIFs or their unit holders or shareholders.
Sub-section 1 - Approval of codes of conduct
Where a professional organisation draws up a code of conduct applicable to AIF management, the AMF shall verify whether the code's provisions are consistent with this General Regulation.
The professional organisation may ask the AMF to approve all or part of the code as professional standards.
If, having sought the opinion of the Association Française des Etablissements de Crédit et des Entreprises d'Investissement (AFECEI), the AMF considers that some or all the provisions of such code should be recommended to investment services providers, the AMF shall announce its decision by publishing it on its website.
Sub-section 2 - Primacy of the AIF and its unit holders or shareholders' interest and market integrity
Articles 17 to 23 of the Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012 supplementing Directive 2011/61/EU of the European Parliament and of the Council with regard to exemptions, general operating conditions, depositaries, leverage, transparency and supervision
The asset management company shall:
Act honestly, with due skill, care and diligence and fairly in conducting their activities;
Act in the best interests of the AIFs or the unit and shareholders of the AIFs they manage and the integrity of the market;
Have and employ effectively the resources and procedures that are necessary for the proper performance of their business activities;
Take all reasonable steps to avoid conflicts of interest and, when they cannot be avoided, to identify, manage and monitor and, where applicable, disclose, those conflicts of interest in order to prevent them from adversely affecting the interests of the AIFs and their unit and shareholders and to ensure that the AIFs they manage are fairly treated;
Comply with all regulatory requirements applicable to the conduct of their business activities so as to promote the best interests of the AIFs or the unit and shareholders of the AIFs they manage and the integrity of the market;
Treat all AIF unit or shareholders fairly. No unit or shareholder in an AIF shall obtain preferential treatment, unless such preferential treatment is disclosed in the relevant AIF's rules or instruments of incorporation.
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Asset management companies that market units or shares in AIFs shall comply with the provisions relating to the assessment of the suitability and appropriateness of the service to be provided set out in Section 4 of Chapter IV of Title I of this Book.
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Section 3 - Fees (Articles 319-9 à 319-20)
Articles 24 and 107 of the Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012 supplementing Directive 2011/61/EU of the European Parliament and of the Council with regard to exemptions, general operating conditions, depositaries, leverage, transparency and supervision
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Sub-section 1 - Remuneration policy within the framework of AIF management
I. - When establishing and applying the total remuneration policies, inclusive of salaries and discretionary pension benefits, for those categories of staff referred to in Article L. 533-22-2 of the Monetary and Financial Code, asset management companies shall comply with the following principles in a way and to the extent that is appropriate to their size, internal organisation and the nature, scope and complexity of their activities:
The remuneration policy is consistent with and promotes sound and effective risk management and does not encourage risk-taking which is inconsistent with the risk profiles, rules or instruments of incorporation of the AIFs they manage;
The remuneration policy is in line with the business strategy, objectives, values and interests of the asset management company and the AIFs it manages or the unit and shareholders in such AIFs, and includes measures to avoid conflicts of interest;
The management body of the asset management company, in its supervisory function, adopts and periodically reviews the general principles of the remuneration policy and is responsible for its implementation;
The implementation of remuneration policy is, at least annually, subject to central and independent internal review for compliance with policies and procedures for remuneration adopted by the management body in its supervisory function;
Staff engaged in control functions are compensated in accordance with the achievement of the objectives linked to their functions, independent of the performance of the business areas they control;
The remuneration of the senior officers in the risk management and compliance functions is directly overseen by the remuneration committee;
Where remuneration is performance related, the total amount of remuneration is based on a combination of the assessment of the performance of the individual and of the business unit or AIF concerned and of the overall results of the asset management company. When assessing individual performance, financial as well as non-financial criteria are taken into account;
Assessment of performance is set in a multi-year framework appropriate to the life-cycle of the AIFs managed by the asset management company, in order to ensure that it is based on longer term performance and that the actual payment of performance-based components of remuneration is spread over a period which takes account of the redemption policy of the AIFs it manages and their investment risks;
Guaranteed variable remuneration is exceptional, occurs only in the context of hiring new staff and is limited to the first year;
Fixed and variable components of total remuneration are appropriately balanced and the fixed component represents a sufficiently high proportion of the total remuneration to allow the operation of a fully flexible policy, on variable remuneration components, including the possibility to pay no variable remuneration;
Payments related to the early termination of a contract reflect performance achieved over time and are designed in a way that does not reward failure;
The measurement of performance, when used to calculate individual or collective variable remuneration components, includes a comprehensive adjustment mechanism to integrate all relevant types of current and future risks;
Subject to the legal structure of the AIF and its rules or instruments of incorporation, a substantial portion, and in any event at least 50% of any variable remuneration consists of units or shares of the AIF concerned, or equivalent ownership interests, or share-linked instruments or equivalent non-cash instruments, unless the management of AIFs accounts for less than 50% of the total portfolio managed by the asset management company, in which case the minimum of 50% does not apply.
The instruments referred to in this paragraph shall be subject to an appropriate retention policy designed to align incentives with the interests of the asset management company and the AIFs it manages and the unit or shareholders of such AIFs;
Payment of a substantial portion, and in any event at least 40%, of the variable remuneration component, is deferred over a period which is appropriate in view of the life cycle and redemption policy of the AIF concerned. This portion is fairly proportionate to the nature of the risks of the AIF in question.
The period referred to in the previous paragraph shall be at least three to five years unless the life cycle of the AIF concerned is shorter. The remuneration payable under deferral arrangements vests no faster than on a pro-rata basis.
In the case of a variable remuneration component of a particularly high amount, at least 60% of the amount is deferred;
The variable remuneration, including the deferred portion, is paid or vests only if it is sustainable according to the financial situation of the asset management company as a whole, and justified according to the performance of the business unit, the AIF and the individual concerned.
The total variable remuneration shall generally be considerably reduced where subdued or negative financial performance of the asset management company or of the AIF concerned occurs, taking into account both current compensation and reductions in payouts of amounts previously earned, including through malus or clawback arrangements;
The pension policy is in line with the business strategy, objectives, values and long-term interests of the asset management company and the AIFs it manages.
If the employee leaves the asset management company before retirement, discretionary pension benefits shall be held by the asset management company for a period of five years in the form of instruments defined in point 13. In the case of an employee reaching retirement, discretionary pension benefits shall be paid to the employee in the form of instruments defined in point 13, subject to a five-year retention period;
Staff are required to undertake not to use personal hedging strategies or remuneration- and liability-related insurance to undermine the risk alignment effects embedded in their remuneration arrangements;
Variable remuneration is not paid through vehicles or methods that facilitate the avoidance of the requirements of the legislative and regulatory provisions applicable to asset management companies.
II. - The principles set out in paragraph I shall apply to remuneration of any type paid by the asset management company, to any amount paid directly by the AIF itself, including carried interest, and to any transfer of units or shares of the AIF, made to the benefits of those categories of staff, including senior management, risk takers, control functions and any employee receiving total remuneration that takes them into the same remuneration bracket as senior management and risk takers, whose professional activities have a material impact on their risk profile or the risk profiles of the AIF that they manage.
III. - Asset management companies that are significant in terms of their size or the size of the AIFs they manage, their internal organisation and the nature, the scope and the complexity of their activities shall establish a remuneration committee. The remuneration committee shall be constituted in a way that enables it to exercise competent and independent judgment on remuneration policies and practices and the incentives created for managing risk.
The remuneration committee shall be responsible for the preparation of decisions regarding remuneration, including those which have implications for the risk and risk management of the asset management company or the AIF concerned and which are to be taken by the management body in its supervisory function. The remuneration committee shall be chaired by a member of the management body who does not perform any executive functions in the asset management company concerned. The members of the remuneration committee shall be members of the management body who do not perform any executive functions in the asset management company concerned.
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Sub-section 2 - Other provisions
Asset management companies shall be remunerated for their management of AIFs by a management fee and, if applicable, a proportionate share of subscription and redemption fees or by incidental fees, under the conditions and within the limits set by Articles 319-13 to 319-20 and 422-91. These conditions and limits shall apply whether the fees are charged directly or indirectly.
The management fee referred to in Article 319-12 may include a variable portion tied to the outperformance of the AIF relative to the investment objective, provided that:
It is expressly provided for in the key investor information document or, failing this, in the information document for investors in the AIF;
It is consistent with the investment management objective as set out in the prospectus and the key investor information document or, failing this, in the information document for investors in the AIF;
The share in the outperformance of the AIF allocated to the asset management company must not induce that company to take excessive risk with regard to the investment strategy, investment objective and risk profile set out in the prospectus and the key investor information document or, failing this, in the information document for investors in the AIF.
All fees and commissions paid by the AIF for transactions in the portfolios under management, with the exception of subscription and redemption transactions relating to collective investment scheme, shall be trading costs. They include:
Intermediation costs, taxes and duties included, charged directly or indirectly by third parties that provide:
a) The reception and transmission of orders service and the order execution service for third parties referred to in Article L. 321-1 of the Monetary and Financial Code;
b) The investment decision assistance service;
As appropriate, a turnover commission shared exclusively between the asset management company and the depositary of the AIF.
This turnover commission may also benefit:
a) A company to which the financial management of the portfolio has been delegated;
b) Persons to which the depositary of the AIF has delegated all or part of the responsibility for safekeeping of portfolio assets;
c) An affiliated company conducting only AIF management business, order reception, transmission and execution services, principally on behalf of AIFs managed by the asset management company or by an affiliated company as part of its AIF management activity.
These provisions shall not apply to fees and commissions incurred in connection with advisory and arrangement services, financial engineering, advice on industrial strategy, mergers and acquisitions, or initial public offerings of unlisted securities in which a venture capital fund (fonds de capital investissement), a specialised professional fund or professional venture capital fund has invested.
The sharing of any of the fees or commissions referred to in Point 1 is prohibited unless it would be exclusively and directly of benefit to the AIF. Agreements under which the asset management company shares some of the intermediation fees referred to in Point 1, a, on the occasion of a transaction in a financial instrument shall be prohibited.
The provisions of Article 319-14 shall not apply to fees and commissions for real-estate advice or operations relating to the purchase or sale of the assets referred to in Article L. 214-36, I, 2, a to c of the Monetary and Financial Code in which the assets of a real-estate collective investment undertakings or a professional real-estate collective investment undertakings are invested.
The nature and terms of calculation of these fees and commissions are expressly mentioned in the prospectus and the detailed note of the real-estate collective investment undertakings or professional real-estate collective investment undertakings.
Pursuant to Article 319-14, the sharing of fees or commissions shall be prohibited unless it would be exclusively and directly of benefit to the real-estate collective investment undertakings or the professional real-estate collective investment undertakings. Agreements under which the broker, intermediary or counterparty in a transaction involving one of the assets referred to in Article L. 214-36, I, 2, a to c of the Monetary and Financial Code shares the fees referred to in Point 1° of Article 319-14 or the fees referred to in the first paragraph of this Article shall constitute such sharing of fees and commissions.
Without prejudice to Article 319-13, the income, fees and capital gains generated by AIF management, along with any rights attached thereto, shall belong to the unit and shareholders. The AIF shall be the sole beneficiary of the sharing of management fees and subscription and redemption commissions arising from its investments in collective investment scheme.
The asset management company, the delegate of the asset management company for financial management, the depositary, the delegate of the depositary and the company referred to in Article 319-14, 2, c may receive a share of the income from temporary acquisitions and disposals of securities belonging to the AIF on the terms set out in the prospectus or, failing that, the information document for investors in the AIF.
The prospectus or, failing that, the information document for investors in the AIF may provide for payment of a donation to one or several organisations complying with at least one of the following conditions:
It holds an administrative ruling certifying that it falls under the category of associations exclusively for purposes of assistance, charity, scientific or medical research, or a religious association;
It holds a tax ruling attesting that it is eligible for the scheme of Articles 200 or 238 bis of the French General Tax Code entitling to tax rebates on donations;
3° It is a religious congregation that has been legally recognised by decree further to an opinion issued by the Conseil d'État in compliance with Article 13 of the Law of 1st July 1901.
Asset management companies may enter into written commission-sharing agreements under which the investment services provider providing the order execution service shares the portion of the intermediation fees that it charges for investment decision-making aid services and order execution services with the third party providing such services.
Asset management companies may enter into such agreements provided that they comply with the principles referred to in Articles 319-18 and 319-19.
The intermediation fees referred to in Article 319-14 shall pay for services that are of direct interest to the AIF. These services
are the subject of a written contract.
These fees shall be assessed periodically by the asset management company.
If the asset management company uses investment decision aid and order execution services and if the intermediation fees for the previous year came to more than EUR 500,000, it shall compile a document entitled "Report on Intermediation Fees" that shall be
updated as needed. The report shall specify the terms and conditions on which the asset management company used such investment decision aid and order execution services, along with the breakdown between:
Intermediation fees related to order reception, transmission and execution services;
Intermediation fees related to investment decision aid and order execution services.
The breakdown of costs shall be expressed as a percentage and based on an established method using relevant and objective
criteria. It may be applied to:
Either all the assets in a single category of AIF;
Or any other procedure suited to the method used for applying costs.
If applicable, the "Report on Intermediation Fees" shall specify the percentage of all intermediation fees in the previous year paid to third parties under the terms of the commission sharing agreements referred to in Article 319-17 for the fees referred to in Article 319-14, 1, b.
It shall also give an account of the measures implemented to prevent or deal with any potential conflicts of interest in the
selection of service providers.
This document shall be posted to the asset management company's website, if it has one. The management report of each AIF shall refer expressly to this document. If the asset management company does not have a website, the document shall be included in the management report for each AIF.
The intermediation fees referred to in Article 319-14, 1, b:
Must be directly related to order execution;
Must not cover:
a) The provision of goods or services that correspond to resources that the portfolio management should have for its programme of activity, such as administrative or accounting management, the purchase or leasing of premises, or compensation for staff;
b) The provision of services for which the asset management company receives a management commission.
Where units or shares in collective investment scheme managed by an asset management company are purchased or subscribed by that asset management company or an affiliated company on behalf of an AIF, subscription and redemption commissions shall be prohibited, except for the portion retained by the AIF in which the investment has been made.
