French Monetary and Financial Code
In forceI. - The subscription and purchase of units in professional private equity funds is reserved for the investors referred to in article L. 214-144 as well as for investors who are managers, employees or natural persons acting on behalf of the fund management company and for the management company itself.
The custodian or the person designated for this purpose by the regulations of the professional private equity fund shall ensure that the subscriber or purchaser is an investor as defined in the previous paragraph. It shall also ensure that the subscriber or purchaser has declared that it has been informed that the fund falls within the scope of this sub-paragraph.
II. - Professional investment funds may hold debt securities up to a maximum of 10% of their assets. Professional private equity funds may grant loans to companies, under the conditions set out in Regulation (EU) No 2015/760 of the European Parliament and of the Council of 29 April 2015 on European long-term investment funds, when they have received authorisation to use the name "ELTIF" pursuant to this same regulation.
These funds may also grant loans to non-financial companies under conditions and limits set by decree in the Conseil d'Etat. Loans granted in this way have a maturity of less than the residual life of the fund, and redemptions of units or shares and the use of leverage are subject to limitations.
These funds may also hold digital assets mentioned in article L. 54-10-1 of this code, up to a limit of 20% of their assets.
The assets of a professional private equity fund may also include :
1° Within the 15% limit mentioned in 1° of II of article L. 214-28, current account advances granted, for the duration of the investment made, to companies in which the professional private equity fund holds a stake. These advances are taken into account when calculating the quota provided for in I of article L. 214-28 when they are granted to companies which meet the conditions for inclusion in this quota;
The assets of a professional private equity fund or a société de libre partenariat may also include current account advances, which are only included in the investment quota mentioned in I of article L. 214-28 up to a limit of 30% of total assets, provided that the following conditions are met:
a) The main purpose of the fund is to finance, directly or indirectly, infrastructure assets, understood as any physical asset, facility, system or network contributing to or directly providing public services, in particular energy, transport or health services or contributing to the energy transition ;
b) The fund has received authorisation to use the name "ELTIF" pursuant to Regulation (EU) No 2015/760 of the European Parliament and of the Council of 29 April 2015 referred to above.
These current account advances may be granted directly to a company belonging to the group in which the fund holds a stake. The securities issued by the company receiving the shareholder current account advance are not admitted to trading on a regulated market or a multilateral trading facility;
2° Rights representing a financial investment issued under French or foreign law in an entity whose main purpose is to invest directly or indirectly in companies whose equity securities are not admitted to trading on a financial instruments market referred to in I of Article L. 214-28. These rights are included in the fund's 50% investment quota provided for in I only up to the percentage of direct or indirect investment of the assets of the entity concerned in companies eligible for this same quota.
A Conseil d'Etat decree sets the rules specific to professional private equity funds relating to the conditions and limits for holding assets.
III. - The regulations of a professional private equity fund may provide for units giving rise to different rights to all or part of the fund's assets or the fund's income.
By way of derogation from VII of article L. 214-28, the fund rules may stipulate that the redemption of units at the request of unitholders may be blocked for a period exceeding ten years.
Under conditions laid down by decree, the fund rules may provide for one or more fixed-term subscription periods, including when the management company has distributed a portion of the assets.
IV. - Notwithstanding article L. 214-24-32, a private equity company may include approval or non-transferability clauses in its articles of association.
