A/ Definition of
B/ Securities not covered by the
C/ Definition of members of the
Fonds de Garantie des Dépôts (securities guarantee
D/ Date when the guarantee for
the compensation calculation takes effect
E/ Maximum compensation limit and
special rules for its calculation
F/ Compensation procedure
G/ Funds available to the Fonds
de Garantie des Dépôts in support of the "securities
Definition of guaranteed securities
financial instrument mentioned in article L 211-1 of the Code Monétaire
et financier (equities, debt securities, shares or units in mutual
investment fund entities, futures).
of the guarantee includes cash deposits with a member institution that
is not a credit institution, linked to investment services including those
made to secure or hedge a position taken on a financial instruments market.
The deposits must be linked to the service, custody or compensation of
financial instruments by the credit institution or the investment company.
The "securities guarantee" will only provide a double guarantee limit (one
for the financial instruments and the other for cash) if the institution
in question is not a credit institution. If a credit institution is involved,
cash deposits are covered directly under the same terms and conditions
as the "cash guarantee" (regulation CRBF no. 99-05, art.
B) Securities not covered by the guarantee
(see regulation CRBF no. 99-14, art.
exclusions are as follows:
- Securities arising from transactions relating to which
the depositor has been convicted on criminal charges for money laundering
based on articles 222-38, 334-1or 334-2 of the Code pénal (French
Civil Code) or article 415 of the Code des douanes (French Customs
- Securities for which the depositor, as an individual,
has obtained rates and financial advantages, which have worsened the
financial situation of the institution.
- Securities in currencies other than those of states
belonging to the European Economic Area. See list of currencies covered by the guarantee
of the Fonds de Garantie des Dépôts in Appendix 2.
- Securities of personally liable partners or limited
partners holding at least 5 % of the capital of the credit institution,
Directors, members of the Management Board and the Supervisory Board,
managers and auditors of the credit institution as well as any equivalent
depositors in other companies in the group.
- Securities from any third party acting on behalf of
persons set out in paragraph 4 above.
- Securities from pension schemes and pension funds.
Definition of members of the Fonds de Garantie des Dépôts
(securities guarantee procedure)
All holders and administers of financial instruments having
a head office in France, which fall under the institution categories set out
below, are members of the Fonds de Garantie des Dépôts ("securities
guarantee" procedure) :
- credit institutions and investment companies approved
by the CECEI,
- agents authorised by the A.M.F. for custody
or for their activity of administration or conservation of financial
instruments, members of the compensation chambers,
- credit institutions carrying on in the Principality of Monaco an activity
of custody or administration of financial instruments, and approved by the
CECEI under this activity (exchange of letters of 8 November 2004),
- branches of credit institutions having a head office not in a State of
the European Economic Area (e.g. USA etc.) if they have been approved by
the CECEI (see Regulation CRBF no. 99-16, section
See the list of members of
the Fonds de Garantie des Dépôts
Any branch located in France of a credit institution or
an investment company which has its head office in a State of the European Economic Area may
be a member, in a supplementary capacity, of the French Fonds de Garantie
des Dépôts, if the guarantee system of the original country
is less favourable than the French system pursuant to regulation (CRBF no. 99-16, section II).
provided that an agreement is signed between the system to which the parent
company of the branch belongs and the Fonds de Garantie des Dépôts.
To date no such agreement exists.
In any event, any credit institution authorised to trade
as a custodian and manager of financial instruments is obliged to notify the
investor of the guarantee system for securities to which it belongs so that
the investor may check directly in the country concerned.
You will find a standard form in
Appendix 3 prepared by the banking profession, which only affects member institutions
of the French Fonds de Garantie des Dépôts.
D) Date when
the guarantee for the compensation calculation takes effect
The compensation amount is based on the balance on investors’
accounts on the day the funds are frozen by the French banking commission.
E) Maximum compensation
limit and special rules for its calculation
(Regulation CRBF no. 99-14)
The maximum compensation limit is €70,000 per investor
(individuals and legal entities, resident and non-resident) for financial instruments
and €70,000 for cash deposits when these are included in the scope of
the (see A)
"securities guarantee"). For credit institutions, cash deposits are covered
not by the "securities guarantee" but by the "cash guarantee" procedure for
an identical amount.
The maximum guarantee applies to each institution, regardless
of the number of accounts opened by the same investor in France or in branches
of this institution located in the European Economic Area.
Securities in currencies of countries in the European Economic
Area are converted into euros using the current exchange rate on the date the
securities are frozen.
The compensation amount for individual deposit holders of
a joint account is calculated based on each individual investor’s share of
the total amount for the joint account. This share will be added to any specific
securities held by each investor, subject to a maximum total of €70,000
By contrast, an account on which at least two persons have
a right in their capacity as partners or shareholders in a company, members
of an association or any similar collective undertaking that has no separate
status as a legal entity (co-ownership, partnership etc.), is deemed to belong
to a single investor. Deposits are combined together as if belonging to the
same investor for purposes of calculating the maximum limit.