Section 4 - Information about AIF management (Articles 319-21 à 319-26)
Article 37 of the Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012 supplementing Directive 2011/61/EU of the European Parliament and of the Council with regard to exemptions, general operating conditions, depositaries, leverage, transparency and supervision
Asset management companies shall draw up a document entitled "Voting Policy", which shall be updated as necessary and sets out the terms and conditions on which they intend to exercise the voting rights attached to the securities held by the AIFs that they manage under paragraphs 1, 2 and 6 of sub-section 2, of paragraph 2 or sub-paragraph 1 of paragraph 1 of sub-section 3, or sub-section 4 of section 2 of Book II, Title I, Chapter IV of the Monetary and Financial Code.
In particular, this document shall describe:
The organisational structure within the asset management company that enables it to exercise such voting rights. It shall specify which bodies within the asset management company are responsible for examining and analysing the resolutions put forward and which bodies are responsible for deciding how the votes shall be cast;
The principles to which the asset management company intends to refer in determining in which cases it will exercise the voting rights. These principles may include holding thresholds that the asset management companies set for taking part in voting on resolutions submitted to general meetings. In such cases, asset management companies shall explain their choice of threshold. These principles may also concern the nationality of the issuing companies whose securities are held by AIFs managed by the asset management company, the investment policy of the AIFs and the use of securities financing transactions by the asset management company;
The principles to which the asset management company intends to refer when exercising voting rights. The asset management company's document shall present its voting policy, heading by heading, corresponding to the types of resolution submitted at general meetings. The headings shall cover, inter alia:
a) Decisions requiring an amendment of the instruments of incorporation;
b) Approval of the financial statements and allocation of any profits or losses;
c) Appointment and dismissal of governing bodies;
d) "Regulated" agreements;
e) Equity security issuance and buyback programmes;
f) Appointment of statutory auditors;
g) Any other specific type of resolution that the asset management company wishes to identify;
A description of procedures to detect, prevent and manage conflicts of interest that might affect the asset management company's independent exercise of voting rights;
An indication of the way in which it customarily exercises voting rights, such as by physically attending general meetings, using proxies without indicating a specific proxy holder, or voting by mail.
This document shall be held at the disposal of the AMF. It may be viewed on the asset management company's website or at its registered office under the terms and conditions specified in the prospectus. It is placed at the disposal, free of charge, of the holders of units or shares in the AIF upon request.
In a report drawn up within four months of the end of its financial year and appended to the management report of the board of directors or executive board, as the case may be, asset management companies shall report on how they have exercised voting rights in the past year.
This report shall specify, inter alia:
The number of companies in which the asset management company exercised voting rights, compared with the total number of companies in which it had voting rights;
The cases in which the asset management company considered that it could not adhere to the principles set out in its voting policy document;
The conflicts of interest that the asset management company had to deal with in exercising voting rights attaching to securities held by the AIFs that it manages.
This report shall be held at the disposal of the AMF. It must be available for viewing on the asset management company's website or at its registered office under the terms and conditions specified in the prospectus.
Where an asset management company has not exercised any voting rights during the financial year, further to the voting policy it has drawn up under Article 319-21, it does not prepare the report referred to in this article but shall ensure that clients and investors can access said voting policy on its website.
At the request of the AMF, asset management companies shall disclose to the AMF how they voted, or whether they abstained from voting, on each resolution and the reasons for those votes or abstentions.
To any AIF unit or shareholder who so requests, asset management companies shall make disclosures available relating to the exercise of voting rights on each resolution submitted to the general meeting of an issuer, whenever the number of that issuer's securities held by the AIF managed by the asset management company reaches or exceeds the holding threshold specified in the voting policy document referred to in Article 319-21.
These disclosures must be available for viewing at the registered office of the asset management company and on its website.
In the annual reports of venture capital funds, specialised professional funds and professional venture capital funds, asset management companies shall report on their practice for the use of voting rights attaching to securities held in the funds.
The measures referred to in Articles 319-21 to 319-23 shall apply for securities held by venture capital funds, specialised professional funds and professional venture capital funds that are traded on a regulated market of a State that is a party to the European Economic Area agreement or on a recognised foreign market.
The diligence referred to in Articles 319-21 to 319-23 shall apply to asset management companies for the Employee Investment Funds (FCPE) they manage, when they have received a delegation to exercise the voting rights attaching to securities held by the funds.
Pursuant to Article L. 621-8-4 of the Monetary and Financial Code, asset management companies shall provide the AMF with data on the composition of the AIFs they manage.
Section 5 - Obligations in the case of offers of financial securities or minibons via a website (Article 319-27)
I. – Asset management companies making offers of financial securities or minibons described in Article L. 223-6 of the Monetary and Financial Code via a website on the terms set out in Article 325-32 must, for each project and prior to any subscription, provide the client with the information supplied by the issuer pursuant to Article 217-1 unless a prospectus has been drafted and approved by the AMF. In the latter case, the prospectus is sent to the client.
II. – These items shall be completed by information on:
The terms for collecting subscription applications and transmitting them to the issuer, and the rules applied in the event of oversubscription;
Detail of the fees charged to the investor and the possibility of obtaining, on request, a description of the services provided to the issuer of the securities to which subscription is being considered, and the related fees;
The risks inherent to the project and, in particular, the risk of total or partial loss of the capital, illiquidity risk and the risk of an absence of valuation.
If the issuer is not the company carrying out the project, asset management companies must provide the client, via their website and prior to any subscription, with the information referred to in Article 217-1 pertaining to the company carrying out the project and, where applicable, to those companies intervening between the company carrying out the project and that making the offer. Information must be provided on any contractual agreements between the abovementioned companies, whenever such agreements exist.
Asset management companies are responsible for checking the consistency, clarity and balance of this information.
To make this information easily accessible, all these items must be written in non-technical language.
III. – All marketing information must contain prominent and easily-accessible reference to the risks inherent to the proposed investments and, in particular, the risk of total or partial loss of capital and illiquidity risk.
IV. – Asset management companies shall ensure that the articles of the company carrying out the project presented to investors comply with the laws and regulations on companies making offers that are not subject to publication of a prospectus and are made via a website.
This provision is applicable to companies intervening between the company carrying out the project and that making the offer.
V. – The provisions of 3° of Article 325-35, the final paragraph of Article 325-36 and the second to last paragraph of Article 325-41 shall apply to asset management companies offering the minibons mentioned in Article L. 223-6 of the Monetary and Financial Code via a website, under the conditions stated in Article 325-32.
Chapter V - Other provisions (Articles 320-1 à 320-25)
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Section 1 - Management of inside information and restrictions to be applied within the asset management companies of aifs (Articles 320-2 à 320-13)
Sub-section 1 - Rules to prevent undue circulation of inside information
Asset management companies shall establish and maintain effective and adequate procedures to control the circulation and use of inside information, as defined in Article 7 of the market abuse regulation (regulation n° 596/2014/EU), with the exception of paragraph 1.c of that same Article, taking account of the activities conducted by the group to which they belong and the organisation adopted by the company. These procedures, referred to as "information barriers", shall provide for:
Identification of business segments, divisions, departments or any other entities likely to possess inside information;
The organisation, in particular physical organisation, implemented so as to separate entities within which the relevant persons referred to in point 2 of Article 1 of Delegated Regulation (EU) n° 231/2013 of the Commission of 19 December 2012 are likely to possess inside information;
The prohibition of disclosure of inside information by the persons possessing it to other persons, except as provided for in Article 10 the market abuse regulation (regulation n° 596/2014/EU) and after informing the compliance and internal control officer;
The conditions in which the asset management company may authorise a relevant person assigned to a given entity to provide assistance to another entity, whenever one of the two entities is likely to possess inside information. The compliance and internal control officer shall be informed whenever the relevant person assists the entity possessing inside information;
The manner in which the relevant person benefiting from the authorisation provided for in 4° is informed of the temporary consequences thereof on the performance of his regular duties.
The compliance and internal control officer shall be informed when this person returns to his regular duties.
Sub-section 2 - Watch list
To ensure compliance with the abstention requirement set out in Articles 8, 10 and 14 of the market abuse regulation (regulation n° 596/2014/EU), asset management companies shall establish and maintain an appropriate procedure for supervising the issuers and financial instruments on which they have inside information.
Such supervision shall cover:
Transactions in financial instruments by the asset management company for its own account;
Personal transactions, as defined in Article 63 of Delegated Regulation (EU) n° 231/2013 of the Commission of 19 December 2012, made by or on behalf of the relevant persons referred to in point 2 of Article 1 of the same Regulation;
To this end, the compliance and internal control officer shall draw up a watch list of the issuers and financial instruments on which the asset management company has inside information.
The relevant entities shall inform the compliance and internal control officer when they believe they possess inside information.
In such case, the issuer or the financial instruments to which the inside information pertains shall be put on the watch list, under the supervision of the compliance and internal control officer.
The watch list shall indicate the reason for adding an issuer or financial instrument to the list and the names of the persons who have access to the inside information.
The provisions of the foregoing paragraph shall not apply where the asset management company, in its capacity as issuer of financial instruments, maintains the list provided for in Article 18 of the market abuse regulation (regulation n° 596/2014/EU).
The relevant entities shall inform the compliance and internal control officer when they believe that information they had previously reported pursuant to the fifth paragraph has ceased to be inside information.
The contents of the watch list are confidential. Dissemination of items in the watch list is restricted to the persons designated by name in the procedures referred to in the first paragraph of Article 320-2.
The asset management company shall exercise its supervision in accordance with the procedures set out in Article 320-3. It shall take appropriate measures whenever it detects an anomaly.
The asset management company shall keep a record on a durable medium of the measures it has taken in the event of a material anomaly or, if it takes no measures, of the reasons for so doing.
Sub-section 3 - Restricted list
I. - Asset management companies shall establish and maintain an appropriate procedure for monitoring compliance with any restrictions that apply to:
Transactions in financial instruments by the asset management company for its own account;
Personal transactions, within the meaning of Article 63 of Delegated Regulation (EU) n° 231/2013 of the Commission of 19 December 2012, made by or on behalf of the relevant persons referred to in point 2 of Article 1 of the same Regulation;
II. - To this end, the compliance and internal control officer shall establish a restricted list. This list includes those issuers or financial instruments in which the authorised provider must restrict its activities, or the activities of relevant persons, because of:
Legal or regulatory provisions to which the asset management company is subject, other than those resulting from the abstention requirements set out in Articles 8, 10 and 14 of the market abuse regulation (regulation n° 596/2014/EU);
The application of undertakings given on the occasion of a financial transaction.
When an asset management company deems it necessary to prohibit or restrict the performance of an investment service, an investment activity or an ancillary service in respect of certain issuers or financial instruments, those issuers and financial instruments shall also be included on the restricted list.
Asset management companies shall determine, based on the restricted list, which entities are subject to the restrictions referred to in Article 320-5 and how those restrictions shall apply.
They shall inform the relevant persons affected by the restrictions of the list and the nature of the restrictions.
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Section 2 - Obligations relating to prevention of money laundering and financing of terrorism (Articles 320-14 à 320-23)
Asset management companies shall have organisational structures and procedures that enable them to comply with the vigilance and disclosure requirements provided for in Book V, Title VI of the Monetary and Financial Code relating to the prevention of money laundering and terrorist financing.
The asset management company shall be subject to the provisions of this section by virtue of the marketing of shares or units in an AIF, either by itself or through an agent, whether it manages the fund or not.
The asset management company shall establish systems for assessing and managing the risks of money laundering and terrorist financing.
It shall set up suitable organisational structures, internal procedures and a supervision system to ensure compliance with the obligations relating to the prevention of money laundering and terrorist financing.
The asset management company shall appoint a member of management to be responsible for implementing the anti-money laundering and terrorist financing system stipulated in Article L. 561-32 of the Monetary and Financial Code.
This manager may delegate some or all of the implementation under the following conditions:
The empowered person must have the necessary authority, resources and skills, and access to all relevant information;
The empowered person must not be involved in the execution of the services and activities under supervision.
The manager shall remain responsible for the delegated activities.
The asset management company shall ensure that the reporting party and correspondent referred to in Articles R. 561-23 and R. 561-24 of the Monetary and Financial Code have access to all the information they need to perform their duties. The company shall provide them with the appropriate tools and resources to comply with their obligations relating to the prevention of money laundering and terrorist financing.
The abovementioned reporting party and correspondent shall also be informed of:
Incidents relating to the prevention of money laundering and terrorist financing that are brought to light by internal control systems.
Shortcomings found by domestic or foreign supervisory authorities in the implementation of provisions relating to the prevention of money laundering and terrorist financing.
In order to establish the systems referred to in Article 320-16, the asset management company shall compile and periodically update a classification of the money laundering and terrorist financing risks involved in the services that it provides. It shall assess its exposure to these risks in accordance with the terms and conditions under which the services are provided and the characteristics of its clients.
For this purpose, it shall consider the information published by the international body for cooperation and coordination in the prevention of money laundering and by the Minister for the Economy.
The asset management company shall draft and implement written internal procedures to ensure compliance with the provisions relating to the prevention of money laundering and terrorist financing. It shall update them periodically.
These internal procedures shall focus on:
Assessing, monitoring and managing the risks of money laundering and terrorist financing;
Implementing vigilance measures, such as:
The requirements and procedures for accepting new clients and occasional clients;
Due diligence for identifying and obtaining knowledge about clients, beneficial owners and the purpose and nature of the business relationship. The frequency of these information updates shall be specified;
The additional vigilance measures referred to in Articles L. 561-10 and L. 561-10-2 of the Monetary and Financial Code and the requirements and procedures for their implementation.
The information to be gathered and retained about the transactions referred to in II of Article L. 561-10-2 of the Monetary and Financial Code;
The vigilance measures to be implemented with regard to any other risks identified by the risk classification referred to in Article 320-19;
The procedures for implementing these vigilance obligations through a third party pursuant to Article L. 561-7 of the Monetary and Financial Code;
The vigilance measures for determining the conditions in which it needs to sign the agreement referred to in Article R. 561-9 of the Monetary and Financial Code.
