In France, the activities of traditional funds are regulated by the rules from:
- General provisions of monetary funds;
- Monetary and Financial Codes;
- Funds’ charters;
- Funds’ prospectus (if they exist).
Investment licensing in France
Applicable to some types of NPFs in France, a license from the AMF is necessary before a fund is created. Yet there are still certain types as the FPCIs that are not obliged with licensing. No matter if they are licensed or not, all OTC funds are supervised and regulated by the FMA.
Selling traditional funds
The process of traditional fund selling must meet the criteria dictated by the MFC and RGAMF. These rules apply to certain investment activities including these:
- Trading in financial instruments;
- Providing investment advice;
- Receiving and processing orders.
The local RFP rules apply to the marketing of such businesses. However, if investors are professional clients the bidding would not happen.
In France, only professional investors or the ones able to invest more than one hundred thousand euros are allowed to invest in non-retail funds. The same regulation is valid for professional venture funds, specialized investment funds, individuals and legal entities who contributed more than thirty thousand euros and also fulfill certain conditions.
Requirements for managers in investment funds
Traditional funds are not intended for retail activities and qualify as AIFs. That is why their managers need to comply with licensing requirements in order to obtain an AIFM license in Europe.
The type of investment strategy used by funds defines the scope of the license. Due to this, a fund manager needs to obtain additional permission to manage AIFs if they already have the authorization to manage professional venture funds.
Generally, all investment instruments are governed by tax rules. Funds that have the legal entity are subject to income tax for legal entities. However, there might be special benefits or exemptions from such taxation. Funds without the legal entity are not taxed.
Typically, resident investors must pay taxes on their capital gains.
Would you like to start a traditional fund in France and need advice on this topic? COREDO is here for you: our experts are available for consultations.