If the investor, in whose name the account is opened, is
not the beneficiary (e.g. a manager of a co-owned property, the guardian of
disabled people etc.) of securities held by the institution, the beneficiary
will receive the guarantee from the Fonds de Garantie des Dépôts provided
that this beneficiary has been identified or is identifiable before the securities
are frozen. If there are several investors, the share of the total received
by each one will be calculated based on regulations governing the management
of the securities deposited.
Any debit balances or other due but unpaid amounts owed
by investors will be deducted from the total amount payable.
procedure and deadline
(Regulation CRBF no. 99-14)
The request to the Fonds de Garantie des Dépôts is made
by the French Banking Commission except for beginning receivership or liquidation
proceedings. The request is made once it has established that the securities
are frozen following an institution defaulting on its obligation to deliver
the securities in question for a reason that could be linked to its financial
situation and that it does not seem possible to the French banking commission
that the said securities will be recovered in the near future.
It should be noted that, when
it is about a credit institution in the Principality of Monaco, the request
for intervention made to the Fonds de Garantie des Dépôts by
the French Banking Commission has to intervene only after receiving the advice
of the Commission (of Monaco) that is in charge of the management of portfolios
and the similar stock exchange activities.
Based on documents produced
by the institution concerned, or in the case of beginning receivership or liquidation
proceedings of those products in application of article L 431-6 of the Code monétaire et financier,
the Fonds de Garantie des Dépôts verifies amounts owing
to investors with reference to the frozen securities and notifies them as soon
as possible of the amount and the category of securities covered by the securities
guarantee by registered letter with confirmation of receipt. This letter also
informs the investors that they have a period of 15 days to make any comments
linked to their compensation or to make a claim against the amount of compensation
proposed, calculated based on the market value of the financial instruments
covered as of the date the securities were frozen. Following this period the Fonds
de Garantie des Dépôts makes payment of the compensation due
to the investors.
The Fonds de Garantie des
Dépôts may also offer compensation to all investors in the
form of identical securities to those that have been frozen, subject to the
maximum limit of €70,000 and based on their market value as of the date
they were frozen. Each investor must inform the Fonds de Garantie des
Dépôts within 15 days whether or not he accepts this offer.
In the absence of any response within this period, the investor is deemed
to have rejected the offer.
In the event that receivership
or liquidation proceedings are launched against a defaulting credit institution,
the aforementioned letter from the Fonds de Garantie des Dépôts will
explain to the investors the procedure to follow for declaring to the creditors
representative or to the liquidator appointed by the commercial court the amounts
owing not covered by the "securities guarantee".
If the Fonds de Garantie
des Dépôts is involved with a credit institution against
which receivership or liquidation proceedings are undertaken, it will notify
the creditors’ representative or liquidator appointed by the commercial court
of the compensation amount per investor and any amounts not compensated (see decree 2000-1307 dated 26
December 2000, art. 12-3).
The Fonds de Garantie des Dépôts will
compensate1 the creditors for amounts approved
by it arising from the securities guarantee, within three months of the date
of the request made by the French banking commission. If circumstances so
require, the Fonds de Garantie des Dépôts may request
an extension in this time period up to a maximum of three months to the French
The established time limits
(including the period of 15 days granted to the depositor for claims) cannot
be used by the Fonds de Garantie des Dépôts as a reason
to refuse payment of the amount in connection with the securities guarantee
to investors who can prove that they were not in a position to exercise their
rights, within the established time limits, to receive payment of the guaranteed
G/ Funds available
to the Fonds de Garantie des Dépôts in support of the
"securities guarantee" procedure
All credit member institutions of the Fonds de Garantie
des Dépôts for the "securities guarantee" procedure provide
it with the necessary resources to carry out its duties. Each member’s contribution
is calculated by the French banking commission based on
criteria established by regulation CRBF no. 99-15 as modified, provided
that the total amount claimed does not endanger the stability of the banking
From its creation until 2002, it is estimated that funds
received by the Fonds de Garantie des Dépôts from its members
amount to 90 millions euros in various forms (membership certificates, contributions,
guarantee deposits) (see CRBF no. 99-17),
in addition to funds of 16.4 millions euros held by the Fonds de Garantie
des Sociétés de Bourse (Guarantee Fund for French stock exchange
trading companies). From 2003 until 2006, the annual global amount of contributions
is set at 8 millions euros.
Membership certificates are purchased by each member and
are repaid if their trading approval is withdrawn for a reason not linked to
a merger/ takeover.
Although contributions belong to the Fonds de Garantie
des Dépôts, they may, on request from the member, take the
form of guarantee deposits repayable after 5 years, but may be converted,
on first request from the Fonds de Garantie des Dépôts into
monetary contributions belonging to the Fonds de Garantie des Dépôts.
In addition, the Fonds de Garantie des Dépôts can,
if required, borrow funds from members and/or call for additional contributions
for which the amounts are also determined by the authorities.
1/ If the investor or any other entitled person with
an interest in the amounts held on an account has been charged with an offence
linked to money laundering based on articles 222-38, 324-1 or 324-2 of the
French Criminal Code or article 415 of the French Customs Code, the Fonds
de Garantie des Dépôts will halt any applicable payments pending
final judgement. Back to text