If the asset management company belongs to a financial group, a mixed group or a financial conglomerate, the procedures for circulating the information needed to organise the prevention of money laundering and terrorist financing within the group as stipulated in Article L. 511-34 of the Monetary and Financial Code, while ensuring that this information is not used for any other purpose than the prevention of money laundering and terrorist financing;
Detecting and dealing with unusual or suspicious transactions;
Implementing the obligation to report and send information to the national financial intelligence unit;
Procedures for sharing information about suspicious transaction reports sent to the national financial intelligence unit, when the entities concerned belong to a group or act on behalf of the same client and in the same transaction as stipulated in Articles L. 561-20 and L. 561-21 of the Monetary and Financial Code;
The record-keeping procedures for the purposes of 2, as well as:
The results of the enhanced examination referred to in Article R. 561-22 of the Monetary and Financial Code;
The information, documents and reports about the transactions referred to in Article L. 561-15 of the Monetary and Financial Code.
The internal procedures shall also specify under what conditions the asset management company applies the provisions of Article L. 561-34 of the Monetary and Financial Code in terms of vigilance and record-keeping with regard to its branches and subsidiaries in other countries.
When it implements its investment policies for its own account or for third parties, the asset management company shall assess the risk of money laundering and terrorist financing and establish procedures to oversee the investment selections made by its employees.
When recruiting employees, the asset management company shall consider the risks relating to the prevention of money laundering and terrorist financing, in accordance with employees' level of responsibility.
At the time of hiring, and periodically thereafter, it shall provide its personnel with information on and training in the applicable regulations and amendments, current money-laundering techniques, prevention and detection measures, and the procedures and terms referred to in Article 320-17. They shall be adapted to the functions performed, members, locations and risk classification.
It shall draft and implement written procedures to ensure compliance with the provisions relating to the prevention of money laundering and terrorist financing.
Section 3 - Miscellaneous provisions (Article 320-24)
Articles 50 to 56 of the Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012 supplementing Directive 2011/61/EU of the European Parliament and of the Council with regard to exemptions, general operating conditions, depositaries, leverage, transparency and supervision
Chapters III, IV and V of this Title and Article 316-2 (V) apply to the relevant persons referred to in point 2 of Article 1 of Delegated Regulation (EU) N° 231/2013 of the Commission of 19 December 2012.
The rules adopted by the asset management company under the provisions of Chapters III, IV and V of this Title and Article 316 2 (V) and applying to the relevant persons referred to in point 2 of Article 1 of Delegated Regulation No. 231/2013 mentioned above shall constitute professional obligations for those persons.
Chapters IV and V of this Title and Article 316-2 (V) shall apply to the relevant persons referred to in point 2 of Article 1 of Delegated Regulation N° 231/2013 mentioned above in branches established in France by management companies or managers.
Section 4 - Handling and monitoring of subscription applications and book (Article 320-25)
When it makes offers of financial securities via a website on the terms set out in Article 325-32, the asset management company may provide a subscription application handling and monitoring service that includes the registration of financial securities in a securities account. This service shall be formalised in an agreement between the asset management company and the mandating issuer setting out in particular the obligations of the asset management company and the fees charged. For this purpose, it shall collect notably the personal data of subscribers and transmit it to the issuer for registration in the records of the latter.
The asset management company shall implement a procedure setting out:
The terms for handling and monitoring subscription applications, notably in the event of oversubscription.
The procedure for registering financial securities in a securities account.
This procedure shall provide for time stamping of the subscription applications on receipt.
The asset management company shall act with diligence and professionalism when processing subscription applications and registering financial securities in a securities account.
It shall keep a record of the service provided on a durable medium.
If the offer is cancelled, it shall inform the client promptly.
Title I ter - Asset management companies of UCITS (Articles 321-1 à 321-152)
I. - The present Title is applicable to asset management companies that are authorised to manage UCITS.
II. - An asset management company may apply for authorisation to provide investment services comprising portfolio management on behalf of a third party or investment advice referred to in 4 and 5 of Article L. 321-1 of the Monetary and Financial Code.
III. - When it is authorised to provide one or more of the investment services referred to in II or when it markets units or shares of UCITS or AIFs in France in accordance with Article 411-129 and Article 421-26, to perform these activities it shall comply with the provisions of this Title as well as the provisions applicable to investment services providers contained in Title I.
IV. - When an asset management company markets financial instruments in accordance with Article L. 533-24-1 of the Monetary and Financial Code, it shall comply with section 2 of Chapter III of Title I.
V. - Unless otherwise provided, asset management companies that are authorised in accordance with Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 and authorised in accordance with Directive 2011/61/EU of the Parliament and of the Council of 8 June 2011 shall cumulatively apply Title I bis and Title I ter of the present Book.
Chapter I - Procedures for authorisation, programme of operations and passport (Articles 321-2 à 321-8)
Section 1 - Authorisation and programme of operations (Articles 321-2 à 321-7)
Sub-section 1 - Authorisation
The authorisation of an asset management company referred to in Article L. 532-9 of the Monetary and Financial Code requires submission to the AMF of an application specifying the scope of the authorisation, together with a file that complies with the model provided for in Article R. 532-10 of the Monetary and Financial Code.
The file shall include a programme of operations for each of the services that the asset management company intends to provide, specifying the conditions in which it expects to provide those services and indicating the type of transactions envisaged and its organisational structure. The programme of operations is supplemented, where necessary, by additional information corresponding to the assets used by the asset management company. The AMF issues an acknowledgement of receipt when it receives this file.
In deciding whether to grant authorisation to an asset management company, the AMF shall review the items in the file referred to in Article 321-2, along with the items set forth in Chapter II of this Title. The AMF may require the applicant to produce any additional information it needs to make its decision. The AMF shall outline the scope of the authorisation.
The AMF shall reach a decision on the application within three months of receiving the file.
It may extend this deadline by up to three months where it considers this necessary due to special circumstances, having notified the asset management company.
For any amendments to the information provided in the asset management company's authorisation file pursuant to Article 321 2, a prior declaration, notification or application for authorisation, as appropriate, is made to the AMF.
On receiving the prior declaration, notification or application for authorisation from the asset management company, the AMF issues a receipt.
In accordance with II of Article L. 532-9-1 of the Monetary and Financial Code, when the asset management company submits an application for authorisation prior to making a material change to the information in its authorisation file, the AMF has one month to notify the company of its rejection or of any restrictions placed on its application.
Should the specific circumstances of the case so justify, the AMF may notify the applicant that this deadline has been extended by up to one month.
The changes are implemented at the end of the one-month assessment period, extended as appropriate.
Sub-section 2 - Withdrawal of authorisation and deregistration
Except in cases where the company requests withdrawal, the AMF, whenever it envisages withdrawing a management company's authorisation pursuant to Article L. 532-10 of the Monetary and Financial Code, shall so inform the company, specifying the reasons for which such decision is envisaged. The company shall have one month from receipt of such notification to submit any observations it may have.
Where the asset management company manages a UCITS established in another European Union Member State or in another State party to the European Economic Area agreement, the AMF consults the competent authorities of the home Member State before withdrawing the authorisation of the management company of the UCITS.
Where the AMF is consulted by the competent authorities of the home Member State of an asset management company that manages a French UCITS, it shall take appropriate measures to safeguard the interests of the UCITS's unit holders or shareholders. These measures may include measures preventing the asset management company from carrying out new transactions on the behalf of the UCITS.
When the AMF decides to withdraw an authorisation, the company concerned shall be notified of the AMF's decision by registered letter with acknowledgement of receipt. The AMF shall inform the public of the withdrawal by inserting notices in newspapers or other publications of its choosing.
The decision shall specify the timetable and method for carrying out the withdrawal. During this period, the company shall be put under the supervision of an administrator designated by the AMF on the basis of his or her skills. The administrator shall be bound by the obligation of professional secrecy. If he or she manages another company, said company may not acquire the clientele directly or indirectly.
During this period, the company may make only such transactions as are strictly necessary to protect its clients' interests. The company shall inform its clients and the custodian(s) of the portfolios under discretionary management of the withdrawal of its authorisation. It shall ask its clients in writing to request transfer of their accounts to another investment services provider, or to request liquidation of their portfolios, or to assume the management thereof themselves. For common funds (FCPs), the AMF shall invite the custodian to appoint another manager.
When the AMF deregisters the company pursuant to Article L. 532-12 of the Monetary and Financial Code, the AMF shall notify the company of its decision in accordance with the conditions stipulated in Article 321-6. The AMF shall inform the public by inserting notices in newspapers or other publications of its choosing.
Section 2 - Passport (Article 321-8)
An asset management company seeking to create and manage a UCITS or to provide investment services under the freedom to provide services or under the right of establishment in another European Union Member State or in another State party to the European Economic Area agreement, shall notify the AMF of its plans in accordance with Articles R. 532-24, R. 532-25, R. 532 28 and R. 532-29 of the Monetary and Financial Code.
Chapter II - Authorisation requirements for asset management companies and for acquiring or increasing an equity interest in an asset management company (Articles 321-9 à 321-22)
Section 1 - Authorisation requirements (Articles 321-9 à 321-14)
The asset management company shall have its registered office in France. It may be incorporated in any form, subject to a review of its constitutive rules to ensure they are consistent with the laws and regulations applicable to the company and provided its accounts are subject to a statutory audit.
I. - The share capital of an asset management company must be at least EUR 125,000 and must be fully paid in cash at least to this minimum amount.
II. - When authorisation is granted and in subsequent financial years, the asset management company must be able to prove at any time that its capital is at least equal to the higher of the two amounts specified in Points 1° and 2° below:
EUR 125,000 plus an amount equal to 0.02 % of assets under management by the asset management company in excess of EUR 250 million.
The total capital requirement shall not exceed EUR 10 million.
The assets included in the calculation of the additional capital requirement referred to in the third paragraph are:
a) French or collective investments, organised as companies, that have delegated the overall management of their portfolio to the asset management company;
b) French or foreign collective investments in the form of funds, managed by the asset management company, including portfolios for which it has delegated management to another entity, but excluding portfolios that it manages on a delegated basis.
Up to 50% of the additional capital requirement may be met by a guarantee given by a credit institution or insurance undertaking having its registered office in another State party to the European Economic Area agreement, or in another State, provided the guarantor is subject to prudential rules that the AMF deems equivalent to those applicable to credit institutions and insurance undertakings having their registered offices in States parties to the European Economic Area agreement.
One-quarter of general operating expenses for the preceding financial year, calculated in accordance with Articles 34 ter to 34 quinter of Commission Regulation (EU) No. 241/2014 of 7 January 2014.
Where an asset management company is also authorised to manage a securitisation vehicle mentioned in I of Article L. 214-167 of the Monetary and Financial Code, it is not subject to the provisions of this section II.
III. - The capital requirement at the time of authorisation shall be calculated on the basis of forecast data.
For subsequent years, the amount of general operating expenses and the total value of portfolio assets used to determine the capital requirement shall be calculated on the basis of the most recent of the asset management company's financial statements for the preceding financial year, interim statement of financial position certified by the statutory auditor, or the data sheet referred to in Article 321-75.
I. - The asset management company's own funds must be invested in liquid assets or assets that can easily be converted into cash in the short term and that do not include speculative positions.
II. - However, if own funds exceed 130% at least of the regulatory own funds mentioned in Article 321-10, the excess portion of this amount may be invested in assets that do not meet the requirements of l, provided that these assets do not create a material risk for the company's regulatory own funds.
The asset management company shall disclose the identities of legal entities or individuals who are direct or indirect shareholders with qualifying holdings as well as the amounts of their holdings. The AMF shall assess the quality of the company's shareholders having regard to the need for sound and prudent management and proper performance of its own supervisory responsibilities. It shall make the same assessment of partners and members in an economic interest grouping.
The asset management company shall be effectively directed by at least two persons of sufficiently good repute and sufficient experience for their duties, so as to ensure sound and prudent management.
At least one of these two persons must be a company officer with the power to represent the company in its dealings with third parties.
The other person may be the chairman of the board of directors or a person specifically empowered by the company's governing bodies or bylaws to direct the company and determine its policies.
The persons who effectively manage the asset management company within the meaning of Article 321-13 shall undertake to inform the AMF without delay of any changes in the situation they declared when they were appointed.
Section 2 - Content of the programme of operations (Articles 321-15 à 321-17)
The asset management company shall have a programme of operations that complies with the provisions of Chapter III.
An asset management company may hold equity interests in companies set up for purposes that represent an extension of its own activities. These holdings shall be compatible with the measures that the asset management company is required to take in order to detect and prevent or manage the conflicts of interest that may arise from these holdings.
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Section 3 - Requirements for acquiring or increasing an equity interest in an asset management company (Articles 321-18 à 321-22)
The AMF shall be notified of any transaction that enables a person acting alone or in concert with other persons, within the meaning of Article L. 233-10 of the Commercial Code, to acquire, increase or decrease or cease owning, directly or indirectly, a qualifying holding in an asset management company. The notice must be given to the AMF by the person or persons concerned before the transaction is executed, if one of the following conditions is met:
The capital or voting rights held by the person(s) exceed or fall below one-tenth, one-fifth, one-third or one-half of the capital or voting rights;
The asset management company becomes or stops being a subsidiary of the person(s) concerned;
The person or persons gain or lose significant influence over the management of the management company as a result of the transaction.
For the purposes of this Chapter:
A “qualifying holding” means, pursuant to sub-paragraph j of Article 2(1) of Directive 2009/65/EC of 13 July 2009, “a direct or indirect holding in a management company which represents 10% or more of the capital or of the voting rights or which makes it possible to exercise a significant influence over the management of the management company in which that holding subsists”;
Voting rights are calculated in accordance with the provisions of Article L. 233-4, points I and IV of Article L. 233-7 and Article L. 233-9 of the Commercial Code;
The capital holding is calculated by adding up, as applicable, the direct holding and any indirect holdings in the capital of the asset management company. Indirect holdings are calculated by multiplying together the fractions held in the capital of each intermediate entity and in the capital of the asset management company;
The fraction of capital or voting rights held by investment firms or credit institutions as a result of underwriting or guaranteed placement of financial instruments, within the meaning of 6-1 or 6-2 of Article D. 321-1 of the Monetary and Financial Code, shall not be counted, as long as these rights are not exercised or used in any other way to influence the issuer's management and provided that they are sold within one year of acquisition;
In the case of an indirect holding, any person likely to acquire, sell or lose a qualifying holding must notify the AMF of this. However, without prejudice to the obligations of the direct holder, the final holder may make notifications for and on behalf of the entities under its control, provided it includes the relevant information on these entities.
