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Capital Markets
France - Update of the procedure for the authorisation of UCITS depositaries constituted as investment firms - The procedure for examining the specifications of other UCITS and AIF depositaries
On 9 May 2018, the AMF updated its doctrine concerning the terms and procedure for approving depositaries of UCITS having the status of investment firm.
The Instruction Doc-2016-01 describes the specifications' contents of credit institutions and UCITS depositaries branches.
The document also underlines the methods of transmission of these specifications to the AMF, and the authorisation process to which it will be subject. Finally, the instruction provides for the content and methods of transmission of the specifications related to the depositories of AIF.
France - Update of the procedure of authorisation for investment management companies, their disclosure requirements and the passport requirements
On 9 May 2018, the AMF clarified its doctrine on the terms and procedures for approving investment management companies, certain of their disclosure requirements and the passport requirements for French and foreign investment management companies.
The AMF has updated Annexes 1.1, 2.1 and 3.1 on the following points:
- Standard authorisation file for management companies;
- Supplementary form related to AIFM authorisation;
- Remuneration policy for investment management companies under UCITS V Directive;
- Statement by capital providers; and
- Disclosure sheet to be provided by directors of investment management companies.
Data Protection
France - The General Data Protection Regulation entered into force
The General Data Protection Regulation (the "GPDR") entered into force on 25 May 2018. The GDPR notably removes most of the prior formalities to be carried out before the French data protection authority (the "CNIL") and makes the actors responsible for ensuring that their personal data processing complies with the GDPR and being able to demonstrate this compliance.
However, the CNIL specified that, in the first months of implementation of the GDPR, it would distinguish between, on the one hand, the fundamental data protection principles, which remained essentially unchanged compared to the former Data Protection Directive of 1995, and which will continue to be subject to rigorous checks and sanctions, and, on the other hand, the new obligations resulting from the GDPR for which the controls will essentially aim to support the organizations towards a good understanding of the GDPR.
However, some associations have already initiated class actions to denounce a GDPR breach.
France - Publication of a personal data security kit on the ANSSI website
The ANSSI published on its website a kit containing several guides and documents intended to support the organizations seeking to review their security practices for compliance with the provisions of the GDPR.
These documents are classified according to different objectives: identifying the digital risk, setting up appropriate protection, increasing employees' awareness, choosing appropriate service providers and tools and how to act in the event of a breach.
FRANCE - THE CNIL LAUNCHES PUBLIC CONSULTATION ON DPO CERTIFICATION
Until 22 June 2018, the CNIL is seeking the stakeholders' views on two draft procedures. The first procedure relates to DPO (Data Protection Officer) certification, enabling individuals to prove that they meet the DPO's competence requirements laid down by the GDPR. The second procedure relates to the accreditation criteria of the organization that will issue this certification.
Insurance
France - French implementation of the Insurance Distribution Directive
The Directive no. 2016/97 dated 20 January 2016 on insurance distribution has been implemented into French law by Ordinance no. 2018-361 dated 16 May 2018 on insurance distribution ("Ordinance") and Decree no. 2018-431 dated 1st June 2018 on insurance distribution ("Decree"). The implementation legislation introduces under French law the concept of insurance distribution, amends the intermediation regime, and notably the provisions of the French Insurance Code with regard to professional training, pre-contractual information and duty to advise obligations.
The amendments made by the Ordinance and the Decree will enter into force on 1st October 2018, with the exception of Article L. 511-2, II and Article R. 512-13-1 of the French Insurance Code relating to ongoing professional training obligations which will enter into force on 23 February 2019.
France - Further details on electronic registered letter
The Decree no. 2018-347 dated 9 May 2018 on the electronic registered letter ("Decree") provides further details on the rules applicable to the electronic registered letter introduced by the law no. 2016-1321 of 7 October 2016 for a digital Republic. The Decree provides for a legal definition of the electronic registered letter, which may potentially be used in connection with contractual relationships between insurers and insureds, as well as the rules applicable in relation to the issuance of such electronic registered letter. The Decree will enter into force on 1st January 2019.
European Union - Brexit – Risks for the solvency position of insurance and reinsurance undertakings in the light of the withdrawal of the United Kingdom from the European Union
The EIOPA published an Opinion ("Opinion") on 18 May 2018 on the solvency position of insurance and reinsurance undertakings in the context of the withdrawal of the United Kingdom ("UK") from the European Union ("EU"). In this Opinion, the EIOPA addresses the risks arising from the withdrawal of the UK from the EU in relation to the solvency position of insurance and reinsurance undertakings, and provides for measures to be therefore adopted by those undertakings and by the national authorities, notably with regards to the identification, monitoring, management and reporting of such risks.
European Union - Solvency II – Calculation of technical provisions and basic funds
The Commission Implementing Regulation (EU) no. 2018/730 dated 4 May 2018 ("Implementing Regulation") laid down technical information for the calculation of technical provisions and basic own funds for reporting with reference dates from 31 March 2018 to 29 June 2018, in accordance with the Directive no. 2009/138/EC on the taking-up and pursuit of the business of insurance and reinsurance ("Solvency II") Directive.
The Commission Implementing Regulation entered into force on 5 May 2018 and is applicable retroactively since 31 March 2018.
