France Unveils Groundbreaking Reform for Financing Industry


With an Orrick team playing a major role, France unveiled a groundbreaking reform that will reshape the French financing industry.

Introduced in the form of a “Macron Ordinance,” this reform creates a new category of direct lending vehicles under French law that will permit non-banks to make loans available to French borrowers, opening the door to capital financing options that had previously been restricted under French banking legislation. The reform was executed by President Macron on 4 October and will become effective in several phases beginning in January 2018.

Hervé Touraine, a Paris-based partner and head of the firm’s Europe finance group, was one of the architects of the reform, chairing a committee established by Paris EUROPLACE to draft the regulations. Olivier Bernard, another finance partner in our Paris office, also served on the committee. They both worked with the French legal and finance community and French government to set up the reform. Paris EUROPLACE comprises many private and public French and international players working to promote France’s financial markets.

“This reform introduces a notable exception to the French banking monopoly, and constitute a major milestone in the development of the French financing industry,” Hervé said. “This change opens a large range of new possibilities for a variety of French and foreign actors, such as insurers, asset managers, investment funds, private equity funds, debt funds, special situation funds, and direct lending platforms.”

The reform will create a new category of lending vehicles, encompassing the existing “securitization vehicles” and the newly created “specialized financing vehicles.” Key features of these vehicles include: the possibility of directly making loans available to corporate borrowers in France and abroad without the intermediation of credit institutions or regulatory capital requirements; an unrivalled creditor friendly legal regime, such as extended protections against the insolvency of the vehicles’ counterparties; the possibility to benefit from the “European Long Term Investment Fund” EU label; and the possibility to be managed by a company incorporated outside France, if licensed by an EU member to manage alternative investment funds.

The involvement of Hervé and Olivier in revamping the legal framework of the French financial industry is a reflection of Orrick’s global imprint on international financial matters.

Hervé describes the reform further in this article published in IFLR [subscription required].