Transactions to acquire or increase qualifying holdings are subject to prior authorisation by the AMF under the following conditions:
Within two trading days of receipt of the notice and all the documents required, the AMF shall provide the applicant with written acknowledgement of receipt.
The AMF shall have up to sixty trading days, starting from the date of the written acknowledgement of receipt of the notice, in which to assess the transaction. The written acknowledgement of receipt shall specify the expiry date of the assessment period.
During the assessment period and by the fiftieth trading day thereof at the latest, the AMF may request further information to complete the assessment. This request shall be made in writing and shall specify additional necessary information. Within two trading days of receipt of the further information, the AMF shall send the applicant a written acknowledgement of receipt.
The assessment period shall be suspended from the date of the AMF's request for further information until the receipt of the applicant's response to this request. The suspension shall not last more than twenty trading days. The AMF may make further requests for more information or clarifications, but these requests shall not suspend the assessment period.
The AMF may extend the suspension mentioned in the preceding paragraph to thirty trading days, if the applicant:
a) Is located outside of the European Union or is covered by regulations from outside the Union;
b) Is not subject to monitoring under the terms of European Directives 2006/48/EC, 85/611/EC, 92/49/EEC, 2002/83/EC, 2004/39/EC or 2005/68/EC.
If the AMF decides to object to a planned acquisition after the assessment, it shall give written notice of its decision to the applicant within two trading days and before the end of the assessment period. The AMF shall give the grounds for its decision. The asset management company shall also be notified.
At the request of the applicant, the AMF shall publish the grounds for its decision on the website mentioned in Article R. 532-15-2 of the Monetary and Financial Code.
If the AMF has not made a written objection to the planned acquisition by the end of the assessment period, the acquisition shall be deemed to be approved.
The AMF may set a deadline for completing the planned acquisition and may extend this deadline.
If the AMF receives several notifications under the terms of Article L. 532-9-1 of the Monetary and Financial Code concerning the same asset management company, it shall examine them jointly in such a way as to ensure equal treatment of the applicants.
Notwithstanding the preceding provisions, the AMF shall be notified only of transactions that occur between companies directly or indirectly owned and controlled by the same company and that change the structure of ownership among the existing shareholders of the asset management company, unless such transactions result in the transfer of control or ownership of some or all of the abovementioned rights to persons that are not subject to the laws of a State party to the European Economic Area agreement.
When the number or distribution of voting rights is restricted in relation to the number or distribution of the relevant shares or units under the provisions of legislation or the articles of association, the percentages stipulated in this Chapter and in Article 321-19 shall be calculated in terms of shares or units respectively.
Transactions involving the sale or decrease qualifying holdings in an asset management company mentioned in Article 321-18 shall entail a re-examination of the authorisation in view of the need to ensure sound and prudent management.
The AMF may ask asset management companies for the identity of partners or shareholders who report holdings of less than one twentieth, but more than 0.5%, or the relevant figure set by the articles of association for the purposes of Article L. 233-7 of the Commercial Code.
Chapter III - Organisational requirements (Articles 321-23 à 321-97)
Section 1 - General organisational requirements (Articles 321-23 à 321-29)
I. - Asset management companies must use adequate and appropriate resources, including material, financial and human resources at all times.
II. - They shall establish and maintain effective decision-making procedures and an organisational structure that clearly and in a documented manner specifies reporting lines and allocates functions and responsibilities.
III. - They shall ensure that their relevant persons are aware of the procedures which must be followed for the proper discharge of their responsibilities.
IV. - They shall establish and maintain effective and adequate internal control mechanisms designed to secure compliance with decisions and procedures at all levels of the asset management company.
V. - They shall employ personnel with the skills, knowledge and expertise necessary for the discharge of the responsibilities allocated to them.
VI. - They shall establish and maintain effective and effective internal reporting and communication of information at all relevant levels.
VII. - They shall maintain adequate and orderly records of their business and internal organisation.
VIII. - They shall ensure that the performance of multiple functions by relevant persons does not and is not likely to prevent those persons from discharging any particular function soundly, honestly, and professionally.
IX. - For the purposes of I to VIII above, asset management companies shall take into account the nature, scale, complexity and range of the services that they provide and the businesses that they engage in.
Asset management companies shall establish and maintain effective systems and procedures that are adequate to safeguard the security, integrity and confidentiality of information, taking into account the nature of the information in question.
Asset management companies shall establish and maintain effective business continuity plans aimed to ensure, in the case of an interruption to their systems and procedures, the preservation of essential data and functions, and the maintenance of their UCITS management activity, or, where that is not possible, the timely recovery of such data and functions and the timely resumption of their activities.
Asset management companies shall establish and maintain effective accounting policies and procedures that enable them, at the request of the AMF, to deliver in a timely manner financial reports which reflect a true and fair view of their financial position and which comply with all applicable accounting standards and rules.
Asset management companies shall monitor and, on a regular basis, to evaluate the adequacy and effectiveness of their systems, internal control mechanisms and other arrangements established in accordance with Articles 321-23 to 321-26, and to take appropriate measures to address any deficiencies.
The annual financial statements of the asset management company must be certified by a statutory auditor. Within six months of the end of the financial year, asset management companies shall file copies of their balance sheet, income statement and the notes to the financial statements, along with their annual management reports and notes, the statutory auditors' general and special reports with the AMF. If applicable, the companies shall also produce consolidated financial statements.
The asset management company shall:
Ensure that the accounting procedures referred to in Article 321-26 are applied so that unit holders and shareholders in the UCITS are protected;
Establish appropriate procedures to ensure the proper and accurate valuation of the assets and liabilities of the UCITS, as consistent with the applicable rules referred to in Article L. 214-17-1 of the Monetary and Financial Code;
Ensure compliance with Articles 411-24 to 411-33.
Section 2 - Compliance system (Articles 321-30 à 321-33)
Sub-section 1 - General provisions
Asset management companies shall establish and maintain appropriate operational policies, procedures and measures to detect any risk of non-compliance with the professional obligations referred to in II of Article L. 621-15 of the Monetary and Financial Code and the subsequent risks and to attenuate those risks.
For the purposes of the preceding paragraph, asset management companies shall take into account the nature, scale, complexity and range of the businesses that they engage in.
I. - Asset management companies shall establish and maintain an effective compliance function that operates independently and has the responsibility to monitor and, on a regular basis, assess the adequacy and effectiveness of policies, procedures and measures implemented for the purposes of Article 321-30, and actions taken to remedy any deficiency in compliance of asset management company and the relevant persons with their professional obligations referred to in II of Article L. 621-15 of the Monetary and Financial Code.
II. - In this Title, a relevant person is any person who is:
A manager, member of the board of directors, the supervisory board, or the executive board, managing director or deputy managing director, or any other company officer or tied agent of the asset management company referred to in Article L. 545-1 of the Monetary and Financial Code;
A manager, member of the board of directors, the supervisory board, or the executive board, managing director or deputy managing director, or any other company officer of any tied agent of the asset management company;
An employee of the asset management company or of a tied agent of the asset management company;
A natural person that is seconded to and placed under the authority of the asset management company or of a tied agent of the asset management company and that takes part in the management of a collective investment scheme by the asset management company;
A natural person who takes part, under a delegation of authority to manage a collective investment scheme, in the investment asset management company's management of such a scheme.
Asset management companies shall ensure that the following conditions are met to enable the compliance function to perform its tasks properly and independently:
The compliance function must have the necessary authority, resources and expertise and access to all relevant information;
A compliance and internal control officer must be appointed and must be responsible for this function and for reporting as to compliance, including the report referred to in Article 321-36.
The relevant persons involved in the compliance function are not involved in the performance of the services and activities that they monitor;
The method for determining the remuneration of the relevant persons involved in the compliance function must not compromise their objectivity and must not be likely to do so.
However, asset management companies shall not be required to comply with Points 3° or 4° if they are able to demonstrate that, in view of the nature, scale, complexity and range of the businesses that they engage in, the requirements under Points 3° or 4° are not proportionate and that their compliance function continues to be effective.
Sub-section 2 - Appointment and responsibilities of the compliance and internal control officer
The compliance and internal control officer referred to in Point 2° of Article 321-32 shall hold a professional license issued under the conditions defined in Section 8 of this Chapter.
Senior management shall apprise the board of directors, the supervisory board or, failing that, the body responsible for supervision, if such a body exists, of the appointment of the compliance and internal control officer.
Section 3 - Responsibilities of senior management and supervisory bodies (Articles 321-34 à 321-36)
For the purposes of this Section, the supervisory body shall be the board of directors, the supervisory board or, failing that, the body responsible for supervision of senior management referred to in Article L. 532-9 of the Monetary and Financial Code, if such a body exists,.
The responsibility for ensuring that asset management companies comply with their professional obligations stipulated in II of Article L. 621-15 of the Monetary and Financial Code shall lie with senior management and, where appropriate, with the supervisory body.
More specifically, senior management and, where appropriate, the supervisory body, shall periodically assess and review the effectiveness of the policies, systems and procedures that the asset management company has established to comply with its professional obligations and take the appropriate measures to remedy any deficiencies.
The asset management company shall ensure that its senior management:
a) is responsible, with regard to each UCITS and managed by the asset management company, for implementing the general investment policy set forth in the SICAV's prospectus, rules or articles of association, as the case may be;
b) oversees the approval of investment strategies for each managed UCITS;
c) is responsible for ensuring that the asset management company has a permanent and effective compliance function, within the meaning of Article 321-31, even if this function is performed by a third party;
d) ensures and verifies on a periodic basis that the general investment policy, the investment strategies and the risk limits of each managed UCITS are properly and effectively implemented and complied with, even if the risk management function is performed by third parties;
e) approves and reviews on a periodic basis the adequacy of the internal procedures for undertaking investment decisions for each UCITS, so as to ensure that such decisions are consistent with the approved investment strategies;
f) approves and reviews on a periodic basis the risk management policy and arrangements, processes and techniques for implementing that policy, as referred to in Article 321-78, including the risk limit system for each managed UCITS;
g) in application of Article L. 621-8-4 of the Monetary and Financial Code, informs the AMF immediately of any incidents that could lead to a loss or gain for the asset management company, a cost linked to its civil or criminal liability, an administrative sanction or reputational damage and resulting from non-compliance with Articles 321-23 to 321-26, of an amount that exceeds 5% of its regulatory capital. Under the same conditions, they shall also inform the AMF of any event preventing the asset management company from meeting the requirements of its authorisation. They shall provide the AMF with an incident report indicating the nature of the incident, the measures implemented after it happened and the initiatives taken to prevent similar incidents from taking place in the future.
Asset management companies shall ensure that senior management receives frequent compliance, risk control and periodic control reports at least once a year specifying if the appropriate measures have been taken in the event of deficiencies.
Asset management companies shall also ensure that its supervisory body, if such a body exists, receives periodic written reports on the same topics.
These reports give information about the implementation of investment strategies and internal procedures for approving the investment decisions referred to in items b to e of Article 321-35.
Section 4 - Verification of the knowledge of specified persons (Articles 321-37 à 321-39)
I.- The asset management company shall ensure that natural persons acting on its behalf have the minimum qualification as well as a sufficient level of knowledge.
II. - It verifies that the persons carrying out one of the following functions can prove they have the minimum level of knowledge set forth in Point 1° of II of Article 321-39:
a) asset manager, within the meaning of Article 321-38;
b) compliance and internal control officer, within the meaning of Article 321-53;
III. - The asset management company shall not carry out the verification provided for in II with regard to persons employed as at 1 July 2010. Persons having passed one of the examinations referred to in Point 3° of II of Article 321-39 shall be deemed to have the minimum knowledge required to perform their duties.
IV. - To conduct the verification referred to in II, asset management company has six months from the date on which the employee starts to perform one of the above functions. However, where the employee has been taken on under a work/study contract, as provided in Articles L. 6222-1 and L. 6325-1 of the labour code, the asset management company may not conduct such verification. If it decides to hire the employee when his or her training period finishes, the asset management company shall ensure that he or she has the minimum qualification as well as a sufficient level of knowledge as referred to in I, at the latest by the end of the contract training period.
The asset management company shall ensure that any employee whose minimum knowledge has not yet been verified is appropriately supervised.
An asset manager is any person authorised to take investment decisions in connection with the management of one or more UCITS.
I. - The AMF has formed a Financial Skills Certification Board.
The Financial Skills Certification Board issues opinions at the request of the AMF concerning certification of the professional knowledge of natural persons acting under the authority or on behalf of asset management companies and performing one of the functions referred to in II of Article 321-37;
When rendering opinions, the Financial Skills Certification Board considers the possibility of establishing equivalencies with similar schemes abroad.
II. - Further to an opinion of the Financial Skills Certification Board, the AMF:
Determines the content of the minimum knowledge to be acquired by natural persons acting under the authority or on behalf of an asset management company and performing one of the functions referred to in II of Article 321-37. It shall publish that content;
Sees to it that the minimum knowledge content is updated;
Determines and verifies the arrangements for the examinations that validate acquisition of the minimum knowledge;
Certifies examinations for a two-year period within three months of the filing of applications.
This deadline shall be extended as necessary until requests for further information are met.
Certification can be renewed for a three-year period.
The AMF shall charge an application fee when applications for certification are filed. The AMF shall determine the amount of this fee.
III. - The Financial Skills Certification Board has at least seven members:
One AMF representative;
At least four members named by the AMF on the basis of their professional skills, after consulting with the main professional associations representing investment services providers;
Two independent persons named by the AMF and skilled in the fields of education or vocational training in finance.
The Financial Skills Certification Board chooses one of its members as chairman.
The members of the Financial Skills Certification Board are appointed for a renewable three-year term.
The AMF publishes the list of members.