European Union - Solvency II – Modification of the list of external credit assessment institutions
The Commission Implementing Regulation (EU) no. 2018/633 dated 24 April 2018 ("Implementing Regulation") amended the Implementing Regulation (EU) no. 2016/1800 of 11 October 2016 laying down implementing technical standards with regards to the allocation of credit assessments of external credit assessment institutions to an objective scale of credit quality steps in accordance with the Solvency II Directive. The Implementing Regulation added five new external credit assessment institutions to annex 2 of the Regulation n° 2016/1800 of 11 October 2016 and deleted one of the credit assessment institutions previously included in such annex 2.
The Commission Implementing Regulation entered into force on 14 May 2018.
Intellectual Property
France - Order n°2018-341 of May 9th, 2018 regarding the unitary patent and the Unified Patent Court (JORF n°0107of May 10, 2018)
This Order amends the Intellectual Property Code in order to make it compatible with European regulations establishing a Unified Patent Court (UPC) and implements the UPC agreement signed in Brussels on 19 February 2013 and ratified by France in 2014.
First of all, the Order provides for the possibility of combining a French patent with a unitary patent and with a European patent where the latter has not been subject to a derogation from the exclusive competence of the UPC. It also establishes the exclusive competence of the UPC when the action relates to a unitary patent or a European patent or a European patent application which has not been subject to a derogation.
The Order also amends important provisions applicable to national patents resulting from French or European applications.
It notably modifies the starting point of the limitation period for infringement proceedings, previously set at the date of the facts giving rise to the action, now becoming the date on which the owner knew or should have known the facts enabling him to bring the action.
It also provides for the imprescriptibility of the action for patent invalidity.
The entry into force of the Order is subject to the entry into force of the UPC Agreement, which is suspended until the ratification of the Agreement by Germany, which depends itself on the outcome of the pending constitutional appeal against it.
Real Estate
France - Extension of the scope of the notaries' obligation to file certain documents electronically at the Land Registry Service (Service de la publicité foncière)
The Order of 30 April 2018, issued pursuant to the Decree No. 2017-770 of 4 May 2017, extends the scope of the notaries' obligation to file certain documents electronically at the Land Registry Service.
This obligation has now been extended to documents referring to one or more legal provisions of rights and tax contribution of real estate security exemption for which there is no cashing by the Land Registry Service.
The Order of 30 April 2018 will apply to documents signed from 1 June 2018.
Tax
France - Financial expenses: the French tax authorities updated the maximum rate of deductible interest from a tax standpoint
The French tax authorities (the "FTA") updated their guidelines by modifying the reference rate for the twelve-month periods ending from 31 March 2018 to 29 June 2018 used to calculate the limit of deductible interest in accordance with the provisions of Article 39, 1-3° of the French Tax Code (the "FTC").
As a reminder, Article 39, 1-3° of the FTC applies to interest payments made by a company to its shareholders in consideration for the sums they make available to such company.
The maximum deductible rates for this period are respectively 1.60%, 1.58% and 1.57% for fiscal years ended (i) between 31 March 2018 and 29 April 2018, (ii) between 30 April 2018 and 30 May 2018, and (iii) between 31 May 2018 and 29 June 2018 (BOI-BIC-CHG-50-50-30-20180502, n°40).
France - Withholding of French individual income tax: new update to the FTA's official guidelines
The FTA updated their official guidelines relating to the withholding of French individual income tax to be implemented as from 1 January 2019 (after a first update of the FTA's general guidelines in this respect which was made on 31 January 2018 – BOI-IR-PAS-20180515).
As a reminder, Article 60 of the Finance Act n°2016-1917 for 2017 dated 29 December 2016 (as modified by Government Regulation n°2017-1390 dated 22 September 2017) provided for a withholding tax mechanism applicable for French individual income tax purposes. This withholding tax mechanism replaces the current payment system of French individual income tax.
In these new guidelines, the FTA specifies the implementing rules of the withholding of French individual income tax (i.e. scope, applicable rates, tax reporting obligations, etc.).
International - Franco-Australian tax treaty: exchange of letters regarding tax collection
The agreement reached by the French and Australian governments as result of an exchange of letters regarding the
implementation of Article 26 of the tax treaty entered into between France and Australia on 20 June 2006 has been published by executive order n° 2018-352 dated 14 May 2018.
As a reminder, Article 26 of the Franco-Australian tax treaty provides for the conditions under which a request for assistance with respect to tax collection may be filed by one of the contracting States with the other contracting State.
The new rules provided in the exchange of letters between the French and the Australian governments (dated December 2017 and March 2018) will enter into force as of 1 May 2018.
International - Tax transparency: new European directive aiming to tackle aggressive cross-border tax planning
The European Council adopted a new directive on 25 May 2018, aiming at boosting tax transparency in order to tackle aggressive cross-border tax planning.
Pursuant to such directive, intermediaries (i.e. tax advisors, accountants and legal advisors) who draft and prepare tax planning schemes will have the obligation to disclose those of these schemes which may be considered as potentially aggressive. Moreover, a centralised database will be implemented to enable EU Member States to exchange automatically information on aggressive tax planning.
This new directive will have to be implemented by EU Member States before 31 December 2019, and the new disclosure obligations will apply as from 1 July 2020.
Authored by Bruno Knadjian
