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FR - Current account advances by UCIs to distressed companies

02/09/2020

On 18 June 2020, the French government released Order No. 2020-740 on allocation of current account advances to distressed companies by undertakings for collective investment in private equity and by venture capital companies.

Prior to the Order, UCI assets could not feature more than 15% of current account advances granted to their portfolio companies. The Order raises the applicable ceiling for granting current account advances to:

  • 20% of assets, for private equity funds (open to non-professional investors, i.e. FCPR, FCPI and FIP);
  • 30% of the total amount of subscription commitments, for professional private equity funds and free partnership companies; and
  • 30% of the net book value for venture capital companies.
     

The measures outlined in the Order will enable companies affected by the economic implications of the COVID-19 crisis to overcome their temporary cash-flow challenges until 31 December 2020 with help from UCIs present in their shareholding, with the understanding that the portion of current account advances exceeding the ceiling set for UCIs will have to be regularised (15% maximum threshold) and the corresponding current account advances repaid before 30 June 2022.

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