Shareholders and management of a payment or e-money institution in France
Acquiring shares in a French payment institution or electronic money institution (EMI), crossing a holding threshold or taking control all require the prior authorisation of the ACPR. The authority has two months from a complete application; in practice, allow two to three months. ORWL Avocats handles the regulatory side of these transactions, from due diligence on the target to closing, and assists institutions whenever a member of the management body changes.
A fund investing in a payments fintech, a group buying an EMI, a shareholder increasing its stake: none of these can close without the approval of the ACPR (Autorité de contrôle prudentiel et de résolution, the French Prudential Supervision and Resolution Authority). The French Monetary and Financial Code (CMF) makes any acquisition, increase or disposal of a holding, direct or indirect, in a payment institution or an EMI subject to its prior authorisation, except for transactions within a group (Articles L. 522-10-1 (in French) and L. 526-13). The buyer, the target and their corporate counsel should therefore build the ACPR into the deal timetable from the letter of intent onwards.
Which transactions require ACPR approval?
The Code sets the principle and two ministerial orders (arrêtés) set the thresholds. For a payment institution, authorisation is required to cross 10%, 20% or 30% of the capital or voting rights, upwards or downwards, and to acquire or lose effective control over the management of the institution (ministerial order of 29 October 2009, Article 7). For an EMI, the 50% threshold also applies (ministerial order of 2 May 2013, Article 7).
The French regime goes beyond the Payment Services Directive (PSD2, DSP2 in French) and the second E-Money Directive. Those directives require prior notification of acquisitions and increases of qualifying holdings at 20%, 30% and 50%. French law requires prior authorisation instead, adds a 10% threshold, drops the 50% threshold for payment institutions and applies the rule to disposals as well.
Three points often catch the parties out:
- disposals are covered as well as acquisitions: a shareholder that falls below a threshold must also obtain ACPR approval;
- voting rights are calculated under the French Commercial Code, which adds to the shares held those of any person acting in concert with the investor (Articles L. 233-9 and L. 233-10);
- institutions with a simplified authorisation (agrément simplifié) are not exempt: the ACPR also assesses the good repute of holders of a qualifying holding in these institutions.
| Transaction | Procedure before the ACPR | Expected deliverables |
|---|---|---|
| Acquiring 10% or more | Prior authorisation; two months from a complete application | Acquirer’s application form, cover memorandum, ownership chart, acquirer’s financial statements, evidence of good repute and source of funds |
| Crossing 20% or 30% (and 50% for an EMI) | Prior authorisation, at each threshold crossed | Updated acquirer’s application form, cover memorandum, capitalisation table before and after the transaction |
| Acquiring or losing control | Prior authorisation; the ACPR also reviews the acquirer’s plans for the institution | Acquirer’s application form, cover memorandum, revised business plan, target governance and proposed managers |
| Disposal that takes a holding below a threshold | Prior authorisation; the ACPR checks that the conditions of authorisation are still met | Memorandum on the shareholding after the transaction, capitalisation table, effects on governance |
| Change of control of a foreign corporate shareholder | Notification by the institution within one month; the ACPR reviews the situation | Notification by the institution, updated ownership chart, presentation of the new controlling shareholder |
| Appointment or departure of a member of the management body | Notification within five business days; the ACPR may oppose the appointment | Appointment form, CV, criminal record extract, notice of termination of office |
How does the ACPR review the application?
The acquirer files its application on the ACPR portal, using the form set out in ACPR Instruction No 2021-I-20 (in French). The authority decides within two months. The period only starts once the application is complete and stops each time the ACPR requests further documents, until they are received. If the ACPR has not responded when the period ends, authorisation is deemed granted (ministerial orders of 2009 and 2013, Articles 13 and 14).
In practice, the review takes two to three months. The ACPR’s questions cover:
- the identity of the acquirer and of those who control it, up to the natural persons;
- the source of the funds invested;
- the good repute and financial soundness of the acquirer;
- the effect of the transaction on the sound and prudent management of the institution: own funds, governance, business plan.
Once the transaction has closed, a manager of the institution sends the ACPR a letter within eight days, giving the closing date and confirming that the transaction complies with the authorisation (Article 15 of the same orders).
The timetable should also allow for the coming reform. The PSD3 and PSR package, still under negotiation, would end the separate EMI status and require every institution to obtain a new authorisation. A buyer acquiring today should expect the target to file a new application with the ACPR in the years that follow.
Funds and passive shareholders: mapping the ownership chain
Applications by investment funds take the longest. The ACPR does not stop at the vehicle that signs the subscription form: it wants to see the whole ownership chain, from the fund manager to the persons who control the fund. Each level must therefore be mapped: who holds what, and who decides.
