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Financial Instruments

Stocks

Bonds

Mutual funds

OPCC

FPCT

OPCI

Securities are marketable and fungible financial instruments that can be listed on the stock exchange. There are two categories of securities: stocks and bonds.

Stocks (shares)

A Stock is a security representing a unit of equity ownership in a company. It represents a claim on the company's assets and earnings.A Stock is a security representing a unit of equity ownership in a company. The holder of the stock (or share) is a stockholder (or shareholder),owner of a unit of equity of the company capital proportional to the number of shares held.He therefore enjoys the rights associated with the shares (information, voting rights, dividend etc.).Stocks can be registered shares or bearer shares. In the latter case the identity of the shareholder is known to the issuer.

Bonds

A bond is a debt security, representing a claim on the issuer. The bondholder is entitled to receive regular interests’ payments until the maturity of the bond. Bond Instrument can take many forms defined by the issuer depending on the funding structure and the intended target (fixed rate, floating rate, convertible bonds ...).

Are considered as securities funds units comprising UCITS, CIF in venture capital, and CIF on securitization.

Mutual funds

A Mutual fund is an investment company whose funds are invested in securities and/or other liquid financial assets.

Two legal corporate forms can be found: open ended mutual funds (SICAV) and mutual funds.

  • Open ended mutual funds (SICAV)area limited company with variable capital whose sole purpose is to manage securities and cash portfolio.
  • Mutual Fund is a joint ownership of securities and cash.

UCITS are savings products offering to their shareholders or unit holders a perfect liquidity for their savings through the subscription mechanism (creation of new shares to investors) and redemption (the acquisition of existing shares from investors). Subscriptions and redemptions are based on a price called Liquidation value. This liquidation value can be obtained by dividing the total value of net assets of the fund by the number of units or shares outstanding. The liquidation value is calculated and published at predefined frequency. UCITS are classified in categories according to the investment strategy, the composition and the nature of assets.

  • Equity UCITS:  investments mainly made on equity, investment certificates, subscription and allotment rights, and traded subscription warrants;
  • Bond UCITS: predominantly invested in debt instruments;
  • Money UCITS:  invested mainly in short term debt securities;
  • Contractual     UCITS:  holders are entitled, contractually, to a predetermined performance or guarantee;
  • Diversified UCITS: are not included in any of the previously listed categories.

 

OPCC

OPCCs, or Undertakings for Collective Investment in Capital, are private equity funds. They are managed by approved OPCC management companies and are held collectively, in the form of units or shares, by investors.

The private equity activities carried out by the OPCCs consist of investing in unlisted companies in the form of equity securities, debt securities which may or may not be convertible into equity securities, as well as advances in partners' current accounts.

OPCCs can be legal entities and are then called Companies for Collective Investment in Capital (Sociétés de Placement Collectif en Capital - SPCC) or Funds, called Collective Investment in Capital (Fonds de Placement Collectif en Capital- FPCC).

  • The Collective Investment Scheme (SPCC) is a joint stock company
  • The Collective Investment Fund (FPCC) is a co-ownership of assets issuing shares; it can be a legal entity under private law by decision of the management company subject to its registration in the trade register.

FPCT

Securitization is the financial transaction which, for an FPCT, consists in issuing securities to carry out the following transactions:

1- To invest or acquire, permanently or temporarily, eligible assets from one or more originator institutions.

2- Or to grant financing to one or several originator institutions in order to acquire or hold eligible assets or in order to make investments, guaranteed by securities on these assets;

3- Or to guarantee financing or insurance risks.

Assets eligible for a securitization transaction are:

  • Debts resulting either from a transaction that has already taken place or from a transaction that is yet to take place, whether or not the amount or the due date has been determined;
  • Capital securities;
  • Sukuk certificates;
  • Debt securities, with the exception of securities giving direct or indirect access to a company's equity;
  • Tangible or intangible, real or movable assets and commodities.

The securities that can be issued by an FPCT are:

  • Units including sukuk certificates;
  • Debt securities;
  • Shares.

Units, debt securities and shares issued by an FPCT are treated as financial instruments.

 

OPCI

Undertakings for Collective Investment in Real Estate (OPCI) are regulated investment vehicles whose main purpose is the acquisition or construction of buildings exclusively for rental purposes.

This investment vehicle allows investors of all kinds (individuals, legal entities, qualified investors, etc.) to gain access to the real estate market through the acquisition of units or shares of an OPCI that directly or indirectly holds real estate assets.

Managed by OPCI management companies, OPCIs can be classified into two categories:

  • OPCIs open to the general public;
  • OPCIs with streamlined operating rules (OPCI-RFA) reserved for qualified investors.

They can have either of two legal forms:

  • Real Estate Investment Trust (FPI - Fonds de Placement Immobilier), in the form of co-ownership with no legal personality;
  • Real Estate Investment Company (SPI -Société de Placement Immobilier), established as an open-ended limited company