Key Benefits:
Mr. President of the Republic,
This order is made on the basis of the article 1, of the article 2 and article 3 Act No. 2014-1662 of 30 December 2014 on various provisions for the adaptation of legislation to European Union economic and financial law.
It takes measures in the area of the law necessary for the transposition of Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment enterprises and amending Council Directive 82/891/EEC as well as the directives of the European Parliament and Council 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2012/35/EU
It adapts the rules on deposit guarantee in accordance with Directive 2014/49/EU of the European Parliament and the Council of 16 April 2014 on deposit guarantee systems. It amends the rules applicable to the deposit and resolution guarantee fund, in particular those governing the operation and competence of its supervisory board and the modalities by which its members contribute to its funding.
It finally adapts, when necessary, the provisions of the monetary and financial code to Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and procedures for the resolution of credit institutions and certain investment companies within the framework of a single resolution mechanism and a single banking resolution fund, and amending Regulation (EU) No 1093/2010.
The 2014/59/EU directive of 15 May 2014 (known as BRRD) aims to equip public authorities with new powers and tools within the European Union to better prevent and manage banking crises.
This directive provides for the establishment of a public authority in charge of the resolution in each Member State and specifies the tools at its disposal to prevent and manage banking crises, especially when resolution measures appear preferable to the liquidation of an entity in the sector in accordance with common law procedures. For the States participating in the Banking Union, Regulation (EU) No. 806/2014 of 15 July 2014 (known as "MRU") organizes the sharing of competences between the Single Resolution Council (CRU), competent as of 1 January 2016 for the development of the resolution plans and the adoption of resolution decisions with respect to important establishments within the meaning of Regulation (EU) 1024/2013 (known as "MSU") and other national institutions The CRU will also be competent for the adoption of resolution decisions with respect to all establishments as long as the resources of the Single Bank Resolution Fund (CRF) are mobilized.
First, the Directive provides for crisis prevention measures to be implemented: recovery plans and resolution plans to be prepared. These plans identify measures that may be taken either at the initiative of credit institutions and investment companies, or at the initiative of public authorities, to deal with the situation where one of these entities or a banking group would encounter difficulties. A principle of proportionality is provided to modulate the contents of these plans according to the situation of each entity. The Directive provides that the resolution authority assesses the obstacles to the implementation of the resolution powers against an entity and may request that it amend its activity or organization to remove these obstacles. The directive also provides for early intervention measures when an institution faces difficulties, with the ability to designate a provisional administrator, to activate an intragroup support device, or to make a reduction and conversion of prudential equity instruments in order to absorb limited losses of magnitude. The latter instrument operates identically to that of internal swelling but on a limited scope of application to the most subordinate shareholders and creditors.
The Directive provides, in the second place, crisis management measures: the resolution authority applies the resolution measures when the entity is deficient or likely to become deficient (according to the acceptance given by the directive to this concept), that there is no alternative solution by financing the private sector (such as recapitalization) and that this is necessary in the context of the general interest (in the sense given by the directive to this concept). The resolution authority is vested with extensive powers in such a hypothesis, including the authority to carry out the internal bail ("lease-in") of the entity. This measure allows the private sector to be involved in the financing of the resolution by pre-emptively imputing to the shareholders or creditors of the entity all or part of the losses they would have suffered if that entity had been liquidated. The scope of this device is specified by the directive which provides for the exclusion of certain creditors (such as depositors covered by the deposit guarantee, that is, up to 100,000 euros or creditors benefiting from a security right). The resolution authority may also decide on the transfer of assets to an establishment-replacement or to an asset porting structure to ensure the sale of assets.
Finally, the directive provides for the creation of a resolution fund in each Member State that will be funded (up to 1% of the deposits covered by the deposit guarantee mechanisms after a 10-year transitional period) by entities entering the scope of the directive. For the States participating in the Banking Union, the Regulation establishes the RUF, abounded by contributions from the institutions to which the MRU Regulation is applicable. It provides that contributions collected from institutions within the MRU Regulation field will be transferred by the deposit and resolution guarantee fund to the RUF starting in 2016.
