Base Prospectus dated 4 October 2017
THIS DOCUMENT IS A FREE TRANSLATION OF THE FRENCH LANGUAGE "PROSPECTUS DE BASE" DATED 4 OCTOBER 2017 PREPARED BY METROPOLE AIX-MARSEILLE-PROVENCE. IN THE EVENT OF ANY AMBIGUITY OR CONFLICT BETWEEN CORRESPONDING STATEMENTS OR OTHER ITEMS CONTAINED IN THESE DOCUMENTS, THE RELEVANT STATEMENTS OR ITEMS OF THE FRENCH LANGUAGE "PROSPECTUS DE BASE" SHALL PREVAIL.
Métropole d’Aix-Marseille-Provence Euro Medium Term Note Programme of a maximum amount of Euro 400,000,000
Métropole d’Aix-Marseille-Provence (the Issuer or the Métropole) may, at any time, under the Euro Medium Term Note Programme (the Programme) which is subject to the present base prospectus (the Base Prospectus) and in compliance with applicable legislations, regulations and directives, issue debt notes (the Notes). The aggregate nominal amount of Notes outstanding shall not, at any time, exceed Euro 400,000,000. Application may, under certain circumstances be made for Notes to be admitted to trading on Euronext Paris (Euronext Paris). Euronext Paris is a regulated market as defined in Directive 2004/39/EC dated 21 April 2004 as amended (a Regulated Market). Notes may also be admitted to trading on another Regulated Market of a member State of the European Economic Area (EEA) or on a non-regulated market or not admitted to trading on any market. The final terms prepared for an issue of Notes (the Final Terms), based on the form set out in the Base Prospectus, shall specify whether or not such Notes shall be admitted to trading on a regulated market and shall list, if applicable, the relevant Regulated Market(s). The Notes admitted to trading on a Regulated Market shall have a nominal amount, specified in the Final Terms, greater or equal to euro 100,000 or any other greater amount which could be authorised or requested by any relevant competent authority or any applicable legislation or regulation. This Base Prospectus has been submitted for the approval of the Autorité des Marchés Financiers (AMF) which has granted it visa No. 17-531 on 4 October 2017. The Notes may be issued in dematerialised form (Dematerialised Notes) or materialised form (Materialised Notes), as more fully described in the Base Prospectus. Dematerialised Notes will be entered in an account in accordance with articles L. 211-3 et seq. of the French Code monétaire et financier. No physical document of title shall be issued in respect of Dematerialised Notes. Dematerialised Notes may be issued, at the option of the Issuer, either (a) in bearer form, inscribed on their date of issue in the books of Euroclear France (acting as central depositary), which shall credit the accounts of the Account Holders (as defined in "Terms and Conditions of the Notes - Form, denomination, and title") including Euroclear Bank S.A./N.V. (Euroclear) and the depositary bank for Clearstream Banking S.A. (Clearstream, Luxembourg) or (b) in registered form and, in such case, at the option of the relevant Noteholder (as defined in "Terms and Conditions of the Notes - Form, denomination and title"), either in pure registered form (au nominatif pur), in which case they shall be entered in an account maintained by the Issuer or any registration agent (as specified in the applicable Final Terms) on behalf of the Issuer, or in administered registered form (au nominatif administré), in which case they shall be entered in the accounts of the Account Holder nominated by the relevant Noteholder. Materialised Notes shall be issued in bearer form only and may only be issued outside France. A temporary global certificate in bearer form without interest coupons attached (Temporary Global Certificate) shall be issued initially in respect of the Materialised Notes. Such Temporary Global Certificate shall subsequently be exchanged for Materialised Notes represented by physical notes (Physical Notes) together with, if applicable, interest coupons, on a date falling at the earliest approximately 40 calendar days after the issue date of the Notes (unless postponed, as described in the section "Temporary Global Certificates in respect of Materialised Notes") upon certification that the Notes are not being held by U.S. Persons in accordance with U.S. Treasury regulations, as more fully described in the Base Prospectus. The Temporary Global Certificates shall be deposited (a) in the case of a Tranche (as defined in the section "General Description of the Programme") intended to be cleared through Euroclear and/or Clearstream, Luxembourg, on the issue date with a common depositary on behalf of Euroclear and Clearstream, Luxembourg, or (b) in the case of a Tranche intended to be cleared through a clearing system other than, or in addition to, Euroclear and/or Clearstream, Luxembourg or delivered outside any clearing system, in the manner agreed between the Issuer and the relevant Dealer (as defined below). The Issuer has been attributed an A+ rating, stable outlook by Fitch France Ratings (Fitch). The Programme has been attributed a A+ rating by Fitch. Notes issued under the Programme may or may not be attributed a rating. The rating attributed to the Notes, if any, shall be specified in the applicable Final Terms. The rating of the Notes may not necessarily be the same as that of the Programme. A rating is not a recommendation to buy, sell or hold Notes and may be suspended, amended or withdrawn at any time by the relevant rating agency. On the date of the Base Prospectus, Fitch is a rating agency established in the European Union and registered in accordance with Regulation (EC) No. 1060/2009 of the European Parliament and Council of 16 September 2009 relating to credit rating agencies as amended (the ANC Regulation) and is included on the list of rating agencies published on the European Financial Markets Authority website (https://www.esma.europa.eu/supervision/credit- rating-agencies/risk) in accordance with the ANC Regulation.
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Investors should be aware of the risks described in the section "Risk factors" before making any decision to invest in Notes issued under this Programme. The Base Prospectus, any supplement thereto and, so long as any Notes are admitted to trading on a Regulated Market in accordance with directive 2003/71/CE as amended (the Prospectus Directive), the applicable Final Terms shall be published on the websites of (a) the AMF (www.amf-france.org) and (b) the Issuer (http://www.marseille-provence.fr/index.php/la-metropole/emissions-obligataires) and shall be available for inspection and obtaining copies, free of charge, during normal office hours, on any day (except on Saturdays, Sundays and public holidays) at the specified offices of the Fiscal Agent or the Paying Agent(s).
Arranger
HSBC
Dealers
BARCLAYS CREDIT AGRICOLE CIB
HSBC NATIXIS
SOCIETE GENERALE CORPORATE & INVESTMENT BANKING
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This Base Prospectus (together with any supplement thereto) constitutes a base prospectus for the purposes of Article 5.4 of Prospectus Directive containing or incorporating by reference all relevant information on the Issuer to enable investors to make an informed assessment of the assets, business, financial position, results and prospects of the Issuer as well as of the rights attached to the Notes. Each Tranche (as defined in "General Description of the Programme") of Notes shall be issued in accordance with the provisions set forth in the "Terms and Conditions of the Notes" of this Base Prospectus, as completed by the provisions of the applicable Final Terms agreed between the Issuer and the relevant Dealers (as defined in "General Description of the Programme") at the time of issue of such Tranche. The Base Prospectus (together with any supplement thereto) combined with the Final Terms shall constitute a prospectus for the purposes of Article 5.1 of the Prospectus Directive.
In connection with the issue or sale of any Notes, no person has been authorised to provide any information or make any representation other than as set forth or incorporated by reference in this Base Prospectus. Otherwise, no such information or representation may be treated as having been authorised by the Issuer, the Arranger or any of the Dealers. Neither the delivery of this Base Prospectus nor any sale made on the basis of this document shall imply that there has been no adverse change in the situation, in particular the financial situation, of the Issuer since the date of this document or since the date of the most recent supplement to this prospectus, or that any other information provided in connection with this Programme is accurate on any date subsequent to the date on which it was provided or, if different, the date indicated on the document containing such information.
The distribution of this Base Prospectus and the offering or sale of any Notes may be restricted by law in certain countries.
The section "Subscription and Sale" of this Base Prospectus contains a description of certain restrictions applicable to the offering, sale and transfer of Notes and distribution of this Base Prospectus.
This Base Prospectus constitutes neither an invitation nor an offer by or on behalf of the Issuer, the Dealers or the Arranger to subscribe for or purchase Notes.
Neither the Dealers nor the Issuer makes any representation to any prospective investor in the Notes as to the lawfulness of their investment under applicable laws. Any prospective investor in the Notes must be capable of assuming the economic risks that its investment in the Notes implies for an unlimited period of time.
Neither the Arranger nor any of the Dealers has verified the information contained or incorporated by reference in this Base Prospectus. Neither the Arranger nor any of the Dealers makes any express or implied representation, or accepts any liability, as to the accuracy or completeness of any information contained or incorporated by reference in this Base Prospectus. The Base Prospectus is not intended to provide the basis of any credit or other evaluation and must not be treated as a recommendation by the Issuer, the Arranger or any of the Dealers to any recipients of this Base Prospectus to buy Notes. Each prospective investor in Notes must make his own assessment of the relevance of the information contained in this Base Prospectus and his decision to purchase Notes must be based on such research as he considers necessary. Neither the Arranger nor any of the Dealers undertake to review the financial situation or the overall situation of the Issuer during the life of this Base Prospectus, nor undertake to pass on to any investor or prospective investor any information of which they become aware.
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TABLE OF CONTENTS
Page
Risk Factors ...... 5 General Description of the Programme ...... 20 Supplement to the Base Prospectus ...... 25 Documents Incorporated by Reference ...... 26 Terms and Conditions of the Notes ...... 27 Temporary Global Certificates in respect of Materialised Notes ...... 54 Description of the Issuer ...... 56 Taxation ...... 119 Subscription and Sale ...... 121 Form of Final Terms ...... 124 General Information ...... 135 Responsibility for the Base Prospectus ...... 137
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RISK FACTORS
The Issuer believes that the risk factors described below are material to any decision whether or not to invest in the Notes and/or may affect its ability to fulfil its obligations to investors under the Notes. Those risks are unpredictable and the Issuer cannot comment on their potential occurrence.
The Issuer believes that the risk factors described below represent the main risks associated with Notes issued under the Programme, but they are not however exhaustive. The risks described below are not the only risks to which an investor in the Notes is exposed. Other risks and uncertainties, unknown to the Issuer at today's date or which it does not consider as at the date of this Base Prospectus to be material, may have a material impact on the risks associated with an investment in the Notes. Prospective investors should also read the detailed information appearing elsewhere in this Base Prospectus and form their own opinion before taking any investment decision. In particular, investors must make their own assessment of the risks associated with the Notes before investing in the Notes and must seek advice from their own tax, financial and legal advisers on the risks associated with an investment in a given Series of Notes and the suitability of an investment in the Notes in light of their own specific circumstances.
The Issuer believes that the Notes should only be purchased by investors who are (or act on the advice of) financial institutions or other professional investors who are able to assess the specific risks associated with an investment in the Notes.
All terms beginning with a capital letter and not defined in this chapter shall have the meanings given thereto in “Terms and Conditions of the Notes”.
Any reference below to an Article refers to the corresponding article number in the "Terms and Conditions of the Notes" section.
1. RISKS ASSOCIATED WITH THE ISSUER
1.1 Property and asset risks
The property and assets risks associated with the Issuer concern all of the damages, accidents, destruction and physical losses that may affect all or any of its moveable or real property, in particular as a result of a natural disaster, fire, vandalism, and so forth.
Furthermore, the activities and operations of the Issuer are likely to pose risks such as the risk of property damage, particularly relating to its fleet of vehicles, or the actions of its elected and unelected officials.
The Issuer has, through a public procurement procedure, taken out insurance providing adequate coverage against damage to its estate.
1.2 Potential legal ratio warning factors
The ratios of law n° 92-125 of 6 February 1992 on the territorial administration of the French Republic (called the "ATR Law") provide the means of analysing the financial situation of a local authority. They are presented in a consolidated manner for each issuer, between the main budget and the ancillary budgets, in thousands of euros.
In practice, these ratios have mandatory legal force, but they also are warning factors for potential investors, when the level of expenditure (or revenue) reached is higher (or lower) than the national average for the relevant layer (statistical reference sample, covering comparable local authorities). It should be noted that comparative national-level data is not available for the
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metropolitan areas (métropoles), due to the fact that they were only recently established in France (in 2015 and 2016), and moreover, they cover a diverse range of competencies and have varied statuses, which means that it is not possible to gather comparative data across similar-sized métropoles.
Presentation of ratios (Source: the ratios come from the law on the territorial administration of the Republic (known as the “ATR Law”) n° 92-125 of 6 February 1992)
Ratio Measurement Actual Operating Expenditure per Measures the level of service rendered. Inhabitant Actual Operating Revenue per Inhabitant Measures the financial resources of the local (in €) authority. Actual operating revenue excludes any surplus carried over from the previous financial year. Gross Equipment Expenditure per Measures spending on equipment. Inhabitant (in €) Outstanding Debt per Inhabitant (in €) Measures the level of indebtedness. This refers to the outstanding principal amount as at 31 December of the relevant financial year. Global Operating Endowment per Measures the main State endowment paid to Inhabitant (GOE) (in €) local authorities. The ratio of Payroll Expenditure to Actual Relative measurement of payroll costs. This is Operating Expenditure (as %) an irreducible expenditure item, irrespective of the local authority's population. The ratio of Actual Operating Expenditure Measures the relative capacity to generate self- (including debt repayment) to Actual financing resources once mandatory expenses Operating Revenue (as %) have been paid. The ratio of Gross Equipment Expenditure Measures the relative weight of investment in to Actual Operating Revenue (as %) the budget. The ratio of Outstanding Debt to Actual Measures overall indebtedness, in other words Operating Revenue (as %) the debt burden relative to wealth. The ratio of savings to Actual Operating Measures the level of the authority’s internal Revenue (as %) financing compared to its revenue.
Métropole Aix-Marseille-Provence’s statutory ratios
Main Budget of the 2017 Primary Budget * Actual operating expenditure per inhabitant 912.71 € Actual operating revenue per inhabitant 986.62 € Gross equipment expenditure per inhabitant 234.64 € Outstanding debt per inhabitant 809.92 € Global Operating Endowment (GOE) per inhabitant 155.59 € Payroll expenditure / actual operating expenditure 14.72% Actual operating expenditure and annual debt 98.41% principal repayment / actual operating revenue
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Gross equipment expenditure / actual operating 23.78% revenue Outstanding debt / actual operating revenue 82.09% 8.65 Gross savings / actual operating revenue The Primary Budget is a financial forecast document which records forecast revenue and expenditure for the year. It is prepared before the beginning of the financial year and includes an Operating section and an Investment section.
1.3 Risks related to the Issuer’s tax potential
Tax Potential is an indicator used to compare the potential tax wealth of local authorities relative to each other. It represents the total revenue that the local authority would be able to raise if it applied the mean stratum rates to its tax base. It is calculated in accordance with the following formula: Mean stratum rate of taxation * local authority tax base. The tax potential is determined by multiplying the gross tax base for year N-1 of the four direct local taxes (the residence tax, the real estate tax on developed land/built properties, the real estate tax on undeveloped land and the territorial economic contribution) by the national mean rate of taxation for each of these taxes.
The Aggregate Tax Potential (PFA) of the inter-communal bloc refers to the aggregate communal and inter-communal tax wealth from within the boundaries of the inter-communal bloc. It is obtained by adding to the tax potential of the member communes, the proceeds of the contribution on the added value of companies (CVAE), the supplemental tax on undeveloped land (TAFNB), the fixed taxes on utilities companies (IFER), the tax on commercial premises (TASCOM), the amount of the business tax reform compensatory endowment (DCRTP), the national individual resources guarantee fund (FNGIR), the mining fee, gambling income levy, the surcharge on mineral waters received or borne by the inter-communal cooperation public establishment (EPCI) or the member commune and also the inter-communal cooperation public establishment (EPCI) compensatory endowment and the amount of the compensatory element of the communes’ fixed endowment relating to wage compensation (CPS) (For the purposes of this calculation, proceeds means the gross proceeds for the last year for which the results are known).
Financial Potential (PFI), as defined in article L. 2334-4 of the local authorities general Code (CGCT), is the method for calculating, not only the ability of the local authority to raise tax revenue (tax potential), but also the wealth derived by local authorities from endowments paid on a recurring basis by the State and that are essential for balancing the budget. It therefore takes into account all of a local authority’s stable sources of revenue. Aggregate Financial Potential (PFIA), established by article 144 of law n°2011-1977 of 28 December 2011, the finance law for 2012, is the sum of the wealth of the base local authorities and of their intercommunalities enabling a comparison to be made between local authorities irrespective of how they are organised institutionally thereby neutralising the alternative tax arrangements of the intercommunalities and allowing the various categories of EPCI to be compared. This has been used since 2011 for distributing the rebalancing element of the intercommunal bloc endowment.
It is equal to the tax potential, to which is added the fixed part of the global operating endowment paid by the State, received by communes within the intercommunal bloc for the previous year (excluding the wages compensation element (CPS) and compensation for the decreased business tax reform compensatory endowment). This is reduced, if relevant, by the amount of any tax deductions suffered, in the previous year, by the bloc and its communes as a result of the abolition of allocations for communal social action, or the commercial premises tax.
The Métropole’s aggregate financial potential for the 2017 financial year, calculated on 2016 bases, derives from the 2017 intercommunal and communal revenues rebalancing fund (FPIC)
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notification. It should be noted that comparative national-level data is not available for the metropolitan areas (métropoles), due to the fact that they were only recently established in France (in 2015 and 2016), and, moreover, they cover a diverse range of competencies and have varied statuses, which means that it is not possible to gather comparative data across similar-sized métropoles.
2017 Aggregate Financial Potential (PFIA) 2,177,593,126 € PFIA per inhabitant of the 567 € intercommunal bloc
Note concerning the aggregate financial potential per inhabitant (PFIA/inhab): to take account of the increasing burden of local authority expenditure depending on its size, the population used as the basis for calculating aggregate financial potential is weighted by a logarithmic coefficient which varies between 1 and 2 as the size of the local authority increases. This allows all intercommunal blocs and isolated communes to be compared whatever their size.
1.4 Financial risks associated with existing borrowings
A significant part of the Issuer's debt consists of variable rate loans, the cost of which cannot be determined in advance. Indeed, a deterioration of the current market conditions could increase the cost of the Issuer’s debt.
The proportion of the Issuer's total outstanding debt represented by variable rate loans is 38.24%.
However, the legal framework of the loans of the local authorities limits the risk of the Issuer insolvency.
Article 2 of law n° 82-213 of 2 March 1982, concerning the rights and freedoms of communes, départements and régions, abolished all State supervision over local authority actions. These changes led to the recognition of the wide freedom of local authorities in financial matters and to the liberalisation and normalisation of the rules governing the local authorities' loans. Henceforth, local authorities are free to use bond issues and their relationship with theirs investors is, in principle, governed by private law.
This freedom is subject to the following principles: Borrowings must only be used to finance capital expenditure; and the repayment of capital must be covered by own funds.
Furthermore, the law n° 2013-672 of 26 July 2013 on the separation and regulation of banking activities complements these principles as follows: for borrowings denominated in foreign currencies, the foreign exchange risk must be fully hedged by a (euro) currency swap agreement when the loan is signed, for the full amount and entire duration of the loan; where variable interest rates apply, indices and index spreads permitted for indexation clauses are set by decree of the Conseil d’Etat and the indexation formulas must satisfy simplicity and foreseeability criteria concerning the financial costs weighing on local authorities under such instruments.
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Finally, decree n° 2014-984 of 28 August 2014, adopted pursuant to the above-mentioned law dated 26 July 2013, sets forth the conditions under which local authorities may subscribe for loans with banking institutions and sign financial contracts, to limit high-risk borrowings. This decree entered into force on 1 October 2014.
Debt service (repayment of principal and interest) constitutes a mandatory expense and must therefore be registered in the Issuer's budget.
If the Issuer fails to satisfy this legal requirement, its creditors may rely on the so-called automatic budget entry and payment execution procedures (article 1 – II of the codified law n°80- 539 dated 16 July 1980 concerning administrative law coercive measures and the execution of judgements by public law legal entities as supplemented in articles L.1612-15 and L.1612-16 of the Code général des collectivités territoriales). Under these provisions, once a final and non- appealable court decision has ordered a local authority, such as the Issuer, to pay a sum of money fixed by the decision itself, payment of such amount must be authorised within a period of two months from the date of notification of the judicial decision. Failing execution of payment within such period, the State representative in the Département (the Préfet) shall execute such payment ex officio ("mandatement d'office").
When credits are not sufficient to cover any of the Issuer’s mandatory expenses, the Préfet has the power to issue a formal notice to create the necessary funds; if the community council has not generated or created such funds within the period set in the formal notice, the Préfet enters the amount due ex officio in the Issuer’s budget by generating the necessary funds, either by cancelling or reducing other expenditure, or by creating the required funds.
In this regard, any failure on the part of the Préfet in implementing this procedure may result in the State being liable, potentially, for the full amount of the unpaid expenditure (cf. Conseil d’Etat, 18 November 2005, Société Fermière de Campoloro, req. n° 271898; Conseil d’Etat, 29 October 2010, Ministry for Food, Agriculture and Fisheries, req. n° 338001).
Furthermore, under the terms of article L.1612-15 of the Code général des collectivités territoriales, this procedure may be initiated by the regional audit office (Chambre Régionale des Comptes) upon request either by the Préfet, or by the Issuer’s public auditor, or by any person with standing, for the purpose of determining, within a period of one month from the date of the request, that a mandatory expense has not been entered in the Issuer’s budget or has been entered but in an insufficient amount and to issue a formal notice to the Issuer to rectify its budget.
If, within the one-month period, such formal notice has not been complied with, the Chambre Régionale des Comptes requests the Préfet to enter such expense in the budget and proposes, if necessary, either that the funds are created or that non-mandatory expenses are reduced to cover the mandatory expense.
The principle of immunity from seizure or attachment of French local authority property (set forth in article L. 2311-1 of the General public entity property Code) protects the Issuer from the effect of general law enforcement measures, such as seizure of property.
The mandatory nature of debt repayment (capital and interest) is therefore a legal protection for lenders.
However, legal, economic, political or social imperatives or developments, which are difficult to foresee, may result in the Issuer voting unforeseen or additional budgetary expenditure, the corresponding revenue for which has to be generated either by use of revenue not specified in the primary budget, or by cancelling previously approved expenditure. These are approved by means of modificatory budgetary decisions which may be made during the course of the year.
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1.5 Risks associated with off-balance sheet arrangements of the Issuer
As of 31 December 2016, the Métropole manages an outstanding consolidated guaranteed debt of 595.89 million euros.
This outstanding guaranteed debt is essentially composed of loan guarantees granted by the Métropole for the benefit of social-housing organisms (HLM) and deals with the financing of social-housing transactions sponsored by the State.
No guarantee was called for over the course of the last two financial years.
1.6 Risk of change in the Issuer’s sources of funds
The State administers the local tax of the territorial authorities, determines their base and then, using this base and the rates voted by the local authority or the inter-communal cooperation public establishment (EPCI), notifies the community what amount it will receive. The State guarantees that the local authority or the EPCI will receive the full amount of the notified tax receipts, regardless of the amount in fact collected. Furthermore, the State advances each month one twelfth of the amount of the taxes voted.
In terms of resources, the Issuer is exposed to any changes in its legal and regulatory environment.
The Issuer’s level of funding is, also, but not to a critical extent, dependent on the revenue paid by the State. The law n° 2014-1653 of 29 December 2014 on the planning of the public finances for the years 2014 to 2019 provides a decrease in all financial support paid annually by the State to local authorities.
Against this background, the planned decrease in the level of endowments paid by the State is likely to affect unfavourably the Issuer's operating revenue. The impact on the Issuer of the fall in State funding is estimated at -€10.7M in 2017 compared with 2016. Since budgetary balance has to be respected, the Issuer might either be required to adjust changes to its expenses or to increase its other resources (specifically, the changes to local taxation, subsidies paid by Région Provence-Alpes-Côte-d-Azur and the Département des Bouches-du-Rhône, or the increase in resources related to the Issuer's commercial activities).
1.7 Risks associated with the use of financial products
The use of financial instruments (derivatives such as swaps, caps, tunnels, etc.) is governed by inter-ministerial circular No. NOR IOCB1015077C dated 25 June 2010 which sets out the rules on financial instruments offered to local authorities and their public entities. The circular specifies the risks inherent to debt management by local authorities and summarises the current law governing the use of financial products and financial risk hedging instruments. In particular, it notes that there is a complete prohibition on any speculative transactions on the grounds that such transactions do not fall either under the remit of the local authorities, nor are they in the local general interest. In this context, the use of financial products is only permitted to hedge against exchange or interest rate risk.
The Issuer has, to date, not taken any exchange rate risk, since all of its borrowings are denominated in euro.
In this regard, law no. 2013-672 of 26 July 2013 on the separation and regulation of banking activities inserted a new article L.1611-3-1 into the Code général des collectivités territoriales, pursuant to which, where a local authority takes out a loan denominated in a foreign currency, the
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local authority shall be obliged to enter into a currency exchange contract against euros at the same time, for the total amount and duration of the loan.
Moreover, decree no. 2014-984 of 28 August 2014, issued as part of the implementation of the aforementioned law dated 26 July 2013, governs in particular, the conditions for the conclusion of financial contracts by local authorities.
