French Monetary and Financial Code
In forceWhen granting loans, a specialised professional fund :
1° May borrow under the following cumulative conditions:
a) The maximum leverage of the fund, expressed as a ratio between the fund's exposure and its net asset value, is set in the articles of association or fund rules, within the limits defined by order of the Minister for the Economy. For the purpose of calculating this leverage, borrowing agreements contracted on a temporary basis and which are fully covered by contractual promises to provide capital from the fund's investors are excluded. The exposure is calculated using the commitment calculation method as set out in Article 8 of Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012 ;
b) The fund rules or articles of association shall define the conditions under which cash borrowing may be used;
c) The objectives pursued by the borrowing of liquid assets and the terms of such borrowings, in particular their duration and repayment or refinancing terms, are compatible with the fund's liquidity profile;
d) The management company carries out stress tests to ensure that the liquidity of the assets, in particular the loans granted, enables the fund to meet redemption requests and the commitments arising from the borrowings contracted;
e) Borrowings have a maturity shorter than the residual life of the fund;
f) The assets encumbered by these loans do not represent more than the percentage of the fund's net assets defined in a, at the time of the loan;
2° Does not enter into financial contracts other than for the purpose of hedging interest rate and currency risks;
3° May not make short sales of financial instruments;
4° May use techniques and instruments involving eligible financial securities and money market instruments, up to a limit of 10% of its net assets, and in particular repurchase agreements and similar transactions for the temporary purchase or sale of securities, under the conditions set out in Article R. 214-32-27;
If the limits provided for in this article are exceeded beyond the control of the specialised professional fund, the latter must aim, as a priority, to rectify this situation, taking into account the interests of the shareholders or unit-holders.