La La La La La La La La La La La La La La La La La La La La La La La La La La La La La La La La La La La La La La Act No. 2013-672 of 26 July 2013 Separation and regulation of banking activities has allowed to anticipate certain provisions of the BRRD directive by setting up the French banking resolution regime whose implementation has been entrusted to the Autorité de contrôle prudentiel et de résolution and the deposit and resolution guarantee fund if additional funding is to be mobilized in connection with the resolution of a credit institution. This law has defined the main principles of this regime for the prevention and management of banking crises and has lifted the main national options open by the directive that was then being negotiated.
This draft order reproduces, completes and specifies this mechanism to bring it into line with the provisions of the BRRD directive and to include it within the framework of the European resolution mechanism. Since the MRU Regulation is directly applied, the order makes necessary adjustments to allow the implementation, such as the repeal or adjustment of internal provisions that have become non-compliant with European law.
The draft order also adapts the deposit guarantee regime in accordance with Directive 2014/49/EU of 16 April 2014 (hereinafter referred to as "DGSD2"). This directive provides a harmonized ceiling within the European Union for the payment of deposits up to 100,000 euros by depositor and bank institution when the latter is unable to return the deposits to its customers. Depositors will be able to benefit from this high level of protection as well as compensation times reduced to seven days. Finally, the deposit guarantee mechanism managed by the deposit and resolution guarantee fund will have to be pre-financed by the adhering institutions like the national resolution fund or the RUF.
The draft order also amends the rules applicable to the deposit and resolution guarantee fund. It amends, inter alia, the rules governing the operation and composition of its supervisory board and the funding arrangements for the fund. The voting rules in the supervisory board are thus adapted. The members of the Supervisory Board will have equal voting rights to adopt decisions relating to the financing of the Guarantee Mechanisms managed by the Fund. The powers of the Authority for prudential control and resolution are strengthened: decisions concerning the financing of the fund will be submitted in its opinion in accordance. A specific procedure is planned to ensure that these deliberations are adopted in accordance with the obligations set out in the directive.
Except for section 4 that amends the provisions of Trade codeArticles 1 to 3 and 5 to 7 amend the provisions of monetary and financial code.
Section 1 of the order amends them articles L. 312-4 et seq. of the monetary and financial code. These amendments are derived from Directive 2014/49/EU, Articles 99 to 109 of Directive 2014/59/EU and Regulation (EU) No. 806/2014. These amendments relate to the rules governing the operation of the deposit and resolution guarantee fund and the various mechanisms it manages. They aim to clarify the missions of the deposit and resolution guarantee fund, including the coverage of depositors in credit institutions. The terms and conditions of the deposit and resolution guarantee fund are also clarified as the manager of the deposit guarantee mechanism and the resolution financing mechanism as a result of Directive 2014/59/EU. The latter sets, on the one hand, the rules applicable to the financing arrangements for the resolution and, on the other hand, the conditions for intervention of the deposit guarantee system as part of the resolution of a credit institution. The management of these devices has been entrusted by the Act No. 2013-672 of 26 July 2013 the deposit and resolution guarantee fund which can thus intervene in the context of the resolution of a credit institution at the request and under the instructions of the prudential and resolution control authority.
The interventions of the deposit and resolution guarantee fund during the resolution of a credit institution are several orders. As part of the resolution's funding framework, it can provide additional external funding (recapitalization of the failing establishment, participation in the capitalization of an asset management structure, a business-replacement, loans, warranty...) under conditions governed by Book VI of the monetary and financial code. As part of the deposit guarantee mechanism, it is up to the amounts for which it would have been called for in the security of deposits benefiting the depositors if the failed establishment had been put into judicial liquidation. The latter is the corollary of the full protection enjoyed by deposits guaranteed by the deposit and resolution guarantee fund when resolution measures are taken, in particular internal relief measures.
Section L. 312-4 is amended to take into account the scope of the rules governing procedures for the prevention and management of banking crises, which may be extended under certain conditions to the financing companies governed by the monetary and financial code. Section L. 312-5 is amended to clarify the rules and procedures for the operation of the deposit and resolution guarantee fund that are extended in relation to the possibilities opened by the Act No. 2013-672 of 26 July 2013. This section also specifies the conditions of privilege and subrogation of the deposit guarantee fund. A new section L. 312-6-1, taken for the application of the MRU Regulation, also provides that the deposit and resolution guarantee fund recovers and transfers to the FRU resources abused.
