French securitisation and debt fund legislation driven by practitioners to increase investments in France
France enacted more than 30 years ago a specific statutory framework for securitisations providing clear, unambiguous and protective rules. The implementation of the French securitisation legislation was part of a more global objective to offer diverse, modern and flexible tools for financings comparable to the best European standards complying with the criteria developed by rating agencies. The legal framework for securitisation was put into place by the Law n° 88-1201 of 23 December 1988 and its application Decree n° 98-158 of 9 March 1989 (the “Securitisation Legislation”). The Securitisation Legislation was codified in the French monetary and financial code (the “Financial Code”) in 2001.
The Ordinance n° 2008-556 of 13 June 2008 introduced a new type of securitisation vehicle in the form of a company in addition to the former fonds communs de créances (“FCCs”), now called fonds communs de titrisation (“FCTs”), extended the possibility for both securitisation vehicles to cover any risk exposure through derivatives and made even more robust the bankruptcy remoteness of French securitisation vehicles to improve the security of investors.
Another milestone has been reached through the Ordinance n° 2017-1432 of 4 October 2017 (the “Ordinance”) and its implementing Decrees n° 2018-1004 and n° 2018-1008 of 19 November 2018 (the “Reform” and together with the Securitisation Legislation, the “OF Legislation”). This reform is coupled with the introduction into French law of specialised financing vehicles, a new reform of the banking monopoly and of the assignment of professional receivables regime.
The OF Legislation has deeply reformed the French securitisation law and introduced a new category of regulated SPE named organismes de financement (“OF”) which comprises both the existing securitisation vehicles and a new form of vehicles named organismes de financement spécialisés.