The French government has published a decret regulating loan originating activity in France. The scope of the activity is restricted to two types of funds (FPS – “Fonds professionnels specialisés” and FPCI – which are private equity structures). Funds must generally be closed ended, no leverage is allowed and derivative contracts can be used exclusively for hedging purposes. Loans can be originated to any corporate but a financial institution or a collective investment scheme. In addition to the general framework set by this decret, risk requirements and operational processes must be put in place according to an AMF instruction published last June, which include specific a credit risk monitoring system, hiring staff with lending experience and quarterly reporting to the AMF. For further information, please contact Jennifer Wood.