Article L. 312-7 adapts the rules for financing the deposit and resolution guarantee fund. These rules are common to all mechanisms managed by the deposit and resolution guarantee fund. They provide that members of the various mechanisms provide funding. As part of the deposit guarantee, it is anticipated that the fund will eventually have a means of 0.5 to 0.8 per cent of the deposits covered by the fund guarantee. With regard to the resolution financing mechanism, it is also expected that credit institutions, investment companies and, where appropriate, funding companies will participate in the financing of the resolution mechanism. Members may be called upon to abound the fund in the event of a deposit and resolution guarantee fund competition to resolution measures. The modalities for calculating individual contributions are defined by Commission Delegated Regulation 2015/63 of 21 October 2014. Loans of the deposit and resolution guarantee fund are also expanded. Contributions to the deposit and resolution guarantee fund may take the form of permanently acquired contributions to the fund, association certificates and associate certificates. A portion of the contributions may, within 30% of the annual contributions, take the form of a payment commitment to the fund with appropriate guarantees. With respect to the resolution more specifically, these rules will apply on a transitional basis until January 1, 2016 for entities under the MRU Regulation. As of that date, the RUF will become competent for these entities in place of the deposit and resolution guarantee fund.
The governance of the deposit and resolution guarantee fund set out in Articles L. 312-9 to L. 312-11 is appropriate. The rules relating to the composition of the fund supervisory board and the designation of its members are adapted and clarified. The Supervisory Board is required to take action on contributions to each of the mechanisms in which the deposit and resolution guarantee fund is managed. Each of the members of the Supervisory Board will have a voice for the adoption of the deliberations concerning contributions to the Guarantee Mechanisms managed by the Fund. The powers of the Autorité de contrôle prudentiel et de résolution are strengthened. On the one hand, the deliberations on contributions to the deposit and resolution guarantee fund are adopted in accordance with its opinion. On the other hand, in the absence of a consistent decision, it will have the power to provoke a new deliberation; where applicable, a consistent deliberation will be deemed to be adopted following the convening of the fund supervisory board. The deposit and resolution guarantee fund may enter into agreements with the identical mechanisms within the European Union in order to facilitate the exercise of their respective missions. It is also expected that a censor, designated by the Minister responsible for the economy, will attend meetings of the Supervisory Board.
Finally, the Minister responsible for the economy may specify by order, like the current situation, a number of rules applicable to the various mechanisms managed by the deposit and resolution guarantee fund. In particular, the Committee may specify the rules governing the transfer of contributions to the Single Resolution Fund.
Article 2 specifies the rules applicable in particular to credit institutions and investment companies when the Authority of prudential control and resolution intervenes as part of an "early intervention". The BRRD directive reinforces the powers of the Supervisory Board of the Autorité de contrôle prudentiel et de résolution in circumstances where the financial situation of an institution or investment company would deteriorate.
The Autorité de contrôle prudentiel et de résolution may therefore require a credit institution or an investment company to take a number of measures such as implementing its preventive recovery plan or stock plan, modify its business strategy or negotiate a restructuring of its debt with its creditors. The Autorité de contrôle prudentiel et de résolution may also dismiss the directors of this company and appoint a temporary administrator under the conditions set out in Book VI of the monetary and financial code. Finally, it may request that a general meeting of shareholders be convened on an agenda that it determines.
Section 3 amends the banking crisis prevention and management regime from the Act No. 2013-672 of 26 July 2013.
The 1st adapts the CRP's missions to provide for its cooperation with the Single Resolution Council within the framework of the MRU for the exercise of resolution powers with respect to credit institutions, holding financial companies and joint holding financial companies when they are subject to a consolidated monitoring of the ECB under the MSU Regulation, and investment companies and consolidated financial institutions when their parent companies are subject to supervision on the basis of the MSU regulation
The 2° to 6° adapt the mandate entrusted to the Autorité de contrôle prudentiel et de résolution and its rules of organisation and operation. The division of competence between the two colleges of the Authority of prudential control and resolution, their respective powers and those of the Director in charge of the resolution are clarified. The BRRD Directive provides that supervisory authorities and those responsible for the resolution are distinct and do not obey the same hierarchical line.