1.8 Rate-related risks
Given its status as a recurrent borrower, the Issuer is exposed to interest rate fluctuations. In order to limit such exposure and to protect against adverse changes to such interest rates, the Issuer has defined an interest rate hedging strategy.
The Issuer’s rate risk management policy is prudent. It aims to protect the debt against an increase in rates by reducing its cost.
In this regard, law no. 2013-672 dated 26 July 2013 on the separation and regulation of banking activities provides that, where the interest rate of a loan concluded by a local authority is variable, the indices and the index spreads permitted for indexation clauses, following a currency exchange contract, if applicable, shall be set by decree of the Conseil d'Etat and the indexation formulae for such a loan shall meet simplicity and predictability criteria with regard to the financial burden on the local authority.
1.9 Lack of private law enforcement action against the Issuer
Since the Issuer is a local authority, it cannot be subject to a common law enforcement action such as the confiscation of its assets. Indeed, article L.2311-1 of the Code general de la propriété des personnes publiques provides that "the assets of the public entities mentioned in article L.1 cannot be seized".
Therefore, and like any public law legal entity, the Issuer is not subject to the collective procedures provided by the Code de commerce (Paris Court of Appeal, 3rd Chamber, B section, 15 February 1991, National Centre of regional freight offices no. 90-21744 and 91-00859).
1.10 Risks related to the Issuer’s financial statements
The Issuer, as a local authority, is not subject to the same accounting standards as a private law issuer. Its financial statements (budgets, administrative accounts) are subject to specific accounting rules set, in particular, by decree no 2012-1246 of 7 November 2012 on public budget and accounting management, and by the Code général des collectivités territoriales. These budget and accounting rules are more fully described in the section "Description of the Issuer" of this Base Prospectus. The financial assessment of the Issuer by investors should take into account this specific accounting context.
Moreover, the Issuer's accounts are not audited according to the same procedures as a private law issuer, but are subject to verification by the State, which takes three forms: (i) legality check by the Departmental Prefect, (ii) financial checks carried out by the Departmental Prefect and the public accountant and (iii) periodic management review carried out by the Regional Accounting Chamber. These checks are more fully described in the "Description of the Issuer" section of this Base Prospectus.
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1.11 Historical information risk
The information contained in this Base Prospectus concern the past and current financial situation of the Issuer, and the rules of operation currently applicable to Issuer. This information is provided for informational purposes only. No assurance can be given that future financial years will produce similar and/or comparable data, or that the operating rules and procedures currently applicable to the Issuer will remain unchanged. Indeed, Métropole Aix-Marseille-Provence was established on 1 January 2016 (laws no. 2014-58 dated 27 January 2014 on the modernisation of territorial public action and strengthening metropolitan areas and no. 2015-991 dated 7 August 2015 on the new territorial organisation of the Republic) and should receive powers transferred from its member municipalities until 2020. Consequently, the Issuer's financial structure is likely to change over the course of future financial years.
1.12 Potential conflicts of interest
All or some of the Dealers and their subsidiaries have engaged, and/or may in the future be engaged, in investment banking, commercial banking and other commercial and financial advisory activities with the Issuer. They have or may (i) engage in investment banking activities, dealing or hedging activities, including in activities which may include brokering, financing transactions or entering into derivative instruments (ii) act as underwriters in connection with offerings of notes issued by the Issuer or (iii) act as financial advisers to the Issuer. In connection with these activities, certain Dealers may hold or may have held securities issued by the Issuer. They may also have received or will receive the usual fees and commissions for such transactions.
Potential conflicts of interest may arise between the Calculation Agent, if any, for a particular Tranche of Notes and the Noteholders, including in respect of certain discretionary decisions or judgements that the Calculation Agent may be required to make under the Terms and Conditions of the Notes, which may have an impact on the amount received upon redemption of the Notes.
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1.13 Risks relating to the vote of the United Kingdom to leave the European Union
On 23 June 2016, the United Kingdom held a referendum to decide the future of its involvement in the European Union. The result was in favour of a departure from the European Union. On 29 March 2017, the government of the United Kingdom triggered article 50 of the Lisbon Treaty, which relates to withdrawal from the European Union. In accordance with article 50, the Treaty on the European Union and the Treaty on the Functioning of the European Union cease to apply to the relevant state from the date of entry into force of the departure agreement, or, failing that, two years following the notification of its intention to leave, although this period may be extended in certain circumstances. Consequently, there are a number of uncertainties related to the future of the United Kingdom and its relations with the European Union. The negotiation of the terms of its departure from the European Union could take several years. While such terms and the timeline for departure from the European Union are not defined, it is impossible to determine the impact that the referendum, the termination of the European Union membership and/or any other evolution linked to the outcome of this referendum may have on the Issuer’s financial situation. As a result, no assurance may be given that such developments will not adversely affect either the Issuer’s capacity to meet its obligations under the Notes, nor the market value or liquidity of the Notes on the secondary market.
2. RISKS RELATING TO THE NOTES
2.1 General Market Risks
The debt instruments market may be volatile and be adversely affected by certain events
The securities market is affected by economic and market conditions and, to varying degrees, by interest rates, exchange rates and inflation in other European and industrialised countries. No assurance can be given that events in France, Europe or elsewhere will not cause market volatility or that such market volatility will not adversely affect the value of the Notes or that economic and market conditions will not have other adverse effects.
An active market in the Notes may not develop or be sustained
No assurance can be given that an active market in the Notes will develop or that, if such market does develop, that it will be sustained or offer sufficient liquidity. If an active market in the Notes does not develop or is not sustained, the market value or price and liquidity of the Notes may be adversely affected. Therefore, investors may not be in a position to easily sell their Notes or to sell them at a price offering a return comparable to similar products for which an active market has developed.
The Issuer has the right to purchase Notes, on the terms set forth in Article 5.7, and the Issuer may issue new Notes, on the terms set forth in Article 13. Such actions may favourably or adversely affect the value of the Notes. If additional or competing products are brought on to the markets, this may adversely affect the value of the Notes.
Exchange rate and exchange control risks
The Issuer pays the principal and interest on the Notes in euros (the Specified Currency). This presents certain currency conversion risks if the investor's financial activities are principally conducted in a different currency or monetary unit (the Investor's Currency) than the Specified Currency. Such risks include the risk that exchange rates may fluctuate significantly (including fluctuations due to devaluation of the Specified Currency or revaluation of the Investor's Currency) and the risk that the authorities with jurisdiction over the Investor's Currency may impose or modify exchange controls. An increase in the value of the Investor's Currency
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compared to the Specified Currency would reduce (i) the equivalent yield of the Notes in the Investor's Currency, (ii) the equivalent value in the Investor's Currency of the principal payable on the Notes and (iii) the equivalent market value in the Investor's Currency of the Notes.
The Government and the monetary authorities may impose (as has happened in the past) exchange control measures that may adversely affect exchange rates. Accordingly, investors may receive payment of an amount of principal or interest less than expected, or receive neither interest nor principal.
Risks related to rating
The Issuer has been rated A+, stable outlook, by Fitch. The Programme has been rated A+ by Fitch. Independent credit rating agencies may assign a rating to Notes issued under this Programme. Such rating does not reflect the potential impact of the risk factors described in this section and all other risk factors that may affect the value of the Notes issued under this Programme. A rating does not constitute a recommendation to buy, sell or hold Notes and may be revised or withdrawn at any time by the rating agency.
2.2 General risks related to the Notes
The Notes may not be an appropriate investment for all investors
An investment in the Notes may not be appropriate for all investors. Such instruments may be acquired as a way to reduce risk or enhance yield with an understood, measured and appropriate additional risk to their overall investment portfolio. A prospective investor should not invest in Notes which are complex financial instruments unless it has the expertise (either alone or with the assistance of its financial adviser) to evaluate how the Notes will perform under changing conditions, the resulting effects on the value of the Notes and the impact this investment will have on the prospective investor's overall investment portfolio.
Each prospective investor must determine, based on his own assessment and with the assistance of any adviser he may consider appropriate in the circumstances, the suitability of an investment in the Notes in light of his personal circumstances. In particular, each prospective investor should:
(a) have sufficient knowledge and experience to make a meaningful evaluation of the Notes, the merits and risks of investing in the relevant Notes and the information contained in this Base Prospectus or any applicable supplement and in the applicable Final Terms;
(b) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation and attitude to risk, an investment in the relevant Notes and the impact such the Notes might have on its overall investment portfolio;
(c) have sufficient financial resources and liquidity to bear all of the risks of an investment in the Notes;
(d) understand thoroughly the terms and conditions of the Notes and be familiar with the behaviour of any relevant reference rates and financial markets;
(e) be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the relevant risks; and
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(f) ensure that an investment in the Notes meets the regulations or the applicable law, notably in prudential matters.
The Notes may be redeemed prior to maturity
If, at the time of redemption of principal or payment of interest, the Issuer is obliged to pay additional amounts in accordance with Article 7.2, it may reimburse the Notes in full at the Early Redemption Amount together with, unless provided otherwise in the applicable Final Terms, all interest accrued until the relevant redemption date.
Similarly, if it becomes unlawful for the Issuer to fulfil or comply with its obligations under the Notes, the Issuer may, in accordance with Article 5.9, redeem the Notes, in full but not in part only, at the Early Redemption Amount together with all interest accrued until the relevant redemption date.
Any early redemption option available to the Issuer, specified in the Final Terms of an issue of Notes may result in the Noteholders receiving a return considerably below their expectations.
The Final Terms of an issue of Notes may include an early redemption option for the Issuer. In such case, the yield at the time of redemption may be lower than expected and the value of the amount redeemed may be less than the purchase price of the Notes paid by the Noteholder. Consequently, part of the capital invested by Noteholders in the Notes may be lost, resulting in the Noteholder receiving less than the full amount of capital invested. Furthermore, in the event of early redemption, investors who decide to reinvest the funds they receive may only be able to reinvest in securities that offer lower returns than the redeemed Notes.
Risks related to the optional redemption by the Issuer
The market value of the Notes may be affected by the optional redemption of the Notes at the option of the Issuer. During the periods where the Issuer can exercise such redemptions, in general, this market value does not substantially increase above the price at which the Notes may be redeemed. This can also be the case before any redemption period.
It can be expected that the Issuer would redeem the Notes when its borrowing costs are lower than the interest rate of the Notes. In such case, an investor will not, generally, reinvest the proceeds of the redemption at an actual interest rate as high as the interest rate of the redeemed Notes and may only be able to invest in Notes that offer a significantly lower yield. Prospective investors must also take into account the risk linked to the reinvestment in the light of other available investments at the time of the investment.
Risks related to the optional redemption by the Noteholders
The exercise of redemption at the option of the Noteholders for some Notes may affect the liquidity of Notes of the same Series for which such option has not been exercised. Depending on the number of Notes of the same Series in respect of which the optional redemption provided for in the applicable Final Terms has been exercised, any market of Notes for which such a redemption has not been exercised may become illiquid.
Amendment of the Terms and Conditions of the Notes
Noteholders will be grouped for the defence of their common interests in a Masse (as defined in Article 10 of the Terms and Conditions of the Notes "Representation of Noteholders") and may hold general meetings of Noteholders. The Terms and Conditions of the Notes provide that in certain cases Noteholders, not present or represented at a general meeting, may be bound by
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resolutions voted for by Noteholders who were present or represented, even if they disagree with the decision. Likewise, to the extent that the decisions of the general meetings are taken on the basis of two-thirds of the votes of the Noteholders attending such meetings (in person or represented thereat), Noteholders, present or represented, may equally be bound by a vote receiving the required majority, even where they do not agree with the outcome of such vote.
The general meeting of Noteholders may, subject to the provisions of Article 10 of the Terms and Conditions of the Notes "Representation of Noteholders", deliberate on any proposal relating to the modification of the Terms and Conditions of the Notes, notably on any proposal, whether for arbitration or settlement, relating to rights that are in dispute or the subject of judicial decision.
Change of law
The Terms and Conditions of the Notes are governed by French law as of the date of this Base Prospectus. No assurance can be given as to the consequences of any judicial decision or any change of French law or regulation subsequent to the date of this Base Prospectus.
Taxation
Prospective purchasers and sellers of the Notes should be aware that they may be required to pay taxes or documentary charges or duties in accordance with the laws and practices of the country where the Notes are transferred or in other jurisdictions. In some jurisdictions, no official statements of the tax authorities or court decisions on the tax treatment of securities such as the Notes are available.
Prospective investors are advised not to rely upon the tax summary contained in this Base Prospectus but to ask for their own tax adviser's advice based on their individual situation with respect to the acquisition, holding, proceeds, divestiture and redemption of the Notes. Only these advisors are in a position to duly consider the specific situation of a prospective investor.
These considerations relating to investment in the Notes should be read in connection with the "Taxation" section of this Base Prospectus.
Proposals of a European financial transactions tax (FTT)
On 14 February 2013, the European Commission published a proposal (the Commission Proposal) for a directive for a common FTT in Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia (the participating member states). In March 2016, Estonia indicated its withdrawal from enhanced cooperation.
The Commission Proposal has very broad scope and could, if introduced, apply to certain dealings in the Notes (including secondary market transactions) in certain circumstances. The issuance and subscription of Notes should, however, be exempt.
Under the Commission Proposal, the FTT could apply in certain circumstances to persons both within and outside of the participating Member States. Generally, it would apply to certain dealings in the Notes where at least one party is a financial institution, and at least one party is established in a participating Member State. A financial institution may be, or be deemed to be, "established" in a participating Member State in a broad range of circumstances, including (a) by transacting with a person established in a participating Member State or (b) where the financial instrument which is subject to the dealings is issued in a participating Member State.
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However, the Commission's Proposal is still under negotiation between the participating member states. It may, therefore, be amended before its implementation, the timetable for which remains unclear. Additional EU Member States may also decide to participate.
Prospective investors in the Notes are advised to seek their own professional advice in relation to the FTT.
Loss of investment in the Notes
The Issuer reserves the right to purchase Notes, at any price, on the stock exchange or otherwise, in accordance with applicable regulations. Although this does not impact on the normal schedule for redemption of the Notes remaining outstanding, it would however reduce the yield of the Notes redeemed early. Similarly, in the event of change of the taxation rules applicable to the Notes, the Issuer may be obliged to redeem the Notes in full at the Anticipated Redemption Amount as defined in the applicable Final Terms. Any early redemption of the Notes may result in the Noteholders receiving a yield significantly below their expectations.
Also, there is a risk that the Notes will not be redeemed on their maturity date if the Issuer is no longer solvent. The non-redemption or partial redemption of the Notes would de facto result in a total or partial loss of investment in the Notes. The Issuer, which is not subject to collective private law procedures, (see Risk Factor 1.9 "Lack of private law enforcement action against the Issuer") would, in the event of insolvency, be subject to specific procedures for local authorities (see Risk Factor 1.4 "Financial risks associated with existing borrowings").
Finally, any sale of a Note on the market may occur at a price below the purchase price and cause a capital loss. Under this operation, the Investor does not benefit from any protection or guarantee of the invested capital. The initial invested capital is exposed to the market risks and may thus not be returned in case of adverse stock exchange evolution. Investors may lose all or part of their investment value, depending on the case.
Verification of legality
The Préfet of the Department Bouches-du-Rhône has two months as from the date of the reception to the préfecture of any resolution or decision of the Métropole d’Aix-Marseille- Provence, and of some contracts entered into by it to verify their legality and, if he considers them to be illegal, to refer them to the relevant administrative tribunal and, if appropriate, seek an order for those of them which constitute administrative acts (actes administratifs) to be suspended. The relevant administrative tribunal may then, if it considers the referred acts to be illegal, order their suspension or annul them in whole or in part.
Third party action
A third party, having legal standing, may bring an action for abuse of authority before the administrative courts against any resolution of the Métropole d’Aix-Marseille-Provence and/or any decision to sign contracts issued by it, other than a resolution or decision which is not intrinsically connected to an administrative contract, within a period of two months as from the date of its publication and, if appropriate, seek an order for the suspension of their performance. This two months period can be extended if the action for abuse of authority brought against a resolution has been preceded by an administrative redress, if such action is brought by a non- resident or in some other circumstances. In addition, if such resolution or decision to sign are not published in an appropriate manner, such right of action shall be brought by any third party for an unlimited period.
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In case of an action for abuse of authority brought against a resolution or decision to sign, other than a resolution or decision which is not intrinsically connected to an administrative contract, the competent administrative judge may then, if he considers that such administrative act is illegal, annul it totally or in part, which may lead to the illegality of the agreements entered into on the basis of the aforementioned administrative act.
In case a contract entered into by the Métropole d’Aix-Marseille-Provence was to be considered as an administrative contract, a third party having a legal standing may bring a full remedy action (recours de pleine jurisdiction) to the administrative courts against such contract or some of its non-regulatory provisions which are not intrinsically connected to such contract, and as the case may be, seek an order for it to be suspended. Such action shall be brought in a two months period as from the date of the appropriate publications. Moreover, if the administrative contract has not been duly published, actions can be brought by a third party, having a legal standing, for an unlimited period.
If the competent judge points out the existence of any defects rendering the contract void, he can decide to terminate or annul the contract, after having evaluated the importance of such defects and of their consequences and after having taken in mind the nature of the defects.
2.3 Risks related to a specific issue of Notes
Floating Rate Notes
A key difference between Floating Rate Notes and Fixed Rate Notes is that interest payments on Floating Rate Notes cannot be predicted. Due to fluctuations in interest payments, investors cannot determine the actual yield on the Floating Rate Notes at the time of purchase, and therefore their investment returns cannot be compared to investments with longer fixed interest periods. If the terms and conditions of the Notes specify frequent interest payment dates, investors are exposed to reinvestment risk if market interest rates fall. In such case, investors will only be able to reinvest their interest income at a potentially lower prevailing interest rate.
Accordingly, the market value of Floating Rate Notes may be volatile if changes, in particular short-term changes, on the interest rate market applicable to the relevant rate cannot be applied to the interest rate of such Notes until the next periodic adjustment of the relevant rate.
Fixed Rate Notes
It cannot be ruled out that the value of Fixed Rate Notes may be adversely affected by future fluctuations on the interest rate markets.
Fixed to Floating/Floating to Fixed Rate Notes
Fixed/Floating Rate Notes may bear interest at a fixed rate which the Issuer may elect to convert into a floating rate or at a floating rate which the Issuer may elect to convert into a fixed rate. The existence of this Issuer conversion option may affect the secondary market in, or the market value of, the Notes to the extent that the Issuer may elect to convert the rate when this will enable it to reduce its overall borrowing costs. If the Issuer converts a fixed-rate into a floating rate, the rate spread on Fixed/Floating Rate Notes may be less favourable than spreads on Floating Rate Notes with the same benchmark rate. Furthermore, the new floating rate may be lower at any time than the interest rate on its other Notes. If the Issuer converts a floating rate into a fixed rate, the fixed rate may be lower than the rates on its other Notes.
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Zero Coupon Notes and other Notes issued below par or with an issue premium
The market value of Zero Coupon Notes and other securities issued below par or with an issue premium tends to be more sensitive to fluctuation due to variations in interest rates than typical interest-bearing securities. Generally, the longer the maturity of the Notes, the more the price volatility of such Notes resembles that of typical interest-bearing securities of similar maturity.
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GENERAL DESCRIPTION OF THE PROGRAMME
The following general description must be read with all the information setup in this Base Prospectus. The Notes shall be issued pursuant to the terms agreed between the Issuer and the relevant Dealer(s) and shall be governed by the Terms and Conditions specified in pages 25 to 52 of the Base Prospectus.
Terms and expressions defined in the section "Terms and Conditions of the Notes" hereafter shall have the same meaning in this general description of the programme.
Issuer: Métropole d’Aix-Marseille-Provence Description of the Euro Medium Term Note Programme (the Programme). Programme: The Notes will constitute obligations pursuant French Law. Arranger: HSBC FRANCE Dealers: BARCLAYS BANK PLC CREDIT AGRICOLE CORPORATE & INVESTMENT BANK HSBC FRANCE NATIXIS SOCIETE GENERALE The Issuer may, at any time, revoke any Dealer under the Programme, or appoint supplement Dealers either for one or several Tranches, or for the Programme as a whole. Any reference made in this Base Prospectus to the Permanent Dealers refers to persons named above as Dealers and to any other person who would have been appointed as a Dealer for the Programme as a whole (and who would have not been revoked) and any reference made to Dealers refers to any Permanent Dealer and any other person named as Dealer for one or several Tranches. Fiscal Agent and Principal BNP Paribas Securities Services Paying Agent: Calculation Agent: Unless otherwise stipulated in the applicable Final Terms, BNP Paribas Securities Services. Maximum Amount of the The aggregate nominal amount of the Notes outstanding shall not, at any Programme: time, exceed euros 400,000,000. Issuance method: The Notes shall be issued under syndicated or non-syndicated issues. The Notes shall be issued by series (each a Series), at same or different issue dates, and shall be governed (except for the first interest payment) by identical terms, the Notes of each Series being fungible amongst themselves. Each Series may be issued by tranches (each a Tranche), having same or different issue dates. The specific terms of each Tranche (which shall be supplemented, if necessary, on the basis of additional terms and shall be identical to the terms of the other Tranches of the same Series (with the exception of the issue date, issue price, first interest payment and nominal amount of the Tranche)) shall be set up in the applicable final terms (the Final Terms) supplementing this Base Prospectus.
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Maturities: Subject to compliance with all applicable legislations, regulations and directives, the Notes shall have a minimum maturity of one month and a maximum maturity of 30 years from the initial issue date as specified in the applicable Final Terms. Currencies: Notes shall be issued in euros. Denomination(s): The Notes shall have the denomination(s) specified in the applicable Final Terms (the Specified Denomination(s)). The Dematerialised Notes shall be issued in one Specified Denomination only. Notes admitted to trading on a regulated market shall have a unique denomination greater than or equal to euros 100,000 or to any other greater amount which could be authorised or required by the relevant competent authority or by any legislation or regulation applicable to the Specified Currency. Status of the Notes and The Notes and, if any, related Receipts and Coupons constitute direct, negative pledge: unconditional, non-subordinated and (subject to the following paragraph) non-guaranteed obligations of the Issuer which rank pari passu amongst themselves and (subject to mandatory exceptions under French Law) pari passu with any other present or future, non- subordinated and non-guaranteed obligation of the Issuer. As long as the Notes or, if any, Receipts or Coupons linked to the Notes will remain outstanding (as defined in the Terms), the Issuer will not grant or permit to subsist any mortgage, pledge, lien or any other security interest upon any of its assets or revenues, present or future, in order to secure any present or future indebtedness, represented by bonds, securities or other negotiable instruments admitted to trading with a maturity greater than a year and which are (or are able to be) admitted to trading on any market, unless the obligations of the Issuer under the Notes and, if any, Receipts and Coupons, do not benefit from an equivalent and pari passu security interest. Events of Default: The terms and conditions of the Notes set up events of default, as described further in paragraph "Terms and Conditions of the Notes – Events of default". Redemption Amount: Unless events of default or redemption and cancellation, the Notes shall be redeemed at the Maturity Date specified in the applicable Final Terms and at the Final Redemption Amount. Redemption by Instalment: The Final Terms concerning the Notes which are redeemable in two or more instalments shall indicate the dates at which these Notes will be redeemable and the redemption amount. Optional Redemption: The Final Terms prepared for each issue of Notes will indicate if whether or not they may be redeemed at the option of the Issuer (as a whole or in part) and/or at the option of the Noteholders before their expected maturity date, and if they may be, the terms applicable to such redemption. Early Redemption: Subject to provisions of paragraph "Optional Redemption" above, the Notes shall only be redeemed early at the option of the Issuer for tax reasons. Withholding tax: All payments of principal, interest or other amounts linked to the Notes, Receipts or Coupons by or on behalf of the Issuer shall be made without
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any withholding or deduction for any taxes or duties of whatever nature imposed, levied or collected by or on behalf of France or any authority therein or thereof having power to tax, unless such withholding or deduction is required by law. Should French law require that payments of principal, interest and other proceeds in respect of any Note, Receipt or Coupon be subject to a withholding at source or deduction with respect to any taxes or duties whatsoever, present or future, the Issuer will, to the fullest extent then permitted by law, pay such additional amounts as may be necessary in order that the holders of Notes, Receipts and Coupons receive the full amount that would have been payable in the absence of such withholding at source or deduction; subject to certain exceptions described further in section "Terms and Conditions of the Notes - Taxation" of this Base Prospectus. Interests Periods and Rates: For each Series, the duration of interest periods of the Notes, the applicable interest rate and its calculation method may vary or stay the same, as the case may be. The Notes may have a maximum interest rate (Maximum Interest Rate), a minimum interest rate (Minimum Interest Rate) or both at the same time, it being specified that (i) in no case shall the amount of interest payable in relation to each Note be less than zero and (ii) except where a higher Minimum Interest Rate is specified in the applicable Final Terms, the Minimum Interest Rate shall be equal to 0. The Notes may bear interest at different rates during the same interest period through the use of accrual interest periods (defined in the Terms and Conditions as Accrual Interest Periods). All this information will figure in the applicable Final Terms. Fixed Rate Notes: Fixed interests will be payable in arrear at the date(s) for each period indicated in the applicable Final Terms. Floating Rate Notes: Floating Rate Notes will bear interest at the determined rate for each Series as follows: (a) on the same basis than the floating rate indicated in the relevant applicable Final Terms to a notional interest rate exchange transaction in the relevant Specified Currency, pursuant to the Fédération Bancaire Française (the FBF) Master Agreement dated June 2013 relating to transactions on forward financial instruments supplemented by the Technical Schedules published by the FBF; or (b) by reference to EURIBOR (or TIBEUR in French), to EONIA (or TEMPE in French), or to TEC10; in each case, as adjusted according to margins eventually applicable and paid at the dates indicated in the applicable Final Terms. Fixed to Floating/Floating Each Fixed Interest Rate/Floating Interest Rate Notes bears interest at a to Fixed Rate Notes rate (i) that the Issuer may decide to convert at the date specified in the applicable Final Terms from a Fixed Rate to a Floating Rate (or vice versa) or (ii) which shall be automatically converted from a Fixed Rate to a Floating Rate (or vice versa) at the date specified in the applicable Final Terms. Zero Coupon Notes: Zero Coupon Notes may be issued at par or below the par and will not
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pay interests.
