France

The General Regulation of the AMF and the AMF instruction no. 2014-03 provide for the possibility to apply for a marketing authorisation in relation to the marketing of non-passported AIFs.

Summary of private placement provisions for fund interests (if applicable)

Marketing of an AIF (including its private placement) that does not benefit from the AIFMD passporting regime is prohibited unless the fund obtains a specific authorisation from the Autorité des marchés financiers (“AMF”).

The concept of a private placement under French law is based on the definition given under the Prospectus Regulation. It benefits closed-ended funds (subject to additional requirements for closed-ended AIF) but not open-ended funds.

French law and regulations do not provide for an express definition of a closed-ended AIF. For the ESMA, a closed- ended AIF is defined as an AIF whose shares or units cannot be repurchased or redeemed prior to the commencement of its liquidation phase or wind-down.

Private placement covers any offer of financial securities (a concept that includes negotiable securities) (an “Offer”) in France:

• made to qualified investors (i.e. investors qualifying as professional investors or eligible counterparties under MiFiD) (“Qualified Investors”);
• made to 150 natural or legal persons per EU State, other than Qualified Investors;
• where the total amount of the Offer in France and in the EU is less than EUR 8,000,000 or the foreign currency equivalent thereof;
• where the transaction is intended for investors acquiring at least EUR 100,000 worth, or the foreign currency equivalent thereof, per investor and per transaction, of the relevant financial securities; and
• where the transaction concerns financial securities with a minimum denomination of at least EUR 100,000 or the foreign currency equivalent thereof.

Other forms of possible placement options for fund interests outside fund regulations

The prohibition on marketing does not include a prohibition on the introduction of financial securities in France and therefore French investors may invest in such products (either directly or through a discretionary investment management agreement), provided that the investment was made at the specific request of the investor (the reverse solicitation exemption).

However, in order to fully comply with the spirit of such exemption, any request for information should be interpreted strictly and dealt with carefully. Thus, a request from a potential investor to receive the prospectus for an offer should not be replied to simply by forwarding the prospectus and the application form for such an offer.

According to the AMF, payment of fees to a third party as a result of subscriptions by a French investor raises a rebuttable presumption of an unlawful reverse solicitation exemption.

Consequences of non-compliance with placement regimes for fund interests:

• Marketing of a non-authorised fund in France is subject to heavy criminal sanctions; and
• Although not yet clear, it is likely that a subscription made further to the unlawful marketing of financial securities issued by a non-authorised fund may be declared null and void.

Private placement rules for non-fund investments available

Any instruments covered by the Prospectus Regulation may benefit from the private placement exemption, in particular:

• securities by “ordinary companies”; and
• closed-ended AIF exempted structures whose securities fall within the ambit of the Prospectus Regulation (e.g. an alternative investment fund that does not qualify as an AIF which falls outside the scope of the AIFMD and that does not allow redemption of its interests in line with ESMA guidelines on closed-ended funds and whose interests qualify as financial securities under the Prospectus Regulation); etc.

Private placement may benefit either:

• Qualified Investors i.e. both professional investors and eligible counterparties within the meaning of MiFID; or
• any non-Qualified Investor within a group of fewer than 150 offerees.

There is no distinction between a private placement of the interests of a fund or a non-fund.