General Decision of the Financial Markets Council No. 20 of December 26, 2013 on the Establishment and Liquidation Procedures for Venture Capital Funds and Seed Funds, as well as Related Modifications and Information Obligations

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General Decision of the Financial Markets Council No. 20 of December 26, 2013 on the Establishment and Liquidation Procedures for Venture Capital Funds and Seed Funds, as well as Related Modifications and Information Obligations The College of the Financial Markets Council, convened on December 26, 2013, Having regard to Law No. 94-117 of November 14, 1994 on the reorganization of the financial market, as amended and supplemented by subsequent texts, particularly Articles 28, 31, and 48; Having regard to the Collective Investment Scheme Code promulgated by Law No. 2001-83 of July 24, 2001, as amended and supplemented by subsequent texts, particularly Chapter Two bis; Having regard to Law No. 2005-58 of July 18, 2005 on seed funds; Having regard to the Financial Markets Council Regulation concerning securities collective investment schemes and portfolio management for third parties, as amended and supplemented by subsequent texts, particularly Articles 21, 22, 23, 24, 29, 30, 31, 38, 40, and 41; Decides,

Article 1:
For the purposes of this General Decision, the following terms shall apply:

• "fund": the venture capital fund and the seed fund;
• "fund benefiting from a simplified procedure": the venture capital fund benefiting from a simplified procedure and the seed fund benefiting from a simplified procedure.

Chapter 1
Establishment Procedures

Article 2
The approval of the establishment of a fund or a fund benefiting from a simplified procedure is subject to the submission by the management company to the Financial Markets Council of an approval application signed by its legal representative and containing:

• a duly completed copy of the approval form set out in Annex 1 to this General Decision;
• the documents referred to in Annex 1 above, as well as any other document that the management company deems necessary for the processing of the approval application.
  The Financial Markets Council may request any additional document or information.
  When the submitted application is incomplete or contains non-compliant or inconsistent information, it is returned to the management company with an indication of the reasons for the return. The Financial Markets Council's approval decision is notified to the management company by registered letter with acknowledgment of receipt.

Article 3
A fund or a fund benefiting from a simplified procedure may receive subscriptions only after the preparation of a prospectus submitted to the Financial Markets Council's visa, which must be drafted according to the model presented in Annex 2 of this General Decision if it is a fund, or in Annex 3 if it is a fund benefiting from a simplified procedure. A copy of the prospectus must be sent to the Financial Markets Council electronically.

Article 4
The management company and the depositary shall draft the internal regulations according to the model presented in Annex 4 of this General Decision if it is a fund, or in Annex 5 if it is a fund benefiting from a simplified procedure. The internal regulations, signed by the concerned parties, are filed with the Financial Markets Council. A copy is sent to the Financial Markets Council electronically.

Chapter 2
Modifications Affecting the Fund or a Fund Benefiting from a Simplified Procedure and Related Information Obligations

Article 5
A fund or a fund benefiting from a simplified procedure may be subject to modifications submitted to the Financial Markets Council's approval and others not subject to its approval. Modifications may take effect immediately or deferred. Immediate entry into force is understood as three business days after the information of unitholders. The procedures and information obligations related to each type of modification are summarized in the synthetic table provided in Annex 6 of this General Decision. In all cases, the Financial Markets Council must be previously informed of any modification not included in this General Decision. The Financial Markets Council determines the appropriate processing method and the information medium for unitholders.

Section 1
Modifications Subject to Approval and Related Information Obligations

Article 6
Modifications subject to approval require the submission by the management company to the Financial Markets Council of an approval application signed by its legal representative and containing:

• a duly completed copy of the approval form set out in Annex 7 of this General Decision;
• the documents referred to in Annex 7 above, particularly the draft information for unitholders, as well as any other document that the management company deems necessary for processing the approval application.
  The information intended for unitholders must particularly include:
• a table comparing the new wording of the modified sections of the internal regulations and prospectus with the previous version;
• a statement that the updated internal regulations and prospectus are available to unitholders at the registered office of the management company;
• details on how unitholders can obtain the updated internal regulations and prospectus, and, where applicable, the electronic address for obtaining them.