The 7th to 9th set up the police powers of the Autorité de contrôle prudentiel et de résolution as supervisory authority. The Autorité de contrôle prudentiel et de résolution may, in particular, appoint a temporary administrator in the event of early intervention. The latter may be invested with a more or less extended mandate ranging from assistance to replacement of executive and supervisory bodies or effective leadership within the meaning of monetary and financial code and subject to shareholder rights.
The 10° to 12° coordinates the powers of the sanctions commission of the Autorité de contrôle prudentiel et de résolution when it has to know offences charged to an entity returning to the scope of the regulations to prevent or manage banking crises.
The 13° to 17° adapt the rules of cooperation with the European authorities, including the European Banking Authority and other supervisory authorities applicable to the Autorité de contrôle prudentiel et de résolution as supervisory authority.
The 18° to 30° amend the applicable rules for the remediation and liquidation of community credit institutions. These special rules in relation to those established in Book VI of the Trade Code are extended to entities that are likely to be applied to resolution measures. They base the regime of recognition within the European Union of the decisions taken by the authorities responsible for taking these measures in the territory of another Member State. The resolution regime, as an alternative to liquidation, enjoys the same regime of recognition.
The 19th, which follows from Article 108 of the BRRD directive, particularly changes the rank of some applicants in the event of judicial liquidation of a credit institution. It creates two new ranks of privilege for the benefit, on the one hand, of deposits benefiting from the deposit and resolution guarantee fund and, on the other hand, of deposits of natural persons and micro, small and medium-sized enterprises that exceed the ceiling of compensation for the deposit and resolution guarantee fund. This rank determines that of the deposit and resolution guarantee fund when it is required to replace the depositors guaranteed during the resolution of a credit institution.
31° to 33 and 35° to 38° repeal and move existing articles to create two new sections 4 and 5 and move section 5 into a new section 6 on measures to prevent and manage banking crises divided into 13 sub-sections. They also provide for the conditions of cooperation of the Autorité de contrôle prudentiel et de résolution under the resolution with the ECB and the CRU.
The 34th creates two new sections 4 and 5 that set the rules for preventing and managing bank crises.
Section 4 is primarily applicable to credit institutions and investment companies with the exception of portfolio management companies or that provide only one or more of the investment services referred to in 1, 2, 4 or 5 of section L. 321-1 and that are not authorized to provide the related financial instrument account-keeping service referred to in 1 of section L. 321-2.
It is also expected that the Supervisory Board of the Autorité de contrôle prudentiel et de résolution will be able to submit the financing companies or a parent company of financing which it considers to be a specific risk in terms of financial stability to the obligation to establish a preventive recovery plan. The subjection of this obligation entails the application of all the rules set out in section 4 and the obligation to contribute under resolution to the deposit and resolution guarantee fund.
Sub-section 1 sets out the scope of individuals and entities to which the provisions of section 4 apply, as well as the definitions and general rules applicable when the supervisory college or the resolution panel determines measures on its basis.
This subsection also provides the criteria to be taken into account by the Supervisory and Resolution Authority's Supervisory and Resolution Authority's Supervisory and Resolution Authority's Supervisory and Resolution Authority's Supervisory and Resolution Authority to determine the subjugation of the entities to which the section applies or to decide on the resolution measures. It is anticipated that these hardships and measures will be proportionate to the situation of each entity or group in relation to the risks it poses to the financial system and financial stability.
It also sets out the confidentiality and information exchange rules that apply in the exercise of the prerogatives or competencies conferred on the authorities involved under section 4. These rules are also applicable to persons who may acquire or be transferred all or part of the assets, rights or obligations of an entity subject to resolution measures.
It also opens the possibility for the Autorité de contrôle prudentiel et de résolution to require that the subject persons maintain records of the financial contracts to which they are a party.
In general, it is anticipated that intakes, increases or reductions of capital, mergers, divides and transfers decided in accordance with section 4 will not be subject to any formalism, including that of convening a general assembly. The prerogatives of the general assemblies of shareholders, societal or co-operators are indeed suspended when the resolution college of the Autorité de contrôle prudentiel et de résolution decides on measures of resolution.
