Paragraph 1: Approval

I. - Portfolio management companies are legal entities which manage one or more :

1° UCITS ;

2° FIA ;

3° UCITS governed by foreign law and approved in accordance with Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 ;

4° FIA governed by foreign law and subject to Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011;

5° "Other collective investments".

A portfolio management company managing one or more FIAs may not manage one or more "Other collective investments" without managing UCITS mentioned in 1° and 3°:

1° Falling under II of article L. 214-24, excluding those mentioned in the last paragraph of the same II and excluding FIAs falling under I of article L. 214-167 and those mentioned in the second paragraph of III of this article;

2° Or covered by 1° of III of Article L. 214-24.

II. - Portfolio management companies are authorised by the Autorité des marchés financiers.

In order to grant authorisation to a portfolio management company, the Autorité shall verify whether the company:

1. Has its registered office and effective management in France ;

2. has sufficient initial capital and appropriate and sufficient financial resources;

3. Provides the identity of its shareholders or holders of shares, whether direct or indirect, natural persons or legal entities, who have a qualifying holding, as well as the amount of their holding; the AMF assesses the status of these shareholders in the light of the need to ensure sound and prudent management;

4. Is effectively managed by at least two persons of sufficiently good repute and with appropriate experience to ensure its sound and prudent management. The General Regulation of the Autorité des marchés financiers sets out the conditions under which a portfolio management company may, by way of derogation, be effectively managed by a single person. They shall specify the measures that must be taken to ensure the sound and prudent management of the company concerned;

5. Has a programme of operations for each activity or service that it intends to carry out or provide, specifying the conditions under which it intends to manage the collective investments referred to in I and provide the investment services for which it is authorised, and indicating the type of transactions envisaged and the structure of its organisation;

6. Participates in a securities guarantee scheme managed by the Fonds de garantie des dépôts et de résolution in accordance with Articles L. 322-5 and L. 322-10.

The Autorité des marchés financiers may refuse authorisation where the performance of the supervisory role of the portfolio management company is likely to be hindered either by the existence of a direct or indirect capital or control relationship between the applicant company and other natural or legal persons, or by the existence of legislative or regulatory provisions, or difficulties relating to their application, of a State which is not a party to the Agreement on the European Economic Area and to which one or more of these persons belong.

The AMF takes a decision within three months of receipt of a complete application. Its decision shall be reasoned and notified to the applicant.

The AMF may attach special conditions to the authorisation in order to preserve the balance of the portfolio management company's financial structure. It may also make the granting of authorisation subject to compliance with undertakings given by the applicant company or its shareholders.

The General Regulation of the Autorité des marchés financiers sets out the conditions for authorisation of portfolio management companies.

Portfolio management companies must meet the conditions of their authorisation at all times.

III. - By way of derogation from II, managers who exclusively manage one or more FIAs mentioned in article L. 214-24 whose only investors are the manager itself or subsidiaries of the manager, or companies of which the manager is a subsidiary, or other subsidiaries of these companies, are not subject to authorisation or to the legislative and regulatory provisions governing portfolio management companies, provided that none of these investors is itself an FIA.

The managers mentioned in the previous paragraph who manage one or more of the AIFs listed in II of article L. 214-24 are, however, subject to authorisation and to the legislative and regulatory provisions governing portfolio management companies. These managers and their AIFs are not subject to the provisions of paragraphs 1, 3, 4 and 5 of sub-section 1 of section 2 of chapter IV of title I of book II.

IV. - Legal entities which manage, directly or indirectly, the AIFs referred to in article L. 214-24 whose volume of assets is below the thresholds set by decree in the Conseil d'Etat must obtain the authorisation referred to in II, except in the case provided for in 3° of III of article L. 214-24.

When they no longer meet the conditions mentioned in the first paragraph, these legal entities shall notify the Autorité des marchés financiers in accordance with the conditions laid down in the general regulations of the Autorité des marchés financiers.

V. - Notwithstanding II, the following entities are not subject to authorisation or to the legislative and regulatory provisions governing portfolio management companies:

1° International institutions such as the European Central Bank, the European Investment Bank, the European Investment Fund, the European development finance institutions and the bilateral development banks, the World Bank, the International Monetary Fund and other international institutions and similar international bodies when they manage AIFs and insofar as these AIFs act in the public interest ;

2° National central banks;

3° National, regional and local authorities and other bodies or institutions which manage funds intended for the financing of social security and pension schemes;

4° Institutions for occupational retirement provision covered by Directive 2003/41/EC of 3 June 2003 on the activities and supervision of institutions for occupational retirement provision, including, where appropriate, authorised entities which are responsible for the management of such institutions and which act on their behalf, as referred to in Article 2(1) of that Directive, or investment managers designated in accordance with Article 19(1) of that Directive insofar as they do not manage AIFs;

5° Employee participation schemes or employee savings plans;

6° Special purpose vehicles, the sole purpose of which is to carry out one or more securitisation transactions meeting the criteria of point 2 of Article 1 of Regulation (EC) No 24/2009 of the European Central Bank of 19 December 2008 concerning statistics on the assets and liabilities of financial vehicle corporations engaged in securitisation transactions and other activities appropriate for this purpose, other than the managers of securitisation undertakings referred to in Article L. 214-167 ;

7° Holding companies.

Within the meaning of this article, a holding company is a company holding interests in one or more other companies, the business purpose of which is to implement one or more business strategies through its subsidiaries, associated companies or participating interests with a view to contributing to the creation of long-term value and which is a company:

a) Operating for its own account and whose shares are admitted to trading on a regulated market in the European Union or a State party to the Agreement on the European Economic Area; or

b) is not set up for the principal purpose of generating a return for its investors through the disposal of its subsidiaries or associated companies, as shown in its annual report or other official documents.

VI. - 1° All portfolio management companies may apply for authorisation to provide the investment service referred to in Article L. 321-1 .5;

2° Portfolio management companies authorised to manage UCITS and those authorised under Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 may also apply for authorisation to provide the investment service referred to in 4 of Article L. 321-1 ;

3° Portfolio management companies authorised under Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 and, where they are not authorised to manage UCITS, portfolio management companies authorised to manage AIFs with assets below thresholds set by decree in the Conseil d'Etat, may also apply for authorisation to provide the investment service referred to in 1 of Article L. 321-1.

VII. - Where they are authorised to provide one or more of the investment services referred to in VI, portfolio management companies must comply with the provisions of this Title applicable to portfolio management companies and the provisions applicable to investment firms when providing these services.

VIII. - Articles L. 531-5, L. 531-7 and L. 531-8 apply to portfolio management companies. The powers of the authorities defined in these articles are exercised by the Autorité des marchés financiers.

IX. - The portfolio management company appoints an auditor.