Form of the Notes: The Notes may be issued either in dematerialised form (Dematerialised Notes) or in materialised form (Materialised Notes). Dematerialised Notes may be, at the option of the Issuer, issued in bearer form (au porteur) or in registered form (au nominatif) and, in such case, at the option of the relevant Noteholder, either in fully registered form (au nominatif pur) or in administered registered form (au nominatif administré). No document materialising the title of the Notes will be issued. Materialised Notes will only be in bearer form. A Temporary Global Certificate in respect of each Tranche of Materialised Notes will be initially issued. Materialised Notes may only be issued outside France. Governing Law: French law. Any dispute relating to the Notes, Receipts, Coupons or Talons shall be submitted to the competent court under jurisdiction of the Paris Court of Appeal (subject to mandatory provisions related to territorial jurisdiction of French courts). No attachment proceedings under private law can be taken and no seize proceedings can be implemented against the assets or properties of the Issuer as a legal person governed by public law. Clearing systems: Euroclear France as a central depositary in relation to the Dematerialised Notes and, in relation to the Materialised Notes, Clearstream Luxembourg and Euroclear or any other clearing system that may be agreed between the Issuer, the Fiscal Agent and the relevant Dealer. Notes admitted to trading on Euronext Paris will be cleared by Euroclear France. Initial Delivery of The accounting letter (lettre comptable) relating to each Tranche of Dematerialised Notes: Dematerialised Notes shall be delivered to Euroclear France, acting as central depositary, one Paris business day before the issue date of such Tranche. Initial Delivery of At least at the issue date of each Tranche of Dematerialised Notes, the Materialised Notes: Temporary Global Certificate relating to such Tranche shall be delivered to a common depositary for Euroclear and Clearstream Luxembourg, or to any other clearing system, or may be delivered outside any clearing system provided that the method of such delivery has been agreed in advance by the Issuer, the Fiscal Agent and the relevant Dealer(s). Issue Price: The Notes may be issued at their nominal amount or at a discount or premium to their nominal amount. Admission to Trading: On Euronext Paris and/or on any other Regulated Market of the European Economic Area (EEA) and/or on a non-regulated market
which may be indicated on the applicable Final Terms. The applicable Final Terms may specify that a Series of Notes shall not be admitted to trading. Rating: The Programme has been granted an A+ rating by Fitch Ratings (Fitch). Notes issued under the Programme may be rated or not. The rating of the Notes, if any, shall be specified in the applicable Final Terms. The rating of the Notes may not necessarily be the same as that of the Programme. A rating is not a recommendation to buy, sell or hold Notes and may be suspended, amended or withdrawn at any time by the relevant rating
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agency. At the date of the Base Prospectus, Fitch is established in the European Union and registered pursuant to Regulation (EC) No. 1060/2009 of the European Parliament and the Council dated 16 September 2006 on credit rating agencies, as amended (the ANC Regulation) and is included on the list of registered credit rating agencies published by the European Securities and Markets Authority on its website (www.esma.europa.eu/page/List-registered-and-certified-CRAs) in accordance with the CRA Regulation. Selling restrictions: There are restrictions relating to the sale of Notes and the distribution of the offering materials in different jurisdictions. The Issuer is Category 1 for the purposes of Regulation S under the United States Securities Act of 1933, as amended. Materialised Notes shall be issued pursuant to Section (U.S. Treas. Reg.) §1.163-5(c)(2)(i)(D) of the U.S. Treasury Regulations (D Rules) unless (a) the applicable Final Terms provide that such Materialised Notes are issued pursuant to Section (U.S. Treas. Reg.) §1.163-5(c)(2)(i)(C) of the U.S. Treasury regulations (C Rules), or (b) the Materialised Notes are not issued pursuant to C Rules or D Rules, but under such conditions that these Materialised Notes shall not constitute "registration required obligations" by the United States Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), in such case the applicable Final Terms shall indicate that the transaction is outside the scope of the TEFRA rules. The TEFRA rules do not apply to Dematerialised Notes.
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SUPPLEMENT TO THE BASE PROSPECTUS
Any new material fact or any material error or inaccuracy concerning the information contained in the Base Prospectus, which may have a substantial impact on any assessment of the Notes and which occurs or becomes apparent between the AMF visa and the beginning of the negotiation on a regulated market if this event occurs later, must be mentioned in a supplement to this Base Prospectus, in accordance with article 212-25 of the AMF General Regulations. The Issuer undertakes to submit the abovementioned supplement to the Base Prospectus for approval at the AMF and to give to each Dealer and to the AMF at least one copy of this supplement.
Any Base Prospectus supplement shall be published on the websites of (a) the AMF (www.amf- france.org), (b) the Issuer (http://www.marseille-provence.fr/index.php/la-metropole/emissions- obligataires) and (c) shall be available for inspection and obtaining copies, free of charge, during normal office hours, on any day of the week (except Saturdays, Sundays and public holidays) at the specified offices of the Fiscal Agent or the Paying Agent(s).
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DOCUMENTS INCORPORATED BY REFERENCE
This Base Prospectus shall be read and construed together with the section of the document listed in the table below which has previously been published and filed with the AMF:
Document Section incorporated by reference
Base Prospectus of the Communauté Urbaine “Conditions of the Notes” pages 27 to 56 (the Marseille Provence Métropole dated 16 June 2015 Conditions of the Notes) 2015 which received AMF visa no. 15-277 dated 16 June 2015.
Base Prospectus of the Métropole Aix- “Conditions of the Notes” pages 26 to 54 (the Marseille Provence dated 4 October 2016 2016 Conditions of the Notes) which received AMF visa no. 16-462 dated 4 October 2016.
The 2015 Conditions of the Notes and the 2016 Conditions of the Notes are deemed to form an integral part of this Base Prospectus for the purposes of issues of fungible notes. The other parts of the base prospectus dated 16 June 2015 and 4 October 2016 are not incorporated by reference.
Copies of documents incorporated by reference into this Base Prospectus may be obtained, without charge, during normal business hours, on any weekday (other than Saturdays, Sundays and public holidays) as from the date hereof at the specified offices of the Fiscal Agent or Paying Agent(s).
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TERMS AND CONDITIONS OF THE NOTES
The following is the text of the terms and conditions that, subject to completion in accordance with the provisions of the applicable Final Terms, shall apply to the Notes (the Terms and Conditions). In the case of Dematerialised Notes, the text of the terms and conditions of the Notes shall not appear on the reverse side of the Physical Notes evidencing title thereto, but shall be constituted by the following text as completed by the provisions of the applicable Final Terms. In the case of Materialised Notes, either (i) the full text of these terms and conditions together with the relevant provisions of the applicable Final Terms (as the same may be simplified by deletion of non-applicable terms) or (ii) the complete text of the terms and conditions, shall appear on the reverse side of the Physical Notes. All terms beginning with a capital letter and not defined in these Terms and Conditions shall have the meaning given to them in the applicable Final Terms. References made in the Terms and Conditions to the Notes refer to the Notes of a single Series and not to all Notes as may be issued under the Programme. The Notes constitute bonds (obligations) as defined under French law.
The Notes are issued by the Métropole d’Aix-Marseille-Provence (the Issuer or the Métropole) in series (each a Series), on the same issue date or on different dates. The terms and conditions of the Notes of any Series shall (with the exception of the issue date, the issue price, the nominal amount and the first interest payment) be identical, the Notes of each Series being fungible. Each Series may be issued in tranches (each a Tranche), on the same issue date or on different issue dates. The Notes shall be issued in accordance with the Terms and Conditions of this Base Prospectus, as supplemented by the provisions of the relevant final terms (the Final Terms) relating to the specific terms of each Tranche (including the issue date, the issue price, the first interest payment and the nominal amount of the Tranche), shall be set forth in the final terms (the Final Terms) supplementing this Base Prospectus. An amended fiscal agency agreement (as it may be amended and/or supplemented, the Fiscal Agency Agreement) relating to the Notes was entered into on 4 October 2017 between the Issuer, BNP Paribas Securities Services as fiscal agent and principal paying agent and the other agents appointed therein. The fiscal agent, the paying agents and the calculation agent(s) for the time being (where relevant) are referred to below respectively as the Fiscal Agent, the Paying Agents (such term including the Fiscal Agent) and the Calculation Agent(s). Holders of interest coupons (Coupons) relating to interest-bearing Materialised Notes and, if applicable to such Notes, talons for additional Coupons (Talons) and the holders of receipts for instalments of principal paid on Materialised Notes (Receipts) are referred to respectively as Couponholders and Receiptholders.
The term "day" in these Terms refers to a calendar day, unless specified otherwise.
Article 1195 of the French Civil Code does not apply to these Terms.
Unless otherwise provided or the context requires otherwise, any reference to "€", "Euro", "EUR" and "euro" refers to the lawful currency in the Member States of the European Union that have adopted the single currency introduced in accordance with the Treaty establishing the European Economic Community as amended.
Any reference below to Article refers to the numbered articles below, unless the context requires otherwise.
1. FORM, DENOMINATION AND TITLE
1.1 Form
The Notes may be issued either in dematerialised form (Dematerialised Notes) or in materialised form (Materialised Notes), as specified in the applicable Final Terms.
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(a) Title to Dematerialised Notes is evidenced by entry in an account, in accordance with articles L. 211-3 et seq. of the French Code monétaire et financier. No physical document of title (including certificates of title in accordance with article R. 211-7 of the French Code monétaire et financier) shall be issued in respect of Dematerialised Notes.
Dematerialised Notes (as defined in articles L. 211-3 et seq. of the French Code monétaire et financier) are issued, at the option of the Issuer, either in bearer form, inscribed in the books of Euroclear France (acting as central depositary) which shall credit the accounts of the Account Holders, or in registered form, and in such case either, at the option of the relevant Noteholder, in administered registered form (au nominatif administré), entered in the accounts of an Account Holder nominated by the relevant holder of the Notes, or in pure registered form (au nominatif pur), entered in an account maintained by the Issuer or any registration agent (specified in the applicable Final Terms) acting on behalf of the Issuer (the Registration Agent).
In these Terms, Account Holder means any intermediary authorised to hold securities accounts, directly or indirectly, with Euroclear France and includes Euroclear Bank S.A./N.V., as operator of the Euroclear system (Euroclear) and Clearstream Banking S.A. (Clearstream, Luxembourg).
(b) Materialised Notes are issued in bearer form only. Materialised Notes represented by physical notes (Physical Notes) are numbered in series and issued with Coupons (and, if applicable, with a Talon) attached, except in the case of Zero Coupon Notes in respect of which references to interest (except in relation to interest due after the Maturity Date), Coupons and Receipts in these Terms shall not apply. Instalment Notes are issued with one or more Receipts attached.
(c) In accordance with articles L.211-3 et seq. of the French Code monétaire et financier, financial securities (such as Notes which constitute obligations as defined under French law) in materialised form and governed by French law must be issued outside France.
The Notes may be Fixed Rate Notes, Floating Rate Notes, Fixed to Floating/Floating to Fixed Rate Notes, Instalment Notes and Zero Coupon Notes.
1.2 Denomination
The Notes shall be issued in the specified denomination(s) specified in the applicable Final Terms (the Specified Denomination(s)). Dematerialised Notes must be issued in one single Specified Denomination. Notes admitted to trading on a Regulated Market under circumstances that require the publication of a prospectus pursuant Directive 2003/71/CE, as amended (the Prospectus Directive) shall have a minimum specified denomination greater than or equal to euros 100,000 or to any other greater amount which could be allowed or required by any relevant competent authority or any law or regulation applicable to the Specified Currency.
1.3 Title
(a) Title to Dematerialised Notes in bearer form and in administered registered form (au nominatif administré) passes, and such Notes may only be transferred, by registration of the transfer in the books of the Account Holders. Title to Dematerialised Notes in pure registered form (au nominatif pur) passes, and such Notes may only be transferred, by registration of the transfer in the books held by the Issuer or the Registration Agent.
(b) Title to Physical Notes with, if applicable, Receipts, Coupons and/or a Talon attached at issue, is transferred by hand-to-hand delivery.
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(c) Except as ordered by a court of competent jurisdiction or as required by law, the holder (as defined below under paragraph (d)) of any Note, Coupon, Receipt or Talon shall be deemed to be and may be treated as its absolute owner for all purposes, whether or not it is overdue and regardless of any notice of ownership, or any right over or interest in such Note, Coupon, Receipt or Talon, any writing on it or its theft or loss and no person shall be liable for so treating the holder.
(d) In these Terms:
Noteholder or, as appropriate, holder of a Note means (i) in the case of Dematerialised Notes, the person whose name is recorded in the books of the relevant Account Holder, the Issuer or the Registration Agent (as applicable) as being the owner of such Notes, and (ii) in the case of Physical Notes, any holder of any Physical Note and the related Coupons, Receipts or Talons.
Outstanding means, in respect of Notes of any Series, all of the Notes in issue other than (i) those that have been redeemed in accordance with these Terms, (ii) those in respect of which the redemption date has passed and the redemption amount (including interest accrued on such Notes up to the redemption date and all interest payable after such date) has been duly paid in accordance with the provisions of Article 6, (iii) those that are no longer valid or in respect of which the limitation period has expired, (iv) those that have been repurchased and cancelled in accordance with Article 5.8, (v) those that have been repurchased and retained in accordance with Article 5.7, (vi) in the case of Physical Notes, (A) all damaged or defaced Physical Notes that have been exchanged for replacement Physical Notes, (B) (for the sole purpose of determining the number of Physical Notes outstanding and without prejudice to their status for any other purpose) any allegedly lost, stolen or destroyed Physical Notes for which replacement Physical Notes have been issued and (C) any Temporary Global Certificate to the extent that it has been exchanged for one or more Physical Notes in accordance with its terms.
Terms beginning with a capital letter shall have the meaning given to them in the applicable Final Terms. Where no definition is given, such term does not apply to the Notes.
2. CONVERSION AND EXCHANGE OF NOTES
2.1 Dematerialised Notes
(a) Dematerialised Notes issued in bearer form cannot be converted into Dematerialised Notes in registered form, whether in pure registered form (au nominatif pur) or in administered registered form (au nominatif administré).
(b) Dematerialised Notes issued in registered form cannot be converted into Dematerialised Notes in bearer form.
(c) Dematerialised Notes issued in pure registered form (au nominatif pur) may, at the option of the Noteholder, be converted into Notes in administered registered form (au nominatif administré), and vice versa. Such option must be exercised by the Noteholder in accordance with article R.211-4 of the French Code monétaire et financier. Any costs relating to such conversion shall be borne by the relevant Noteholder.
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2.2 Materialised Notes
Materialised Notes of a Specified Denomination cannot be exchanged for Materialised Notes of another Specified Denomination.
3. STATUS AND NEGATIVE PLEDGE
The Notes and, if applicable, related Receipts and Coupons, constitute direct, unconditional, unsubordinated and (subject to the paragraph below) unsecured obligations of the Issuer ranking (subject to mandatory exceptions imposed by law) equally between themselves and equally and rateably with all other present or future unsecured and unsubordinated obligations of the Issuer.
As long as the Notes or, if any, Receipts and Coupons attached to the Notes remain outstanding (as defined in Article 1.3(d) above), the Issuer shall not grant or permit to subsist any mortgage, pledge, lien or other form of security interest upon any assets or revenues, present or future, to secure any Indebtedness (as defined below) subscribe by the Issuer, unless the obligations of the Issuer under the Notes and, if any, the Coupons and Receipts benefit from equivalent and equal ranking security.
For the purpose of this Article, Indebtedness means any borrowing, present or future, represented by bonds, securities or other negotiable instruments (including, securities which are, or have been, initially distributed on a private placement basis) with a maturity greater than one year and which are (or may be) admitted to trading on any market.
4. CALCULATION OF INTEREST AND OTHER CALCULATIONS
4.1 Definitions
In these Terms, unless the context requires otherwise, the terms defined below shall have the following meaning:
Reference Banks (Banques de Référence) means the institutions specified in the applicable Final Terms or, if none is specified, four prime banks selected by the Calculation Agent on the interbank market (or if necessary, on the money market, the swaps market) with the closest connection to the Benchmark (which, if the relevant Benchmark is EURIBOR (TIBEUR in French) or EONIA (TEMPE in French) shall be the Euro-zone.
Interest Period Commencement Date (Date de Début de Période d'Intérêts) means the Issue Date of the Notes or any other date referred to in the applicable Final Terms.
Coupon Determination Date (Date de Détermination du Coupon) means, in respect of an Interest Rate and an Interest Accrual Period, the date specified as such in the applicable Final Terms or, if no date is specified the day falling two TARGET Business Days before the first day of such Interest Accrual Period.
Issue Date (Date d'Emission) means, in respect of a Tranche, the settlement date of the Notes.
Interest Payment Date (Date de Paiement du Coupon) means the date(s) referred to in the applicable Final Terms.
Interest Accrual Period Date (Date de Période d'Intérêts Courus) means each Interest Payment Date unless provided otherwise in the applicable Final Terms.
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Relevant Date (Date de Référence) means in respect of any Note, Receipt or Coupon, the date on which the amount payable under such Note, Receipt or Coupon becomes due and payable or (if any due and payable amount is not paid or not paid in time without any justification) the date on which the outstanding amount is paid in full or (in the case of Materialised Notes, if such date falls earlier) the day falling seven calendar days after the date on which the holders of such Materialised Notes have been notified that, upon further presentation of such Materialised Note, Receipt or Coupon being made in accordance with the Terms, such payment will be made, provided however that the payment is in fact made on such presentation.
Effective Date (Date de Valeur) means, in respect of a Floating Rate to be determined on any Coupon Determination Date, the date specified in the applicable Final Terms, or, if no date is specified, the first day of the Interest Accrual Period to which such Coupon Determination Date relates.
FBF Definitions (Définitions FBF) means the definitions referred to in the FBF Master Agreement of June 2013 relating to transactions on forward financial instruments, as supplemented by the Technical Schedules, as published by the Fédération Bancaire Française (together the FBF Master Agreement) as amended, as the case may be, at the Issue Date.
Specified Currency (Devise Prévue) means, euro.
Specified Duration (Durée Prévue) means, with respect to any Floating Rate to be determined by Screen Rate Determination on any Coupon Determination Date, the period specified in the applicable Final Terms, or if no period is specified, a period equal to the Interest Accrual Period, ignoring any adjustment pursuant to Article 4.3(b).
Relevant Time (Heure de Référence) means, with respect to any Coupon Determination Date, the local time in the Relevant Financial Centre specified in the applicable Final Terms or, if no time is specified, the local time in the Relevant Financial Centre at which it is customary to determine bid and offered rates in respect of deposits in the Specified Currency on the interbank market in the Relevant Financial Centre. Local time means, with respect to Europe and the Euro- zone as a Relevant Financial Centre, 11.00 a.m. (Brussels time).
Business Day (Jour Ouvré) means:
(a) in the case of euro, a day on which the Trans-European automated real-time gross settlement express transfer system (TARGET 2) (TARGET), or any system that replaces such system, is operating (a TARGET Business Day); and/or
(b) in the case of a Specified Currency and/or one or more business centre(s) specified in the applicable Final Terms (the Business Centre(s)), a day (other than a Saturday or a Sunday) on which commercial banks and foreign exchange markets settle payments in the currency of the Business Centre(s).
Margin (Marge) means, for any Interest Accrual Period, the percentage or the number for the relevant Interest Accrual Period, as indicated in the relevant Final Terms, being specified that it shall be positive, negative or zero.
Day Count Fraction (Méthode de Décompte des Jours) means, in respect of the calculation of an amount of coupon on any Note for any period of time (from (and including) the first day of such period to (but excluding) the last day in such period) (whether or not constituting an Interest Period, the Calculation Period):
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(a) if Actual/365 or Actual/365-FBF is specified in the applicable Final Terms, it is the actual number of days in the Calculation Period divided by 365 (or, if any portion of that Calculation Period falls in a leap year, the sum of (i) the actual number of days in that portion of the Calculation Period falling in a leap year divided by 366 and (ii) the actual number of days in that portion of the Calculation Period falling in a non-leap year divided by 365);
(b) if Actual/Actual-ICMA is specified in the applicable Final Terms:
(i) if the Calculation Period is equal to or shorter than the Determination Period during which it falls, the number of days in the Calculation Period divided by the product of (A) the number of days in such Determination Period and (B) the number of Determination Periods that would normally end in one year; and
(ii) if the Calculation Period is longer than the Determination Period, the sum:
(A) of the number of days in such Calculation Period falling in the Determination Period during which it begins, divided by the product (I) of the number of days in such Determination Period and (II) the number of Determination Periods that would normally end in one year; and
(B) the number of days in such Calculation Period falling in the following Determination Period, divided by the product (I) of the number of days in such Determination Period and (II) the number of Determination Periods that would normally end in one year,
in each case, Determination Period means the period beginning on a Coupon Determination Date (included) in any year and ending on the next Coupon Determination Date (excluded) and Coupon Determination Date means the date specified in the applicable Final Terms, or if no date is specified, the Interest Payment Date;
(c) if Actual/Actual - FBF is specified in the applicable Final Terms, the fraction of which the numerator is the actual number of days during such period and the denominator is 365 (or 366 if 29th February is included in the Calculation Period). If the Calculation Period is longer than one year, the basis shall be determined as follows:
(i) the number of complete years shall be counted back from the last day of the Calculation Period;
(ii) this number is increased by the fraction for the relevant period calculated as provided in the first paragraph of this definition;
(d) if Actual/365 (Fixed) is specified in the applicable Final Terms, the actual number of days in the Calculation Period divided by 365;
(e) if Actual/360 is specified in the applicable Final Terms, the actual number of days in the Calculation Period divided by 360;
(f) if 30/360, 360/360 or Bond Basis is specified in the applicable Final Terms, the number of days in the Calculation Period divided by 360 (i.e. the number of days to be calculated based on a 360 day year of 12 months of 30 days each (unless (i) the last day of the Calculation Period is the thirty-first day of a month and the first day of the Calculation Period is a day other than the thirtieth or thirty-first day of a month, in which case the
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month in which the last day falls shall not be reduced to a thirty day month or (ii) the last day of the Calculation Period is the last day of the month of February, in which case the month of February shall not be extended to a thirty day month));
(g) if 30/360 - FBF or Actual 30A/360 (American Bond Basis) is specified in the applicable Final Terms, then, in respect of each Calculation Period, the fraction of which the denominator is 360 and the numerator is the number of days calculated in the same manner as the 30E/360 – FBF basis, except in the following case:
where the last day of the Calculation Period is the 31st and the first is neither a 30th nor a 31st, the last month of the Calculation Period shall be deemed to be a month of 31 days.
The fraction is:
2 1 if dd 31and dd 30,31,
then:
1 yy2 yy1 360 mm2 mm1 30 dd2 dd1 360
or:
1 yy2 yy1 360 mm2 mm1 30 Mindd2,30 Mindd1,30 360
where:
1 1 1 D1(dd , mm , yy ) is the commencement date of the period
1 2 2 D2(dd , mm , yy ) is the end date of the period;
(h) if 30E/360 or Euro Bond Basis is specified in the applicable Final Terms, the number of days in the Calculation Period divided by 360 (the number of days to be calculated based on a 360 day year of 12 months of 30 days each, ignoring the date on which the first or last day of the Calculation Period falls, unless, in the case of a Calculation Period ending on the Maturity Date, the Maturity Date is the last day of the month of February, in which case the month of February shall not be extended to a thirty day month); and
(i) if 30E/360 – FBF is specified in the applicable Final Terms, then, in respect of each Calculation Period, the fraction of which the denominator is 360 and the numerator is the number of days in such period, calculated on the basis of a year of 12 months of 30 days, except in the following case:
If the last day of the Calculation Period is the last day of the month of February, the number of days in such month is the exact number of days.