The second difficulty is acting in concert. Several vehicles run by the same fund manager, or investors bound by a shareholders’ agreement, may together cross a threshold that none of them crosses alone. Their holdings are then added together to assess the thresholds, and each of them must be presented to the ACPR.
Passive shareholders need the same attention. A capital increase they do not take part in, the exercise of warrants, the conversion of bonds or the exit of another shareholder can change their stake without their buying anything. Before every transaction on the share capital, we check each shareholder’s position against the thresholds, before and after the transaction.
For each application, ORWL Avocats prepares:
- a complete ownership chart, up to the beneficial owners;
- an analysis of the links between investors and of any concert arrangements;
- the capitalisation table before and after the transaction, threshold by threshold;
- the list of persons who must file an application and the documents expected from each of them.
Changing the management of a payment institution or an EMI
The members of the management body of a payment institution or an EMI must have the good repute, knowledge and experience their role requires (CMF, Article L. 522-6). The institution notifies the ACPR of any new appointment within five business days, using the appointment form on the ACPR portal (ACPR Instruction No 2024-I-10, in French). The authority may oppose the appointment and may decide to interview the person. A manager’s departure must be notified within the same period (ministerial orders of 2009 and 2013, Articles 9 and 11).
The institution runs the procedure itself, through forms, and an interview with the ACPR is not systematic. The ACPR’s questions cover the manager’s background, their knowledge of payment services and of the anti-money laundering framework, and the time they can devote to the role. An unexpected departure needs planning: the institution must be able to put forward, without delay, a replacement whose profile meets the conditions of its authorisation.
We prepare the manager’s file, review their answers and help them prepare for the ACPR’s questions.
What if the transaction went ahead without authorisation?
A threshold is sometimes crossed without prior approval: a funding round whose final amount changes, a fund that subscribes for additional shares, a shareholders’ agreement that creates a concert party. The situation is rare, but it exposes the parties:
- the ACPR may ask the court to suspend the voting rights attached to the shares that should have been authorised;
- if the acquirer disregards a refusal, it may ask the court to suspend the acquirer’s voting rights or to annul the votes cast;
- it may also bring disciplinary proceedings against the institution, with sanctions ranging from a warning to withdrawal of authorisation.
We recommend acting voluntarily and quickly. As soon as the breach comes to light, the institution informs the ACPR, sets out the facts and files the acquirer’s application without delay. A voluntary remediation backed by a complete application puts the institution in a far better position than a breach found during an inspection.
Our approach to an acquisition
The firm handles the regulatory side of the transaction. For the buyer, we carry out due diligence on the target, draft the conditions precedent and prepare the ACPR application. For the target, we handle the procedure before the authority through to closing. We work alongside the parties’ corporate counsel, who keep the transaction documents.
Due diligence serves two purposes. It informs the buyer’s decision and the price it offers. It also prepares the ACPR application, since the authority will assess the effect of the transaction on an institution whose weaknesses it already knows. Depending on the target, due diligence covers the safeguarding of client funds, the anti-money laundering and counter-terrorist financing (AML/CFT) framework, sanctions lists and, where needed, digital operational resilience (DORA).
Institutions that are also CASPs
Many payment institutions also hold an authorisation as a crypto-asset service provider (CASP). A single transaction on the share capital then triggers two procedures: one before the ACPR for the payment licence, the other before the AMF (Autorité des marchés financiers, the French financial markets regulator) under Article 83 of MiCA, with thresholds and forms that differ. ORWL Avocats pools the documents for both applications and coordinates the exchanges to make the work of both authorities easier, as for any transaction on the share capital of a CASP.
Why work with ORWL Avocats?
Since 2018, the firm has represented payments fintechs, e-money issuers, crypto-asset service providers and the funds that invest in them before the ACPR and the AMF. It knows what the ACPR expects of payment institutions and EMIs, and its combined experience of payments and crypto-assets allows it to handle institutions with both statuses. The firm is ranked by Chambers FinTech and Leaders League.
A lawyer brings to the transaction what a consultant cannot: the legal analysis of each situation against the thresholds and the control test, professional secrecy over the information of the buyer and the target, and liability for the advice given. The lawyer drafts the conditions precedent and speaks to the ACPR on the client’s behalf.
A partner leads every matter, from the first due diligence to the closing confirmation.
ORWL Avocats’ regulatory expertise
ORWL Avocats is recognised for its work with payment and electronic money institutions before the ACPR, from authorisation of the institution to the qualification of crypto activities under payment services rules. The firm also advises crypto-asset service providers and token issuers on all their regulatory matters.