IV. - The Financial Skills Certification Board shall draw up bylaws, approved by the AMF.
V. - Members are of the Financial Skills Certification Board receive no remuneration.
Section 5 - Complaint handling (Articles 321-40 à 321-41)
Asset management companies shall establish and maintain operational an effective and transparent procedure for reasonable and prompt handling of complaints received from all holders of units or shares in a UCITS if no investment service is provided to them when they subscribe.
Such holders of units or shares can file complaints free of charge with the asset management company.
Asset management companies shall respond to the complaint within a maximum of two months from the date of receipt of the complaint, except in duly justified exceptional circumstances.
They shall implement an equal and consistent procedure for handling complaints from holders of units or shares. This procedure shall be allocated the necessary resources and expertise.
Asset management companies shall record each complaint and the measures taken to handle it. They shall also implement a complaint monitoring system enabling them to identify problems and implement the appropriate corrective measures.
Information on the complaint handling procedure shall be made available to holders of units or shares free of charge.
The complaint handling procedure shall be proportionate to the size and structure of the asset management company.
Asset management companies shall take measures in accordance with Article 411-138 and establish appropriate procedures and arrangements to ensure that they deal properly with complaints from all holders of units or shares in a UCITS and that there are no restrictions on these persons exercising their rights if they reside in another European Union Member State or State party to the European Economic Area agreement. These measures shall allow holders of units or shares in a UCITS to send a complaint in the official language or one of the official languages of the Member State in which the UCITS is sold and to receive a response in the same language.
Asset management companies shall also establish appropriate procedures and arrangements to supply information, at the request of the public or, where the asset management company manages a UCITS established in another European Union Member State or State party to the European Economic Area agreement, of the competent authorities of the home Member State of that UCITS.
These provisions apply if no investment service is provided upon subscription.
Section 6 - Personal transactions (Articles 321-42 à 321-45)
I. - For the purposes of this Title, "personal transaction" shall refer to a transaction carried out by or on behalf of a relevant person where at least one of the following criteria is met:
The relevant person is acting outside of the scope of his functions;
The transaction is carried out on behalf of one of the following persons: the relevant person, any person with whom he has a family relationship or close links, a person whose relationship with the relevant person is such that the relevant person has a material direct or indirect in the outcome of the trade, other than the payment of a fee or commission for the execution of the trade.
II. - A person with a family relationship with the relevant person means any of the following:
The spouse of the relevant person or the partner of the relevant person under the terms of a civil solidarity pact;
Children over whom the relevant person holds parental authority or resident in his household, or who are his permanent wards;
Any other relative of the relevant person resident in his household for at least one year on the date of the personal transaction concerned.
III. - A situation in which a person has close links with the relevant person shall mean a situation where natural or legal persons are linked:
By an equity holding, meaning a direct holding or a holding through a controlled entity of 20% or more of the voting rights or the share capital of a company;
Or by control, meaning the relationship between a parent company and a subsidiary, in any of the cases referred to in Article L. 233-3 of the Commercial Code or a similar relationship between any natural or legal person and an undertaking, any subsidiary undertaking of a subsidiary undertaking also being considered a subsidiary of the parent undertaking which is at the head of those undertakings.
A situation where two or more natural or legal persons are permanently linked to one and the same person by a control relationship shall also be regarded as constituting a close link between such persons.
Asset management companies shall establish and maintain effective and adequate arrangements aimed at preventing the following activities in the case of any relevant person, or person acting on behalf of a relevant person, who is involved in activities that may give rise to a conflict of interest, or who has access to inside information defined in Article 7 of Regulation (EU) no. 596/2014 of the European Parliament and of the Council of 16 April 2014 or to other confidential information relating to clients or transactions with or for clients by virtue of the performance of his functions within the asset management company:
Entering into a personal transaction that meets at least one of the following criteria:
a) The transaction is prohibited by the provisions of Regulation (EU) no. 596/2014 of the European Parliament and of the Council of 16 April 2014;
b) The transaction involves the misuse or improper disclosure of inside or confidential information;
c) The transaction conflicts or is likely to conflict with the asset management company's professional obligations referred to in II of Article L. 621-15 of the Monetary and Financial Code.
Advising or procuring, other than in the proper course of the relevant person's function, any other person to enter into a transaction in financial instruments which, if it were a personal transaction of the relevant person, would be covered by III of Article 321-107;
Disclosing, other than in the proper course of his employment, any information or opinion to any other person if the relevant person knows, or reasonably ought to know, that as a result of that disclosure that other person will or would be likely to take either of the following steps:
a) Entering into a transaction in financial instruments which, if it were a personal transaction of the relevant person, would be covered by III of Article 321-107;
b) Advising or procuring another person to enter into such a transaction.
For the purposes of the provisions of Article 321-43, asset management companies must specifically ensure that:
All the relevant persons referred to in Article 321-43 are aware of the restrictions on personal transactions, and of the measures decided by the asset management company in connection with personal transactions and disclosure for the purposes of Article 321-43;
The asset management company is informed promptly of any personal transaction entered into by a relevant person referred to in the first paragraph of Article 321-43, either by notification of any such transaction or by other procedures enabling the asset management company to identify such transactions;
If the asset management company has entered into an outsourcing contract, it must ensure that the service provider to which the task or function has been outsourced keeps a record of personal transactions entered into by any relevant person and is able to provide such information to the asset management company promptly on request.
A record is kept of the personal transaction notified to the asset management company or identified by it. The record shall also mention any authorisation or prohibition in connection with the transaction.
Articles 321-43 and 321-44 shall not apply to the personal transactions in units or shares in a collective investment scheme, provided that the relevant person or any other person on whose behalf the transactions are executed is not involved in the management of such scheme.
The foregoing provision shall not apply to the collective investment schemes governed by Article L. 214-154 of the Monetary and Financial Code, or to the schemes referred to in Articles L. 214-144 to L. 214-147 ibid. that rely on the waiver provided for in III of Article R. 214-193 ibid.
Section 7 - Conflicts of interest (Articles 321-46 à 321-52)
Sub-section 1 - Principles
The asset management company shall take all reasonable measures to detect conflicts of interest that arise in the course of providing management of UCITS:
Either between itself, relevant persons, or any person directly or indirectly linked to the asset management company by control, on the one hand, and its clients, on the other hand;
Or between two UCITS.
This Section is applicable to all collective investment schemes managed by the asset management company.
In order to detect conflicts of interest that could damage a UCIT' interests for the purposes of Article 321-46, the asset management company shall at least take into account the possibility that the persons referred to in Article 321-46 might find themselves in one of the following situations, whether as a result of providing management of a UCITS or other activities:
The asset management company or that person is likely to make a financial gain or avoid a financial loss, at the expense of the UCITS;
The asset management company or that person has an interest in the outcome of a service provided to a client or a UCITS, or of a transaction carried out on behalf of the client or the UCITS, which is distinct from the UCITS' interest in that outcome;
The asset management company or that person has a financial or other incentive to favour the interest of another client or a group of clients or a UCITS over the interest of the UCITS to whom the service is being provided;
The asset management company or that person carries on the same business for the UCITS as the client;
The asset management company or that person receives or will receive from a person other than the UCITS an inducement in relation to a service provided to the UCITS in any form whatsoever, other than the commissions or fees usually charged for such service.
Sub-section 2 - Conflicts of interest policy
Asset management companies shall establish and maintain an effective conflicts of interest policy, set out in writing and appropriate to their size and organisation and to the nature, scale and complexity of their business.
Where an asset management company is a member of a group, its conflicts of interest policy must also take into account any circumstances, of which it is or should be aware, that may give rise to a conflict of interest as a result of the structure and business activities of the other members of the group.
I. - The conflicts of interest policy established in compliance with Article 321-48 must specifically:
Identify, with reference to the asset management company's collective asset management activities, the circumstances which constitute or may give rise to a conflict of interest entailing a material risk of damage to the interests of the UCITS or one or more clients when providing management of a UCITS;
Specify procedures to be followed and measures to be adopted in order to manage such conflicts.
II. - The procedures and measures provided for in Point 2° shall be designed to ensure that relevant persons engaged in different business activities involving a conflict of interest of the kind specified in Point 1° carry on those activities at a level of independence appropriate to the size and activities of the asset management company and of the group to which it belongs, and to the materiality of the risk of damage to clients' interests.
The procedures to be followed and measures to be adopted shall include such of the following as are necessary and appropriate for the asset management company to ensure the requisite degree of independence:
Effective procedures to prevent or control the exchange of information between relevant persons engaged in activities involving a risk of a conflict of interest where the exchange of that information may damage the interests of one or more clients;
Separate supervision of relevant persons whose principal functions involve carrying out activities on behalf of, or providing services to, clients whose interests may conflict, or who otherwise represent different interests that may conflict, including those of the asset management company;
Elimination of any direct links between the remuneration of relevant persons principally engaged in one activity and the remuneration of, or revenues generated by, other relevant persons principally engaged in another activity, where a conflict of interest is likely to arise in relation to those activities;
Measures to prevent or limit any person from exercising inappropriate influence over the way in which a relevant person carries out his activities;
Measures to prevent or control the simultaneous or sequential involvement of a relevant person in separate activities other than collective asset management where such involvement may impair the proper management of conflicts of interest;
Measures to ensure that a relevant person may only provide paid advisory services in that capacity and on behalf of the asset management company to companies issuing the securities held by the UCITS under the company's management or the securities that it plans to acquire, regardless of whether it is the company concerned or the UCITS under management that pays for those services.
If the adoption or the practice of one or more of those measures and procedures does not ensure the requisite degree of independence, asset management companies shall adopt such alternative or additional measures and procedures as are necessary and appropriate for those purposes.
The asset management company shall keep and regularly update a log of the collective asset management activities carried out by it or on its behalf where a conflict of interest entailing a material risk of damage to the interests of a UCITS or one or more clients has arisen or, in the case of ongoing activities, is likely to arise.
Sub-section 3 - Disclosure to holders of units or shares
Where the organisational or administrative arrangements made by the asset management company for the management of conflicts of interest are not sufficient to ensure with reasonable confidence that the risk of damage to the interest of the UCITS or its unit holders or shareholders will be prevented, the senior management or other competent internal body of the asset management company shall be promptly informed in order for them to take any necessary decision to ensure that in any case the asset management company acts in the best interests of the UCITS and of its unit holders or shareholders.
Unit holders or shareholders in the UCITS shall be informed, using a durable medium, of the decision taken by the asset management company.
When collective investment schemes or third country investment funds managed by the asset management company or by an affiliated company are purchased or subscribed on behalf of a UCITS, the prospectus of this UCITS must provide for this possibility.
Section 8 - Professional licences (Articles 321-53 à 321-68)
Sub-section 1 - General provisions
The compliance and internal control officer must hold a professional licence issued by the AMF, pursuant to Article 321-62.
The persons referred to in Article 321-91 shall fulfill the function of compliance and internal control officer.
A natural person may perform the function of compliance and internal control officer, on a probationary or temporary basis, without holding the required professional licence, for a maximum period of six months, that can be renewable once.
The function of compliance and internal control officer may only be performed on a probationary or temporary basis with the prior consent of the AMF.
Issuance of a professional license shall require the applicant to compile an application for authorisation, which shall be submitted to the AMF.
The application for authorisation shall be kept on file by the AMF for ten years after the licensee has ceased to perform the functions that gave rise to the issuance of the professional licence.
Where a person provisionally ceases to perform the activity that required a professional licence, such interruption shall not result in withdrawal of the licence.
When a person definitively ceases to perform the function for which a professional licence was issued, the licence shall be withdrawn. This withdrawal is performed by the AMF.
The asset management company on behalf of which the licensee is acting informs the AMF promptly when a person definitively ceases the activity as referred to in the previous paragraph.
Whenever an asset management company takes disciplinary measures against a person holding a professional licence because of a breach of their professional obligations, it shall notify the AMF to this effect within one month.
The AMF shall keep a register of professional licences.
It is kept informed of the appointment of the compliance and internal control officer.
The information in the register of professional licences shall be kept on file for ten years after the professional licence has been withdrawn.
Sub-section 2 - Compliance and internal control officer professional licence issuance
The AMF shall issue compliance and internal control officer professional licenses to the persons performing such functions. For this purpose, the AMF shall organise a professional examination under the terms referred to in Articles 321-66 to 321-68.
However, where asset management companies appoint one of their effective managers within the meaning of Article L. 532-9, II, 4° of the Monetary and Financial Code to the function of compliance and internal officer, that person shall hold the relevant professional license. He or she shall not be required to take the examination provided for in the first paragraph.
Before issuing the professional license, the AMF shall verify:
That the relevant natural person is fit and proper, that he is familiar with the professional requirements and capable of performing the functions of compliance and internal control officer.
That pursuant to Article 321-37, II, the asset management company has conducted an internal verification or an examination as provided for in Article 321-39, II, 3 to ensure that the person in question has the minimum knowledge referred to in Article 321-39, II, 1.
That the asset management company complies with Article 321-32.
The AMF may waive the examination requirement for a person who has performed comparable functions with another asset management company having equivalent business activities and organisational structures, provided that person has already passed the examination and that the asset management company planning to appoint him or her has already presented a candidate who passed the examination.
If an asset management company requires compliance and internal control officer professional licenses to be issued to several persons, the AMF shall ensure that the number of license holders is proportionate to the nature and risks of the asset management company's business activities, size and organisational structure.
Asset management companies shall provide precise written definitions of the attributions of each professional license holder.
The examination shall consist of an interview of the professional license applicant by a jury. The applicants shall be presented by the asset management companies on whose behalf they are to perform their functions.
An AMF instruction shall specify the examination programme and procedures.
The AMF shall hold the examinations at least twice a year. It shall decide who sits on the jury, set the examination dates and determine the amount of examination fees. This information shall be made known to asset management companies.
The AMF shall collect the examination fees from the asset management companies presenting applicants.
The members of the jury referred to in the first paragraph of Article 321-66 shall be:
A serving compliance officer, chair;
A person holding an operational function in an asset management company;
A member of the AMF staff.
If an applicant considers that a member of the jury has a conflict of interest with regard to him, he or she may ask the AMF to be examined by another jury.
If the jury deems that the conditions referred to in Article 321-63 have been met, it shall propose that the AMF issue a professional license.