Using the same defined terms as used for 30/360 - FBF, the fraction is:
1 yy2 yy1 360 mm2 mm1 30 Mindd2,30 Mindd1,30 360
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Coupon Amount (Montant de Coupon) means the amount of interest due and, in the case of Fixed Rate Notes, the Fixed Coupon Amount or the Broken Amount, (as defined under Article 4.2), as the case may be, as specified in the applicable Final Terms.
Representative Amount (Montant Donné) means, with respect to any Floating Rate to be determined in accordance with a Screen Rate Determination on a Coupon Determination Date, the amount specified as such on that date in the applicable Final Terms or, if none is specified, an amount that is representative for a single transaction in the relevant market at the time.
Screen Page (Page Ecran) means any page, section, heading, column or any other part of a document supplied by any information service (including without limitation Reuters (Reuters)) as may be nominated to provide a Relevant Rate or any other page, section, heading, column or any other part of a document of such information service or any other information service as may replace it, in each case as nominated by the entity or organisation providing or responsible for the dissemination of the information appearing on such service to indicate rates or prices comparable to the Relevant Rate, as specified in the applicable Final Terms.
Interest Period (Période d'Intérêts) means the period beginning on (and including) the Interest Period Commencement Date and ending on (but excluding) the first Interest Payment Date as well as each subsequent period beginning on (and including) an Interest Payment Date and ending on (but excluding) the following Interest Payment Date.
Interest Accrual Period (Période d'Intérêts Courus) means the period beginning on (and including) the Interest Period Commencement Date and ending on (but excluding) the first Interest Accrual Period Date as well as each subsequent period beginning on (and including) an Interest Accrual Period Date and ending on (but excluding) the following Interest Accrual Period Date.
Relevant Financial Centre (Place Financière de Référence) means, in respect of a Floating Rate to be determined in accordance with a Screen Rate Determination on a Coupon Determination Date, such financial centre as may be specified in the applicable Final Terms or, if none is so specified, the financial centre with which the relevant Benchmark is most closely connected (which, in the case of EURIBOR (TIBEUR in French) or EONIA (TEMPE in French), shall be the Euro-zone or, failing which, Paris.
Benchmark (Référence de Marché) means the relevant rate (EURIBOR (or TIBEUR in French), EONIA (or TEMPE in French) or TEC10) as specified in the applicable Final Terms.
Interest Rate (Taux d'Intérêt) means the interest rate payable on the Notes and which is either specified or calculated in accordance with the provisions of these Terms, as supplemented by the applicable Final Terms.
Relevant Rate (Taux de Référence) means the Benchmark for a Representative Amount in the Specified Currency for a period equal to the Specified Duration commencing on the Effective Date (if such period is applicable to or compatible with the Benchmark).
Euro-zone (Zone Euro) means the region occupied by the Member states of the European Union that have adopted the single currency in accordance with the Treaty.
4.2 Interest on Fixed Rate Notes
Each Fixed Rate Note bears interest calculated on its outstanding nominal amount, as from the Interest Period Commencement Date, at an annual rate (expressed as a percentage) equal to the
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Interest Rate, payable annually, six-monthly, quarterly or monthly in arrears on each Interest Payment Date.
If a fixed coupon amount (Fixed Coupon Amount) or broken amount (Broken Amount) is specified in the applicable Final Terms, the Coupon Amount payable on each Interest Payment Date shall be equal to the Fixed Coupon Amount or, if applicable, the Broken Amount as specified, it shall be payable on the Interest Payment Date(s) specified in the applicable Final Terms.
4.3 Interest on Floating Rate Notes
(a) Interest Payment Dates
Each Floating Rate Note shall bear interest calculated on its unredeemed nominal amount, as from the Interest Period Commencement Date, at an annual rate (expressed as a percentage) equal to the Interest Rate, payable annually, six-monthly, quarterly or monthly in arrears on each Interest Payment Date. Such Interest Payment Date(s) shall be specified in the applicable Final Terms or, if no Interest Payment Date(s) is/are specified in the applicable Final Terms, Interest Payment Date shall mean each date falling at the end of such number of months or at the end of such other period as is specified in the applicable Final Terms as being the Interest Period, falling after the preceding Interest Payment Date and, in the case of the first Interest Payment Date, after the Interest Period Commencement Date.
(b) Business Day Convention
If any date referred to in these Terms, that is specified to be subject to adjustment in accordance with a Business Day Convention, would otherwise fall on a day that is not a Business Day, then, if the applicable Business Day Convention is (i) the Floating Rate Business Day Convention, such date shall be postponed to the next day that is a Business Day unless it would thereby fall into the next calendar month, in which event (x) such date shall be brought forward to the immediately preceding Business Day and (y) each such subsequent date shall be the last Business Day of the month in which such date would have fallen had it not been subject to adjustment, (ii) the Following Business Day Convention, such date shall be postponed to the next day that is a Business Day, (iii) the Modified Following Business Day Convention, such date shall be postponed to the next day that is a Business Day unless it would thereby fall into the next calendar month, in which event such date shall be brought forward to the immediately preceding Business Day or (iv) the Preceding Business Day Convention, such date shall be brought forward to the immediately preceding Business Day. Notwithstanding the above, if the applicable Final Terms specify that the Business Day Convention shall be applied on a "non- adjusted" basis, the Coupon Amount payable on any date shall not be affected by application of the relevant Business Day Convention.
(c) Interest Rate for Floating Rate Notes
The Interest Rate applicable to Floating Rate Notes for each Interest Accrual Period shall be determined in compliance with the provisions below relating to either FBF Determination or Screen Rate Determination shall apply, as specified in the applicable Final Terms.
(i) FBF Determination for Floating Rate Notes
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Where FBF Determination is specified in the applicable Final Terms as being the method applicable for the determination of the Interest Rate, the Interest Rate applicable to each Interest Accrual Period shall be determined by the Agent as being a rate equal to the relevant FBF Rate plus or minus, as the case may be (as specified in the applicable Final Terms), the Margin. For the purposes of this sub-paragraph (i), "FBF Rate" in respect of an Interest Accrual Period means a rate equal to the Floating Rate as determined by the Agent for a swap transaction entered into pursuant to an FBF Master Agreement supplemented by the Interest Rate or Currency Swaps Technical Schedule under the terms of which:
(A) the relevant Floating Rate is as specified in the applicable Final Terms; and
(B) the Floating Rate Determination Date is as specified in the applicable Final Terms.
For the purposes of this sub-paragraph (i), "Floating Rate", "Agent", and "Floating Rate Determination Date" shall have the meanings given thereto in the FBF Definitions.
If the paragraph "Floating Rate", in the applicable Final Terms, provides that the interest rate in respect of an Interest Period shall be determined by linear interpolation, the Interest Rate applicable to this Interest Period shall be evaluated by the Calculation Agent through a linear interpolation between two (2) interest rates based on the relevant Floating Rate, the first one corresponding to a maturity immediately inferior to the relevant Interest Period and the second one corresponding to a maturity immediately superior to the same relevant Interest Period.
(ii) Screen Rate Determination for Floating Rate Notes
Where Screen Rate Determination is specified in the applicable Final Terms as being the method applicable for the determination of the Interest Rate, the Interest Rate for each Interest Accrual Period shall be determined by the Calculation Agent at (or about) the Relevant Time on the Coupon Determination Date relating to such Interest Accrual Period as specified below:
(A) if the primary source for the Floating Rate is a Screen Page, subject as provided below, the Interest Rate shall be:
I. the Relevant Rate (where such Relevant Rate on such Screen Page is a composite quotation or is customarily supplied by one entity); or
II. the arithmetic mean of the Relevant Rates of the entities whose Relevant Rates appear on that Screen Page;
in each case as published on such Screen Page, at the Relevant Time on the Coupon Determination Date as indicated in the applicable Final Terms, decreased or increased, if appropriate (as indicated in the relevant Final Terms), by the Margin;
(B) if the primary source for the Floating Rate is Reference Banks or if sub- paragraph (A)(I) above applies and no Relevant Rate appears on the
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Screen Page at the Relevant Time on the Coupon Determination Date or if sub-paragraph (A)(II) above applies and fewer than two Relevant Rates appear on the Screen Page at the Relevant Time on the Coupon Determination Date, the Interest Rate, subject as provided below, shall be equal to the arithmetic mean of the Relevant Rates that each of the Reference Banks is quoting to leading banks in the Relevant Financial Centre at the Relevant Time on the Coupon Determination Date, as determined by the Calculation Agent, decreased or increased, if appropriate (as indicated in the relevant Final Terms), by the Margin;
(C) if paragraph (B) above applies and the Calculation Agent determines that fewer than two Reference Banks are so quoting Relevant Rates, the Interest Rate shall, subject as provided below, be the arithmetic mean of the rates per annum (expressed as a percentage) that the Calculation Agent determines to be the rates (being the nearest equivalent to the Benchmark) in respect of a Representative Amount of the Specified Currency that at least two out of five leading banks selected by the Calculation Agent in the Euro-zone as selected by the Calculation Agent, (the Principal Financial Centre) are quoting at or about the Relevant Time on the date on which such banks would customarily quote such rates for a period beginning on the Effective Date for a period equivalent to the Specified Duration (I) to leading banks carrying on business in Europe, or (if the Calculation Agent determines that fewer than two of such banks are so quoting to leading banks in Europe) (II) to leading banks carrying on business in the Principal Financial Centre; except that, if fewer than two of such banks are so quoting to leading banks in the Principal Financial Centre, the Interest Rate shall be the Interest Rate determined on the previous Coupon Determination Date (after readjustment for any difference between any Margin, Rate Multiplier or Maximum or Minimum Interest Rate applicable to the preceding Interest Accrual Period and to the relevant Interest Accrual Period).
If the paragraph "Benchmark" in the applicable Final Terms provides that the interest rate in respect of an Interest Period shall be determined by linear interpolation, the Calculation Agent shall calculate the interest rate applicable to the relevant Interest Period, by linear interpolation between two (2) interest rates based on the relevant Benchmark, the first one corresponding to a maturity immediately inferior to the duration of the relevant Interest Period, and the second one corresponding to a maturity immediately superior to the same relevant Interest Period;
(D) When a Screen Rate Determination is indicated in the relevant Final Terms as the method used to determine the Interest Rate and that the Relevant Rate relating to Floating Rate Notes is specified as the TEC10, the Interest Rate for each Interest Accrual Period, subject to the provisions as set forth above, shall be determined by the Calculation Agent, based on the following formulae:
TEC10 + Marge.
"TEC10" refers to the free valuation (expressed as a percentage per year) for the EUR-TEC10-CNO calculated by the French Bond Association (Comité de Normalisation Obligataire - "CNO"), listed on the relevant Screen Page which is the row "TEC10" on the Reuters
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Screen Page CNOTEC10 or any successor page, at 10 a.m. Paris Time, on the relevant Coupon Determination Date; and
(E) If, during any Coupon Determination Date, the TEC10 does not display on the Reuters Screen Page CNOTEC or any successor page, (i) the Calculation Agent shall determine it on the basis of the mid-market exchange rate for each of the two French Treasury Bills (Obligation Assimilable du Trésor – "OAT") references which would have been used by the CNO for calculation of the applicable rate, in each case assessed by five Primary dealers (which are the market counterparties of choice for the Agency France Trésor and the Caisse de la dette publique for most of their activities on the markets, and which have the responsibility to participate in auctions, to invest Treasury issues and to maintain the liquidity of the secondary market), around 10 a.m. Paris Time, at the relevant Coupon Determination Date; (ii) the Calculation Agent shall ask to each Primary dealer to provide the price yield valuation; and (iii) the TEC10 shall be the yield to call of the arithmetic mean of such prices, which is determined by the Calculation Agent after elimination of both the highest and the lowest estimate. The yield to call as mentioned earlier shall be determined by the Calculation Agent in accordance with the formulae that has been used by the CNO to determine the relevant rate.
For information purposes, the EUR-TEC10-CNO, established in 1996, is the performance percentage (which is rounded to the nearest cent and 0,005 per cent being rounded up to the 100th above) of an OAT notional to 10 years corresponding to the linear interpolation between yield to maturity of the two existing OAT (the "Reference OAT") whose periods until maturity are the closest in duration of the notional OAT to 10 years, the duration of a Reference OAT being under 10 years and the duration of the other Reference OAT being 10 years or more.
4.4 Fixed Interest Rate/Floating Interest Rate of the Notes
Each Fixed Interest Rate/Floating Interest Rate Notes bears interest at a rate (i) that the Issuer may decide to convert at the date specified in the applicable Final Terms from a Fixed Rate to a Floating Rate (or vice versa) or (ii) which shall be automatically converted from a Fixed Rate to a Floating Rate (or vice versa) at the date specified in the applicable Final Terms.
4.5 Zero Coupon Notes
Where a Zero Coupon Note is redeemable prior to its Maturity Date by exercise of an Issuer Redemption Option or, if so specified in the applicable Final Terms, pursuant to Article 5.5 or in any other manner, and such Note is not redeemed on the due date, the amount due and payable prior to the Maturity Date shall be the Optional Redemption Amount or the Early Redemption Amount, as applicable. As from the Maturity Date, the overdue principal of such Note shall bear interest at a rate per annum (expressed as a percentage) equal to the Amortisation Yield (as defined in Article 5.5(a)(ii)).
4.6 Accrual of interest
Interest shall cease to accrue on each Note on the due date for redemption unless (a) on such due date, in the case of Dematerialised Notes or (b) upon due presentation, in the case of Materialised Notes, repayment of principal is improperly withheld or refused; in which event interest shall
0013112-0000368 PA:19690366.6 38
continue to accrue (after as well as before judgment) at the Interest Rate in the manner provided in Article 4 up to the Relevant Date.
4.7 Margin, Rate Multipliers, Minimum and Maximum Interest Rates and Rounding
(a) If a Margin or Rate Multiplier is specified in the applicable Final Terms (either (x) generally or (y) in relation to one or more Interest Accrual Periods), an adjustment shall be made to all Interest Rates, in the case of (x), or the Interest Rates applicable to the relevant Interest Accrual Periods, in the case of (y), calculated in accordance with paragraph (c) above by adding (if a positive number) or subtracting (if a negative number) the absolute value of such Margin or by multiplying the Interest Rate by such Rate Multiplier, subject always to the provisions of the following paragraph.
(b) If any Minimum or Maximum Interest Rate is specified in the applicable Final Terms, then this Interest Rate shall be subject to such maximum or minimum, as the case may be, it being specified that (i) in no case shall the amount of interest payable in relation to each Note be less than zero and (ii) except where a higher Minimum Interest Rate is specified in the applicable Final Terms, the Minimum Interest Rate shall be equal to 0.
(c) For the purposes of any calculations required pursuant to these Terms (unless otherwise specified), (i) if FBF Determination is specified in the applicable Final Terms, all percentages resulting from such calculations shall be rounded, if necessary, to the nearest ten thousandth of a percentage point (with halves being rounded up) (ii) all percentages resulting from such calculations shall be rounded, if necessary, to the nearest fifth decimal place (with halves being rounded up), and (iii) all figures shall be rounded to seven significant figures (with halves being rounded up).
4.8 Calculations
The amount of interest payable in respect of any Note for any period shall be calculated by multiplying the product of the Interest Rate and the outstanding nominal amount of such Note by the Day Count Fraction, unless a Coupon Amount (or a formula for its calculation) is specified in respect of such period, in which case the amount of interest payable in respect of such Note for such period shall be equal to such Coupon Amount (or be calculated in accordance with such formula). Where any Interest Period comprises two or more Interest Accrual Periods, the amount of interest payable in respect of such Interest Period shall be the sum of the amounts of interest payable in respect of each of those Interest Accrual Periods.
4.9 Determination and publication of Interest Rates, Coupon Amounts, Final Redemption Amounts, Early Redemption Amounts, Optional Redemption Amounts and Instalment Amounts
As soon as practicable after the relevant time on such date as the Calculation Agent may be required to calculate any rate or amount, obtain any quotation or make any determination or calculation, it shall determine such rate and calculate the Coupon Amounts in respect of each Specified Denomination of the Notes for the relevant Interest Accrual Period. It shall also calculate the Final Redemption Amount, Early Redemption Amount, Optional Redemption Amount or Instalment Amount, obtain such quotation or make such determination or calculation, as the case may be. It shall then cause the Interest Rate and the Coupon Amounts for each Interest Period and the relevant Interest Payment Date and, if required, the Final Redemption Amount, Early Redemption Amount or any Optional Redemption Amount or any other Instalment Amount to be notified to the Fiscal Agent, the Issuer, each of the Paying Agents and any other Calculation Agent appointed in respect of the Notes that is to make a further calculation upon receipt of such information. If the Notes are admitted to trading on a regulated market and
0013112-0000368 PA:19690366.6 39
the rules of such market so require, it shall also notify such information to such market and/or the Noteholders as soon as possible after their determination but in no event later than (i) the commencement of the relevant Interest Period, if determined prior to such time, in the case of notification to such market of an Interest Rate and Coupon Amount, or (ii) in all other cases, no later than the fourth Business Day after such determination. Where any Interest Payment Date or Interest Accrual Period Date is subject to adjustment pursuant to Article 4.3(b), the Coupon Amounts and the Interest Payment Date so published may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) without notice in the event of an extension or shortening of the Interest Period. The determination of any rate or amount, the obtaining of each quotation and the making of each determination or calculation by the Calculation Agent(s) shall (in the absence of manifest error) be final and binding upon all parties.
4.10 Calculation Agent and Reference Banks
The Issuer shall procure that there shall at all times be four Reference Banks (or such other number as may be required) with at least one office in the Relevant Financial Centre and one or more Calculation Agents if so specified in the applicable Final Terms and for so long as any Note is outstanding (as defined in Article 1.3(c) above). If any Reference Bank (acting through its relevant office) is unable or unwilling to continue to act as a Reference Bank, then the Issuer shall appoint another Reference Bank with an office in the Relevant Financial Centre to act as such in its place. Where more than one Calculation Agent is appointed in respect of the Notes, references in these Terms to the Calculation Agent shall be construed as a reference to each Calculation Agent performing its respective duties under these Terms. If the Calculation Agent is unable or unwilling to act as such or if the Calculation Agent fails duly to establish the Interest Rate for an Interest Period or Interest Accrual Period or to calculate any Coupon Amount, Instalment Amount, Final Redemption Amount, Optional Redemption Amount or Early Redemption Amount, as the case may be, or to comply with any other requirement, the Issuer shall appoint a leading bank or investment bank operating in the interbank market (or, if appropriate, money market, swaps market or over-the-counter index options market) that is most closely connected with the calculation or determination to be made by the Calculation Agent (acting through its principal Paris office or any other office actively involved in such market) to act as such in its place. The Calculation Agent may not resign its duties without a successor having been appointed in the manner described above.
5. REDEMPTION, PURCHASE AND OPTIONS
5.1 Redemption at maturity
Unless previously redeemed, or purchased and cancelled as provided below, each Note shall be finally redeemed on the Maturity Date specified in the applicable Final Terms at its Final Redemption Amount (which, unless provided otherwise, is equal to its nominal amount (except for Zero Coupon Notes)) as specified in the applicable Final Terms or, in the case of Notes to which Condition 5.2 below applies, to its last Instalment Amount.
5.2 Redemption by Instalments
Unless previously redeemed, or purchased and cancelled as provided in this Article 5, each Note, for which the terms and conditions provide Instalment Dates (being the dates so specified in the applicable Final Terms) and Instalment Amounts shall be partially redeemed on each Instalment Date at the related Instalment Amount specified in the applicable Final Terms. The outstanding principal amount of each such Note shall be reduced by the Instalment Amount (or, if such Instalment Amount is calculated by reference to a proportion of the principal amount of such Note, such proportion) for all purposes with effect from the related Instalment Date, unless payment of the Instalment Amount is improperly withheld or refused (i) in the case of
0013112-0000368 PA:19690366.6 40
Dematerialised Notes, on the scheduled payment date or (ii) in the case of Materialised Notes, on presentation of the related Receipt, in which case, such amount shall remain outstanding until the Relevant Date relating to such Instalment Amount.
5.3 Redemption at the option of the Issuer
If Issuer Call is specified in the applicable Final Terms, the Issuer may, subject to compliance by the Issuer with all applicable laws, regulations and directives, and on giving not less than fifteen (15) and not more than thirty (30) calendar days' irrevocable notice to the Noteholders in accordance with Article 14 (or any other notice specified in the applicable Final Terms), redeem all or, if so provided, some of the Notes, as the case may be, on any Option Redemption Date, as the case may be. Any such redemption of Notes shall be at their Optional Redemption Amount, specified in the applicable Final Terms, together with interest accrued to the date fixed for redemption. Any such redemption or exercise must relate to Notes of a nominal amount at least equal to the minimum nominal amount to be redeemed as specified in the applicable Final Terms and no greater than the maximum nominal amount to be redeemed as specified in the applicable Final Terms.
All Notes in respect of which any such notice is given shall be redeemed on the date specified in such notice in accordance with this Article.
In the case of a partial redemption by the Issuer in respect of Materialised Notes, the notice to holders of such Materialised Notes must also indicate the number of Physical Notes to be redeemed or in respect of which such option has been exercised. The Notes must have been selected in such manner as is fair and objective in the circumstances, taking account of prevailing market practices and in accordance with all applicable stock market laws and regulations.
In the case of a partial redemption or partial exercise of an Issuer's option in respect of Dematerialised Notes of any one Series, the redemption shall be made by reducing the nominal amount of such Dematerialised Notes pro rata the nominal amount redeemed, in accordance with all applicable stock market laws and regulations.
5.4 Redemption at the option of the Noteholders
If Investor Put is specified in the applicable Final Terms, the Issuer shall, at the request of the holder of any such Note and upon giving not less than fifteen (15) and not more than thirty (30) calendar days' irrevocable notice (or any other notice specified in the applicable Final Terms) to the Issuer, redeem such Note on the Optional Redemption Date(s) at its Optional Redemption Amount, specified in the applicable Final Terms, together with interest accrued to the date fixed for redemption. In order to exercise such option, the Noteholder must deposit with a Paying Agent at its specified office by the required deadline a duly completed option exercise notice (the Exercise Notice) in the form obtainable during normal office hours from the Paying Agent or Registration Agent, as the case may be. In the case of Materialised Notes, the relevant Notes (together with all unmatured Receipts and Coupons and unexchanged Talons) must be attached to the Exercise Notice. In the case of Dematerialised Notes, the Noteholder shall transfer, or cause to be transferred, the Dematerialised Notes to be redeemed to the account of the Paying Agent, as specified in the Exercise Notice. No option that has been exercised or, if relevant, no Note that has been deposited or transferred may be withdrawn without the prior written consent of the Issuer.
5.5 Early redemption
(a) Zero Coupon Notes
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(i) The Early Redemption Amount payable in respect of any Zero Coupon Note shall, upon redemption of such Note pursuant to Article 5.6 or 5.9 or upon it becoming due and payable as provided in Article 8, be the Amortised Face Amount (calculated as provided below) of such Note.
(ii) Subject to the provisions of sub-paragraph (iii) below, the Amortised Face Amount of any such Zero Coupon Note shall be the scheduled Final Redemption Amount of such Note on the Maturity Date discounted at a rate per annum (expressed as a percentage) equal to the Amortisation Yield (which, if there is no indication of a rate in the applicable Final Terms, shall be such rate as would result in an Amortised Face Amount equal to the issue price of the Notes if discounted back to their issue price on the Issue Date) compounded annually.
(iii) If the Early Redemption Amount payable in respect of each Note upon its redemption pursuant to Article 5.6 or 5.9 or upon it becoming due and payable in accordance with Article 8, is not paid when due, the Early Redemption Amount due and payable in respect of such Note shall be the Amortised Face Amount of such Note, as defined in sub-paragraph (ii) above, except that such sub- paragraph shall have effect as if the reference therein to the date on which such Note becomes due and payable were a reference to the Relevant Date. The calculation of the Amortised Face Amount in accordance with this sub-paragraph shall continue to be made (as well after as before any judgment) until the Relevant Date, unless the Relevant Date falls on or after the Maturity Date, in which case the amount due and payable shall be the scheduled Final Redemption Amount of such Note on the Maturity Date, together with any interest that may accrue in accordance with Article 4.4. Where such calculation is to be made for a period of less than one (1) year, it shall be made on the basis of one of the Day Count Fractions mentioned at Article 4.1 and specified in the applicable Final Terms.
(b) Other Securities
The Early Redemption Amount due for any other securities, upon its redemption pursuant to Article 5.6 or 5.9 or upon it becoming due and payable pursuant to Article 8, shall be equal to the Final Redemption Amount plus all accrued interests until the date of redemption specified in the applicable Final Terms.
5.6 Redemption for tax reasons
(a) If, at the time of any redemption of principal or the payment of interest or other proceeds, the Issuer is obliged to pay additional amounts in accordance with Article 7.2 below, by reason of any change in or amendment to the laws and regulations in France, or any change in the official application or interpretation thereof, made after the Issue Date, unless such relevant obligations to make additional payments can be avoided by reasonable measures taken by the Issuer, to the Issuer may (having given notice to the Noteholders in accordance with Article 14, at the earliest forty five (45) calendar days and at the latest thirty (30) calendar days prior to such payment (which notice shall be irrevocable)) redeem, on any Interest Payment Date or, if specified in the applicable Final Terms, at any time, all but not some only of the Notes at the Early Redemption Amount together with, all interest accrued until the date fixed for redemption, provided that the due date for redemption of which notice hereunder shall be given shall not be earlier than the latest practicable date on which the Issuer could make a payment of principal and/or interest without withholding or deduction for French taxes.