Article 7
The management company must prepare a report on the relevance of the modifications to be made and their potential impact on unitholders' interests, when these modifications concern the following elements:

• The investment objective and policy;
• The duration of the lock-up period;
• The guarantor;
• The life span;
• Management fees;
• Redemption fees.
  The management company must submit this report to the Financial Markets Council when filing the approval application.

Article 8
During the processing of the approval application regarding modifications to be made, the Financial Markets Council may request any additional document or information. When the submitted application is incomplete or contains non-compliant or inconsistent information, it is returned to the management company with an indication of the reasons for the return. The Financial Markets Council's approval decision is notified to the management company by registered letter with acknowledgment of receipt.

Article 9
The envisaged modifications may only be implemented after the information or agreement of the depositary, as applicable, and after obtaining the Financial Markets Council's approval. The management company must promptly inform the fund's or fund benefiting from a simplified procedure's auditor of modifications subject to approval.

Article 10
The management company must file with the Financial Markets Council the updated internal regulations signed by the concerned parties, as well as the updated prospectus, no later than three business days before the entry into force of the modifications. A copy of these documents is sent to the Financial Markets Council electronically.

Article 11
When the internal regulations of a fund or a fund benefiting from a simplified procedure provide for the possibility for unitholders to request early redemption of their shares in case of a modification subject to approval, this redemption must not incur any fees for the unitholders.

Section 2
Modifications Not Subject to Approval and Related Information Obligations

Article 12
The management company must inform the depositary and the auditor of a fund or a fund benefiting from a simplified procedure about modifications not subject to approval, and declare them to the Financial Markets Council no later than three business days before the entry into force of the modifications. The envisaged modifications may only be implemented after filing with the Financial Markets Council the updated internal regulations signed by the concerned parties, as well as the updated prospectus. A copy of these documents must be transmitted electronically. The management company informs unitholders about these modifications according to the procedures set out in the table provided in Annex 6 of this General Decision.

Article 13
When the management company declares to the Financial Markets Council that a fund or a fund benefiting from a simplified procedure has entered pre-liquidation, it must file a dossier containing:

• a written statement explaining the reasons for the fund or fund benefiting from a simplified procedure's entry into pre-liquidation;
• the draft individual letter to be sent to unitholders.
  The letter addressed to unitholders must particularly include the following information:

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• the date of opening of the pre-liquidation period;
• the consequences of the opening of the pre-liquidation period on the blocking of redemptions and on the management of the fund or a fund benefiting from a simplified procedure.

Chapter 3
Liquidation Procedures

Article 14
The approval of the liquidation of a fund is subject to the submission by the management company to the Financial Markets Council of an approval application signed by its legal representative and containing:

• a duly completed copy of the approval form set out in Annex 8 of this General Decision;
• the documents referred to in Annex 8 above, as well as any other document that the management company deems necessary for processing the approval application.
  The Financial Markets Council may request any additional document or information.
  The approval of the liquidation of a fund benefiting from a simplified procedure is subject to the submission by the management company to the Financial Markets Council of an approval application signed by its legal representative, accompanied by a copy of the minutes of the management company's board of directors or executive committee and a written declaration attesting that the depositary has been informed of the liquidation. When the submitted application is incomplete or contains non-compliant or inconsistent information, it is returned to the management company with an indication of the reasons for the return. The Financial Markets Council's approval decision is notified to the management company by registered letter with acknowledgment of receipt.

Article 15
The management company must, before the fund or a fund benefiting from a simplified procedure enters liquidation, provide unitholders with necessary information, including:

• the date of dissolution of the fund or a fund benefiting from a simplified procedure;
• the consequences of liquidation on the blocking of redemptions;
• the schedule of liquidation operations;
• a statement that there is an auditor's report on the conditions of liquidation for the fund or a fund benefiting from a simplified procedure, with details on how unitholders can access said report.

Chapter 4
Information Obligations vis-à-vis the Financial Markets Council

Article 16
The management company must file with the Financial Markets Council the net asset value of a fund or a fund benefiting from a simplified procedure on the same day it is determined. A copy is also transmitted to the Financial Markets Council electronically.

