Investment banking and M&A advisory regulation to be introduced by France watchdog AMF

France’s financial regulator the Autorité des Marchés Financiers (AMF) has launched a formal open consultation on its plan to regulate Corporate Finance Advisory services providers.

The AMF announced that it is reviewing the opportunity of intervening in the regulation of entities that advise businesses on company mergers and acquisitions (or M&A), business transfers, external growth transactions and the raising of capital. These types of corporate finance advisory services are not currently regulated in France.

The AMF stated that it regularly receives queries about entities which provide companies, their directors or their shareholders with advisory services and assistance as part of their projects concerning company sales or transfers, external growth operations or the raising of capital.

This types of services, commonly referred to as “mergers and acquisitions advisory”, “business transfer advisory” or, more generally, as “corporate finance advisory”, are provided both by non-regulated professionals and regulated players such as investment banks, financial investment advisers and regulated legal and accounting professions, including lawyers, notaries and chartered accountants.

While there are no plans to create a new regulated profession grouping all of these professionals, the AMF is nevertheless reviewing the opportunity of intervening in the oversight of these services and its providers. As such, it is launching a public consultation on two alternative proposals:

  1. The status quo relative to the current situation: the provision of a “corporate finance advisory” service is governed by common law and any disputes fall under the competency of the commercial courts.
  2. The introduction of “optional” regulation for professionals: those players having opted for this system undertake to respect a code of conduct and organisational rules such that their business is conducted competently, carefully and diligently, in the best interest of the customers. Any failure to do so could result in sanctions from a professional organisation or the AMF.

Contributions to the AMF’s public consultation must be received by February 28, 2017. More on the AMF’s plans to regulate advisory services can be seen here.

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