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(b) If, on the occasion of the next redemption of principal or the payment of interest or other proceeds in respect of the Notes, Receipts or Coupons, the Issuer would be prevented by French law from making payment of the full amount then due and payable to the Noteholders, notwithstanding the undertaking to pay additional amounts in accordance with Article 7.2 below, the Issuer shall forthwith give notice of such fact to the Fiscal Agent. The Issuer shall, having given seven (7) calendar days' notice to the Noteholders in accordance with Article 14, redeem all, and not some only, of the Notes then outstanding at their Early Redemption Amount, together with all interest accrued up to the date fixed for redemption, on (i) the latest practicable Interest Payment Date on which the Issuer could make payment of the full amount due and payable on the Notes, Receipts or Coupons, provided that if the notice referred to above would expire after such Interest Payment Date, the date for redemption to the Noteholders shall be the later of (A) the latest practicable date on which the Issuer could make payment of the full amount then due and payable on the Notes, Receipts or Coupons and (B) fourteen (14) calendar days after giving notice to the Fiscal Agent or (ii) if so specified in the applicable Final Terms, at any time, provided that the due date for redemption of which notice hereunder is given shall be the latest practicable date on which the Issuer could make payment of the full amount due and payable in respect of the Notes and, if relevant, any Receipts or Coupons or, if that date is passed, as soon as practicable thereafter.
5.7 Purchases
The Issuer may at any time purchase Notes on the stock market or otherwise (including pursuant to a public offer) at any price (provided however that, in the case of Materialised Notes, all unmatured Receipts or Coupons, and all unexchanged Talons relating thereto, are attached to or surrendered with such Materialised Notes), in accordance with applicable laws and regulations.
Notes purchased by or on behalf of the Issuer may, at the option of the Issuer, be retained in accordance with applicable legal and regulatory provisions or cancelled in accordance with Article 5.8.
5.8 Cancellation
Notes purchased for cancellation in accordance with Article 5.7 above shall be cancelled, in the case of Dematerialised Notes, by transfer to an account pursuant to the rules and procedures of Euroclear France, and in the case of Materialised Notes, by delivery to the Fiscal Agent of the relevant Temporary Global Certificate or the Physical Notes in question, together with all unmatured Receipts and Coupons and all unexchanged Talons attached to such Notes, if relevant, and in each case, if so transferred and surrendered, all such Notes shall, together with all Notes redeemed by the Issuer, be cancelled forthwith (together with, in the case of Dematerialised Notes, all rights in respect of payment of interest and other amounts in respect of such Dematerialised Notes and, in the case of Materialised Notes, all unmatured Receipts and Coupons and all unexchanged Talons attached thereto or surrendered therewith). Any Notes so cancelled or, as the case may be, transferred or surrendered for cancellation may not be re-issued or re-sold and the obligations of the Issuer in respect of any such Notes shall be discharged.
5.9 Illegality
If, by virtue of the introduction of any new law or regulation in France, any change of law or other mandatory provision or any change in the interpretation thereof by any court or administrative authority, which takes effect after the Issue Date, it becomes unlawful for the Issuer to perform or comply with its obligations under the Notes, the Issuer shall have the right, having given notice to the Noteholders in accordance with Article 14, at the earliest forty five (45) calendar days and at the latest thirty (30) calendar days prior to such payment (which notice
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shall be irrevocable), redeem all and not some only of the Notes at the Early Redemption Amount together with all interest accrued up to the date fixed for redemption.
6. PAYMENTS AND TALONS
6.1 Dematerialised Notes
Any Payment of principal or interest in respect of Dematerialised Notes shall be made (a) in the case of Dematerialised Notes in bearer form or in administered registered form (au nominatif administré), by transfer to an account denominated in the Specified Currency held with the Account Holders for the benefit of the Noteholders, and (b) in the case of Dematerialised Notes in pure registered form (au nominatif pur), by transfer to an account denominated in the Specified Currency, held with a Bank (as defined below) specified by the relevant Noteholder. The Issuer's payment obligations shall be discharged upon such payments being duly made to such Account Holders or such Bank.
6.2 Physical Notes
(a) Method of payment
Subject as provided below, any payment in a Specified Currency shall be made by credit or transfer to an account denominated in the Specified Currency or to which the Specified Currency may be credited or transferred held by the beneficiary or, at the option of the beneficiary, by cheque denominated in the Specified Currency drawn on a bank located in the principal financial centre of the country of the Specified Currency (which shall be a country within the Euro-zone).
(b) Presentation and surrender of Physical Notes, Receipts and Coupons
Any payment of principal in respect of Physical Notes, shall (subject as provided below) be made in the manner described in paragraph Error! Reference source not found. bove solely upon presentation and surrender (or, in the case of a partial payment of an outstanding amount, upon endorsement) of the relevant Notes and any payment of interest in respect of Physical Notes shall (subject as provided below) be made in the manner described above solely upon presentation and surrender (or, in the case of a partial payment of an outstanding amount, upon endorsement) of the relevant Coupons, in each case at the specified office of any Paying Agent located outside the United States of America (such term meaning for the purposes hereof the United States of America (including the States and District of Columbia, their territories, possessions and other places under its jurisdiction)).
Any instalment of principal in respect of Physical Notes, other than the last instalment, shall, where relevant, (subject as provided below) be made in the manner described in paragraph (a) above upon presentation and surrender (or, in the case of a partial payment of an outstanding amount, upon endorsement) of the related Receipt in accordance with the preceding paragraph. Payment of the last instalment shall be made in the manner described in paragraph (a) above solely upon presentation and surrender (or, in the case of a partial payment of an outstanding amount, upon endorsement) of the related Note, in accordance with the preceding paragraph. Each Receipt must be presented for payment of the relevant Instalment together with the related Physical Note. Any Receipt presented for payment without the related Physical Note shall render the Issuer's obligations null and void.
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Unmatured Receipts relating to Physical Notes (whether or not attached thereto) shall become void and no payment shall be made in respect thereof on the date on which such Physical Notes mature.
Fixed Rate Notes represented by Physical Notes must be surrendered for payment together with all unmatured Coupons appertaining thereto (such expression including, for the purposes hereof, Coupons to be issued in exchange for matured Talons), failing which the amount of any missing unmatured Coupon (or, in the case of a partial payment, that proportion of the amount of such missing unmatured Coupon that the sum of principal so paid bears to the total principal due) shall be deducted from the amount due. Any amount of principal so deducted shall be paid in the manner described above against surrender of the missing Coupon before the 1st January of the fourth year following the due date for payment of such amount, and not under any circumstances thereafter.
Where a Fixed Rate Note represented by a Physical Note becomes due prior to its Maturity Date, unmatured Talons appertaining thereto become void and no further Coupons shall be delivered.
Where a Floating Rate Note represented by a Physical Note becomes due prior to its Maturity Date, unmatured Coupons and Talons (if any) appertaining thereto (whether or not attached) become void and no payment shall be made or, if relevant, no further Coupons shall be delivered in respect thereof.
If a Physical Note is redeemed on a date that is not an Interest Payment Date, the interest (if any) accrued on such Note since the previous Interest Payment Date (included) or, as the case may be, the Interest Period Commencement Date (included) shall be paid only against presentation and surrender (if relevant) of the related Physical Note.
6.3 Payments subject to fiscal laws
All payments are subject to any applicable fiscal or other laws, regulations and directives, but without prejudice to the provisions of Article 7. No commission or expenses shall be charged to the Noteholders, Receiptholders or Couponholders in respect of such payments.
6.4 Appointment of Agents
The Fiscal Agent, the Paying Agents, the Calculation Agent and the Registration Agent initially appointed by the Issuer and their respective specified offices are listed at the end of this Base Prospectus for the Programme. The Fiscal Agent, the Paying Agents and the Registration Agent act solely as agents, and the Calculation Agents solely as independent experts, of the Issuer and under no circumstances do any of them assume any obligation or relationship of agency for or with any Noteholder or Couponholder. The Issuer reserves the right at any time to vary or terminate the appointment of the Fiscal Agent, any Paying Agent, Calculation Agent or Registration Agent and to appoint any other Fiscal Agent, Paying Agent(s), Calculation Agent(s) or Registration Agent(s) or any additional Paying Agent(s), Calculation Agent(s) or Registration Agent(s), provided that the Issuer shall at all times maintain (a) a Fiscal Agent, (b) one or more Calculation Agents, where the Terms so require, (c) a Paying Agent with specified offices in at least two major European cities (providing fiscal agency services in respect of the Notes in France so long as any Notes are admitted to trading on Euronext Paris and applicable market regulations so require), (d) in the case of Dematerialised Notes in pure registered form (au nominatif pur), a Registration Agent and (e) any other agent that may be required under the rules of any regulated market on which the Notes may be admitted to trading.
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Notice of any such change or of any change of any specified office shall promptly be given to the Noteholders in accordance with Article 14.
6.5 Talons
On or after the Interest Payment Date for the final Coupon forming part of a Coupon sheet issued in respect of any Materialised Note, the Talon forming part of such Coupon sheet may be surrendered at the specified office of the Fiscal Agent in exchange for a further Coupon sheet (and if necessary another Talon for a further Coupon sheet) (but excluding any Coupons that may have become void pursuant to Article 9).
6.6 Business Days for payment
If any date for payment in respect of any Note or Coupon is not a business day (as defined below), the Noteholder or Couponholder shall not be entitled to payment until the next following business day, nor to any other sum in respect of such postponed payment. In this paragraph, "business day" means a day (other than a Saturday or Sunday) (a) (i) in the case of Dematerialised Notes, on which Euroclear France is operating, or (ii) in the case of Materialised Notes, on which banks and foreign exchange markets are open for business in the relevant place of presentation of the note for payment, and (b) on which banks and foreign exchange markets are open for business in the countries specified as "Financial Centres" in the applicable Final Terms and (c) which is a TARGET Business Day.
6.7 Bank
For the purposes of this Article 6, Bank means a bank established in a city in which banks have access to the TARGET system.
7. TAXATION
7.1 Withholding
All payments of principal, interest or other amounts by or on behalf of the Issuer in respect of the Notes, Receipts and Coupons shall be made free and clear of, and without withholding or deduction for, any taxes or duties of whatever nature imposed, levied or collected by or on behalf of France or any authority therein or thereof having power to tax, unless such withholding or deduction is required by law.
7.2 Additional amounts
If French law should require that payments of principal, interest or other proceeds in respect of any Note, Receipt or Coupon be subject to withholding at source or deduction with respect to any taxes or duties of any kind whatsoever, present or future, the Issuer will, to the fullest extent then permitted by law, pay such additional amounts as may be necessary in order that the holders of Notes, Receipts and Coupons receive the full amount that would have been payable in the absence of such withholding at source or deduction; except that no such additional amounts shall be payable with respect to any Note, Receipt or Coupon in the following cases:
(a) Other connection: the holder of Notes, Receipts or Coupons, or any third party acting on his behalf, is liable to such tax or duty in France by reason of having some connection with France other than the only ownership of the Notes, Receipts or Coupons; or
(b) More than thirty (30) calendar days have passed since the Relevant Date: in the case of Materialised Notes, more than thirty (30) calendar days have passed since the Relevant
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Date, except where the holder of Notes, Receipts or Coupons would have been entitled to an additional amount on presentation of the same for payment on the last day of such thirty (30) calendar days period.
References in these Terms to (i) "principal" shall be deemed to include any premium payable in respect of the Notes, Final Redemption Amounts, Instalment Amounts, Early Redemption Amounts, Optional Redemption Amounts and all other amounts in the nature of principal payable pursuant to Article 5 as completed by the Final Terms, (ii) "interest" shall be deemed to include all Coupon Amounts and all other amounts payable pursuant to Article 4 as completed by the Final Terms and (iii) "principal" and/or "interest" shall be deemed to include any additional amounts that may be payable under this Article.
8. EVENTS OF DEFAULT
If any of the following events occurs (each an Event of Default), (i) the Representative (as defined in Article 10) on its own initiative or upon request of any holder of Notes may, upon simple written notice addressed on behalf of the Masse (as defined in Article 10) to the Fiscal Agent with copy addressed to the Issuer, before the considered default has been cured, make the redemption immediately and automatically due and payable of all the Notes of the considered Series (and not a part only); or (ii) if there is no Representative, any holder of Notes may, on simple written notice addressed to the Fiscal Agent with copy addressed to the Issuer, before the considered default has been cured, make the redemption immediately and automatically due and payable of the Notes held by the author of the notice, immediately and automatically due and payable, at their Early Redemption Amount with interest accrued to the date of repayment, without the necessity for any prior formal demand:
(a) if the Issuer defaults in any payment at its due date of any amount in principal or interest payment due under any Notes, Receipt or Coupon (including payment of any gross up provided by Article 7.2 "Taxation" above) unless it has been remedied to that default of payment within fifteen (15) calendar days following the due date of this payment;
(b) if the Issuer fails to perform any other provision of this terms and conditions of the Notes if it has not been remedied within thirty (30) calendar days following on the receipt by the Issuer of a written notice of this failure by registered letter with an acknowledgement of receipt;
(c) if the Issuer is not able to face its mandatory expenses as specified in Articles L.2321-1 et seq. of the Code général des collectivités territoriales or make a written statement recognising such inability;
(d) failure to pay on the maturity date, or as the case may be, upon the expiration of any applicable grace period, a sum exceeding ten million euros (Euro 10,000,000) (or its equivalent in any other currency) in relation with any amount due in respect with any actual or future indebtedness of the Issuer resulting from a bank loan or notes, other than the Notes, Receipts and Coupons, or the enforcement of a real security related to one of the aforementioned indebtednesses, for an amount exceeding ten million euros (Euro 10,000,000) (or its equivalent in any other currency) or the failure to pay a sum exceeding ten million euros (Euro 10,000,000) in relation with any sum due upon a guarantee granted by the Issuer in relation to one or more bank loans or notes entered into or issued by a third party;
(e) if the legal status or regime of the Issuer is amended, including as a result of a legislative or regulation amending, as far as in each case, such modification reduces the rights of the
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Noteholders against the Issuer or makes more difficult or more expensive actions of the Noteholders against the Issuer.
Provided that any of the events specified in paragraphs (a), (b) or (d) above, will not constitute an Event of Default, if the Issuer notifies to the Fiscal Agent before the expiration of the considered deadline (if such deadline is set out) that a lapse of time is needed in order to adopt a resolution authorising the unforeseen or additional budgetary expenses payment. The Issuer shall indicate to the Fiscal Agent the date on which such resolution will become enforceable. The Fiscal Agent shall transfer immediately to the Noteholders any notification it has received from the Issuer in respect with this paragraph and in compliance with the provisions of Article 14 (Notices). In case the additional budgetary resolution has not been adopted and has not become enforceable upon the expiration of a four (4) months period after the notification made to the Noteholders, the events set out in paragraphs (a), (b) and (d) above and not cured at the end of the four (4) month delay will constitute an Event of Default.
9. PRESCRIPTION
All claims against the Issuer in relation to the Notes, Receipts and Coupons (except for Talons) shall lapse after four years from the 1st of January of the year following their respective due dates (pursuant to the Law n°68-1250 of 31 December 1968).
10. REPRESENTATION OF NOTEHOLDERS
In respect of the representation of Noteholders, the following paragraphs shall apply:
(a) If the applicable Final Terms specify "Full Masse", the Noteholders shall, in respect of all Tranches of a single Series, be grouped together automatically for the defence of their common interests in a masse (the Masse) and the provisions of the French Code de commerce, relating to the Masse shall apply.
The names and addresses of the initial Representative of the Masse and its alternate representative shall be specified in the applicable Final Terms. The Representative appointed in respect of the first Tranche of any Series of Notes shall be the Representative of the single Masse of all Tranches of such Series.
The Representative shall receive the remuneration in connection with its functions and duties, if such remuneration is provided, at the date(s) specified in the Final Terms, and to the extend specified therein. The Representative’s expenses and disbursements may as well be limited by the Final Terms.
In case of death, resignation or dismissal of the Representative, he shall be replaced by the alternate Representative. In case of death, resignation or dismissal of the alternate Representative, he shall be replaced by another alternate representative appointed by the general meeting of the Noteholders (the General Meeting).
(b) If the applicable Final Terms specify "Contractual Masse", the Noteholders shall be automatically grouped, in respect of all Tranches of a single Series, for the defence of their common interests in a Masse. The Masse shall be governed by the provisions of the Code de commerce, except articles L. 228-48, L. 228-59, L. 228-71, R. 228-63, R. 228- 67 and R. 228-69, and subject to the following provisions:
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(i) Legal personality
The Masse will be a separate legal entity, acting in part through a representative (the Representative) and in part through a Noteholders' general meeting (the Noteholders' General Meeting).
The Masse alone, to the exclusion of all individual Noteholders, shall exercise the common rights, actions and benefits which may accrue now or in the future under or with respect to the Notes.
(ii) Representative
The person acting as Representative may be of any nationality. However, the following persons may not be chosen as Representative:
(A) the Issuer, the members of its Municipality Council (Conseil communautaire), its employees and their ascendants, descendants and spouses; or
(B) entities guaranteeing all or part of the obligations of the Issuer, their respective general managers, managing directors, members of their Board of Directors, Executive Board or Supervisory Board, their statutory auditors, employees or any of their ascendants, descendants and spouses respectively; or
(C) any persons prohibited from exercising the profession of banker, or who are disqualified from acting as director, administrator or manager of a company in whatever capacity.
The names and addresses of the incumbent Representative of the Masse and his alternate shall be set forth in the applicable Final Terms. The Representative appointed for the first Tranche of a Series of Notes shall be the sole Representative of the Masse for all Tranches of such Series.
The Representative shall receive remuneration for the performance of his functions and duties, if so provided, on such date or dates as may be specified in the applicable Final Terms to the extend specified therein. The Representative’s expenses and disbursements may as well be limited by the Final Terms.
In the event of death, resignation or dismissal of a Representative, the alternate Representative shall replace him. In the event of death, resignation or dismissal of the alternate Representative, the Noteholders' General Meeting shall appoint another alternate Representative to replace him.
All interested parties may at any time obtain the names and addresses of the initial Representative and his alternate at the principal office of the Issuer and the specified office of any of the Paying Agents.
(iii) Powers of the Representative
The Representative shall (in the absence of any decision to the contrary of the Noteholders' General Meeting), have the power to take any management action necessary for the defence of the common interests of the Noteholders.
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All legal proceedings brought against or by the Noteholders must be brought by or against the Representative.
The Representative may not interfere in the management of the Issuer's affairs.
(iv) General Meeting
Noteholders' General Meetings may be held at any time, on convocation either by the Issuer or the Representative. One or more Noteholders, holding together at least one-thirtieth of the nominal amount of the Notes outstanding may request the Issuer or the Representative to convene a General Meeting. If such General Meeting has not been convened within two months from such demand, such Noteholders may instruct one of themselves to petition the competent courts of Paris to appoint an agent to convene the meeting.
Notice of the date, hour, place and agenda of the General Meeting shall be published as provided in Article 14.
Each Noteholder has the right to participate in General Meetings in person, by proxy or by postal ballot. Each Note carries one vote or, in the case of Notes issued with several Specified Denominations, one vote in respect of each multiple of the smallest Specified Denomination comprised in the principal amount of the Specified Denomination of such Note.
(v) Powers of the General Meeting
The General Meeting has power to consider proposals for the dismissal and replacement of the Representative and his alternate. It may also vote on any other matter concerning the common rights, actions and benefits attached to or accruing with respect to the Notes, now or in the future, including authorising the Representative to act at law whether as plaintiff or defendant.
The General Meeting may also consider any proposal relating to modification of the Terms, including any proposal for arbitration or settlement, relating to rights that are in dispute or the subject of judicial decision; the General Meeting may not, however, increase the obligations of the Noteholders or breach in any manner the principle of equality between Noteholders.
General Meetings may only deliberate validly on first convocation if the Noteholders present or represented hold at least one fifth of the nominal amount of Notes then outstanding. On second convocation no quorum is required. Decisions at General Meetings shall be valid if taken by a majority of two thirds of the votes cast by the Noteholders present or represented at such meeting.
Pursuant article R. 228-71 of the Code de commerce, the right of each Noteholder to participate in General Meetings will be evidenced, by the entities, of the Notes in the securities account of the Relevant Holder on the second business day prior to the relevant General Meeting as of 0:00, Paris time.
Resolutions adopted by General Meetings shall be published in accordance with the provisions of Article 14.
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(vi) Information for Noteholders
Each Noteholder or its representative shall have the right, throughout the fifteen (15) calendar day period preceding the holding of each General Meeting, to consult or make copies of the text of the resolutions to be proposed and of the reports to be presented at the General Meeting. Such documents will be available for inspection at the principal office of the Issuer, at the specified offices of the Paying Agents and at any other place specified in the notice of such meeting.
(vii) Expenses
The Issuer shall pay, upon presentation of duly documented evidence, and subject to the limitations set out in the Final Terms, if any, all expenses incurred in connection with the conduct of the affairs of the Masse, including all expenses relating to notices and the holding of General Meetings and, more generally, all administrative expenses voted by the Noteholders' General Meeting, provided however that no expenses may be imputed against any interest payable on the Notes.
(viii) Single Masse
The holders of Notes of the same Series, (including Noteholders of any other Tranche consolidated in accordance with Article 13), shall be grouped together for the defence of their common interests into a single Masse. The Representative appointed for the first Tranche of a Series of Notes shall be the Representative of the single Masse of the Series.
(ix) Single Noteholder
For so long as the Notes are held by a single Noteholder, and if no Representative has been appointed, the relevant Noteholder shall exercise all powers conferred upon the Representative and the General Meeting under the Conditions of the Notes. The single Noteholder shall keep (or cause any authorised agent to keep) a register of all decisions taken by it in such capacity and make it available, upon request, to all subsequent Noteholders.
A Representative shall be appointed whenever the Notes of a Series are held by more than one Noteholder.
For the avoidance of doubt in this Article 10, the term "outstanding" shall not include the Notes repurchased by the Issuer, pursuant to Article 5.7 that are held by it and not cancelled.
11. AMENDMENTS
The parties to the Fiscal Agency Agreement may, without the consent of the Noteholders, Receiptholders or Couponholders, amend or waive any provisions thereof with a view to remedying any ambiguity or rectifying, correcting or completing any defective provision of the Fiscal Agency Agreement, or in any other manner that the parties to the Fiscal Agency Agreement may consider necessary or desirable but only to the extent that, in the reasonable opinion of the parties, the interests of the Noteholders, Receiptholders or Couponholders are not prejudiced.
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12. REPLACEMENT OF PHYSICAL NOTES, COUPONS, RECEIPTS AND TALONS
In the case of Materialised Notes, any Physical Note, Receipt, Coupon or Talon that has been lost, stolen, defaced or destroyed in whole or in part, may be replaced, in compliance with applicable laws and stock market rules and regulations at the offices of the Fiscal Agent or any other Paying Agent, if any, appointed by the Issuer for such purpose and whose appointment shall be notified to the Noteholders. Such replacement shall be made against payment by the claimant of any fees and expenses incurred in connection therewith and subject to such terms as to proof, security or indemnity (which may provide, inter alia, that in the event that the Physical Note, Receipt, Coupon or Talon allegedly lost, stolen or destroyed is subsequently presented for payment or, as the case may be, for exchange for further Coupons, the Issuer shall be paid, at its request, the amount payable by the Issuer in respect of such Physical Notes, Coupons or further Coupons). Partially destroyed or defaced Materialised Notes, Receipts, Coupons or Talons must be surrendered before replacements will be issued.
13. CONSOLIDATED ISSUES
The Issuer shall be entitled, without the consent of the holders of any Notes, Receipts or Coupons, to create and issue further notes to be consolidated with the Notes to form a single Series, provided that such Notes and the further notes confer on their holders rights that are identical in all respects (or identical in all respects other than the issue date, issue price and the first interest payment) and that the terms of such Notes provide for consolidation and references to "Notes" in these Terms shall be interpreted accordingly.
14. NOTICES
14.1 Notices addressed by the Issuer to the holders of Dematerialised Notes in registered form shall be valid either (a) if they are posted to their respective addresses, in which case they shall be deemed to have been delivered on the fourth (4th) Business Day after posting or (b) at the option of the Issuer, if they are published on the website of any relevant regulatory authority, in one of the leading economic and financial daily newspapers with general circulation in Europe (which is expected to be the Financial Times). So long as the Notes are admitted to trading on any regulated market and the applicable rules of such market so require, notices shall not be deemed to be valid unless published in an economic and financial daily newspaper with general circulation in the city(ies) in which the Notes are admitted to trading, which in the case of Euronext Paris is expected to be Les Echos and in any other manner required, as the case may be, under the applicable rules of such market.
