French Monetary and Financial Code
In forceI. - In the event that compulsory liquidation proceedings are opened against a credit institution under Book VI of the French Commercial Code, creditors holding a preferential right, pledge, collateral security or mortgage contribute to the distribution in proportion to their admitted claims:
1° Firstly, creditors holding deposits for the portion of their deposits covered by the guarantee instituted pursuant to 1° of II of Article L. 312-4, and the deposit guarantee and resolution fund for the claims it holds on the institution concerned in respect of sums paid pursuant to I or III of Article L. 312-5 ;
2° Secondly, natural persons and micro, small and medium-sized enterprises mentioned in paragraph 1 of Article 2 of the Annex to European Commission Recommendation 2003/361/EC of 6 May 2003, defined on the basis of their annual turnover:
a) For the portion of their deposits eligible for the guarantee mentioned in 1° which exceeds the compensation ceiling provided for in application of article L. 312-16 ;
b) For their deposits that would be eligible for this guarantee if they were not made with branches of the institution concerned located in a non-EU Member State and not party to the European Economic Area agreement.
3° Thirdly, creditors not mentioned in 4° or 5°;
4° Fourthly, unsecured creditors consisting solely of :
a) Owners of an unstructured debt security mentioned in II of Article L. 211-1 or creditors under an unstructured loan meeting the conditions that must be met by eligible commitments in order to satisfy the requirement mentioned in IV of Article L. 613-44 ;
b) Owners or holders of an instrument or right referred to in Article L. 211-41 with characteristics similar to a debt security referred to in a) of this 4° ;
c) Owners or holders of a "bon de caisse", within the meaning of Article L. 223-1, or of any instrument, right or claim issued on the basis of the law of another Member State of the European Union and having characteristics similar to those provided for in the first sentence of the first paragraph of the same Article L. 223-1, provided that they are unstructured and have not been the subject, at the time of their issue, of a public offer or have been the subject of a public offer aimed exclusively at qualified investors mentioned in 1° of Article L. 411-2 or a public offer relating to a loan equal to or greater than an amount set by decree,
for sums due to them in respect of such securities, claims, instruments or rights, the initial maturity of which may not be less than one year and provided that the contractual documentation and, where applicable, the prospectus within the meaning of Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC provide that their owner or holder is unsecured within the meaning of this 4°, and for securities, claims, instruments or rights issued on or after 28 December 2020, that their unit nominal value at issue is at least fifty thousand euros.
5° Fifthly, subordinated creditors, including holders of the claims referred to in Article L. 228-97 of the French Commercial Code. Among these creditors, creditors holding subordinated securities, claims, instruments or rights which are not, and have not been before 28 December 2020, retained as additional tier 1 capital instruments or as tier 2 capital instruments, contribute to the distributions, in proportion to their admitted claims, before creditors holding subordinated securities, claims, instruments or rights which are, or have been before 28 December 2020, fully or partially retained as additional tier 1 capital instruments or as tier 2 capital instruments.
Ia - The creditors mentioned in 3° of I, the creditors mentioned in 4° of I and the creditors mentioned in 5° of I shall participate in the distribution in proportion to their admitted claims after the creditors holding a lien, a pledge, a collateral security or a mortgage, in the event that compulsory liquidation proceedings are opened under Book VI of the Commercial Code against one of the following persons:
1° Investment firms within the meaning of article L. 531-4 of this Code, with the exception of those which exclusively provide one or more of the investment services mentioned in 1, 2, 4 or 5 of article L. 321-1 and which are not authorised to provide the related service of custody account-keeping for financial instruments mentioned in 1 of article L. 321-2 ;
2° Financial institutions within the meaning of Article L. 511-21 (4) which are subsidiaries of a credit institution, investment firm or company mentioned in 3° to 5° of this Ia and to which the supervision of their parent company applies on a consolidated basis, on the basis of Articles 6 to 17 of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012;
3° Financial holding companies and parent financial holding companies in a Member State or in the Union within the meaning of Article 4(1) of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 referred to above;
3°a Investment holding companies and EU parent investment holding companies;
4° Mixed financial holding companies and parent mixed financial holding companies in a Member State or in the Union within the meaning of Article 4(1) of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 referred to above;
5° Mixed holding companies within the meaning of Article 4(1) of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 referred to above.
II. - A decree of the Conseil d'Etat shall specify the conditions under which a security, debt, instrument or right is considered to be unstructured within the meaning of 4° of I of this article. This decree may stipulate that the minimum initial maturity of the securities, debt securities, instruments and rights referred to in the same 4° is more than one year.
