French Monetary and Financial Code
In forceIn order to prevent an imbalance between redemption requests and the assets of the fund of hedge funds or one of its sub-funds from preventing it from honouring redemption requests under conditions that protect the interests of unitholders and ensure equal treatment, the fund rules or articles of association may, pursuant to the second paragraph of Article L. 214-141, set a ceiling on redemptions of units or shares under the following conditions:
1° The fund rules or articles of association of the fund of hedge funds shall set the threshold above which a cap may be placed on redemptions occurring on the same centralisation date;
2° The threshold set at 1° must be justifiable in terms of the frequency with which the net asset value is calculated, the management strategy and the liquidity of the assets held by the fund of hedge funds.
This threshold corresponds to the ratio between :
the difference recorded on the same centralisation date between the amount or number of units or shares of the fund of hedge funds or sub-fund in question for which redemption is requested and the amount or number of units or shares of the same fund or sub-fund for which subscription is requested;
the net assets or the total number of units or shares of the fund of hedge funds or sub-fund in question.
This threshold is determined on the basis of the last published net asset value or the last estimated value calculated by the management company, or on the basis of the number of units or shares in circulation on the date on which it is established;
3° The regulations or articles of association shall determine the conditions under which the fund of alternative funds shall defer redemption orders exceeding the threshold mentioned in 1° to the next centralisation dates or cancel them.
