France – AMF UCITS, AIFs Policy Update

France – AMF UCITS, AIFs Policy Update

On 26 November 2019, AMF updated policies to cover fund developments.

  • Announced updated policies re collective investment undertakings (CIUs) in order to integrate recent national and European legislative and regulatory developments.

Updated Documents

  • Instruction DOC-2011-19 authorisation procedures, preparation of a KIID and a prospectus and periodic reporting for French and foreign UCITS marketed in France.
  • Instruction DOC-2011-20 authorisation processes, preparation of a KIID and a prospectus and periodic reporting for retail investment funds, funds of alternative funds and professional retail investment funds.
  • Instruction DOC-2011-21 authorisation procedures, preparation of a KIID and a prospectus, and reporting for employee investment undertakings.
  • Instruction DOC-2011-22 authorisation procedures, preparation of a KIID and rules, and periodic reporting for private equity funds.
  • Instruction DOC-2011-23 authorisation and establishment processes for a KIID and a prospectus and periodic information for real estate collective investment undertakings and professional real estate collective investment undertakings.
  • Position DOC-2008-14 fund performance swaps and actively managed investment structures.

Policy Update

  • Updated 5 instructions to integrate changes, in particular entry into force of EU MMFR.
  • Instructions adapted to take into account new European framework and resulting disclosure requirements, in line with updated November 2018 guide to MMFs.
  • Also to take into account the work related to the transposition of MiFID 2.
  • In particular procedures for displaying research costs in prospectuses of UCITS, AIFs when investment management company chooses to use a research account.
  • Where use a research account is within the meaning of MiFID 2 as provided for in Art 314-22 of the AMF General Regulation as part of its collective management activity.
  • Also takes into account possibility, introduced by Order 2017-1432.
  • Allowing creation of French employee savings plan funds (FCPEs) invested in firm's shares when company is not governed by French law, as per CMF Art L. 214-165-1.

Reporting Outperformance Fees

  • Also changed way performance fees are published in regulatory documentation.
  • The change in procedure will allow the publishing of a maximum rate of outperformance sharing in the prospectus when the effective rate is also indicated.
  • If maximum and effective rate are stated in prospectus, only an increase in maximum rate will result in specific information to holders with possibility of exit without fees.
  • As long as the effective rate remains lower than the projected maximum rate.
  • AMF will later set out details of AMF’s new approach on review of promotional marketing materials on collective investments according to a risk-based approach.
  • This later update will also take into account provisions of the PACTE Law that impact these documents, e.g. the revision of the side pockets system.

Performance Swaps

  • Updated position on performance swaps on CIUs, structuring of active management.
  • Some references in position DOC-2008-14 updated to take into account renumbering.
  • Update has also been the occasion to expressly include total return swaps on CIUs.
  • These are now subject to the same regime as fund performance swaps on CIUs.
  • References to appendices of SFTR, which list information to be provided to investors in the prospectus and the annual report, have been added for educational purposes.

Effectiveness

  • 1yr grace period from publication to bring regulatory documentation into compliance.
  • Provided does not place in situation of non-compliance with laws, regulations in force.
  • In particular, update may involve adjustments to contents of regulatory documents.