French Insurance Code
In forceI.-When the resolution college decides to use a liability management structure mentioned in Article L. 311-41, it may:
1° Instruct the person subject to the resolution procedure to submit to it, within a period that it shall determine and which may not be less than one month, a draft trust agreement covering the commitments and assets determined by the resolution college;
2° Instruct the person in resolution, after noting the failure of the procedure mentioned in 3° of I of Article L. 311-30 or 1°, to enter into a trust agreement with one or more trustee-beneficiaries designated by it.
II - When, under the terms of 2° of I, the resolution college decides to set up a liability management structure, and after the procedure provided for in 3° of I of Article L. 311-30 or 1° of I of this Article has failed, it shall issue a call for tenders with a view to designating one or more persons likely to act as trustees and beneficiaries.
The collège de résolution selects the bid that it considers best protects the interests of policyholders, participating members, subscribers, members, employers, subscribing legal entities and beneficiaries of benefits transferred to the liability management structure, in particular with regard to the ability of the candidates to effectively manage the commitments concerned by the trust contract.
III - The collège de résolution approves the trust contract, all subsequent amendments and the management strategy proposed by the trustee. It may also, by way of derogation from article 2023 of the French Civil Code, limit certain of the trustee's powers in respect of the trust assets or make their use subject to the prior approval of the collège de résolution.
Before entering into the contract or renewing it, the collège de résolution shall specify the restrictions applicable to the management of the fiduciary's insurance commitments. The purpose of these restrictions is to ensure that the insurance liabilities are managed exclusively on an extinctive basis. In this respect, the collège de résolution prohibits the conclusion of new insurance contracts. The college of resolution may authorise the continuation of certain operations if they are necessary to respect the commitments or useful for the reorganisation of the person in resolution.
IV - The trust agreement for the liability management vehicle stipulates in particular that:
1° In the event of insufficient trust assets, the assets of the beneficiary trustees shall bear all the liabilities resulting from the trust agreement. The contract may not make use of the provisions of the third paragraph of Article 2025 of the Civil Code;
2° Any amendment to the trust contract is subject to the approval of the collège de résolution;
3° The trust contract is terminated by decision of the collège de résolution and in the cases provided for in Article L. 311-47 ;
4° Termination of the trust contract entails incorporation into the assets of the beneficiary trustee(s) of the commitments and assets comprising the trust assets;
5° In accordance with the provisions of I and II of Article L. 311-51, the settlor may provide the trustee(s) with management data, a service or any technical assistance required for the extinctive management of the commitments transferred;
6° The opening of safeguard, receivership or liquidation proceedings against the settlor does not affect the trust assets or the trust contract;
7° If the trust assets generate a taxable profit, the beneficiary-trustees compensate the settlor for the amount of corporation tax for which the settlor is liable in respect of this profit, pursuant to article 238 quarter F of the General Tax Code;
8° If the trust assets generate losses entitling the settlor to a tax credit, the settlor shall only compensate the trustee if this tax credit enables it to reduce its tax liability;
9° The terms of remuneration of the trustee(s).
If the contract designates more than one trustee-beneficiary, it sets out :
1° The arrangements for distributing the fiduciary assets between the beneficiary-trustees when the contract is terminated, in accordance with 4°;
2° The way in which the trustees take decisions relating to the fiduciary assets;
3° The way in which they divide up the acts relating to the management of the fiduciary assets and how they report to each other;
4° Without prejudice to 3°, the conditions under which a beneficiary-trustee may terminate his commitment or be replaced by another insurance undertaking;
5° The terms and conditions for the conservation of the trust assets applicable in the event of the disappearance of one of the beneficiary-trustees, specifying that in the event of the liquidation of the last beneficiary-trustee, the trust assets are fully integrated into the assets of that person;
6° The conditions under which the beneficiary-trustees may request the termination of the trust contract in accordance with the provisions of the fifth paragraph of I of Article L. 311-47.
V.-For the purposes of I, the collège de résolution may lay down criteria relating to the solvency or risk profile of the trustee at the time the trust agreement is entered into. It may also limit some of the powers of the trustee or trustees in relation to the trust assets or make their use subject to the prior approval of the collège de résolution.
VI - This contract is entered into under conditions that guarantee fair and prior compensation for the person referred to in Article L. 311-1. This compensation may be accompanied by a transfer of assets, the level and composition of which are approved by the collège de résolution as part of the transfer decision.