Sub-section 2 provides for the obligation of credit institutions and investment companies to establish and update preventive recovery plans and the conditions under which this obligation is implemented, both from the point of view of the establishment and the prudential control and resolution authority. These plans provide for recovery measures that they are likely to take to cope with a significant deterioration in their financial situation or that of the group to which they belong while ensuring continuity of so-called "critical" functions. In the case of groups, the procedures are differentiated according to that the Authority of prudential control and resolution is the supervisory authority on an individual basis or on a consolidated basis of the entity.
This obligation is tempered in several ways. On the one hand, people are likely to be subject to simplified requirements based on their characteristics and the level of risk they represent. On the other hand, entities belonging to a group are not generally required to establish such a plan: the obligation is met by the parent company in the Union for the whole group, unless otherwise decided by the Autorité de contrôle prudentiel et de résolution, taken as appropriate with the other supervisory authorities.
The contents of the plans, after approval by the social organs of the subject person, are subject to the assessment of the supervisory college of the Authority for prudential control and resolution. This review is carried out, in the case of groups, in conjunction with the other supervisory authorities concerned.
If the contents of the plan are deemed insufficient, the Autorité de contrôle prudentiel et de résolution, if applicable jointly with the other authorities concerned, may prescribe corrective measures following a contradictory procedure.
Sub-section 3 provides for the Authority's resolution and prudential control panel to establish preventive resolution plans for entities within its jurisdiction. These plans provide for measures that are likely to be taken by the Autorité de contrôle prudentiel et de résolution to deal with the failure of these entities or the group to which they belong while ensuring, to the extent possible, the maintenance of so-called "critical" functions, that is, those that are necessary for the continuity of operations and whose cessation would be most damaging. This obligation is subject to the same proportionality rules as preventive recovery plans.
Sub-section 4 provides the specific rules for assessing the capacity to apply the resolution to an entity or group. On the occasion of the establishment of preventive resolution plans, the resolution panel must ensure that there are no obstacles to the implementation of the measures contained therein; It is a question of assessing the "resolvency" of entities or groups. If this is the case, it may ask the entity to take corrective action. If these obstacles remain, the resolution panel may enjoin the entity, at the end of an adversarial procedure, to take measures that may go to the reorganization of the group or to stop certain activities deemed too risky.
In the case of transnational groups, these decisions are taken within the framework of the colleges of resolution authorities. In the event of disagreement, like the rules put in place for the development of preventive recovery plans, the European Banking Authority may be requested in the context of a so-called "binding mediation" procedure at the end of which it may refer to the content of common decisions to be taken. However, procedures allow the interests of the States and authorities concerned to be adjusted, depending on whether they are competent for the group as a whole or for its subsidiaries alone. In certain circumstances, the competent authorities for the subsidiaries may decide only the measures applicable to persons who fall within their jurisdiction, in particular in the event of disagreement with the decision to take the competent authority for the whole group.
Sub-section 5 sets the applicable rules for minimum requirements for equity and eligible commitments. In fact, it should be avoided that the structure of the liabilities of entities that may be subject to resolution measures limits the effectiveness of the internal swelling instrument. As a result, the resolution college may impose a minimum requirement for eligible funds and commitments, expressed as a percentage of the total liabilities and the establishment's own funds. The subsection defines the type of eligible commitments to meet these requirements, the rules for exemption or limitation of requirements and procedures leading to the definition of these requirements.
Sub-section 6 defines some of the rules applicable in an early intervention conducted by the Supervisory Board of the Autorité de contrôle prudentiel et de résolution, including the continuity of financial contracts, the adoption of an early intervention measure that cannot be considered either as a result of termination or termination of the term of the contract.
Sub-section 7 provides for the possibility for subject entities that are part of the same group to enter into financial support agreements. These agreements are intended to produce their effects in the event of financial difficulties of the group or any of the entities that is part of it. These agreements are subject to the approval of the competent authorities and of the Supervisory Authority Supervisory and Resolution Authority. Once approved, these agreements can only be contested by the parties to the agreement. They contain clauses that set in advance the terms and conditions of intervention within a group of each entity. The level of considerations that an entity is likely to obtain on the occasion of the grant of its support is fixed at the time of the latter. It is anticipated that this level may differ from market conditions at that time, thus allowing the group's interest in the specific interest of each entity that composes it to a certain extent. The subsection provides procedures for the conclusion and approval of these agreements involving the supervisory authorities concerned.