However, if the jury considers that the applicant has the necessary qualities to perform the function of compliance and internal control officer, but that the asset management company does not allow him proper independence or does not provide him with adequate resources, the jury may propose that issuance of a professional license be subject to the condition that the asset management company remedies the situation and notifies the AMF of the measures taken to this effect.
If outsourcing of the compliance and internal control officer function is being considered, the jury may be asked for its opinion.
Section 9 - Record keeping (Articles 321-69 à 321-74)
I.
Asset management companies shall make appropriate arrangements for suitable electronic systems so as to permit a timely and proper recording of the information referred to in II concerning each portfolio transaction.
They shall ensure a high level of security during the electronic data processing as well as integrity and confidentiality of the recorded information, as appropriate.
II. - They shall ensure that, for each portfolio transaction relating to the UCITS, a record of information which is sufficient to reconstruct the details of the order and the executed transaction is produced without delay.
The record referred to in the above paragraph shall include:
a) the name or designation of the UCITS and of the person acting on behalf of the UCITS;
b) the details necessary to identify the UCITS in question;
c) the quantity;
d) the type of the order or transaction;
e) the price;
f) for orders, the date and exact time of the transmission of the order and name or other designation of the person to whom the order was transmitted, or for transactions, the date and exact time of the decision to deal and execution of the transaction;
g) the name of the person transmitting the order or executing the transaction;
h) where applicable, the reasons for the revocation of the order;
i) for executed transactions, the identification of the counterparty and of the execution venue, within the meaning of Article 321-110.
III.
Asset management companies shall ensure that the entity placed in charge of centralising subscription and redemption orders for shares or units of the UCITS pursuant to Article L. 214-13 of the Monetary and Financial Code is able to record promptly and correctly all the information relating to the subscription and redemption orders referred to in II of Article 411-65.
Asset management companies shall ensure a high level of security during the electronic processing of the data referred to in the above paragraph as well as integrity and confidentiality of the recorded information.
Asset management companies shall retain the records referred to in Article L. 533-8 and in 5 of Article L. 533-10 of the Monetary and Financial Code for at least five years.
If the asset management company's authorisation is revoked, the AMF may require said company to retain all the relevant records for the five-year period stipulated in the first paragraph.
The AMF may, in exceptional circumstances, require asset management companies to retain any or all those records for longer periods, to the extent justified by the nature of the instrument or transaction, if that is necessary to enable it to exercise its supervisory functions.
Where the UCITS is managed by a new asset management company, arrangements shall be made such that records for the past five years are accessible to that company.
The records shall be retained in a medium that allows the storage of information in a way accessible for future reference by the AMF, and in such a form and manner that the following conditions are met:
The AMF must be able to access them readily and to reconstitute each key stage of the handling of each transaction;
It must be possible for any corrections or other amendments, and the contents of the records prior to such corrections or amendments, to be easily ascertained;
It must not be possible for the records otherwise to be manipulated or altered.
Asset management companies shall make arrangements under conditions that comply with laws and regulations for recording telephone conversations:
Of traders of financial instruments within the meaning of Article 312-21;
Of relevant persons, other than traders, who are involved in business relationships with clients, whenever the compliance officer deems it necessary in view of the amounts involved and the risks incurred with regard to the orders.
However, the asset management company may specifically empower traders who are likely to carry out a trade in a financial instrument outside of the usual business hours and away from the usual site of the department to which they report. It shall establish a procedure setting the conditions for such trades, so that they are executed with the required security.
The purpose of recording telephone conversations shall be to facilitate monitoring to ensure that transactions are lawful and that they comply with clients' instructions
The compliance and internal control officer may listen to the recordings of telephone conversations made pursuant to Article 321-72. If the compliance and internal control officer does not himself listen to the recording, it may not be listened to without his agreement or the agreement of a person designated by him.
The persons referred to in Article 321-72, whose telephone conversations may be recorded, shall be notified of the conditions under which they are able to listen to the relevant recordings.
The retention period for telephone recordings required under this Regulation shall be at least six months. It must not be more than five years.
Asset management companies shall retain information about the monitoring and assessments referred to in I of Article 321-31 in accordance with the requirements referred to in Article 321-71.
Section 10 - Annual data sheet (Article 321-75)
Within four and a half months of the close of the financial year, asset management companies shall send the AMF the information specified on the data sheet.
Section 11 - Risk management (Articles 321-76 à 321-81)
The following terms shall have the following meanings for the purposes of this Section:
"counterparty risk" means the risk of loss for the UCITS resulting from the fact that the counterparty to the transaction or to a contract may default on its obligations prior to the final settlement of the transaction's cash flow;
"liquidity risk" means the risk that a position in the portfolio cannot be sold, liquidated or closed out at limited cost in an adequately short time frame and that the ability of the UCITS to comply at any time with the provisions of the third paragraph of Article L. 214-7 or Article L. 214-8 of the Monetary and Financial Code is thereby compromised;
"market risk" means the risk of loss for the UCITS resulting from fluctuation in the market value of positions in the CIS portfolio attributable to changes in market variables, such as interest rates, foreign exchange rates, equity and commodity prices, or an issuer's creditworthiness;
"operational risk" means the risk of loss for the UCITS resulting from inadequate internal processes and failures in relation to people and systems of the asset management company or from external events, and includes legal and documentation risk and risk resulting from the trading, settlement and valuation procedures operated on behalf of the UCITS;
"board of directors" means the board of directors, executive board or any equivalent body of the asset management company.
Sub-section 1 - Risk management policy and risk measurement
I. – The asset management company shall establish and maintain a permanent risk management function.
II. - The permanent risk management function shall be hierarchically and functionally independent from operating units.
However, the asset management company may derogate from this obligation where the derogation is appropriate and proportionate in view of the nature, scale diversity and complexity of its business and of the UCITS it manages.
The asset management company shall be able to demonstrate that appropriate safeguards against conflicts of interest have been adopted so as to allow an independent performance of risk management activities and that its risk management process satisfies the requirements of Article L. 533-10-1 du Monetary and Financial Code.
III. - The permanent risk management function shall:
a) implement the risk management policy and procedures;
b) ensure compliance with the UCITS risk limit system, including statutory limits concerning global exposure and counterparty risk in accordance with Articles 411-71-1 to 411-83;
c) provide advice to the board of directors as regards the identification of the risk profile of each managed UCITS;
d) provide regular reports to the board of directors and, where it exists, the supervisory function, on:
i) the consistency between the current levels of risk incurred by each managed UCITS and the risk profile agreed for that UCITS;
ii) the compliance of each managed UCITS with relevant risk limit systems;
iii) the adequacy and effectiveness of the risk management process, indicating in particular whether appropriate remedial measures have been taken in the event of any deficiencies;
e) provide regular reports to the senior management outlining the current level of risk incurred by each managed UCITS any actual or foreseeable breaches to their limits, so as to ensure that prompt and appropriate action can be taken;
f) review and support, where appropriate, the arrangements and procedures for the valuation of OTC derivatives as referred to in Article 411-84.
IV. - The permanent risk management function shall have the necessary authority and access to all relevant information necessary to fulfil the tasks set out in III.
I. - Asset management companies shall establish, implement and maintain an adequate and documented risk management policy which identifies the risks to which the UCITS they manage are or might be exposed to.
In particular, the asset management company shall not solely or mechanistically rely on credit ratings issued by credit rating agencies as defined in Article 3(1)(b) of Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies for assessing the creditworthiness of the assets of UCITS.
II. - The risk management policy shall comprise such procedures as are necessary to enable the asset management company to assess for each UCITS it manages the exposure of that UCITS to market, liquidity and counterparty risks, and the exposure of the UCITS to all other risks, including operational risks, which may be material for each UCITS portfolio it manages.
III. - The risk management policy shall address at least the following:
a) the techniques, tools and arrangements that enable them to comply with the obligations set out in Articles 321-81, 411-72 and 411-73;
b) the allocation of responsibilities within the asset management company pertaining to risk management.
IV. - Asset management companies shall ensure that the risk management policy referred to in I states the terms, contents and frequency of reporting of the risk management function referred to in Article 321-77 to the board of directors and to senior management and, where appropriate, to the supervisory function.
V. - For the purposes of this article, asset management companies take into account the nature, scale and complexity of their business and the UCITS they manage.
Asset management companies shall establish, implement and maintain a risk management policy and procedures that are efficient, appropriate and documented, making it possible to identify the risks relating to their business, processes and systems, and, where needed, to determine the level of risk they can tolerate.
The asset management company shall assess, monitor and periodically review:
a) the adequacy and effectiveness of the risk management policy and of the arrangements, processes and techniques referred to in Articles 321-81, 411-72 and 411-73;
b) the level of compliance by the asset management company with the risk management policy and with arrangements, processes and techniques referred to in Articles 321-81, 411-72 and 411-73
c) the adequacy and effectiveness of measures taken to address any deficiencies in the performance of the risk management process or shortcomings in these arrangements and procedures, including any misconduct by persons concerned by the requirements of these arrangements or procedures.
Sub-section 2 - Risk management processes, counterparty risk exposure and issuer concentration
I. - Asset management companies shall adopt adequate and effective arrangements, processes and techniques in order to:
a) measure and manage at any time the risks which the UCITS they manage are or might be exposed to;
b) ensure compliance with limits applicable to UCITS concerning global exposure and counterparty risk, in accordance with Articles 411-72 and 411-73 and Articles 411-82 to 411-83.
Those arrangements, processes and techniques shall be proportionate to the nature, scale and complexity of the business of the asset management companies and of the UCITS they manage and be consistent with the risk profile of these UCITS.
II. - For the purposes of I, asset management companies shall take the following actions for each UCITS they manage:
a) put in place such risk measurement arrangements, processes and techniques as are necessary to ensure that the risks of taken positions and their contribution to the overall risk profile are accurately measured on the basis of sound and reliable data and that the risk measurement arrangements, processes and techniques are adequately documented;
b) conduct, where appropriate, periodic back-tests in order to review the validity of risk measurement arrangements which include model-based forecasts and estimates;
c) conduct, where appropriate, periodic stress tests and scenario analyses to address risks arising from potential changes in market conditions that might adversely impact the UCITS they manage;
d) establish, implement and maintain a documented system of internal limits concerning the measures used to manage and control the relevant risks for each UCITS taking into account all risks which may be material to the UCITS as referred to in Article 321-76 and ensuring consistency with the risk-profile of the UCITS;
e) ensure that the current level of risk complies with the risk limit system as set out in d) for each UCITS;
f) establish, implement and maintain adequate procedures that, in the event of actual or anticipated breaches to the risk limit system of the UCITS, result in timely remedial actions in the best interests of unit holders or shareholders.
III. - Asset management companies shall use an appropriate liquidity risk management process for each UCITS they manage.
This procedure shall enable them in particular to ensure that all the UCITS they manage comply at all times with the requirement set out in the third paragraph of Article L. 214-7 or Article L. 214-8 of the Monetary and Financial Code.
Where appropriate, investment services providers companies shall conduct stress tests which enable assessment of the liquidity risk of the UCITS under exceptional circumstances.
IV. - Investment services providers shall ensure that for each UCITS they manage the liquidity profile of the investments of the UCITS is appropriate to the redemption policy laid down in the fund rules or the instruments of incorporation or the prospectus.
V. - Investment services providers shall ensure that the UCITS is able at all times to respond to all the payment and delivery obligations to which they committed themselves when concluding a derivative instrument.
VI. - The risk management procedure shall enable asset management companies to satisfy at all times with the requirements referred to in V.
Section 12 - Transmission of information on derivative instruments (Article 321-82)
Asset management companies shall deliver to the AMF and update on at least an annual basis, reports containing information which gives a true and fair view of the types of derivative instruments used for each managed UCITS, the underlying risks, the quantitative limits and the methods which are chosen to estimate the risks associated with the derivative transactions.
The AMF may review the regularity and completeness of this information and ask for explications about it.
Section 13 - Internal audit (Article 321-83)
Asset management companies, where appropriate and proportionate in view of the nature, scale, complexity and range of their business, shall establish and maintain an effective internal audit function which is separate and independent from their other functions and activities and which has the following responsibilities:
To establish and maintain an effective audit plan to examine and evaluate the adequacy and effectiveness of the asset management company's systems, internal control mechanisms and arrangements;
To issue recommendations based on the result of work carried out in accordance with 1°;
To verify compliance with those recommendations;
To provide reports on internal audit issues in accordance with Article 321-36.
Section 14 - Organisation of compliance and internal control functions (Articles 321-84 à 321-92)
Sub-section 1 - Compliance and internal control systems
The compliance and internal control systems shall include a monitoring system as described in Article 321-85 and internal audits as described in Article 321-83.
The monitoring system shall include the compliance monitoring system referred to in I of Article 321-31, the monitoring system referred to in Article 321-27 and the risk management system provided for in Articles 321-76 to 321-81.
First-level control shall be exercised by persons in operational functions.
Monitoring shall be conducted through second-level controls to ensure proper execution of first-level controls.
Monitoring shall be performed exclusively, subject to the provisions of Article 321-90, by staff appointed solely to that function.
Sub-section 2 - Compliance and internal control officers
The compliance and internal control officers shall be responsible for the compliance function referred to in I of Article 321-31, the monitoring system referred to in Article 321-85 and the internal audits referred to in Article 321-83.
If an asset management company establishes a separate and independent internal audit function for the purposes of Article 321-83, that function shall be performed by an internal audit manager who is not the same person as the compliance and continuing monitoring officer.
Asset management companies may give the responsibility for monitoring, other than compliance monitoring, and the responsibility for compliance monitoring to two different people.
When the manager carries out the function of compliance and internal control officer, he shall also be responsible for internal audit and monitoring, other than compliance monitoring.
The following persons shall hold professional licenses:
The compliance and internal control officer referred to in Article 321-87;
The compliance and monitoring manager referred to in Article 321-88;
The manager for monitoring, other than compliance monitoring, referred to in Article 321-89 and the compliance officer referred to in the said Article, if the two functions are separate.
Employees of asset management companies or employees of another entity in their group may hold professional licenses if the asset management companies present them for the examination.
The AMF shall ensure that the number of professional license holders is proportionate to the nature and the risks of the asset management company's business activities, scale and organisational structure.