14.2 Notices addressed to Noteholders of Materialised Notes and Dematerialised Notes in bearer form shall be valid if published in a leading economic and financial daily newspaper with general circulation in Europe (which is expected to be the Financial Times) and, so long as the Notes are admitted to trading on any regulated market and the applicable rules of such market so require, notices shall also be published in an economic and financial daily newspaper with general circulation in the city(ies) in which the Notes are admitted to trading, which in the case of Euronext Paris is expected to be Les Echos and in any other manner required, as the case may be, under the applicable rules of such market.
14.3 If any such publication is not practicable, the notice shall be validly given if published in a leading economic and financial newspaper with general circulation in Europe, provided however that, so long as the Notes are admitted to trading on any regulated market, notices must be published in any other manner required, as the case may be, under the applicable rules of such regulated market. Noteholders shall be deemed to have had notice of the contents of any notice on the date of publication, or if the notice was published more than once or on different dates, on the date of the first publication as described above. Coupon holders shall be deemed, in all
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circumstances, to have had notice of the contents of any notice addressed to Noteholders of Materialised Notes in accordance with this Article.
14.4 Notices addressed to holders of Dematerialised Notes (whether in registered or bearer form) in accordance with these Terms may be delivered to Euroclear France, Euroclear, Clearstream, Luxembourg or any other clearing system through which the Notes are then cleared, instead of posting or publishing the notice as provided in Articles 14.1, 14.2 and 14.3 above, provided however that so long as the Notes are admitted to trading on any regulated market and the applicable rules of such market so require, notices shall also be published in an economic and financial daily newspaper with general circulation in the city(ies) in which the Notes are admitted to trading, which in the case of Euronext Paris is expected to be Les Echos and in any other manner required, as the case may be, under the applicable rules of such market.
15. GOVERNING LAW, LANGUAGE AND JURISDICTION
15.1 Governing law
The Notes, Receipts, Coupons and Talons are governed by and shall be interpreted in accordance with French law.
15.2 Language
This Base Prospectus has been drafted in the French language. A free translation in English may be available, however only the French version in respect of which the AMF has granted visa may be relied upon as the authentic and binding version.
15.3 Jurisdiction
Any dispute in relation to the Notes, Receipts, Coupons or Talons shall be submitted to the courts within the jurisdiction of the Paris Court of Appeal (subject to mandatory provisions related to territorial jurisdiction of French courts). No private law enforcement measures may be instigated and no seizure or attachment proceedings may be brought against the assets or property of the Issuer as a legal entity governed by public law.
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TEMPORARY GLOBAL CERTIFICATES IN RESPECT OF MATERIALISED NOTES
1. TEMPORARY GLOBAL CERTIFICATES
A Temporary Global Certificate in respect of Materialised Notes, without interest coupons, will initially be issued (a Temporary Global Certificate) for each Tranche of Materialised Notes, and shall be deposited at the latest by the issue date of such Tranche with a common depositary (the Common Depositary) for Euroclear Bank S.A./N.V., as operator of the Euroclear system (Euroclear) and Clearstream banking S.A. (Clearstream, Luxembourg). Following deposit of such Temporary Global Certificate with a Common Depositary, Euroclear or Clearstream, Luxembourg shall credit each subscriber with an amount in principal of Notes equal to the nominal amount so subscribed and paid for.
The Common Depositary may also credit the accounts of subscribers of a nominal amount of Notes (if so specified in the applicable Final Terms) in other clearing systems through accounts held directly or indirectly by such other clearing systems with Euroclear and Clearstream, Luxembourg. Conversely, a nominal amount of Notes initially deposited with any other clearing system may, in the same manner, be credited to the accounts of subscribers held with Euroclear, Clearstream, Luxembourg or other clearing systems.
2. EXCHANGE
Each Temporary Global Certificate in respect of Materialised Notes shall be exchangeable, free of charge to the bearer, at the earliest on the Exchange Date (as defined below):
(a) if the applicable Final Terms specify that the Temporary Global Certificate is issued in compliance with the C Rules or in a transaction to which the TEFRA rules do not apply (see the section "General Description of the Programme – Selling Restrictions"), in whole but not in part, for Physical Notes; and
(b) in all other cases, in whole but not in part, after certification, to the extent required under section § 1.163-5(c)(2)(i)(D)(4)(ii) of the US Treasury regulations, that the Notes are not held by US persons, for Physical Notes.
3. DELIVERY OF PHYSICAL NOTES
On or after the Exchange Date, the holder of a Temporary Global Certificate may surrender such Temporary Global Certificate to or to the order of the Fiscal Agent. The Issuer shall, in exchange for any Temporary Global Certificate, deliver or procure the delivery of an equal aggregate nominal amount of duly signed and authenticated Physical Notes. For the purposes of this Base Prospectus, Physical Notes means, in respect of a Temporary Global Certificate, the Physical Notes for which the Temporary Global Certificate may be exchanged (having, if appropriate, attached to them all Coupons and Receipts in respect of interest or Instalment Amounts that have not already been paid on the Temporary Global Certificate and a Talon). Physical Notes will be security printed in accordance with any applicable legal and stock exchange requirements.
Exchange Date means, in relation to a Temporary Global Certificate, the day falling no earlier than forty (40) calendar days after its issue date, provided however that, in the case of a further issue of Materialised Notes, to be consolidated with such previously mentioned Materialised Notes, issued prior to such day in accordance with Article 13, the Exchange Date may, at the option of the Issuer, be postponed until a date falling at least forty (40) calendar days after the issue date of such further Materialised Notes.
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In the case of Materialised Notes with a minimum maturity of more than 365 calendar days (to which the TEFRA C Rules do not apply), the Temporary Global Certificate must include the following legend:
ANY UNITED STATES PERSON (AS DEFINED IN THE INTERNAL REVENUE CODE OF 1986) WHO HOLDS THIS NOTE WILL BE SUBJECT TO RESTRICTIONS UNDER UNITED STATES FEDERAL INCOME TAX LAWS, INCLUDING THOSE PROVIDED UNDER SECTIONS 165(J) AND 1287(A) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
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DESCRIPTION OF THE ISSUER
1. CREATION AND GENERAL OVERVIEW OF METROPOLE AIX-MARSEILLE- PROVENCE
Since 1 January 2016, Métropole Aix-Marseille-Provence created by laws n° 2014-58 of 27 January 2014 on the modernisation of territorial public action and affirmation of Métropoles (the so-called "MAPTAM" law) and n°2015-991 of 7 August 2015 on the new local authority organisation in the Republic of France (the so-called "NOTRE" law) covers six intercommunal cooperation public establishments (établissements publics de coopération intercommunale).
Métropole Aix-Marseille-Provence is home to more than 1.8 million inhabitants and covers a surface area of 3,150 km2 (source Marseille Provence Chamber of Commerce and Industry: http://www.ccimp.com/actualite/dossier/31756-pourquoi-aix-marseille-provence-est-une-chance- pour-France). It encompasses six territories (territoires) which form the framework of this multipolar Métropole. Connected to the World by its ports and airports infrastructure, its Provençal backcountry is endowed with a particularly dense communications network. Marseille, seat of the Métropole Aix-Marseille-Provence, is stakeholder in a multipolar urban system comprising dynamic towns rich in their diversity, hosting population centres ranging in size up to almost 400,000 inhabitants, such as Pays d'Aix for example.
Its population is spread between the commune of Marseille, with more than 850,000 inhabitants, Aix-en-Provence, a large town of 150,000 inhabitants, several towns with between 30,000 and 50,000 inhabitants (Aubagne, Salon-de-Provence, Istres, Martigues, Fos-sur-Mer, Martigues, Miramas, Vitrolles-Marignane, Gardanne...) and numerous villages with strong cultural identities and renowned tourist potential.
These urbanised spaces form part of an area 85% of which is covered by green and agricultural spaces combining woodlands, cultivated fields and valleys (the Calanques National Park, the Sainte Victoire Grand Site of France, the Regional Parks of the Lubéron, the Alpilles, Camargue and Sainte Baume and, as a sign of things to come, the Marine Park of the Blue Coast …). The 260 km of coastline embracing the largest salt water lake in France, the Etang de Berre, add to the wide geographical variety of the Métropole.
Over and above its geographical surroundings and exceptional countryside, Aix-Marseille- Provence boasts numerous assets:
- The port of Marseille-Fos is the no. 1 French port handling around 90 million tonnes of goods, serving 400 ports worldwide (source Port de Marseille Fos, 2017: http://www.marseille-port.fr/fr/Page/presentation_du_port_de_marseille_fos/16404)
- European scale transport infrastructures with an international airport, connections to the TGV network,
- the presence of 80 foreign consulates, making Aix-Marseille-Provence a highly important diplomatic location in France,
- a diverse economy with expanding sectors of excellence (chemical-refinery-metallurgy industry, aeronautics, digital, maritime-transport and logistics, water, energy, health and medico-social, tourism and lifestyle …),
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- a higher education offer including prestigious colleges (grandes écoles) and institutes and a first-class university centre, resulting from the merger of three universities,
- more than 2600 years of history with a rich identity.
The above-mentioned new legislative measures (law for the modernisation of territorial public action and affirmation of métropoles and the law on the new local authority organisation of the French Republic) bring profound change to the way local authorities are administered and redefine the role of métropoles in this transformation.
The Métropole Aix-Marseille-Provence, being the result of this transformation, is a new inter- communal cooperation public establishment (EPCI) with autonomous taxation powers formed by the combining of six former EPCI of the region: the Marseille Provence Métropole urban community, the Pays d'Aix-en-Provence agglomeration community, the Salon Etang de Berre Durance agglomeration community, the Pays d'Aubagne et de l'Etoile agglomeration community, the Pays de Martigues agglomeration community and the former Ouest Provence new agglomeration syndicate.
Since its creation, it has inherited all of the powers that had previously been transferred, by their member communes, to the six former EPCI. It is also automatically invested with powers in economic, social and cultural planning and development, development of the metropolitan area, local housing policy and town planning, the management of community services and the protection and enhancement of the environment and living standards policy.
Divided into localities (territoires) within which local councils (conseils de territoire) are established, each receiving delegations of authority from the Métropole in a number of domains, the head office of the Métropole Aix-Marseille-Provence is situated in Marseille. It is governed by a metropolitan council (Conseil de la Métropole), chaired by the President of the Conseil de la Métropole, assisted by twenty vice-Presidents elected from amongst the members of the Conseil de la Métropole and six automatically appointed vice-Presidents (the six conseil de territoire Presidents). It also has a bureau and twelve research and work select committees.
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Métropole Aix-Marseille-Provence
Legend: 6 local councils (Conseils de Territoire)
92 communes 2 3,148km 1,841,460 inhabitants
Source: http://www.marseille-provence.fr/index.php/la-metropole/la-metropole-aix-marseille-provence (2015 figures)
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2. THE ISSUER’S POSITION IN THE NATIONAL INSTITUTIONAL FRAMEWORK
2.1 Issuer’s head office, legal form and address
Geographical location Legal Date of Address Telephone form establishment Mainland France Métropole Aix- Marseille- Provence-Alpes- EPCI 2016 04 95 09 59 00 Côte d'Azur Région Provence
Bouches-du-Rhône Le Pharo Département 58 Boulevard Charles Livon 13007 Marseille
2.2 General overview of intercommunality and EPCI (intercommunal cooperation public establishments)
Under local authority law, an EPCI is an administrative structure allowing several communes to combine and share common powers (transport, housing, environmental policy, etc.).
Intercommunality enables communes to jointly manage amenities or public services and/or develop economic, land or urban development projects on the scale of an area larger than that of a single commune. Communes transfer mandatory powers, as well as optional powers, to these groupings. This transfer of powers endows EPCIs with the powers to take decisions and exercise executive powers that were previously held by the communes.
The official distribution of fiscally autonomous EPCI in France is as follows (source: Ministry for the Interior, local authorities in figures, 2017, available for consultation on the Ministry for the Interior website):
- 17 Métropoles,
- 7 Communautés Urbaines,
- 196 Communautés d’Agglomération,
- 1,842 Communautés de Communes.
There are therefore 2062 fiscally autonomous EPCI in total, including in particular Communautés Urbaines, established by the law n° 66-1069 of 31 December 1966, which were, prior to the creation of métropoles, the most integrated form of intercommunality in France.
There are two forms of intercommunal cooperation:
- Fiscally autonomous EPCI operating in federative form and which are financed by the four "local" taxes: the territorial economic contribution; the residence tax; the tax on developed land and the tax on undeveloped land. Fiscally autonomous EPCI include the following: Communautés de communes, Communautés d'agglomérations, Communautés Urbaines and finally Métropoles created by the law of 16 December 2010 on the reform of local authorities as amended by the MAPTAM law of 27 January 2014.
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- EPCI without fiscal autonomy, operating in associative form and which are financed by budgetary and/or tax-based contributions of the member communes. EPCI without specific taxation powers include: single-purpose syndicates ("SIVU"), multi-purpose syndicates ("SIVOM") and mixed syndicates.
The law no. 2010-1563 of 16 December 2010 drastically extended intercommunality. Efforts in this area had been made to bring a maximum number of isolated communes under the umbrella of an EPCI and widen the scope of those already in existence to better adapt themselves to local economic and geographical constraints. The status of Métropole was created to increase the competitiveness of the large agglomerations. Originally, the status of Métropole was open to EPCI (with the notable exception of those in the Ile-de-France) forming a bloc of 500,000 inhabitants on the date of their creation, and also to communautés urbaines established by the law of 1966 on a voluntary basis. This process was accelerated by the MAPTAM law (Modernisation of territorial public action and affirmation of métropoles) of 27 January 2014 under which certain groupings were automatically created and by the law of 16 January 2015 which transformed 22 regions into 13 metropolitan regions.
The MAPTAM law also modified the Métropole regime by establishing Métropoles with special status by reference to the law of 2010: Grand Paris, Lyon and Aix-Marseille-Provence.
The fundamental point of this law was the automatic transformation into a Métropole, on 1st January 2015 of fiscally autonomous EPCI of more than 400,000 inhabitants, situated in an urban area (aire urbaine) of more than 650,000 inhabitants (according to the definition of the National Institute for Statistics and Economic Studies, an aire urbaine is a group of communes, in a contiguous and continuous zone, formed by an urban centre (pôle urbain) (or urban unit) of more than 10,000 jobs, and by rural communes or urban units (peri-urban zone) where at least 40% of the resident population in employment, works in the pôle or in communes attracted by it). Nine EPCI were thus automatically transformed: Nice (which was already a Métropole within the meaning of the aforementioned law of 16 December 2010), the communautés urbaines of Toulouse, Lille, Bordeaux, Nantes and Strasbourg and also the communautés d’agglomération of Grenoble, Rennes and Rouen.
The Issuer, which is institutionally organised under the above-mentioned laws, is an inter- communal cooperation public entity (Etablissement Public de Coopération Intercommunale (EPCI)), with separate legal personality and legal financial autonomy.
3. OVERVIEW OF THE ISSUER: THE MÉTROPOLE AIX-MARSEILLE-PROVENCE
The law of 7 August 2015, on the new local authority organisation of the French Republic, specified the timetable for the establishment of the Métropole Aix-Marseille-Provence. It also introduced transitional measures to apply until 2020:
- The municipal councillors of the six merged intercommunalities automatically remain members of the local councils (conseils de territoire), even if they are not members of the Métropole Council (Conseil de la Métropole):
- The departmental assistant director generals of the six merged intercommunalities shall automatically remain in their posts under the President of the Métropole Council;
- Powers are progressively transferred to the Métropole between 2016 and 2020.
At present, the Métropole Aix-Marseille-Provence has, since 1 January 2016, been vested with the powers, governing bodies and specific institutional architecture described below.
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3.1 Powers of the Métropole Aix-Marseille-Provence
(a) Powers of a Métropole
The general powers of a métropole listed in article L.5217-2 - I of the Code général des collectivités territoriales (applicable to the Métropole Aix-Marseille-Provence by virtue of the provisions of article L. 5218-1 – II of the same code), are as follows:
- In matters of economic, social and cultural planning and development: creation, development and management of industrial, commercial, tertiary, artisanal, tourism and port and airport activity zones; economic development action, and support and involvement in steering centres of competition located within its area; construction, planning, maintenance and operation of cultural, socio-cultural, socio-educational and sports amenities of importance in the Métropole; promotion of tourism, including the establishment of tourist information offices; programme for support and assistance to higher education and research establishments and research programmes, having regard to the regional higher education, research and innovation blueprint;
- In matters of metropolitan zone development: regional coherence scheme and sectoral scheme; local urban development plan, or equivalent document or communal map; definition, creation and realisation of development operations of importance in the Métropole; enhancement of countryside and natural heritage; setting aside real estate reserves; organising mobility; creation, development and maintenance of roads; traffic signals; bus shelters; car parking facilities and urban public transport plan; creation, development and maintenance of public spaces dedicated to all forms of urban transport and their associated infrastructure; involvement in governance and planning of stations situated within the metropolitan area; establishment, operation, acquisition and commissioning of telecommunications networks and infrastructure;
- In matters of local housing policy: local housing programme; housing policy; financial assistance for social housing; initiatives to promote social housing; initiatives to promote housing for the disadvantaged; improvement of housing/real estate stock, renovation or demolition of squalid housing; planning, maintenance and management of welcome centres for the travelling community;
- In matters of town planning: preparing diagnostics for the zone and establishing guidelines for the town planning contract; implementation and coordination of contractual measures for urban development, local development and social and economic integration and local measures for the prevention of anti-social behaviour; action programmes defined in the town planning contract;
- In matters of management of collective interest services: sewage, sanitation and water; creation, management, extension and relocation of cemeteries and funerary sites of metropolitan importance and the creation, management and extension of crematoriums: slaughterhouses, slaughterhouse markets and markets of national interest; fire and emergency services; external public fire defence services;
- In matters of environmental protection and enhancement and living standards policy: management of household and similar waste; combating air pollution; combating noise pollution; contribution towards energy transition; support for measures to control demand for energy; drawing up and adoption of the local climate-air-energy plan pursuant to article L. 229-26 of the environmental Code, consistent with the national targets for reducing greenhouse gas emissions, energy efficiency and the production of renewable energy; granting concessions for the public distribution of gas and electricity;
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creation, development, maintenance and management of urban heating or cooling networks; creation and maintenance of charging infrastructure necessary for rechargeable electric or hybrid vehicles; management of the aquatic environment and flood prevention.
It is worth noting two points about the sets of powers listed above:
Firstly, the communes that make up Métropole Aix-Marseille-Provence, which had not transferred the above-mentioned powers to the EPCIs in Métropole Aix-Marseille-Provence, continue to be responsible for:
- "Road building, development and maintenance", "signage" and "building, development and maintenance of public spaces for all modes of urban transport and ancillary work": until 1 January 2020; - The other powers listed above: until 1 January 2018.
Secondly, the transfer of three of these compulsory powers is based on the assumption that the Métropole will have defined that they are of local interest prior to 1 January 2018. These three compulsory powers are:
- construction, development, maintenance and operation of cultural, socio-cultural, socio- educational and sports facilities of local interest; - definition, creation and implementation of developments of local interest mentioned in Article L. 300-1 of the Urban Planning Code; - building, management, extension and moving of cemeteries and columbariums of local interest.
Alongside these general powers of a métropole, Métropole Aix-Marseille-Provence exercises the powers that were, on the date of its establishment, transferred by the member communes of the EPCI forming Métropole Aix-Marseille-Provence (art. L 5211-41-3 of the Code général des collectivités territoriales). The Métropole is therefore individually responsible for a number of powers locally for a transitional period of no more than two years following the merger.
These powers are the optional powers of the former EPCIs and those which were previously defined as of municipal interest (to the extent that the full transfer of these powers was not provided for by the MAPTAM and NOTRe laws).
The Métropole has a period of two years from its establishment, until 31 December 2017, to decide whether to return these optional powers to communes or to extend them to the entire metropolitan area. These decisions will then make it possible to make the necessary upwards or downwards transfers to ensure seamless service delivery across the metropolitan area.
(b) Exercise by the metropolitan council (Conseil de Métropole) of powers not delegated to local councils (Conseils de Territoire)
In accordance with the Code général des collectivités territoriales (article L.5218-7 – II of the Code général des collectivités territoriales), subject to any express decision adopted by two thirds majority of the Conseil de Métropole of the Métropole Aix-Marseille-Provence, the Conseil de Métropole delegates, until 31 December 2019, to each Conseil de Territoire, in compliance with the objectives and rules that it determines, exercise of the powers transferred to it by its member communes, other than powers in respect of:
- Drawing up the metropolitan plans;
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- Regional coherence scheme and sectoral scheme; approval of the local urban development plan, and equivalent local planning documents; definition, creation and realisation of real estate development operations, setting aside of real estate reserves, consideration of an overall development plan and determination of sectors for development;
- Mobility plan and organising mobility;
- Master plan for highways;
- Master plan for economic development policy and for structuring economic spaces and metropolitan operations;
- Programme for support and assistance to higher education establishments and research programmes;
- Local habitation programme; action plans for habitation, housing and renovation or demolition of squalid housing;
- Master plan for contractually structuring urban development, local development and economic and social integration;
- Master plan for treatment of sewage and rain water;
- Master plan for managing household and similar waste;
- Metropolitan plans for the environment, energy and climate;
- Master plan for urban heating and air conditioning networks;
- Concession for the public distribution of gas and electricity;
- Markets of national interest.
As from 1st January 2020, the Conseil de Métropole of the Métropole Aix-Marseille-Provence may delegate to a local council (Conseil de Territoire), with its consent, and in compliance with the objectives and rules that it determines, power to exercise all or any of the powers transferred to it by its member communes, other than the powers listed above.
In connection with the administration of EPCI, the Conseil de la Métropole has exclusive power to adopt acts in relation to:
- budgetary matters (voting the budget, approving the administrative account, introducing and setting taxation, tariff and fee rates):
- statutory matters (amending operational rules and regulations):
- the accession of EPCI to any public establishment or other entity;
- delegation of public services management;
- guidance measures in relation to metropolitan planning and development, social equilibrium of habitation within the metropolitan area and town planning.
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Conseils de Territoire deliberate and exercise the powers delegated to them by the Conseil de la Métropole in compliance with the rules and objectives it determines.
(c) Exercise by Conseils de Territoire of delegated powers
Delegated powers are exercised by Conseils de Territoire in compliance with the rules and objectives determined by the Conseil de la Métropole.
a) Consultative responsibilities of Conseils de Territoire
In addition to the consultative responsibilities provided by law, Conseils de Territoire are also consulted by the Conseil de la Métropole in connection with the preparation of the metropolitan project, metropolitan plans, planning documents and with the regional planning directives which may impact on a Conseil de Territoire.
b) Attribution of powers
Conseils de Territoire exercise, upon delegation by the Conseil de la Métropole, powers split between the six public policy areas listed in article L. 5217-2 – I of the Code général des collectivités territoriales (mentioned above):
- economic, social and cultural planning and development;
- development of the metropolitan space;
- local habitation policy;
- town planning;
- management of community interest services;
- protection and enhancement of the environment and living standards policy.
In addition, there are the optional powers which were exercised by each of the six pre-existing EPCI.
Territoires exercise their powers in consensus with the communes.
c) Award of subsidies by the Conseils de Territoire
In exercising metropolitan powers delegated to them by the Conseil de la Métropole, Conseils de Territoire have the power to grant operating subsidies to associations. Subsidies are awarded in compliance with the budgetary envelope fixed by the Conseil de la Métropole, in respect of which the allocated amounts are entered in the corresponding special territorial statements (états spéciaux de territoire). The arrangements for the award of such subsidies are specified in the Budgetary and Financial Regulation (financial and budgetary regulation, adopted by resolution of the Conseil de la Métropole number HN 021-049/16/CM dated 7 April 2016, which sets the rules applicable to management of budget preparation and implementation, pluriannual management and information for elected officials).
Particular attention is paid to the computation of the amounts of the subsidies paid and their consolidation at Métropole level as a whole.
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(d) Powers transferred by the Départements
The member communes of the Métropole are located mainly in the département of Bouches du Rhône, with the exception of the commune of Pertuis, in the Vaucluse and Saint-Zacharie in the Var.
In accordance with Article L. 5217-2 of the Code général des collectivités territoriales, by agreement with the département, for each department concerned, the Métropole is responsible for three of the eight blocks of powers listed in article L. 5217-2 of the Code général des collectivités territoriales.
Since 1 January 2017, the Métropole has therefore been responsible by transfer (and in place of the départements) for "housing assistance" and "helping young people in difficulty" across its territory, as well as for 115 kilometres of roads including in urban areas.
In addition, the Métropole is responsible for (in lieu of the département of Bouches du Rhône) building, operating and maintaining the Fontainieu sports centre. It is likewise responsible by transfer for specialised prevention in the communes of Pertuis and Saint-Zacharie, in place of the Vaucluse and Var départements.
The combined provisions of Article 43 of Law 2014-58 of 27 January 2014 on the modernisation of territorial public action and the assertion of metropolitan areas and Law No 2015-991 of 7 August 2015 on the new territorial organisation of the Republic, in particular Article 18 thereof, establish a new distribution of powers in public transport which, beginning on 1 January 2017 grants the Métropole, instead of the Département of Bouches-du-Rhône, the status of Authority in charge of Mobility for non-urban passenger public transport on its territory.