Sub-Section 8 provides the conditions under which an assessment is made prior to the adoption of a reduction and conversion measure of equity instruments, the initiation of a resolution procedure and the adoption of a resolution measure. The evaluation is central to the adoption of such measures: it is used to assess the financial situation of a failing entity, to define the amount of losses to be absorbed, to delineate the scope of creditors who may participate in the recovery of the entity or in the preservation of its critical functions, and to choose the most appropriate measures depending on the circumstances.
The assessment is one of the main safeguard measures for creditors as a guarantee of the proportionality of the measures adopted by the resolution panel: it is indeed anticipated that the shareholders and creditors of an entity subject to resolution measures will not be liable to losses greater than those that they would have suffered if the entity had been the subject of a judicial liquidation procedure. As an alternative measure to liquidation and taking into account the extensive prerogatives conferred on the resolution authorities and especially on the resolution college, it appears justified to ensure that the resolution measures generate the least harmful effects for these creditors, the economy and the financial system.
Given the complexity of such an assessment within often very short response times, it is anticipated that this evaluation could be temporary. As long as it does not present the characteristics of a "final" assessment, creditors affected by a depreciation and conversion measure or a resolution measure may see their situation improved.
Finally, an a posteriori assessment is planned for a longer time horizon to establish possible claims that are intended to be handled by the resolution mechanism managed by the deposit and resolution guarantee fund.
Sub-section 9 provides the regime for the reduction of the nominal value of equity instruments and the conversion to representative capital rights securities to meet the prudential requirements applicable to the person subject to the resolution procedure. This type of measure is considered, within the meaning of the directive, as a measure of crisis prevention. It allows the mobilization of shareholders and assimilations as well as the most subordinate creditors whose securities are recorded for the purpose of satisfying the requirements of prudential equity to deal with the failure of a group entity.
This measure may be mobilized when an entity or group is failing or an exceptional public financial support is required to exclude any participation in the recapitalization of an entity after the resistance tests or reviews of assets led by the European Central Bank. It is in all cases in the case that a resolution action would be taken in accordance with subsection 10.
Failure is found when there is no alternative measure of a private or prudential nature to ensure the viability of the entity or group.
In such circumstances, shareholders and subordinate creditors see the nominal value of their securities reduced to the insufficiency of assets of the failing entity. Subordinate creditors may also be required to convert their debt securities into capital securities in order to allow the entity concerned to meet the capital requirements applicable to them.
Sub-section 10 sets the resolution regime. When an entity or group is failing, i.e., no alternative measures of a private or prudential nature, or even a reduction and conversion of equity instruments are sufficient to ensure its sustainability, the resolution panel is invested with extensive prerogatives in order to preserve financial stability and reduce the impact on the economy and the financial system of that failure. The President of the Supervisory College, the Minister responsible for the economy represented by the Chief Executive Officer of the Treasury or the entity's executives may refer to the Resolution College for this purpose.
If it confirms this finding, the resolution panel can therefore decide to apply several types of measures, either alone or jointly, depending on the situation it has to know: the assignment of business branches, the establishment of a business establishment, the transfer to an asset management structure or internal renaffle. In general, it is required to take control of the entity in resolution; it may appoint a special administrator acting under its responsibility and having all the prerogatives of the social organs of the entity, including those of the general assemblies. The resolution panel must also, without having to verify that the conditions for the initiation of the resolution procedure are met, use its powers of resolution on the instruction of the single resolution Council for entities within the competence of the Council.
The College of Resolution intervenes in accordance with several principles. In the first place, shareholders and creditors are affected by resolution measures in the order of the creditors expected to be liquidated in the event of an asset insufficiency and without any one being able to bear losses greater than those incurred in such a case. Secondly, the leaders are replaced, except in particular necessity, and they remain responsible under the common law conditions of the entity's failure. Thirdly, unless otherwise provided, creditors of the same rank are treated equally. Fourth, deposits guaranteed by the deposit and resolution guarantee fund are fully protected. Finally, measures are taken subject to a number of safeguard measures.
