The world of so-called "atypical" investments, such as wine, works of art, manuscripts or even diamonds, attracts many investors with its often high promised returns. However, this appeal can mask significant risks, especially in the absence of a clear protective framework. To address this issue, French law has developed a specific legal category: "miscellaneous assets". Understanding precisely what this concept covers and which transactions are subject to it is fundamental to securing an investment or a commercial proposal. The aim of this article is to clarify the scope of these regulations, in addition to the information presented in the complete guide to the regulation of general merchandise intermediaries.
The concept of "miscellaneous goods": an extensive definition
The concept of "miscellaneous assets" is deliberately broad. The legislator has not drawn up an exhaustive list of the assets concerned. The aim of this flexible approach is to be able to encompass a wide variety of investments, including those that will emerge from future innovations, in order to ensure that savers are constantly protected when faced with investment products that are not conventional financial instruments.
The regulatory approach and its shortcomings
Article L. 551-1 of the French Monetary and Financial Code (CMF) does not define "miscellaneous assets" by their nature (wine, art, forest, etc.) but by the characteristics of the transaction proposed to the investor. This absence of a positive definition is a major feature of the system. Rather than stating what a diverse asset is, the law describes the situations in which an investment in an asset, whatever it may be, falls under this specific regulation. The advantage of this legal technique is that it is highly flexible, but it can also create a degree of uncertainty for project developers, who find it difficult to know whether their activity is covered.
The legal characteristics of sundry goods
A "miscellaneous asset" is first and foremost an asset within the meaning of the Civil Code: it may be a tangible thing (a container, a bottle of wine) or an intangible thing (a property right in a manuscript). Its economic value is a prerequisite, since it is the subject of an investment. The particularity of a miscellaneous asset lies not in its nature, but in the contractual arrangement that surrounds it. The distinction is fundamental: an atypical investment is an economic term for a non-traditional investment, while a "miscellaneous asset" is the legal qualification that triggers protective regulation under the aegis of the Autorité des marchés financiers (AMF).
Not all atypical investments are automatically classified as miscellaneous assets. They only become so if the acquisition transaction meets the legal criteria, in particular the existence of delegated management or the promise of a financial return.
Transactions involving sundry goods: criteria for liability
Application of the sundry goods regime is triggered by the nature of the proposed transaction. Article L. 551-1 of the Monetary and Financial Code sets out several alternative criteria for classifying a sales proposal as a transaction involving miscellaneous assets, making it subject to AMF oversight.
Purchasing life annuities
The first category of transactions covered is the purchase of life annuities, where the intermediary simply collects funds on behalf of a third party who will pay the annuity. This is a historic case of regulation, aimed at controlling arrangements which, under the guise of annuities, were similar to unregulated savings products. Conventional life annuity sales of property, however, are not covered by this scheme.
Acquisition of rights with management by a third party or promise of revaluation
This is the historical core of the system. A transaction involving movable or immovable property falls into the miscellaneous property category if one of these two conditions is met:
- The purchaser does not manage the property himself: if you buy rights to a forest but a third-party company is responsible for exploiting it, selling it and paying you the profits, you are no longer a simple owner but an investor in a financial arrangement. Management must be active and aimed at increasing the value of the asset on behalf of the investor.
- The contract offers the option of surrendering or exchanging the invested capital and revaluing it: if the seller undertakes to buy your property back from you at a future date for a price higher than your initial investment, the law considers that this is no longer a simple sale but an investment product. The promise of a financial gain on resale is the decisive factor.
These two conditions are alternatives. The presence of only one of them is sufficient to bring the transaction within the scope of the regulations governing miscellaneous goods.
The hamon law: the "financial return" criterion
The 2014 Consumer Law, known as the "Hamon Law", considerably broadened the scope of this regulation. It introduced a new, much broader criterion: a sundry goods transaction is any offer to acquire rights in one or more goods "by putting forward the possibility of a direct or indirect financial return or having a similar economic effect".
In practical terms, this means that a simple sales pitch can be enough to qualify the transaction. It does not matter whether the property is managed by a third party or whether there is a promise to buy. If the advertising, website or sales pitch emphasises the potential for capital gains, income or financial performance, the transaction is likely to be subject to AMF supervision. This extension has made it possible to catch up with many schemes that were previously unregulated, but it has also increased uncertainty for professionals. The line between the simple sale of a valuable asset and a savings product has become blurred and depends on how the offer is presented to the public.
Transactions expressly excluded from the sundry property regime
The legislator has provided a restrictive list of transactions which, even if they could meet the general criteria, are explicitly excluded from the sundry goods regime. This exclusion is explained by the fact that these sectors are already subject to their own regulations, often just as protective for the consumer or investor.
List of exclusions and their interpretation
Article L. 551-1, VI of the French Monetary and Financial Code rules out proposals relating to :
- Banking transactions : all products and services covered by the banking monopoly (deposit accounts, loans, etc.).
- Financial instruments and shares : the purchase of shares, bonds or units in commercial companies (SA, SARL, SAS) is governed by company law and financial market law.
- Operations governed by the Insurance, Mutual Insurance or Social Security Codes: Life insurance, retirement savings plans and other similar products have their own legal framework.
- The acquisition of rights to residential, business or commercial premises: standard property transactions (purchase of a flat to let, acquisition of business premises) are excluded, as they are covered by ordinary property law.
It is important to note that this list is strict. Any transaction that does not fall into one of these categories can potentially be classified as a sundry goods transaction if it meets the criteria for liability.
Skills challenges and new forms of employment
The generality of the definition of miscellaneous assets, combined with financial and technological innovation, poses constant qualification challenges. The issue is particularly acute for complex arrangements and new digital assets.
Company shares: when are they miscellaneous assets?
As mentioned above, the acquisition of shares is in principle excluded. However, AMF case law has shown that there are limits to this exclusion. The case of joint ventures (SEP) is instructive. An SEP does not have its own legal personality, which means that it does not act as a complete "screen" between the investor and the underlying asset (e.g. photovoltaic panels). In one case, the AMF ruled that an investment in shares in an SEP set up to finance and operate solar power plants constituted a transaction involving various assets, because the investor was actually acquiring rights to an asset managed by a third party with a view to earning a return.
The case of digital assets, tokens and NFTs
The emergence of digital assets has opened up a new field of uncertainty. Bitcoin, other cryptocurrencies and non-fungible tokens (NFTs) are not included in any of the exclusion lists in Article L. 551-1 of the French Monetary and Financial Code. In the absence of an express exclusion, their qualification therefore depends on the general criteria.
An offer of cryptocurrencies or NFTs, if it is presented to the public primarily with the hope of a financial return in mind, could well be considered as a transaction involving various assets. The fact that the asset is digital and decentralised does not change the logic of protecting savings. The investor is solicited on the basis of a promise of gain, which is precisely the spirit of the Hamon Act. This complex issue is analysed in more detail in our article on qualification of digital assets and NFTs.
The classification of a transaction as a "miscellaneous asset" is a subtle exercise, with important consequences for project initiators and investors alike. Given the constant innovation in investment products, a precise legal analysis is essential to ensure the security of your transactions. For support on these issues, you can call on the services of our firm's legal expertise in financing and credit.
If you are considering offering an investment product, or if you have been approached about an offer that you feel is complex, do not hesitate to contact our firm for an analysis of your situation.
Sources
- French Monetary and Financial Code: articles L. 551-1 et seq (rules governing intermediaries in various goods).
- Civil Code: articles 516 et seq (classification of property).
- General regulations of the Autorité des marchés financiers (AMF).
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