The internal audit manager referred to in Article 321-88 shall not hold a professional license.
Asset management companies shall establish a procedure that enables all their employees and all natural persons acting on their behalf to discuss questions they have about deficiencies that they have noted in the actual implementation of compliance obligations with the compliance and internal control officer.
Section 15 - Outsourcing (Articles 321-93 à 321-96)
If asset management companies outsource the execution of critical operational tasks and functions or tasks and functions that are important for the provision of a service or the conduct of business, they shall take reasonable measures to prevent an undue exacerbation of operating risk.
Outsourcing of critical or important operational tasks or functions must not be done in such a way that it materially impairs the quality of internal control and prevents the AMF from verifying that the asset management company complies with all its obligations.
Outsourcing to an extent that makes the asset management company into a letter box entity must be deemed to be in violation of the requirements that the asset management company must comply with to obtain and keep its authorisation.
Outsourcing shall consist of any agreement, in any form, between an asset management company and a service provider under which the service provider takes over a process, service or activity that otherwise would have been performed by the asset management company itself.
I. An operational task or function shall be regarded as critical or important if a defect or failure in its performance would materially impair the asset management company's capacity for continuing compliance with the conditions and obligations of its authorisation or its professional obligations referred to in II of Article L. 621-15 of the Monetary and Financial Code, or its financial performance, or the continuity of its business.
II. - Without prejudice to the status of any other task or function, the following tasks or functions shall not be considered as critical or important:
The provision to the asset management company of advisory services, and other services which do not form part of the investment services of the firm, including the provision of legal advice, the training of personnel, billing services and the security of the asset management company's premises and personnel;
The purchase of standard services, including market information services and the provision of price feeds.
I. - Asset management companies that outsource an operational task or function shall remain fully responsible for complying with all their professional obligations referred to in II of Article L. 621-15 of the Monetary and Financial Code and complying, in particular, with the following conditions:
Outsourcing must not result in the delegation by senior management of its responsibility.
The relationship and obligations of the asset management company towards its clients must not be altered.
The conditions or commitments with which the company must comply in order to be authorised must not be undermined.
II. - Asset management companies shall exercise due skill, care and diligence when entering into, managing or terminating an outsourcing contract for critical or important operational tasks or functions.
In particular, asset management companies must take the necessary steps to ensure that the following conditions are satisfied:
The service provider must have the ability, capacity, and any authorisation required to perform the outsourced tasks or functions reliably and professionally.
The service provider must carry out the outsourced services effectively. To this end, the asset management company must establish methods for assessing the standard of performance of the service provider.
The service provider must properly supervise the carrying out of the outsourced tasks or functions, and adequately manage the risks stemming from outsourcing.
Asset management companies must take appropriate action if it appears that the service provider may not be carrying out the functions effectively and in compliance with the professional obligations referred to in II of Article L. 621-15 of the Monetary and Financial Code applying to them.
Asset management companies must retain the necessary expertise to supervise the outsourced tasks or functions effectively and manage the risks stemming from outsourcing and must supervise those tasks and manage those risks.
The service provider must disclose to the asset management company any development that may have a material impact on its ability to carry out the outsourced tasks or functions effectively and in compliance with the professional obligations referred to in II of Article L. 621-15 of the Monetary and Financial Code applying to them.
The procedures for terminating outsourcing contracts at the initiative of either party must ensure the continuity and the quality of the activities carried out.
The service provider must cooperate with the AMF in connection with the outsourced tasks or functions.
The asset management company, its auditors and the relevant competent authorities must have effective access to data related to the outsourced tasks or functions, as well as to the business premises of the service provider.
The service provider must protect any confidential information relating to the asset management company and its clients.
The asset management company and the service provider must establish and maintain an effective contingency plan for disaster recovery and periodic testing of backup facilities, where that is necessary having regard to the nature of the outsourced task or function.
III. - The respective rights and obligations of asset management companies and service providers shall be clearly defined in a contract.
IV. - Where the asset management company and the service provider are members of the same group, the asset management company may, for the purposes of determining how this Article shall apply, take into account the extent to which it controls the service provider or has the ability to influence its actions.
V. - Asset management companies must provide the AMF, at its request, all information necessary to enable it to supervise the compliance of the performance of the outsourced tasks or functions with the requirements of this Book.
Section 16 - Delegation management of UCITS (Article 321-97)
When the asset management company delegates the management of a UCITS, it shall be bound by the following conditions:
It shall inform the AMF about the mandate without delay. Where the asset management company manages a UCITS in another European Union Member State or State party to the European Economic Area agreement, the AMF sends the information without delay to the competent authorities of the home Member State of the UCITS in question;
Delegation shall not prevent the effectiveness of the AMF's supervision over the delegating asset management company and, in particular, must not prevent the management company from acting, or the UCITS from being managed in the best interests of its unit holders or shareholders;
Financial management can only be delegated to a person authorised for the purpose of asset management; the delegation must be in accordance with the investment allocation criteria laid down periodically by the delegating asset management company.
For the purposes of this point, the following are considered authorised for the purpose of asset management:
a) Asset management companies authorised to manage UCITS or AIFs;
b) Investment services providers authorised to provide portfolio management services on behalf of third parties;
c) Entities equivalent to those referred to in a) and b) which are authorised in a State that is party to the European Economic Area agreement;
d) Entities equivalent to those referred to in a) and b) which are authorised in a State that is not party to the European Economic Area agreement;
Financial management cannot be delegated to a person established in a State that is not party to the European Economic Area agreement except in the conditions specified in point 3° and provided that an effective cooperation has been entered into between the AMF and the supervisory authority of that State;
The mandate shall not be likely to generate conflicts of interest; delegation of financial management to the depositary is prohibited;
The asset management company has implemented measures enabling its senior management to effectively monitor at all times the entity to which management has been delegated;
The mandate must not prevent the persons who conduct the business of the asset management company from giving further instructions to the entity to which functions are delegated at any time or from withdrawing the mandate with immediate effect when this is in the interest of unit holders or shareholders of the UCITS;
The entity to which management is delegated must be qualified and capable of undertaking the delegated functions;
The prospectus for the UCITS shall list the functions that the AMF has allowed the asset management company to delegate in accordance with this article.
The liability of the asset management company or the depositary shall not be affected by delegation by the management company of any functions to third parties.
The management company shall not delegate its functions to the extent that it becomes a letter-box entity.
The asset management company shall maintain the resources and expertise needed to effectively supervise the activities undertaken by third parties under an agreement with them, notably as regards management of the risk associated with that agreement.
Chapter IV - Conduct of business rules (Articles 321-98 à 321-135)
Section 1 - General provisions (Articles 321-98 à 321-106)
This Chapter is applicable to management of UCITS by asset management companies except, for branches established in other European Union Member States or States that are parties to the European Economic Area agreement, for UCITS they manage in these States.
Pursuant to the final sub-paragraph of Article L. 532-20-1 of the Monetary and Financial Code, this Chapter shall also apply to the management of French UCITS by the branches established in France of asset management companies authorised in other European Union Member State or State party to the European Economic Area agreement.
Asset management companies shall ensure that relevant persons are reminded that they are bound by the obligation of professional confidentiality, subject to the terms and penalties prescribed by law.
For the purposes of this Chapter, the term "client" shall designate existing and potential clients, which includes, where relevant, UCITS or their unit holders or shareholders.
Sub-section 1 - Approval of codes of conduct
Where a professional organisation draws up a code of conduct applicable to management of a UCITS, the AMF shall verify whether the code's provisions are consistent with this General Regulation.
The professional organisation may ask the AMF to approve all or part of the code as professional standards.
If, having sought the opinion of the Association Française des Etablissements de Crédit et des Entreprises d'Investissement (AFECEI), the AMF considers that some or all the provisions of such code should be recommended to investment services providers, the AMF shall announce its decision by publishing it on its website.
Sub-section 2 - Primacy of the UCITS' interest and market integrity
Asset management companies shall act honestly, fairly and professionally, with due skill, care and diligence, in the best interests of UCITS and unit holders or shareholders and the integrity of the market. More specifically, they shall comply with all the rules pertaining to the organisation and operation of the regulated markets and multilateral trading facilities that they use.
Investment services providers shall:
ensure that the unit holders and shareholders of the same UCITS are treated fairly;
refrain from placing the interests of any group of unit holders or shareholders above the interests of any other group of unit holders or shareholders;
apply appropriate policies and procedures for preventing for preventing malpractices that might reasonably be expected to affect the stability and integrity of the market;
ensure that fair, correct and transparent pricing models and valuation systems are used for the UCITS they manage, in order to comply with the duty to act in the best interests of the unit holders and shareholders. Management companies must be able to demonstrate that the portfolios of UCITS have been accurately valued;
act in such a way as to prevent undue costs being charged to the UCITS and its unit holders or shareholders;
ensure a high level of diligence in the selection and ongoing monitoring of investments, in the best interests of UCITS and the integrity of the market;
ensure they have adequate knowledge and understanding of the assets in which the UCITS are invested;
establish written policies and procedures on due diligence and implement effective arrangements for ensuring that investment decisions on behalf of the UCITS are carried out in compliance with the objectives, investment strategy and risk limits of these UCITS;
when implementing their risk management policy, and where it is appropriate after taking into account the nature of a foreseen investment, to formulate forecasts and perform analyses concerning the investment's contribution to the UCITS portfolio composition, liquidity and risk and reward profile before carrying out the investment. The analyses must only be carried out on the basis of reliable and up-to-date information, both in quantitative and qualitative terms.
Asset management companies shall demonstrate all the necessary skill, caution and diligence when entering into, managing and terminating agreements with third parties in connection with risk management activities. Before entering into such agreements, asset management companies shall take the necessary measures to ensure that the third party has the necessary skills and capabilities to carry on its risk management activity reliably, professionally and effectively.
Asset management companies shall establish methods for continuous assessment of the quality of the services supplied by third parties.
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Section 2 - Handling and executing orders (Articles 321-107 à 321-115)
Sub-section 1 - General provisions
I. – Asset management companies shall comply with the following requirements for the execution of orders:
They shall ensure that orders on behalf of UCITS are registered and routed rapidly and accurately;
They shall transmit or execute orders rapidly in their order of arrival, unless the nature of the order or prevailing market conditions do not make this possible, or the interests of the UCITS call for a different action;
II. - Where asset management companies are given the task of supervising or organising the settlement of an executed order, they shall make all reasonable arrangements to ensure that the UCITS' financial instruments or funds received in settlement of the executed order are rapidly and correctly allocated to the account of the UCITS concerned.
III. - Asset management companies must not misuse information about client orders pending execution and they shall be required to take all reasonable measures to prevent misuse of such information by any of the relevant persons referred to in Article 321-31.
IV. - Asset management companies shall define the planned allocation of the orders they give beforehand. As soon as they learn that they orders have been executed, they shall transmit to the UCITS depositary exact instructions for the allocation of the orders executed to the beneficiaries. This allocation shall be final.
I. - Asset management companies must not group client orders with orders passed on behalf of UCITS or with transactions for their own account prior to transmission or execution, unless the following conditions are met.
The grouping of orders and transactions is unlikely to be detrimental overall for any of the clients or UCITS whose orders have been included;
An order allocation policy has been established and is effectively applied to ensure by means of sufficiently specific procedures an equitable allocation of grouped orders and transactions, explaining how, in each case, the order quantities and prices determine the allocations and the treatment of partially executed orders.
II. - Where an asset management company groups an order with one or more other client orders or orders passed on behalf of other UCITS and the grouped order is partially executed, the company shall allocate the corresponding transactions in accordance with its order allocation policy referred to in 2° of I.
I.- Any asset management company that has grouped a transaction for its own account with one or more client orders or orders passed on behalf of UCITS shall refrain from allocating the corresponding transactions in a way that is detrimental to a client or a UCITS.
II. - In cases where an asset management company groups a client order or an order passed on behalf of a UCITS with a transaction for its own account and the grouped order is partially executed, the client or the UCITS shall have the priority for the allocation of the corresponding transactions rather than the asset management company.
However, if the asset management company is able to demonstrate reasonably that, without the grouping of orders, it would not have been able to execute the order on such advantageous terms, or even at all, it may then allocate the transaction for its own account proportionately, in accordance with its order allocation policy referred to in 2° of I of Article 321-108.
Sub-section 2 - Best execution obligation
For the purposes of I of Article L. 533-22-2-2 of the Monetary and Financial Code, asset management companies executing orders on behalf of UCITS shall take account of the following criteria to determine the relative importance of the factors referred to in I of the said Article:
The characteristics of the order concerned;
The characteristics of the financial instruments covered by the order;
The characteristics of the execution venues to which the order may be routed;
The objectives, investment policy and risks specific to the UCITS and listed in the prospectus or, where such is the case, its fund rules or instruments of incorporation.
For the purposes of this Sub-section, "execution venue" shall mean a trading platform, a systematic internaliser, a market maker, another liquidity provider, or an entity that performs similar tasks in a country that is not party to the European Economic Area agreement.
Asset management companies shall be required to provide holders of shares or units in the UCITS with the following information about their execution policy in good time, prior to the provision of services:
The relative importance that the asset management company attributes to the factors referred to in I of Article L. 533-22-2-2 of the Monetary and Financial Code based on the criteria referred to in Article 321-110 or the process by which the relative importance of these criteria is determined;
A list of the execution venues in which the asset management company has the most confidence for meeting its obligation to take all reasonable measures to obtain the best execution of the orders passed on behalf of UCITS on a consistent basis.
Asset management companies shall supervise the effectiveness of their arrangements for order execution and their policy on this matter in order to detect any deficiencies and to remedy them as appropriate.
In particular, they shall periodically verify whether the execution systems stipulated under their order execution policies obtain the best possible result for the UCITS or whether they need to modify their execution arrangements.
Asset management companies shall notify holders of shares or units in the UCITS of any material changes in their order execution arrangements or policies.
Asset management companies shall conduct an annual review of their order execution arrangements and policies.
Such a review must also be conducted whenever a material change occurs affecting the asset management company's ability to continue obtaining best execution for the orders passed on behalf of UCITS on a consistent basis using the execution venues stipulated under its order execution policy.