In addition to the formalization and supervision of the conditions for the implementation of certain measures that have already been taken as part of the failure of credit institutions (e.g., the transfer or transfer of branches of activity, establishment-replacement or porting structure), it is planned to be able to mobilize a new type of measure: internal swelling. This measure allows to involve, beyond shareholders and subordinate creditors, other creditors that may go to deposits not covered by the deposit and resolution guarantee fund. Some of the creditors benefit from an exemption from law (e.g. depositors whose deposits are covered by the deposit and resolution guarantee fund, creditors guaranteed by the entity's assets). Others may be excluded by decision of the resolution college. The use of this measure is strictly governed. If the failing entity is to continue its activity following the resolution procedure, it must submit and implement a plan for reorganization of its activities subject to the approval of the resolution panel.
The deposit and resolution guarantee fund may be required under the resolution mechanism. Liabilities can only be applied when 8% of the total liability of the entity subject to the proceedings has already been reduced. Alternative financing mechanisms, including the ability of the deposit guarantee and resolution fund to use the loan, can also be opened if its means are insufficient. It may also intervene in conjunction with the measures decided by the resolution panel in accordance with the other terms set out in article L. 312-5, provided that such interventions are not lost.
There are several provisions to guarantee the effectiveness of the resolution measures and the continuity of the so-called "critical" activities and functions: suspension of payment or delivery obligations, suspension of the execution of security rights, neutralization of the terms of the contracts allowing their early termination, non-iteration of the guarantees in the event of transfers of assets or liabilities, transfer of rights or temporary maintenance of the administrative authorizations necessary for the exercise of the activity The resolution college also has the ability to unilaterally modify the maturity of certain commitments of the entity.
In order for these interventions to be carried out expeditiously, the measures decided by the resolution panel are not subject to any procedural obligation, formalism, or authorization. However, part of these obligations may be fulfilled after the end. The resolution panel may also request the suspension of the quota of securities admitted to a regulated market and, as such, request the assistance of the President of the Autorité des marchés financiers, also a member of the resolution panel.
Finally, several safeguard measures are provided for creditors: a general safeguard clause on the valuation of a possible difference of treatment in relation to a judicial liquidation procedure; special clauses for certain types of creditors (guaranteance contracts, compensation agreements...) or certain types of transactions (partial transfers of activities for example).
The rights of appeal remain open against the decisions taken by the resolution panel without their cancellation affecting the validity of the acts taken for their application when their questioning is likely to affect the interests of third parties.
Sub-section 11 provides the conditions under which the resolution measures applicable to transnational groups are taken. It sets out the procedures for the adoption of common decisions taken pursuant to the previous subsections, including through the colleges of resolution authorities.
Sub-section 12 sets out procedures for the resolution of groups with the relevant authorities of non-EU countries.
Sub-section 13 provides the principle of a decree in the Council of State to specify the conditions for the application of section 4.
Section 5 provides by-law provisions relevant to the operation of the deposit and resolution guarantee fund.
Section 4 amends the articles L. 811-10 and 812-8 of the Commercial Code in order to allow judicial agents and judicial administrators to be mandated by the Autorité de contrôle prudentiel et de résolution as a temporary administrator in the context of an early intervention or as a special administrator in the context of a resolution procedure.
Sections 5 to 7 provide for the extension in New Caledonia, French Polynesia and the Wallis and Futuna Islands of the metropolitan provisions of this draft order, with the general adaptations necessary to take into account their particular status (these communities are not part of the European Union) and their own competences, particularly in civil and commercial matters.
Section 8 provides for the deferred entry into force on January 1, 2016 of the provisions of the order relating to the internal rebate regime and the requirements for eligible equity and commitments. Section 130 of the Directive provides for the entry into force of these provisions at that time, thus allowing institutions to smooth the efforts necessary to meet these requirements and to adapt their communication in this regard, in particular the financial information that is for investors. It also provides for the specific entry into force conditions of some of the provisions that are applicable in relations with other States parties to the European Economic Area Agreement.
This is the subject of this order that we have the honour to submit to your approval.
Please accept, Mr. President, the assurance of our deep respect.
