French Monetary and Financial Code
In forceI. - As security for the present or future financial obligations referred to in article L. 211-36, the parties may provide for the delivery in full ownership, enforceable against third parties without formalities, of financial instruments, goods represented by a warehouse receipt, bills, debts, contracts or sums of money, or the creation of securities on such goods or rights, can be realised, even when one of the parties is the subject of one of the procedures provided for in Book VI of the Commercial Code, or of equivalent legal or amicable proceedings under foreign law, or of civil enforcement proceedings or the exercise of a right of opposition.
The remittances and securities referred to in the first paragraph of this I may be made or constituted by the parties themselves or by third parties.
The debts and claims relating to these guarantees and those relating to these obligations may then be offset in accordance with I of article L. 211-36-1.
II. - When the guarantees mentioned in I relate to the financial obligations mentioned in 2°, 3° and 4° of I of article L. 211-36:
1° The creation of such guarantees and their enforceability are not subject to any formality. They result from the transfer of the assets and rights in question, the dispossession of the grantor or their control by the beneficiary or by a person acting on his behalf;
2° The identification of the assets and rights in question, their transfer, the dispossession of the grantor or control by the beneficiary must be evidenced in writing;
3° Such guarantees are realised under normal market conditions, by offsetting, appropriation or sale, without prior formal notice, in accordance with the valuation procedures provided for by the parties once the financial obligations covered have become due and payable.
III. - The deed providing for the creation of the sureties mentioned in I may define the conditions under which the beneficiary of these sureties may use or dispose of the assets or rights in question, on condition that he returns equivalent assets or rights to the grantor. The security interests concerned then relate to the equivalent assets or rights thus returned as if they had been constituted from the outset on these equivalent assets or rights. This deed may allow the beneficiary to set off his debt for the restitution of the equivalent goods or rights against the financial obligations for which the securities were created, when they have become due.
Equivalent assets or rights are understood to mean :
1° In the case of cash, a sum of the same amount and in the same currency;
2° In the case of financial instruments, financial instruments having the same issuer or debtor, forming part of the same issue or category, having the same nominal value, denominated in the same currency and having the same designation, or other assets, where the parties so provide, in the event of the occurrence of an event concerning or affecting the financial instruments constituted as security.
In the case of assets or rights other than those referred to in 1° and 2°, restitution relates to the same assets or rights.
IV. - The procedures for realising and offsetting the guarantees referred to in I and the obligations referred to in article L. 211-36 may be relied on as against third parties. Any realisation or set-off effected as a result of civil enforcement proceedings or the exercise of a right of opposition is deemed to have taken place prior to such proceedings.