Sub-section 3 - Obligations of UCITS asset management company
I. - When they transmit for execution orders resulting from their decisions to trade financial instruments on behalf of UCITS that they manage to other entities, asset management companies shall comply with the obligation referred to in Article 321-100 to act in the best interest of the UCITS that they manage.
II. - Asset management companies shall take the measures referred to in III, IV and V to comply with I.
III. - Asset management companies shall take all reasonable measure to obtain the best possible results for for the UCITS that they manage, taking into account the measures referred to in Article L. 533-22-2-2 of the Monetary and Financial Code. The relative importance of these factors shall be determined with reference to the criteria defined in Article 321-110.
IV. - Asset management companies shall establish and implement policies that enable them to comply with the obligation referred to in III. Such policies shall select the entities to which orders for each class of instruments are transmitted for execution. The selected entities must have order execution mechanisms that enable the asset management companies to comply with their obligations under the terms of this Article when they transmit orders to that entity for execution. Asset management companies shall provide unit holders or shareholders in UCITS that they manage with appropriate information about their policies developed for the purposes of this paragraph. This information shall be included in the management report.
V. - Asset management companies shall monitor the effectiveness of the policies established for the purposes of IV on a regular basis, especially with regard to the quality of the execution provided by the entities selected under their policies.
Where appropriate, they shall remedy any deficiencies brought to light.
In addition, asset management companies shall be required to conduct an annual policy review. Such a review must also be conducted each time a material change occurs that has an effect on an asset management company's ability to continue obtaining best execution for the UCITS that it manages.
VI. - This Article shall not apply when an asset management company also executes orders resulting from its investment decisions. In this case, the provisions of Article L. 533-22-2-2 of the Monetary and Financial Code and Sub-section 2 of this Section shall apply.
An asset management company shall draw up and implement a policy for selecting and assessing the entities that provide it with the services referred to in (b) of Point 1° of Article 321-119, having regard to criteria related inter alia to the quality of the investment research produced.
It shall provide the holders of shares or units in the UCITS it manages, with suitable information, posted on its website, about the policy it has adopted in accordance with the first paragraph. The management report for each UCITS shall refer explicitly to this policy.
If the asset management company does not have a website, this policy shall be described in the management report for each UCITS.
Section 3 - Inducements (Articles 321-116 à 321-125)
Asset management companies shall be deemed to be acting honestly, fairly and professionally in accordance with the best interests of a unit holder or shareholder of a UCITS if, in relation to management of a UCITS, they pay, provide or receive the following fees, commissions or non-monetary benefits:
a fee, commission or non-monetary benefit paid or provided to or by a unit holder or shareholder of a UCITS or to or by a person on behalf of the unit holder or shareholder of a UCITS;
a fee, commission or non-monetary benefit paid or provided to or by a third party or a person acting on behalf of that third party, where the following conditions are satisfied:
a) the unit holder or shareholder of a UCITS is clearly informed of the existence, nature and amount of the fee, commission or benefit or, where the amount cannot be ascertained, the method of calculating that amount;
b) this disclosure is made in a manner that is comprehensive, accurate and understandable, prior to the management of a UCITS;
c) asset management companies may disclose the essential terms of the arrangements relating to the fees, commissions or non-monetary benefits in summary form, provided that they undertake to disclose further details at the request of the unit holder or shareholder of a UCITS and provided they honour that undertaking; the payment of the fee or commission, or the provision of the non-monetary benefit, must be designed to enhance the quality of the relevant service to the unit holder or shareholder of a UCITS and not impair compliance with the asset management company's duty to act in the best interests of the unit holder or shareholder of a UCITS;
Proper fees which enable or are necessary for the management of a UCITS, such as custody costs, settlement and exchange fees, regulatory levies or legal fees, and which, by their nature, cannot give rise to conflicts with the asset management company's duty to act honestly, fairly and professionally in accordance with the best interests of unit holders or shareholders of a UCITS.
Asset management companies shall be remunerated for their management of UCITS by a management fee and, if applicable, a proportionate share of subscription and redemption fees or by incidental fees, under the conditions and within the limits set by Articles 321-118 to 321-124 and 411-130 or 422-91. These conditions and limits shall apply whether the fees are charged directly or indirectly.
The management fee referred to in Article 321-116 may include a variable portion tied to the outperformance of the UCITS relative to the investment objective, provided that:
It is expressly provided for in the key investor information document of the UCITS;
It is consistent with investment management objective set forth in the prospectus and the key investor information document of the UCITS;
The share of outperformance of the UCITS allocated to the asset management company must not induce that company to take excessive risk with regard to the investment strategy, investment objective and risk profile set forth in the prospectus and the key investor information document of the UCITS.
All fees and commissions paid by the UCITS for transactions in portfolios under management, with the exception of subscription and redemption transactions relating to collective investment schemes or investment funds of third countries, shall be trading costs. They include:
Intermediation costs, taxes and duties included, charged directly or indirectly by third parties that provide:
a) Order reception and transmission services and order execution services on behalf of third parties referred to in Article L. 321-1 of the Monetary and Financial Code;
b) Investment decision aid services and order execution services;
If applicable, a turnover commission shared exclusively between the asset management company and the custodian of the UCITS.
This turnover commission may also benefit:
a) A company to which the financial management of the portfolio has been delegated;
b) Persons to which the custodian of the UCITS has delegated all or part of the responsibility for safekeeping of portfolio assets;
c) An affiliated company providing only the UCITS management activity, order reception, transmission and execution services, principally for UCITS managed by the asset management company or by an affiliated company as part of its UCITS management activity.
The sharing of any of the fees or commissions referred to in Point 1° is prohibited unless it would be exclusively and directly of benefit to the UCITS. Agreements under which the asset management company shares some of the intermediation fees referred to in a of Point 1° on the occasion of a transaction in a financial instrument shall be prohibited.
Without prejudice to Article 321-118, the income, fees and capital gains generated by management of the UCITS, along with any rights attached thereto, shall belong to the unit holders and shareholders. The UCITS shall be the sole beneficiary of shared management fees and subscription or redemption commissions arising from investments in collective investment schemes or third country investment funds.
The asset management company, the service provider handling the financial management, the custodian, the custodian's delegatee and the affiliated company referred to in c of point 2° of Article 321-119 may receive a share of the income from securities financing transactions using securities belonging to the UCITS, under the conditions set forth in the prospectus of the UCITS.
The prospectus of the UCITS may stipulate that a portion of the income be paid to one or more associations that comply with at least one of the following conditions:
It holds an administrative ruling attesting that it falls under the category of associations whose purpose is exclusively assistance, charity, scientific or medical research, or religious association;
It holds a tax ruling attesting that it is eligible for the scheme of Articles 200 or 238 bis of the French General Tax Code providing a tax reduction for a gift to a charitable organisation;
It concerns a religious congregation that has been legally recognised by decree rendered after clearance by the Conseil d'État in compliance with Article 13 of the Law of 1 July 1901.
Asset management companies may enter into written commission-sharing agreements under which the investment services provider providing order execution service shares the portion of the intermediation fees that it charges for investment decision- making aid services and order execution services with the third party providing such services.
Asset management companies may enter into such agreements, provided that the agreements:
Do not violate the provisions of Article 321-114;
Comply with the principles referred to in Articles 321-122 and 321-123.
The intermediation fees stipulated in Article 321-119 shall pay for services that are of direct interest for the UCITS. Such services shall be covered by a written agreement.
These fees shall be assessed periodically by the asset management company.
If the asset management company uses investment decision aid and order execution services and if the intermediation fees for the previous year came to more than EUR 500,000, it shall compile a document entitled "Report on Intermediation Fees" that shall be updated as needed. The report shall specify the terms and conditions on which the asset management company used investment decision aid and order execution services, along with the breakdown between:
Intermediation fees related to order reception, transmission and execution services;
Intermediation fees related to investment decision aid and order execution services.
The breakdown for applying costs shall be formulated as a percentage and based on an established method using relevant and objective criteria.
It may be applied to:
Either all the assets in a specific UCITS;
Or any other procedure suited to the method used for applying costs.
If applicable, the "Report on Intermediation Fees" shall specify the percentage of all intermediation fees in the previous year shared with third parties under the terms of the commission sharing agreements referred to in Article 321-121 for the fees referred to in b in Point 1° of Article 321-119.
It shall also give an account of the measures implemented to prevent or deal with any potential conflicts of interest in the selection of service providers.
This document shall be posted to the asset management company's website, if the company has one. The management report for each UCITS shall refer explicitly to this document. If the asset management company does not have a website, the document shall be included in the management report for each UCITS.
The intermediation fees referred to in b in Point 1° of Article 321-119:
Must be directly related to order execution;
Must not cover:
a) The provision of goods or services that correspond to resources that the portfolio management should have for its programme of activity, such as administrative or accounting management, the purchase or leasing of premises, or compensation for staff;
b) The provision of services for which the asset management company receives a management commission.
Where units or shares of a collective investment scheme or of third-country investment funds managed by an asset management company are purchased or subscribed by that company or an affiliated company on behalf of a UCITS, subscription and redemption commissions shall be prohibited, except for the portion retained by the UCITS in which the investment has been made.
I. – Where establishing and applying remuneration policies, notably concerning the fixed and variable components of salaries and discretionary pension benefits, for the staff categories referred to in Article L. 533-22-2 of the Monetary and Financial Code, the asset management company shall comply with the following principles in a way and to the extent that is appropriate to its size, internal organisation and the nature, scope and complexity of its activities:
The remuneration policy is consistent with and promotes sound and effective risk management and does not encourage risk taking which is inconsistent with the risk profiles, rules or instruments of incorporation of the UCITS that the management company manages;
The remuneration policy is in line with the business strategy, objectives, values and interests of the management company and the UCITS that it manages and of the investors in such UCITS, and includes measures to avoid conflicts of interest;
The management body of the asset management company in its supervisory function, or, if management and supervisory functions are separated, the supervisory board of the management company or any other body or person performing equivalent supervisory functions in a company with a different corporate structure, adopts the remuneration policy, reviews at least annually the general principles of the remuneration policy and is responsible for, and oversees, implementation of the policy; the tasks referred to in this point shall be undertaken only by members of the above bodies who do not perform any executive functions in the asset management company concerned and who have expertise in risk management and remuneration;
The implementation of the remuneration policy is, at least annually, subject to central and independent internal review for compliance with policies and procedures for remuneration adopted by the bodies mentioned in point 3;
Staff engaged in control functions are compensated in accordance with the achievement of the objectives linked to their functions, independently of the performance of the business areas that they control;
The remuneration of the senior officers in the risk management and compliance functions is overseen directly by the remuneration committee, where such a committee exists;
Where remuneration is performance-related, when assessing individual performance the total amount of remuneration is based on a combination of the assessment of the performance of the individual and of the business unit or UCITS concerned, having regard to the risks they take, and of the overall results of the asset management company, taking financial and non-financial criteria into account;
The assessment of performance is set in a multi-year framework appropriate to the holding period recommended to the investors of the UCITS managed by the asset management company in order to ensure that the assessment process is based on the longer-term performance of the UCITS and its investment risks and that the actual payment of performance-based components of remuneration is spread over the same period;
Guaranteed variable remuneration is exceptional, occurs only in the context of hiring new staff and is limited to the first year of engagement;
Fixed and variable components of total remuneration are appropriately balanced and the fixed component represents a sufficiently high proportion of the total remuneration to allow the operation of a fully flexible policy on variable remuneration components, including the possibility to pay no variable remuneration component;
Payments relating to the early termination of a contract reflect performance achieved over time and are designed in a way that does not reward failure;
The measurement of performance used to calculate variable remuneration components or pools of variable remuneration components includes a comprehensive adjustment mechanism to integrate all relevant types of current and future risks;
Subject to the legal structure of the UCITS and its fund rules or instruments of incorporation, a substantial portion, and in any event at least 50%, of any variable remuneration component consists of units of the UCITS concerned, equivalent ownership interests, or share-linked instruments or equivalent non-cash instruments with equally effective incentives as any of the instruments referred to in this point, unless the management of the UCITS accounts for less than 50% of the total portfolio managed by the management company, in which case the minimum of 50% does not apply.
The instruments referred to in this point shall be subject to an appropriate retention policy designed to align incentives with the interests of the asset management company and the UCITS that it manages and the investors of such UCITS.
This paragraph shall apply to both the portion of the variable remuneration component deferred in line with point 14 and the portion of the variable remuneration component not deferred;
A substantial portion, and in any event at least 40%, of the variable remuneration component, is deferred over a period which is appropriate in view of the holding period recommended to the investors of the UCITS concerned and is correctly aligned with the nature of the risks of the UCITS in question.
The period referred to in the previous sub-paragraph shall be at least three years; remuneration payable under deferral arrangements vests no faster than on a pro-rata basis; in the case of a variable remuneration component of a particularly high amount, at least 60% of the amount shall be deferred;
The variable remuneration, including the deferred portion, is paid or vests only if it is sustainable according to the financial situation of the management company as a whole, and justified according to the performance of the business unit, the UCITS and the individual concerned.
The total variable remuneration shall generally be considerably contracted where subdued or negative financial performance of the asset management company or of the UCITS concerned occurs, taking into account both current compensation and reductions in payouts of amounts previously earned, including through malus or clawback arrangements;
The pension policy is in line with the business strategy, objectives, values and long-term interests of the management company and the UCITS that it manages.
If the employee leaves the asset management company before retirement, discretionary pension benefits shall be held by the management company for a period of five years in the form of instruments referred to in point 13.
In the case of an employee reaching retirement, discretionary pension benefits shall be paid to the employee in the form of instruments referred to in point 13, subject to a five-year retention period;
Staff are required to undertake not to use personal hedging strategies or remuneration- and liability-related insurance to undermine the risk alignment effects embedded in their remuneration arrangements;
Variable remuneration is not paid through vehicles or methods that facilitate the avoidance of the statutory and regulatory requirements applicable to asset management companies.
II. - The principles set out in I shall apply to any benefit of any type paid by the asset management company, to any amount paid directly by the UCITS itself, including performance fees, and to any transfer of units or shares of the UCITS, made for t