French Monetary and Financial Code
In forceI. - The subsidiaries dedicated to carrying out the activities referred to in I of Article L. 511-47 are authorised by the Autorité de contrôle prudentiel et de résolution as investment firms or, where applicable and by way of derogation from the provisions of the same Article L. 511-47, as credit institutions.
When authorised by the Autorité de contrôle prudentiel et de résolution as credit institutions, these subsidiaries may neither receive guaranteed deposits within the meaning of Article L. 312-4 nor provide payment services to customers whose deposits benefit from the guarantee mentioned in the same Article L. 312-4.
The subsidiaries referred to in I of article L. 511-47 which are class 1 bis credit institutions or investment firms must comply, individually or on a sub-consolidated basis, with the management standards provided for in article L. 511-41, under conditions specified by order of the Minister for the Economy.
The subsidiaries referred to in I of Article L. 511-47 that are class 2 or class 3 investment firms must comply, individually or on a sub-consolidated basis, with the management standards provided for in Article L. 533-2-2, under conditions specified by order of the Minister for the Economy.
Without prejudice to the provisions of Article L. 511-41-2, the credit institutions, financial holding companies or mixed financial holding companies that control the subsidiaries mentioned in I of Article L. 511-47 are required to comply with the management standards mentioned in Article L. 511-41 on the basis of their consolidated financial position, excluding the subsidiaries mentioned in this Article, under the conditions laid down by order of the Minister responsible for the economy.
Subscription by the credit institutions, financial holding companies or mixed financial holding companies which control these subsidiaries to an increase in the capital of these subsidiaries is subject to prior authorisation by the Autorité de contrôle prudentiel et de résolution.
For the application of the risk-splitting ratio, the subsidiaries mentioned in I of article L. 511-47 are considered as a single beneficiary, distinct from the rest of the group. For the application of the regulation relating to the control of large exposures by institutions not belonging to the group, the subsidiaries and the group to which they belong are considered to be the same beneficiary.
The subsidiaries defined in this article must use company names and business names that are distinct from those of the credit institutions in the group that control them, so as not to cause any confusion in the minds of their creditors and co-contractors.
The persons mentioned in article L. 511-13 or, as the case may be, article L. 532-2 who effectively manage the business of these subsidiaries may not effectively manage the business, within the meaning of these same articles, of the credit institution, the financial holding company or the mixed financial holding company which control them, or of their subsidiaries other than those mentioned in this article.
II. - The subsidiaries mentioned in I may not carry out the following transactions:
1° High frequency trading transactions taxable underarticle 235 ter ZD bis of the General Tax Code;
2° Transactions on forward financial instruments whose underlying element is an agricultural commodity.
III. - Neither the French State nor any other public entity controlled, directly or indirectly, by the French State may subscribe to a security or make any new financial commitment in favour of this subsidiary if the latter is subject to one of the resolution measures mentioned in paragraph 2 of sub-section 10 of section 4 of chapter III of title I of book VI of the present code.