Article 17
The management company must prepare a quarterly statistical statement of all funds it manages and communicate it to the Financial Markets Council 30 days after the close of each quarter. The management company must also prepare an annual statistical statement of all funds it managed, which must be communicated to the Financial Markets Council before February 15 of each year. The statistical elements are collected for each fund individually and presented according to the models provided in Annex 9 of this General Decision regarding quarterly statistics, and in Annex 10 regarding annual statistics.

Visa
The Minister of Finance The President of the Financial Markets Council

ANNEX 1
APPROVAL FORM FOR THE ESTABLISHMENT OF A FUND OR A FUND BENEFITING FROM A SIMPLIFIED PROCEDURE Establishment 1 Type of Fund: FCPR / FCPR benefiting from a simplified procedure / Seed fund / Seed fund benefiting from a simplified procedure 2 Investment policy:
3 Name of the Fund or fund benefiting from a simplified procedure:
4 Name of the management company:
5 Name of the depositary:
6 Name of the Auditor:
7 Management delegation for the Fund or fund benefiting from a simplified procedure Administrative management: Name of the establishment:
Accounting management: Name of the establishment:
8 Profit allocation methods: Capitalization / Distribution 9 Frequency of net asset value calculation allowing subscriptions/redemptions: Semi-annual / Annual / Other:
10 Fees borne by the fund or fund benefiting from a simplified procedure:
FORM COMPLETED BY
Name of case officer:
Company: Tel.: Email: Fax:
Address of the management company:
ATTACHED DOCUMENTS
Establishment: Documents to be provided obligatorily For all Funds:
A draft internal regulations established according to the model presented in Annex 4 or Annex 5 of this General Decision, depending on whether it is a fund or a fund benefiting from a simplified procedure, and signed by the concerned parties. A copy of the internal regulations must be sent electronically. The agreements concluded between the various parties to the transaction. Commercial documents, where applicable. A written declaration of acceptance of its mission by the depositary. Any other document that the management company deems necessary for processing the file.

ANNEX 2
STANDARD FUND PROSPECTUS
I. - Brief presentation:
The first page of the prospectus provides a brief presentation of the fund as follows:
"This document contains important information and must be read carefully before subscribing to any investment."
1 – Warning:
"The Financial Markets Council draws your attention to the fact that your money is locked for a period of … years, (except cases of early unlocking provided in the internal regulations). The fund is primarily invested in unlisted companies that present particular risks. You must review the risk factors of this fund described in the "risk profile" section of the prospectus. Finally, the Financial Markets Council's approval does not mean that you will automatically benefit from the various tax mechanisms presented by the management company. This depends, among other things, on the fund's compliance with certain investment rules, the duration for which you hold its shares, and the individual situation of each investor." 2 - Summary table presenting the list of other venture capital funds already managed by the management company and the percentage of their eligible assets reaching the quota as of the last known date. 3 - Type of fund: FCPR / Seed fund 4 - Name:
5 - Lock-up period duration:
6 - Fund life span:
7 - Names of participants in the fund's life and their contact details (including, where applicable, the addresses of their respective websites):

• The management company
• The depositary
• Where applicable, other delegates (name + delegated function by delegate)
• The auditor
• Where applicable, the distributor(s)
  8 - Designation of a contact point:
  Mention a telephone contact point and an email address allowing the subscriber to more easily reach the management company in case of information requests.
  9 - Offer summary "Investor Roadmap" (Standard template to be adapted according to fund characteristics):
  The management company will adapt the scheme to the specific characteristics of the fund, taking into account, for example, the life span.
  INVESTOR ROADMAP:

II. - Information concerning investments:
1 - Management objective:
This section explains the overall management objective pursued by the fund. It must give a precise description of it, avoiding general phrases such as "capital appreciation". Step 1: Subscription

