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FR – New legal framework for securitisation and "debt funds" in France

18/01/2018

On 5 October 2017, Order No. 2017-1432 was published in France's Official Journal, in the aim of modernising the legal framework regarding asset management and debt-based financing.

On 5 October 2017, Order No. 2017-1432 was published in France's Official Journal, in the aim of modernising the legal framework regarding asset management and debt-based financing. This Order has 3 well-defined objectives: 

  • increasing the clarity for international players of the legal regime applicable to alternative investment funds (AIFs)
  • boosting the competitiveness of the Paris financial market
  • bringing French law into compliance with the ELTIF regulation.

The most impactful aspect of the Order is the creation of a new category of AIF, i.e. specialised financing vehicles ("OFS" in French), which will join the existing securitisation vehicles ("OT" in French) to form the family of financing vehicles ("OF" in French). The Order extends the scope of the Sapin II Act, which had authorised certain alternative investment funds to grant loans yet without providing them with all the required means for this new competence. The Order now authorises AIFs open to professionals to make use of the mechanism for the assignment of trade receivables, thereby enabling them to take full advantage of the ability to grant loans.