As of 1 January 2017, the Métropole has thus become an Authority in charge of Mobility within its territorial scope and as such is responsible for the following transport services:
- non-urban passenger road transport;
- urban passenger road transport, within the meaning of the new definition given by Article L. 1231-2 of the Transport Code;
- school transport under Article L. 3111-8 of the Transport Code.
For this purpose, the Métropole has been transferred the necessary resources from the Département of Bouches du Rhône, pursuant to an agreement, and has become the new supervisory authority of the Régie Départementale des Transports des Bouches-du-Rhône ("RDT13"), a public establishment of an industrial and commercial nature ("EPIC") which operates the passenger public transport services in Département of Bouches-du-Rhône.
(e) Powers transferred by the Région
By agreement entered into with the Région Provence-Alpes-Côte d'Azur, the Métropole exercises, within its boundaries, instead and in place of the Région, the powers of the Région listed in article L.4221-1-1 of the Code général des collectivités territoriales, namely: promoting economic, social, health, cultural and scientific development, supporting access to housing and improving habitation, supporting town planning and urban renewal and supporting education policy and local planning and equality, promoting regional languages and identity (article L. 5217-2 IV of the Code général des collectivités territoriales). In connection with the preparation of the regional master plan for economic development in innovation and internationalisation, economic development powers may be transferred to the Métropole.
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(f) Powers transferred by the State
In accordance with article L. 5217-2-II and III of the Code général des collectivités territoriales, the State may, by agreement and for a renewable period of six years, transfer certain powers in relation to assistance for rented social housing, help-to-build, the right to housing and social outreach management, reception and accommodation and assistance in finding housing for any homeless person or family.
(g) Powers transferred by communes
Conseils de Territoire and communes are consulted for advice on transferred powers.
Working groups under the auspices of the metropolitan mayors’ conference are formed to prepare for the transfer of powers between the Métropole and communes.
Article 1609, nonies C of the General Taxation Code governs the financial compensation related to transfers of powers between communes and EPCIs. It provides for the establishment of a local transferred powers evaluation committee (CLECT) comprising representatives from each commune. The Métropole has thus established a CLECT in order to assess the costs of exercising the powers transferred which will lead to financial compensation by the communes. This assessment will be presented in a report submitted to the CLECT and then to municipal councils of member communes and to the Council of the Métropole before the end of the year following the date of transfer, i.e. 31 December 2018.
3.2 General description of the Issuer’s political and governance system
(a) Local authority governance
All local authorities have two principal bodies:
1) a deliberative body elected by direct universal suffrage (commune, département or région councils). This assembly has automatic power and authority, and as a result may decide on any matter of local interest. Since 2014 the members of the deliberative body of EPCI are also elected by direct universal suffrage:
2) an executive body elected from among the members of the deliberative assembly (Mayor and his assistants, département and région council Presidents, Presidents of urban communities, agglomeration communities and mixed syndicates).
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(b) The Issuer’s political and governance system
OPERATIONAL STRUCTURE OF THE AUTHORITY
PRESIDENT OF THE METROPOLE
VICE-PRESIDENTS
Consultative Elects opinions METROPOLITAN COUNCIL (CONSEIL DE LA METROPOLE)
May PRESIDENT delegate certain powers VICE-PRESIDENTS DEVELOPMENT MAYORS’ COUNCIL CONFERENCE Elects LOCAL COUNCIL
Appoint their (CONSEIL DE Metropolitan TERRITOIRE) Mayors councillors
92 Communes
(c) The Métropole’s political bodies
The Métropole’s organisational structure centres around the Métropole council (Conseil de la Métropole) and the local councils (Conseils de territoire) whose governance is shared and based upon consensus.
i) The central organs
The executive organ: the President of the Métropole
The President is elected by the Conseil de la Métropole of which he is the executive organ. The Conseil de la Métropole also elects vice-Presidents of which there are 20, in addition to which there are the Presidents of the Conseils de Territoire who are automatically vice-Presidents of the Conseil de la Métropole. The President orders expenditure to be executed and revenue to be collected and directs services.
Under the terms of article L. 5211-10 of the CGTC (Code général des collectivités territoriales), various powers of the Conseil de la Métropole, may be delegated to the President, other than:
- voting the budget, introducing and setting taxation and fee tariffs or rates:
- approving the administrative account;
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- budgetary measures taken by an EPCI following a formal notice given pursuant to article L. 1612-15 of the Code général des collectivités territoriales (procedures for the automatic entry of a mandatory expense by the Préfet);
- decisions relating to changes to the initial rules regarding the composition, functioning and duration of the EPCI:
- the accession of the EPCI to a public establishment;
- delegation of management of a public service;
- guidance measures in relation to planning and development in the metropolitan area, social equilibrium of habitation within the metropolitan area and town planning.
The metropolitan council (Conseil de la Métropole)
The Conseil de la Métropole governs, by its decisions, the affairs of the Métropole. In accordance with the regulations applicable to the Métropole Aix-Marseille-Provence, the Conseil de la Métropole has exclusive authority to exercise non-alienable powers which concern, first, administrative, budgetary and financial acts and, secondly, strategic metropolitan powers and functions.
The composition of the Conseil de la Métropole is governed by the rules of article L. 5211-6-1 of the Code général des collectivités territoriales. It has 240 members: seats are distributed between the communes based on their demographic weight and each commune is entitled to at least one seat. Upon the creation of the Métropole:
- 33 communes have the same number of metropolitan councillors as there were councillors at their intercommunal cooperation public establishment (EPCI): commune councillors, members of the deliberative body of the EPCI, become metropolitan councillors;
- 58 communes have less metropolitan councillors than there were councillors at their EPCI: the municipal councillors of these communes select the metropolitan councillors from amongst the current intercommunal councillors, members of the deliberative body of the EPCI;
- The Communauté Urbaine de Marseille had an additional 39 metropolitan councillors: the 39 intercommunal councillors were elected by the municipal council from amongst the municipal and local district councillors.
Subsequently, metropolitan councillors will be elected by direct suffrage at municipal elections. Metropolitan councillors can join together to form political groups. To form a group, a minimum of five elected officials is required.
All deliberations adopted by majority vote of the Conseil de la Métropole members are subject to control of legality by the Prefect. At each meeting of the deliberative body, the President reports on the bureau's work and on the powers exercised by delegation from the deliberative body.
The Conseil de la Métropole can delegate part of its powers to the President and to the Bureau.
The Bureau of the Métropole
The members of the Bureau of the Métropole Aix-Marseille-Provence are:
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- the President of the Métropole:
- the Presidents of the Conseils de Territoire who are automatically Vice-Presidents of the Métropole:
- Vice-Presidents and other members elected by the Conseil de la Métropole.
The Bureau of the Métropole acts both:
- as decision-making body by delegation from the Conseil de la Métropole:
- as a guidance and arbitration body, allowing discussions, reflection and debate at metropolitan executive level between the President of the Métropole, the Presidents of the Conseils de Territoire and the Vice-Presidents or delegate members of the bureau.
In order to debate projects as a whole and share common strategic plans for the Métropole, meetings of the Bureau are organised in a two-stage process: a territorial stage and a thematic stage. The Bureau may meet as often as necessary.
ii) Territorial organs
Local authorities (Conseils de Territoire) are the guarantors of long-term locally oriented management and of the individual nature of each locality.
Conseils de Territoire deliberate by exercise of the powers delegated to them by the Conseil de la Métropole. They are consulted for advice on draft decisions prior to consideration by the Conseil de la Métropole where, on the one hand, the decision has specific application, in whole or in part, within the boundaries of the locality (territoire) and, on the other hand, the decision relates to matters concerning economic, social and cultural development, planning and development of the metropolitan area and local habitation policy.
Conseils de Territoire are free to organise their decision-making bodies and procedures in preparation for political decisions. Accordingly, they may organise any meeting or committee with politicians and metropolitan services made available to the local authority in accordance with the internal rules of the Métropole.
iii) Consultative bodies
Metropolitan mayors’ conference
This is defined by articles L.5218-9 to L.5218-10 of the Code général des collectivités territoriales as the consultative body for Mayors for the purpose of preparing and implementing Métropole Aix-Marseille-Provence policy.
Communes are members of the Métropole and accordingly their participation in constructing the Métropole requires organisation.
The metropolitan mayors’ conference therefore acts as an organ for information, work, proposals and debate, organised in the form of plenary sessions, thematic working groups and consultative referrals, enabling communes to fully participate on an ongoing basis:
- Plenary sessions enable information to be exchanged on current affairs of the Métropole and on specific points of direct concern to the communes.
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- Ad hoc or permanent select theme working groups are established, based on the desires and expectations of the communes and the metropolitan select committee Vice- Presidents, to organise participation and contributions. The work conducted by these working groups is regularly brought to the attention of the metropolitan mayors’ conference, and also to the relevant delegated metropolitan Vice-Presidents, and to the Presidents of the Conseils de Territoire. An internet portal for information and exchange completes the system.
- Referrals to the Mayors are organised by the President of the Métropole or by the metropolitan select committee Vice-Presidents. Referrals are made in connection with important matters such as the territorial cohesion plan (SCOT), the local habitation plan (PLH), amenities, taxation, major projects and the urban transportation plan (PDU).
- It must be consulted on elaboration of the metropolitan project and on the implementation of metropolitan public policy.
The Métropole, by relying on the metropolitan mayors’ conference and its subdivisions, seeks to promote and encourage solidarity of action, optimisation of resources and effectiveness of public action, based upon the expectations and requirements expressed by the communes. This is, in particular, the purpose of the permanent working group "cooperation-mutualisation".
The objectives its pursues are as follows:
- developing cooperation (grouping of orders, legal and administrative platform, support for communes):
- pooling of resources, services and equipment between the Métropole and communes, and between communes:
- shared elaboration of the mutualisation master plan.
The Development Board
In accordance with article L.5211-10-1 of the Code général des collectivités territoriales, the Development Board brings together representatives of the economic, social, cultural and not-for- profit milieu of the Métropole Aix-Marseille-Provence. Its composition ensures that the various territoires forming it are represented. It is free to structure itself at its own discretion.
It is consulted on the main strategic directions of the Métropole Aix-Marseille-Provence, on planning and forward-looking documents, on the design and assessment of local policy for promoting sustainable development of the territoire.
It may give advice or be consulted on any other matter relating to the Métropole. Referrals to the Development Board are made by the President of the Métropole, and if necessary upon request by the Presidents of Conseil de Territoire or delegated vice-Presidents. An annual activity report is prepared by the Development Board and examined by the Conseil de la Métropole.
The operational rules for the Development Board are set forth in the internal rules of the Conseil de la Métropole. Members of this Board are not entitled to receive any form of remuneration.
iv) Metropolitan and territorial select committees
The Métropole has established 12 select committees to address each main public policy area, the composition of which shall be determined by decision of the Conseil de la Métropole:
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- Finance and General Administration - Economics, New Technologies, Higher Education - Employment, Vocational training, Insertion - Transport, Travel and Accessibility - Urban planning and development - Territorial development, housing, historic town centres, the "city contract" - Environment, Sustainable Development, Agriculture and Forestry - Living environment, waste treatment, water and sanitation - Tourism, showcasing local heritage - Sea, Coast and Ports, protection and improvement of maritime and natural spaces - Highways, Public Spaces and Large Metropolitan Facilities - Culture and sport, major local events
Vice-Presidents of the Métropole sit on all of these committees.
v) Participatory and local democracy
Measures in favour of democracy and transparency enabling territoires, communes and inhabitants to be consulted and informed have been put in place.
With regard to public services, the local public services consultative committee shall ensure all territoires and local user associations are properly represented.
(d) Specific institutional architecture marked by the transitional continuity of six Territoires
The legislator has taken into consideration the size (four times the surface area of Grand Paris, six times that of Grand Lyon) and the particularities of the organisational structure of the metropolitan territory of Aix-Marseille-Provence. It is the only Métropole to be divided into localities (territoires), to take account, as the law itself describes, of "pre-existing geographical solidarities".
Thus, the Métropole Aix-Marseille-Provence has a specific institutional architecture and operational and organisational rules, of which the local councils (conseils de territoire) are an illustration.
Decree n°2015-1520 of 23 November 2015 determined the limits of the territoires of the Métropole Aix-Marseille-Provence, by grouping together the same communes within the boundaries of the merged intercommunal cooperation public establishments (EPCI):
i) Division into six territoires
The Conseil de Territoire Marseille Provence
The Conseil de Territoire Marseille Provence is managed by a territorial council composed of 177 elected officials (including 131 metropolitan councillors). It groups together 18 communes: Allauch, Carnoux-en-Provence, Carry-le-Rouet, Cassis, Ceyreste, Châteauneuf-les-Martigues, La Ciotat, Ensuès-la-Redonne, Gémenos, Gignac-la-Nerthe, Marignane, Marseille, Plan-de-Cuques, Roquefort-la-Bédoule, Le Rove, Saint-Victoret, Sausset-les-Pins and Septèmes-les-Vallons.
The Conseil de Territoire du Pays d’Aix
The Conseil de Territoire du Pays d'Aix is managed by a territorial council composed of 92 elected officials (including 55 metropolitan councillors). It groups together 36 communes: Aix-
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en-Provence, Beaurecueil, Bouc-Bel-Air, Cabriès, Châteauneuf-le-Rouge, Coudoux, Eguilles, Fuveau, Gardanne, Gréasque, Jouques, La Roque d'Anthéron, Lambesc, Le Puy-Sainte-Réparade, Le Tholonet, Les Pennes-Mirabeau, Meyrargues, Meyreuil, Mimet, Pertuis, Peynier, Peyrolles, Puyloubier, Rognes, Rousset, Saint-Antonin-sur-Bayon, Saint-Cannat, Saint-Estève-Janson, Saint-Marc-Jaumegarde, Saint-Paul-lez-Durance, Simiane-Collongue, Trets, Vauvenargues, Venelles, Ventabren and Vitrolles.
The Conseil de Territoire du Pays Salonais
The Conseil de Territoire du Pays Salonais is managed by a territorial council composed of 62 elected officials (including 21 metropolitan councillors). It groups together 17 communes: Alleins, Lançon-Provence, Aurons, Mallemort, La Barben, Pélissanne, Berre l'Etang, Rognac, Charleval, Saint-Chamas, Eyguières, Salon-de-Provence, La Fare-Les-Oliviers, Sénas, Lamanon, Velaux and Vernègues.
The Conseil de Territoire du Pays d'Aubagne et de l'Etoile
The Conseil de Territoire du Pays d’Aubagne et de l’Etoile is managed by a territorial council composed of 61 elected officials (including 16 metropolitan councillors). It groups together 12 communes: Aubagne (siège), Auriol, Belcodène, Cadolive, Cuges-les-Pins, La Bouilladisse, La Destrousse, La Penne-sur-Huveaune, Peypin, Roquevaire, Saint-Savournin and Saint-Zacharie.
The Conseil de Territoire d’Istres-Ouest Provence
The Conseil de Territoire d’Istres-Ouest Provence is managed by a territorial council composed of 47 elected officials (including 10 metropolitan councillors). It groups together six communes: Cornillon-Confoux, Fos-sur-Mer, Grans, Istres, Miramas and Port-Saint-Louis-du-Rhône.
The Conseil de Territoire du Pays de Martigues
The Conseil de Territoire du Pays de Martigues is managed by a territorial council composed of 24 elected officials (including 7 metropolitan councillors). It groups together three communes: Martigues, Port-de-Bouc and Saint-Mitre-les-Remparts.
(e) An original institutional architecture by the arrangement of its organs and budget
i) Institutional structure of its organs
The institutional architecture brings together the central political organs (Conseil de la Métropole, President, Vice-Presidents and members of the metropolitan bureau) and the territorial political organs (Conseil de Territoire, President, Vice-Presidents).
The Conseils de Territoire exercise their powers upon delegation by the Conseil de la Métropole.
Conseils de Territoire are represented at metropolitan executive level by the President of each Conseil de Territoire upon which the capacity of automatic Vice-President of the Métropole is conferred.
In accordance with the law of 27 January 2014 for the modernisation of territorial public action and affirmation of metropoles, the six intercommunalities that constitute the Métropole Aix- Marseille-Provence become Conseils de Territoire.
Territoires are not however an extension of the former intercommunalities because they have no separate legal personality: they are decentralised organs acting on behalf of the Conseil de la
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Métropole. Therefore, the property, rights, obligations and staff of these territoires are transferred to the Métropole.
Local councillors (conseillers de territoire) elect their President and vice-Presidents.
The law bestows on Conseils de Territoire a dual role in the organisation of the Métropole:
- First, they exercise important local operational powers by delegation from the Conseil de la Métropole.
- Second, they act as consultative bodies.
Conseils de Territoire issue opinions on questions submitted to the Conseil de la Métropole and exercise — mandatorily from between 2016 and 2020, then as may be voted by the Conseil de la Métropole from 2020 onwards — certain powers of the Métropole.
Furthermore, territoires and the Conseil de la Métropole are bound by a "fiscal and financial governance pact" adopted by two thirds majority of the Conseil de Territoire. This pact sets forth the strategy for the exercise of powers, financial relations and personnel management.
Conseils de Territoire exercise the following six blocks of powers:
- economic, social and cultural planning and development;
- metropolitan area planning and development;
- local habitation policy;
- town planning:
- management of community interest services:
- protection and enhancement of the environment and living standards policy.
The specificity of the institutional and administrative architecture extends to the construction of the budget, with a metropolitan budget divided into special territorial statements (état spécial de territoire) for each Conseil de Territoire, funded by a territoire management endowment.
ii) Budgetary structure:
Special territorial statements (états spéciaux de territoire)
The Special Territorial Statement (Etat Spécial de Territoire (EST)), governed by the provisions of articles L.5218-8 to L.5218-8-7 of the Code général des collectivités territoriales, refers to the budget granted by the Métropole to a Conseil de Territoire to enable it to function properly having regard to the powers delegated to it by the Métropole. Each budget comprises two sections: an operating section and an investment section.
The Conseil de Territoire, which brings together the representatives of the communes included within its boundaries, elects a President from among its members. The President is the secondary authorising officer (ordonnateur) of the Métropole: he commits, liquidates and mandates expenditure entered in the special territorial statement once it has become enforceable having been passed by the Conseil de la Métropole. He has authority over the departments of the Métropole placed at his disposal.
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The Conseil de Territoire may receive the revenue derived from operation of public services under the powers that it exercises. The special territorial statement must be voted in true equilibrium and is submitted to the Conseil de la Métropole at the same time as the Métropole budget.
Finally, each Conseil de Territoire must every year issue an opinion on the execution of its special territorial statement one month prior to the vote of the Métropole’s administrative account.
The Métropole has 6 special territorial statements which chart operating and investment income and expenditure pertaining to the powers delegated to local authorities. In 2016, following the establishment of the Métropole on 1 January 2016 and its subsequent technical implementation, the investment sections of the ESTs have not been implemented. All of the investments were funded by the Métropole's main budget.
Therefore, the special territorial statements in the 2016 Administrative Accounts are restricted to the operating section:
Operating income – special territorial statements (EST)
Operating income CT1 CT2 CT3 CT4 CT5 CT6 TOTAL 013- Offsets for depreciation 12 033.95 949.36 12 983.31 70- Proceeds from services, domain, 1 865 170.91 3 180 380.69 2 457 998.49 1 114 776.12 1 226 437.83 431 433.40 10 276 197.44 miscellaneous sales 73- Taxes (except 731) 47 022.05 188 164.35 235 186.40 74- Grants and allowances 80 093 048.20 27 006 157.17 14 402 523.88 17 231 987.48 12 083 330.54 9 419 600.41 160 236 647.68
75- Other current operating income 307 811.65 6 406.16 2 108 456.03 16 213.99 12 771.01 67 175.52 2 518 834.36
Current operating income 82 278 064.71 30 192 944.02 19 016 000.45 18 551 141.94 13 323 488.74 9 918 209.33 173 279 849.19
76- Financial income 0.10 0.02 0.12 77- Exceptional income 286 384.20 26 200.55 141 361.30 228.27 23 227.96 17 903.93 495 306.21
Other operating income 286 384.20 26 200.65 141 361.32 228.27 23 227.96 17 903.93 495 306.33
Actual operating income 82 564 448.91 30 219 144.67 19 157 361.77 18 551 370.21 13 346 716.70 9 936 113.26 173 775 155.52
Total operating income 82 564 448.91 30 219 144.67 19 157 361.77 18 551 370.21 13 346 716.70 9 936 113.26 173 775 155.52
Operating expenditure – special territorial statements (EST)
Operating expenditure CT1 CT2 CT3 CT4 CT5 CT6 TOTAL
011- General costs 82 564 448.91 15 775 433.83 19 156 529.59 16 288 178.81 9 375 330.34 5 927 951.24 149 087 872.72 014- Income offsets 178 318.95 1 461 130.00 1 639 448.95 65- Other current operating costs 14 392 028.07 2 081 192.45 3 970 107.92 2 538 808.00 22 982 136.44
Service expenditure 82 564 448.91 30 167 461.90 19 156 529.59 18 547 690.21 13 345 438.26 9 927 889.24 173 709 458.11
67- Exceptional costs 51 682.77 832.18 3 680.00 1 278.44 8 224.02 65 697.41
Other operating costs - 51 682.77 832.18 3 680.00 1 278.44 8 224.02 65 697.41
Actual operating costs 82 564 448.91 30 219 144.67 19 157 361.77 18 551 370.21 13 346 716.70 9 936 113.26 173 775 155.52
Total operating costs 82 564 448.91 30 219 144.67 19 157 361.77 18 551 370.21 13 346 716.70 9 936 113.26 173 775 155.52
Outstanding amounts "n" 808 832.96 808 832.96 Total cumulative operating expenditure 82 564 448.91 31 027 977.63 19 157 361.77 18 551 370.21 13 346 716.70 9 936 113.26 174 583 988.48
Rules applicable to management endowments
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Delegation of powers to the Territoires forming the Métropole Aix-Marseille-Provence, made under and pursuant to article L.5218-7 of the Code général des collectivités territoriales, requires that such Territoires receive the operating and investment funding needed respectively for them to meet the expenditure required for exercise of their delegated powers and to finance the necessary capital assets decided by the Conseil de la Métropole for such purpose.
Management endowments for the Territoires include an operating endowment and an investment endowment. These endowments are determined following an annual consultation process with the Conseils de Territoire under the above-mentioned regulatory framework.
The criteria for calculation and distribution of the management endowments, implemented pursuant to article L. 5218-8-2 of the Code général des collectivités territoriales, take into account:
- meeting expenditure essential for exercising delegated powers, provided these are covered in the main budget from a budgetary perspective;
- balancing the population of a Territoire with the cost of the public services and powers whose exercise has been delegated for such same Territoire;
- a necessary annual adjustment, based upon a management endowment revision formula, when the costs incurred in exercising the delegated powers cannot be assessed with sufficient certainty. This revision formula is the subject of a decision by the Conseil de Métropole;
- the general budgetary balance of the main budget;
- the polycentric nature of, and challenges and issues facing, the Territoires.
The investment endowment is fixed in accordance with the multi-year investment programme, ordered and corrected by the Investment Committee, by reference to the financial capacity identified in the main metropolitan budget, the state of progress of ongoing projects and the financial feasibility of proposed projects.
The exercise of powers transferred by the communes no later than 1st January 2018 is financed through funding of the management endowment by reference to the amount of the expenditure burden transferred as determined by the local transferred expenditure evaluation committee for each Territoire.
Ancillary budgets
In 2017, the Métropole has 25 individual ancillary budgets per Territoire. The "Transports" power, for which the Métropole is fully responsible as organising authority, has been brought under a single budget and accounting structure. 2016 therefore saw the gradual merging of various Transport budgets resulting in one unified budget on 1 January 2017.
The ancillary budgets of the metropolitan main budget are prepared in order to determine, for industrial and commercial public services, the true cost of the service and the appropriateness of the price to be charged to users for such services. Ancillary budgets are maintained within their geographical boundaries and scope of activities existing at the time of creation of the Métropole Aix-Marseille-Provence. The unification of these budgets, other than the transport budget and ancillary budgets specifically relating to development zones, will depend upon an express decision of the Conseil de la Métropole, after its impact on the price and cost of the service has been assessed.
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An analytical accounting system will be implemented for this purpose enabling each Territoire to monitor the source and allocation of expenditure and income posted in the unified ancillary budget.
Ancillary budgets are prepared in consultation with the Territoires in which they apply. Their preparation shall be underpinned by locally-oriented management ensuring maintenance of the public service and integration in the metropolitan strategy through joint blueprints.
Reversals of operating surpluses capitalised in the ancillary budgets for industrial and commercial public services, may be effected, in the cases permitted by jurisprudence (not resulting from over-pricing, after investment section financing requirements have been met, and determination that there is no requirement to finance short-term operating and investment expenditure), only if it can be demonstrated that their utilisation could not have been dedicated to reducing the price or financing investments useful for the service.