1. Signature of the subscription form.
2. Payment of amounts that will be locked for … years, except cases of early unlocking set in the fund's internal regulations.
3. Fund life span … years.
   Step 2: Investment and divestment period
4. During the … months, the management company makes investments in companies for an average duration of … years.
5. The management company may divest participations during this period.
6. Where applicable, possibility to distribute proceeds from divestments as they occur.
   Step 3: Pre-liquidation period on the management company's decision
7. The management company stops investing in new companies and prepares to sell securities held in the portfolio.
8. Where applicable, distribution to unitholders as participations are sold.
   Step 4: Dissolution decision and opening of the liquidation period
9. The management company stops investing in new companies and prepares to sell securities held in the portfolio.
10. Where applicable, distribution to unitholders as participations are sold.
    Step 5: Closure of liquidation
11. Final distribution to unitholders up to their respective share in the fund.
12. Sharing of any capital gains between unitholders and the management company (maximum 20% for the management company).
    Minimum lock-up period of …… years
    Possibility to request redemption (where applicable) Lock-up period The management objective must be independent of the types of securities envisaged for investment and is therefore not a description of these investments. Nevertheless, it can be supplemented by the mention of the main asset classes that will enter into the composition of the fund's assets. 2 - Investment strategy:
    The objective of this section is to explain how the management company will strive to achieve the stated management objective.
    The management company ensures consistency between the securities used, and on the other hand, the scope of its activity program.
    The implemented investment strategy is broken down by asset class and not according to a distribution between quota investment and non-quota investment.
    Generally, it must include:

• The description of the strategies used:
  The prospectus describes in a complete and understandable manner for the targeted type of investors, the different strategies used to achieve the management objective:
• The existence of particular strategies concerning industrial, geographical, or other sectors.
• The type of management adopted (for example, seed capital, venture capital, development capital, etc.).
• The description of asset categories:
  The prospectus must mention all classes of assets that will enter into the composition of the fund's assets.
• The description of the strategy on securities in which the fund intends to invest and that will enter into the composition of the fund's portfolio:
  The description of asset categories in which the fund intends to invest, their contribution to achieving the management objective, and the articulation between these different categories to achieve the management objective, including geographical and/or sectoral distribution, existence of rating-related criteria, concentration on certain types of issuers (States, private issuers of small/medium/large capitalization). 3 - Risk profile:
  The objective of this section is to provide relevant information on the risks to which the investor is exposed, whether regarding unlisted investments or other investments. The fund's risk profile is not limited to the description of instruments in which the fund is invested. It includes two types of risks:
• General risks related to the fund (e.g., low liquidity, etc.),
• Risks related to the management strategy implemented by the fund.
  The prospectus aims to detail and hierarchize risks in a detailed manner. For example:
  a) Mention of the fund's specific characteristics, particularly related to investments in unlisted companies (absence of liquidity of securities, risk linked to innovativeness, risk linked to company selection, lock-up period duration, etc.) b) The risk that the fund's performance may not conform to its objectives, or to the investor's objectives (specifying that this latter risk depends on the composition of the investor's portfolio) c) The risk that invested capital may not be fully returned (capital loss risk) d) Specific mention when the net asset value may not reflect the exact value of the portfolio. 4 - Guarantee or protection (where applicable):
  The "Guarantee" section is to be completed only where there exists a "guarantee" or "protection" of the capital invested by the unitholder.
  The term "guarantee" is used when the unitholder benefits from full capital guarantee. The term "protection" is used when the unitholder benefits from partial capital protection. 5 - Concerned subscribers and typical investor profile The objective of this section is to define the type of investor for whom the product is intended, while explaining the typical profile of the investor for which the fund was created, as well as the recommended investment duration.
• Regarding the typical investor profile, its description is supplemented by the following elements:
• The investment is risky due to the fund's low liquidity, among other factors.
• The limited portion of the subscriber's wealth that is reasonable to invest in this fund.
• Information on the necessity of diversifying investments.
• The lock-up period of assets, with the investor not having access to invested money for … years.
• Regarding the recommended investment duration, it must be consistent with the management objective and the categories of securities in which the fund invests. It must be consistent with the fund's liquidity horizon.
  6 - Profit allocation methods:
  This section specifies the profit allocation policy.
  Where reinvested...