Ireland: Fonds Commun de Placement Vehicles Approved for Listing

Interest in alternative investment products and hedge funds within France, coupled with the restriction on French resident investors investing in unlisted collective investment schemes, has led a significant number of French promoters to list their products on the Irish Stock Exchange ("ISE"). In the past months a number of promoters have approached Dillon Eustace with a view to listing French fonds commun de placement ("FCP") vehicles on the ISE. Following a number of submissions and meetings, the ISE has recently given its approval in principle for the listing of such vehicles, thereby expanding the range of vehicles which may be listed on the ISE to investment companies, unit trusts, limited partnerships and FCPs.

What is an FCP?

An FCP is one of the two principal types of collective investment scheme which can be established in France, the other being a société d’investissement à capital variable ("SICAV").

FCPs are similar to the familiar unit trust product in that they have no legal personality and are essentially pools of assets jointly owned by the subscribers for units in the FCP who have an undivided proportional interest therein. FCPs are managed by an investment company and their assets are held with a custodian. FCPs are regulated by the Commission des Operations de Bourse (the "COB"). An investor in an FCP receives redeemable non-voting units of participation. Each unit represents an undivided proportional interest in the FCP’s underlying assets.

There are different kinds of FCP which are subject to specific investment and marketing rules including: venture capital funds or fonds communs de placement à risque ; futures funds or fonds communs d’intervention sur les marchés à terme; new technology funds or fonds communs de placement dans l’innovation ; and employee savings funds or fonds communs de placement d’entreprise. It is anticipated that all types of FCP, save employee savings funds, will be suitable to list on the ISE.

Listing Considerations

Regulatory Status: The majority of FCPs may be listed as retail funds, as they are regulated by the COB. However, certain sub-categories of FCPs known as "FCP à procédure allégée" are not required to be pre-authorised by the COB. These FCPs are restricted under French law to sophisticated investors. While still supervised by the COB, such FCPs will be considered unregulated by the ISE and will be required to impose a minimum subscription of at least US$100,000.

Valuation Standards: As is the case for any listed fund, FCPs will be required to adhere to the accounting and auditing standards acceptable to the ISE. Currently French accounting standards are not deemed acceptable and FCPs will be required to adopt additional or alternative accounting and valuation practices to meet ISE requirements.

Responsibility: The ISE requires that the directors of an investment company, the directors of the manager of a unit trust and the directors of the general manager in the case of a limited partnership are the parties charged with taking responsibility for the listing. It is likely that this duty of care will be imposed on the directors of the management company in the case of an FCP.

Application of Listing Rules: In reviewing the particulars of an FCP, the ISE will apply and adapt the listing rules as appropriate to the legal nature of the vehicle. The ISE reserves the right to raise comments as it considers necessary in reviewing the various types of FCP product.

It is anticipated that the listing of FCPs will operate smoothly within the current listing rules of the ISE and that the accommodation of such vehicles by the ISE will expand the product range for promoters and investors.