Subsection 2: Mutual certificates

I.-Mutual insurance companies and mutual insurance group companies referred to in the last paragraph of article L. 322-1-3 may issue mutualist certificates from :

1° Their member-policyholders ;

2° Member-policyholders or policyholders of undertakings belonging to the same insurance group as defined in 5° of Article L. 356-1, as well as such undertakings;

3° Mutual insurance companies, mutual insurance group companies, mutual insurance companies and unions governed by Book II of the Mutual Code, mutual group unions referred to in Article L. 111-4-2 of the Mutual Code, provident institutions or unions governed by Title 3 of Book 9 of the Social Security Code and social protection insurance group companies referred to in Article L. 931-2-2 of the Social Security Code.

II - Mutualist certificates may be issued by approved mutual insurance companies, approved agricultural mutual insurance and reinsurance funds and mutual insurance group companies which have drawn up duly approved accounts for the last two financial years, and subject to the penalties provided for in Articles L. 242-10 and L. 242-30 of the French Commercial Code. They may make a public offer, as defined for financial securities in Chapter I of Title I of Book IV of the Monetary and Financial Code, under the conditions laid down by the General Regulations of the Autorité des Marchés Financiers.

Mutualist certificates are indivisible and confer identical rights on their holders.

Prior to issuing mutualist certificates, any company or fund concerned must be registered in the Trade and Companies Register.

The General Meeting of member-policyholders or of the companies affiliated to the mutual insurance group company has sole authority to determine the essential characteristics of the issue. It may, however, delegate to the Board of Directors or the Management Board, within the framework thus defined, the powers necessary to determine the practical details. The Board of Directors or the Management Board shall report to the next General Meeting on the exercise of this delegation. The purpose of issue contracts may not be to favour a category of members, persons who are linked to the company by an employment contract, de jure or de facto directors of the company or any other person. Contracts entered into in breach of this provision are absolutely null and void.

A decree of the Conseil d'Etat shall set out the terms and conditions for the application of this II, in particular the content and the conditions and procedure for prior approval by the Autorité de contrôle prudentiel et de résolution of the special resolution authorising the issue, proposed to the General Meeting.

III - All information, including advertising, relating to mutualist certificates must be accurate, clear and not misleading. Advertising shall be clearly identified as such.

The persons referred to in I shall receive, prior to subscription, information reasonably enabling them to understand the nature of the mutual certificates offered and the risks and drawbacks associated therewith, in order to be able to take their investment decisions in full knowledge of the facts.

Where the mutual certificates are placed with persons falling under 1° or 2° of I, mutual insurance companies and mutual insurance group companies shall specify the requirements and needs expressed by these persons and the reasons for the advice given regarding the proposed investment. These details, which are based in particular on the information provided by these persons on their financial situation and their subscription objectives, are adapted to the specific features of mutual certificates. For the application of these obligations, mutual insurance companies and mutual insurance group companies shall enquire about the knowledge and experience in financial matters of these persons. Where such persons do not provide all the information referred to above, mutual insurance companies and mutual insurance group companies shall warn them prior to subscription.

IV - Mutualist certificates are recorded in registered form in a register kept by the issuer and in a securities account kept either by the issuer or by one of the intermediaries mentioned in 2° to 7° of Article L. 542-1 of the Monetary and Financial Code.

The securities account is opened in the name of one or more holders, who are the owners of the mutualist certificates held therein.

V.-The remuneration of mutualist certificates is variable and is set annually by the General Meeting when the accounts are approved. The maximum proportion of the profits of the last financial year and previous financial years that may be allocated annually to the remuneration of mutual certificates is set by decree in the Conseil d'Etat.