4. RECENT EVENTS MATERIAL TO ASSESSING THE ISSUER’S SOLVENCY
As of today’s date, there are no recent material events relevant to the assessment of the Issuer’s solvency.
5. THE ECONOMY OF THE ISSUER
5.1 Issuer’s economic structure
The Issuer's action areas flow from the powers delegated to it, in particular with respect to urban planning and development, economic action, transport, sewage and water, household waste, social welfare, professional training, education, fire and emergency services.
Newly formed, the Métropole aims to maintain and step up its economic activity to boost growth. Some structural weaknesses, such as unequal access to resources (employment, housing, culture, transport, education) and the high unemployment rate, means that the authority will have to define a strategy for sustained and balanced economic development, pursuing one priority objective: employment.
The economic development agenda for the Métropole, the result of a shared process of consultation with all local development stakeholders, is intended to achieve this aim by focusing on action. This position is embodied in an operational action plan, geared towards having a significant short-term impact, through priority activities to be continued or launched as early as 2017.
The economic development agenda, adopted by the Metropolitan Council on 30 March 2017, sets long-term strategic axes while establishing short- and medium-term objectives and priorities, with a first deadline of 2021. This work, backed by constant assessment involving all partners, will be adjusted if necessary in the coming years. The economic governance supporting the implementation of this strategy will respond to any changes as they may be needed.
The gross domestic product (GDP) of the Provence-Alpes-Côtes-d’Azur region, where the Métropole Aix-Marseille-Provence is located, was 151,050 million euros in 2014 (latest available reports provided by INSEE, semi-definitive 2014 accounts). According to INSEE, GDP per inhabitant in the Provence-Alpes-Côtes-d’Azur region was €30,299/inhabitant, in 2014 while the average GDP/inhabitant in France outside of the Ile-de-France region was €32,106/inhabitant over the same period).
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Breakdown of Added Value in Provence-Alpes-Côte d'Azur (PACA) Breakdown of added value in PACA
1% Market services 7%
Non-market 11% services
Manufacturing
Construction 55% 26%
Agriculture
Source: Agence régionale pour l'innovation et l'internationalisation des entreprises Provence- Alpes-Côte d'Azur, 2016: http://arii-paca.fr/wp- content/uploads/2016/01/Pr%C3%A9sentation-%C3%A9conomique-de-la- r%C3%A9gion-PACA.pdf
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Breakdown of establishments by activity sector in Provence-Alpes-Côte d'Azur (PACA)
Breakdown of establishments by activity sector in PACA
Retail
Constuction 3% 2% Manufacturing 5% Agriculture 28% Other service activities 15%
Public administration, education, health and social work Specialist, scientific and technical activities, administrative and support services 15% Real estate activities 12%
Financial and insurance activities 8% 6% 6% Information and communication
Source Agence régionale pour l'innovation et l'internationalisation des entreprises Provence- Alpes-Côte d'Azur, 2016: http://arii-paca.fr/wp- content/uploads/2016/01/Pr%C3%A9sentation-%C3%A9conomique-de-la- r%C3%A9gion-PACA.pdf
Presentation of the Issuer's budget by function
The presentation of the budget by function provides an accounting analysis of each relevant area. The budget is therefore split into eight separate functions corresponding to the authority's main areas of action (example: urban planning and development, security etc.).
Example: Function "2. Education-training" includes the sub-function "21. Primary education" which covers three headings including "211. Nurseries" and "212. Primary Schools".
All expenditure and revenue is then allocated between these functions to enable any changes to be tracked.
It should be noted that sub-function "01. Non-itemisable transactions" includes all expenditure and revenue that cannot be classified under functions 0 to 8. This includes all transactions relating to debt, most operating revenue items, such as taxes, duties and endowments, as well as amortisations and provisions.
In some cases, the figures appearing in this sub-function may be substantial. This may be explained by the fact that the Issuer has not been able to allocate payroll expenditure items
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between the various available functions, and has therefore entered this type of expenditure in non-itemisable transactions.
Level of investment and operating expenditure for each of the Issuer’s areas of authority
Details of the level of investment and operating expenditure for each of the Issuer’s areas of authority are set forth below (in €). Where main budget and ancillary budget data has been consolidated, this is specified where relevant.
The data set forth below traces the most recent financial information per budget, on a consolidated basis if relevant, unless specified otherwise. The Issuer’s main budget is presented by function solely due to consolidation being impossible or due to lack of data relating to some ancillary budgets.
Expenditure by function for the main budget of the Métropole’s Administrative Accounts 2016 (units in Euros) Actual Actual capital Actual operating Actual investment operating expenditure expenditure expenditure expenditure PB 2017 AA 2016 AA 2016 PB 2017 Function 01 non-itemisable 706 443 734 108 329 645 708 208 435 514 378 553 Function 0 general services 405 704 402 62 231 174 426 638 533 7 440 193 Function 0-5 European funds 1 444 089 477 489 2 619 119 0 management Function 1 public health and 30 930 343 3 558 583 31 740 708 0 safety Function 2 education-training 4 579 688 2 709 105 6 032 305 2 500 Function 3 culture 34 106 693 57 142 188 37 183 562 911 558 Function 4 Health and social 3 710 946 2 163 318 11 146 323 0 action (excl APARSA) Function 5 Local development 27 865 971 109 254 254 21 318 634 64 744 061 and housing Function 6 Economic action 15 640 424 34 663 252 14 700 802 12 640 000 Function 7 Environment 318 252 684 16 560 759 315 671 071 650 000 Function 8 Transport 136 507 747 140 388 452 130 400 324 21 243 707 1 705 659 Total 1 685 186 720 537 478 220 622 010 572 815
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5.2 Métropole Aix-Marseille-Provence activity sectors
BREAKDOWN OF EMPLOYMENT BY BROAD ACTIVITY SECTORS
JOB CHARACTERISTICS 7 out of 10 jobs fall under the category of activities for local benefit*
10% is the proportion of jobs in Métropole-Aix-Marseille Provence represented by civil servants working for the local authority
This rate is rising but remains below the national average in mainland France
*Activities for local benefit are those Agriculture: 1% carried our locally for the production of goods or services aimed at meeting the Manufacturing: 10% needs of people in the area, be they residents or tourists. Construction: 6%
Retail, transport and misc. services: 48%
Public administration, education, healthcare, social work: 34%
Source: Agence d’urbanisme de l’agglomération marseillaise (AGAM) 2014 (based on the latest available INSEE data): http://www.mouvementmetropole.fr/Public/Files/home_resource_doc/agam_metropole_en_chiffres_b d_e9e62328dc.pdf
6. PUBLIC FINANCES
6.1 Taxation and budgetary system
(a) Taxation system
i) Overview of the Issuer’s tax powers
Local authorities cannot create new taxes to increase their budgets. However, since the law no. 80-10 of 10 January 1980, reforming local direct taxation, they do have the freedom to decide the rates to apply for the four direct taxes (residence tax, tax on developed land, tax on undeveloped land, and the real estate contribution by companies) and also the household waste removal tax and transport payment. However, this law heavily restricts this freedom to avoid inequality of treatment between taxpayers and a too sharp growth in the tax burden.
Its status as a Métropole and its associated powers mean that the Métropole Aix-Marseille- Provence receives not only the proceeds of both economic and household taxes, but also the proceeds of taxation specific to its duties and responsibilities. The merger of the six former intercommunalities which applied extremely varied rates, exemptions, upper limits and
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allowances to these various taxes and charges, involved a process of harmonisation as from 2016 requiring the Conseil de la Métropole to adopt specific decisions.
"Household" taxation includes:
- Residence tax (taxe d'habitation (TH)): the residential tax contribution paid by private owners, tenants or non-paying occupants of a furnished residence, is the product of the residential tax base as well as the rates adopted by the commune and the EPCI of which it is a member. Added to this are the management fees charged by the State. The tax base is calculated from a land registry assessment of the relevant premises (rental value which is associated with the characteristics of each dwelling, the allowances policy defined by the commune and the EPCI and the composition of households). This tax revenue is earmarked solely for communes.
- Tax on developed land (taxe sur le foncier bâti (TFB)): paid by legal owners, beneficial owners or fiduciaries of a building. The tax base is equal to 50% of the land registry rental value of properties liable to this tax. This tax revenue is earmarked for all local authorities, except regions;
- Tax on undeveloped land (taxe sur le foncier non bâti (TFNB)): the basis of assessment of which is equal to 80% of the land registry rental value. This tax revenue is earmarked solely for communes and EPCIs.
- the supplemental tax on undeveloped land (taxe additionnelle sur le foncier non bâti (TAFPNB)): This is a new source of revenue for the commune sector as from 2011, which is linked to the transfer of the département’s and région’s shares of the real estate tax on undeveloped land in the form of a supplemental property tax on undeveloped land (TAFPNB). EPCI may be substituted for their commune members regarding application of the supplemental tax provisions and collection of this tax revenue.
In 2016 the Métropole introduced a metropolitan allowances policy for the purposes of calculating the residence tax by decision dated 28 April 2016. The following rates have been set for the mandatory allowances: 15% for each of the first two dependent persons, 15% for each person as from the third dependent person. A general allowance base rate of 5% has been adopted.
Furthermore the Conseil de la Métropole has approved the household rate for 2017:
o residence tax: 11.69%:
o real estate tax on developed land: 2.59%:
o real estate tax on undeveloped land: 2.78%.
In 2016, the Conseil de la Métropole has decided to gradually integrate the rates of the residence tax, the real estate taxes on developed and undeveloped land over a maximum period of 12 years.
- Household Waste Collection Tax (TEOM):
The public waste collection and treatment service is financed essentially by the household waste collection tax (TEOM). This is a supplemental tax on the real estate tax on developed land. It is assessable on all properties that are subject to, or which benefit
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from a temporary exemption from, the real estate tax on developed land and also on the dwellings of civil and military employees or civil servants. The tax is determined based upon the net income used as the basis for the real estate tax.
Article 1379-0 bis VI of the General Tax Code provides that métropoles are substituted in place of communes for the purposes of applying the household waste collection tax (TEOM) provisions. Furthermore, article L.5217-2 of the Code général des collectivités territoriales, introduced by the law of 27 January 2014 for the modernisation of territorial public action and affirmation of métropoles, provides that métropoles are automatically empowered, instead and in place of the member communes, to manage household and similar waste.
Article 1636 B undecies of the General Tax Code and the tax instruction BOI-IF-AUT- 90-30-10-20150624 authorise newly created EPCI to adopt different rates within its boundaries over a period not exceeding 10 years, to limit increases in TEOM contributions relating to harmonisation of the manner in which household waste collection and treatment services are financed. The deliberative body of the Métropole Aix-Marseille-Provence must harmonise the TEOM rates by 2026 as follows:
o either by introducing a single rate for all communes;
o or by introducing zoned TEOM rates depending on the service level provided, assessed by reference to the conditions of provision and/or cost of the service.
The Conseil de la Métropole passed a deliberation on 28 April 2016 to introduce TEOM in the Métropole with effect on and from 1st January 2017. It recorded that the process of tax harmonisation commenced within the dissolved EPCI would continue as provided in prior deliberations. The resolution dated 15 December 2016 approved the TEOM rates applicable in the area of the Métropole.
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2017 TEOM rates
AIX EN PROVENCE 10,60% LE THOLONET 10,60% ALLAUCH 9,50% LES PENNES MIRABEAU 10,60% ALLEINS 10,00% MALLEMORT 10,00% AUBAGNE 10,00% MARIGNANE 11,50% AURIOL 10,00% MARSEILLE 18,10% AURONS 10,00% MARTIGUES 11,50% BEAURECUEIL 10,60% MEYRARGUES 10,60% BELCODENE 10,00% MEYREUIL 10,60% BERRE L'ETANG 10,00% MIMET 10,60% BOUC-BEL-AIR 10,60% MIRAMAS 7,00% CABRIES 10,60% PELISSANNE 10,00% CADOLIVE 10,00% PERTUIS 10,60% CARNOUX EN PROVENCE 11,50% PEYNIER 10,60% CARRY-LE-ROUET 9,50% PEYPIN 10,00% CASSIS 9,50% PEYROLLES-EN-PROVENCE 10,60% CEYRESTE 9,50% PLAN DE CUQUES 9,50% CHARLEVAL 10,00% PORT DE BOUC 11,50% CHATEAUNEUF-LE-ROUGE 10,60% PORT-SAINT-LOUIS 7,00% CHATEAUNEUF-LES-MARTIGUES 9,50% PUYLOUBIER 10,60% CORNILLON-CONFOUX 7,00% ROGNAC 10,00% COUDOUX 10,60% ROGNES 10,60% CUGES LES PINS 10,00% ROQUEFORT LA BEDOULE 11,50% EGUILLES 10,60% ROQUEVAIRE 10,00% ENSUES-LA-REDONNE 9,50% ROUSSET 10,60% EYGUIERES 10,00% SAINT CHAMAS 10,00% FOS-SUR-MER 7,00% SAINT SAVOURNIN 10,00% FUVEAU 10,60% SAINT ZACHARIE 10,00% GARDANNE 8,68% SAINT-ANTONIN-SUR-BAYON 10,60% GEMENOS 9,50% SAINT-CANNAT 10,60% GIGNAC-LA-NERTHE 9,50% SAINT-ESTEVE-JANSON 10,60% GRANS 7,00% SAINT-MARC-JAUMEGARDE 10,60% GREASQUE 8,68% SAINT-MITRE-LES-REMPARTS 11,50% ISTRES 7,00% SAINT-PAUL-LEZ-DURANCE 10,60% JOUQUES 10,60% SAINT-VICTORET 9,50% LA BARBEN 10,00% SALON-DE-PROVENCE 10,00% LA BOUILLADISSE 10,00% SAUSSET-LES-PINS 11,50% LA CIOTAT 9,50% SENAS 10,00% LA DESTROUSSE 10,00% SEPTEMES LES VALLONS 9,50% LA FARE LES OLIVIERS 10,00% SIMIANE-COLLONGUE 10,60% LA PENNE SUR HUVEAUNE 10,00% TRETS 10,60% LA ROQUE D'ANTHERON 10,60% VAUVENARGUES 10,60% LAMANON 10,00% VELAUX 10,00% LAMBESC 10,60% VENELLES 10,60% LANCON-PROVENCE 10,00% VENTABREN 10,60% LE PUY SAINTE REPARADE 10,60% VERNEGUES 10,00% LE ROVE 9,50% VITROLLES 10,60%
"Economic" taxation includes:
- the transport payment (VT), which is a form of social security contribution paid by employers, collected by the social security and family allowances contributions collection agency (URSSAF), and paid over to the authorities organising sustainable mobility (AOMD). Introduced by the law n°73-640 dated 11 July 1973 and codified under articles L.2333-64 et seq. of the Code général des collectivités territoriales, it is paid by all companies as well as any public or private entity employing more than 11 employees within the jurisdiction of the relevant AOMD. It should be noted that, pursuant to law n° 2015-990 of 6 August 2015 for economic growth, activity and equality of opportunity, the applicability threshold was increased from 9 to 11 employees as from 1 January 2016 and compensation is payable by the State.
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As an authority organising sustainable mobility pursuant to law n°2014-58 of 27 January 2014 for the modernisation of territorial public action and affirmation of métropoles, the Métropole Aix-Marseille-Provence collects the proceeds of the transport payment (VT) which provides the main revenue allocated to financing public transport in the Métropole. The powers of métropoles have been extended to shared usage by automobiles, active modes of transport and urban logistics.
The setting of the VT rate is organised under article L. 2333-67 of the Code général des collectivités territoriales which authorises harmonisation of transport payment (VT) rates if urban transport boundaries are extended as a result of an extension of the boundaries of a fiscally autonomous EPCI. This gradual convergence of rates may take place over a maximum period of five years.
The six former EPCI, as transport organising authorities, collected the proceeds of the VT whose rates were voted by each EPCI. With the aim of fiscal equity between the Territoires of the Métropole, and to combine the resources necessary to finance metropolitan Mobility projects, the Conseil de la Métropole has unified the VT rate at Métropole level at 2% beginning on 1 January 2017.
- the Territorial Economic Contribution ("CET") comprises:
o a real property contribution by companies (CFE), the base of which corresponds to that of the former real property component of the business tax (taxe professionnelle - TP), and the rate of which is still voted by local elected officials under capping and liaison rules. This revenue goes to communes and groupings with autonomous powers of taxation;
o and the contribution on the added value of companies (CVAE), which is calculated at a uniform rate of 1.5% on the added value generated by companies with a turnover of more than €152,500.
The sum of the two components "CFE+CVAE" is capped at 3% of the added value generated by the company.
Article 1379-0 bis of the General Tax Code provides that métropoles receive the real estate contribution by companies (CFE), and therefore it is the Conseil de la Métropole that approves the CFE rate, prior to 15 April every year, subject to exceptions. The CFE rate for the Métropole in 2017 is set at 31.02%.
- Fixed Tax On Utilities Companies (IFER) which is calculated by reference to a scale depending on the power or size of the taxable installation;
- Tax on Commercial Premises (TASCOM) which is payable by all retail stores with an annual turnover equal to or greater than €460,000 and more than 400 m² of retail space or forming part of a network with a surface area of more than 4000 m². The rate per m² varies between €5.74 and €34.12 (from €8.32 to €35.70 for retail vendors of fuels – other than garages whose principal activity is the sale or repair of motor vehicles – from one and the same site or at a shopping centre) and depends on the turnover per m² of the business, the surface area and nature of the business;
- the Levy on Betting Revenue (horse race betting): the law of 12 May 2010 on betting industry competition and regulation introduced a levy on horse race betting. 15% of the revenue from this levy is allocated to EPCI as from 2014. This is assessed
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on the amount of bets placed on races organised at public racecourses located within the intercommunal boundaries, at a rate of 5.7%.
- The Development Tax (TA): has since 1st March 2012 replaced the local equipment tax (TLE), and also the ancillary taxes (supplemental local equipment tax (TC/TLE), departmental vulnerable natural spaces tax (TDENS), departmental architecture, urban planning and environmental consultancy tax (TD/CAUE). It is automatically introduced in local authorities where a local urban development plan (PLU) or a land occupation plan (POS) exists. The development tax (TA) applies to development operations and to operations for the construction, reconstruction or extension of buildings, installations, or developments of any kind where permits are required, subject to exemptions. This tax is collected with the aim of funding actions and operations contributing to the financing of public amenities. The proceeds of the tax are allocated to the investment section of the budget, concerning communes and EPCI.
ii) Issuer’s forecast tax revenue
THE METROPOLE'S PRINCIPLE TAX RESOURCES PB 2017
Transport payment (VT) 324 187 024 € Real estate contribution by companies (CFE) 243 197 992 € Contribution on the added value of companies (CVAE) 125 600 496 € Fixed Tax On Utilities Companies (IFER) 18 306 184 € Tax on Commercial Premises (TASCOM) 20 397 175 € Levy on Horse Race Betting 446 400 € Residential property tax 290 100 108 € Developed land tax 58 896 939 € Household waste collection tax 297 514 199 € Undeveloped land tax 388 416 € Additional tax on undeveloped land 1 553 412 € Additional rolls 15 000 000 € Development Tax 17 000 000 € TOTAL 1 412 588 345 € Source: Primary Budget 2017 (PB 2017) of Métropole Aix-Marseille-Provence
Forecast change in household tax revenue:
Anticipated residence tax revenue of 290.10 million euros has been calculated on the basis of +1.8% growth since 2016.
Revenue from developed land tax estimated at 58.90 million euros has been calculated on the basis of +1.5% growth since 2016.
Revenue from undeveloped land tax and the additional related tax, assessed respectively as 0.39 million euros and 1.55 million euros has been calculated with a +2.5% change since 2016.
Forecast change in economic tax revenue:
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The Transport Payment is the primary source of revenue for the Métropole with revenue forecast to be 324.19 million euros. The change in the tax base has been estimated at 3% compared to 2016 and there is a single rate of + 2% as from 1 January 2017.
The estimated property tax revenue of businesses is estimated at €243.20 million, corresponding to an increase in the bases estimated at + 0.5% compared with 2016, based only on local changes. The application of revised rental values in 2017 brings an end to the application of the national revaluation coefficient and provides for its replacement taking into account changes in business rents in the local area. Given that commercial rent indices have stagnated in recent years, these are not expected to change in 2017.
The estimated value of the business value added tax is estimated at € 125.60 million, up 1.8% compared to 2016.
Lump-sum charges for network companies are estimated at € 18.31 million and a provisional change in revenue of 1% is forecast versus 2016.
Proceeds from the tax on commercial premises are estimated at €20.40 million, and a provisional increase in revenues of 1% is forecast versus 2016.
The proceeds from the levy on horse race betting are valued at €0.45 million and proceeds are expected to remain stable for 2017.
• Forecast of other tax revenues:
TEOM proceeds are expected to reach an estimated €297.51 million, with an increase of + 2% since 2016, corresponding to the application of a national revaluation coefficient of +0.5% and local growth of + 1.5%. As the national revaluation coefficient no longer applies to "economic" land from 2017, its impact on the tax base is halved. The local growth of + 1.5% since 2016 takes into account the abolition of a TEOM exemption scheme.
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iii) Endowments, compensation allocations and equalisation funds of the Métropole
State financial support and inter-communal equalisation "Additional" taxes and duties PB 2017 Compensation endowment 183 484 856 € Intercommunality endowment 107 276 913 € FNGIR (1) 245 793 455 € DCRTP (2) 129 240 252 € Tax compensation excluding DCRTP 12 343 505 € DUCSTP (3) 2 800 724 € DGD urban transport (4) 7 593 947 € FPIC (5) 18 949 619 € Compensation allocation 251 513 € Other tax transfers 1 834 637 € TOTAL State financial support and inter- 709 569 420 € communal equalisation
(1) FNGIR: National individual resources guarantee fund (2) DCRTP: Business tax reform compensation endowment (3) DUCSTP: Single business tax compensatory endowment (4) DGD: General decentralisation endowment (5) FPIC: Intercommunal and communal equalisation fund
State financial support:
In accordance with the trust and responsibility pact signed between the Government and local authorities on 16 July 2013 and in connection with the contribution of local authorities towards the restoration of public finances, the finance law 2015 commits to an annual reduction of the approved envelope for State funding for local authorities and more particularly the global operating endowment (DGF) of 3.67 billion euros for a period of three years. Pursuant to the finance law 2017, this reduction of the approved envelope is 1.84 billion euros in 2017. This fall is reflected by a levy on the global operating endowment.
- endowments used as adjustment variables:
The Métropole receives two endowments both of which constitute adjustment variables: the compensatory endowment, a component of the global operating endowment, and the single business tax compensatory endowment (DUCSTP), which is a merger of all of the former business tax compensation endowments. Adjustment variables absorb positive changes in other endowments and in particular equalisation endowments, by recording a corresponding reduction in their respective budget envelopes.
The compensatory endowment, one of the two components of the global operating endowment, should fall by -1.9%, from 2016 levels.
The single business tax compensatory endowment (DCUSTP) represents the tax compensations for the former business tax that were grouped together in one single endowment as from 2011. An amount of 2.80 million Euros, i.e. a fall of -15% since 2016 is expected.
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- Endowments not included in the adjustment variable:
The amount of the intercommunality endowment was simulated by taking into account the increase on the levy towards the recovery of public accounts (additional levy representing 50% of the amount applied in 2016). 2016 2017 Gross intercommunality endowment 171,549,704 171,549,704 Additional contribution towards the recovery of public accounts -21,562,040 € -10,781,020 € Total contribution towards the recovery of public accounts -53,491,771 € -64,272,791 € Net intercommunality endowment 118,057,933 € 107,276,913 €
The business tax reform compensatory endowment (DCRTP) was created in 2011 to compensate for the loss of revenue resulting from abolition of the business tax (taxe professionnelle). Financed by the State, it is the vertical component (i.e. a component paid from the State to local authorities) of a financial compensation mechanism introduced with the aim of reforming the business tax. This endowment was updated for the last time in 2013 and is now fixed. This endowment remains at its 2016 level, generating a revenue of 129.24 million euros.
The national individual resources guarantee fund (FNGIR) is the second component of the financial neutralisation of the abolition of the business tax (taxe professionnelle). This fund is contributed to by the local authorities that gained from the reform, such authorities having their 2011 gain deducted and transferred to the local authorities that lost out. Like the DCRTP, this fund remains stable in 2017. Thus the amount received by the Métropole in 2017 is 245.79 million euros.
Tax compensations depend on the number of tax payers eligible for exemption for which the State accepts financial responsibility in respect of taxes for the real estate contribution by companies (CFE), residence tax (taxe d’habitation) and real estate tax (taxe foncière) and on the application of a cap by the State. The forecast consolidated amount of these compensations is 15.14 million euros.
The Métropole receives a general decentralisation endowment (DGD) in an amount of 7.6 million euros as the organising authority for urban transport.
Equalisation funds:
- National intercommunal and communal resources equalisation fund (FPIC): Article 144 of the 2012 finance law introduced a horizontal equalisation mechanism for the communal sector; this intercommunal and communal resources equalisation fund (FPIC) involves deducting part of the revenue of certain intercommunalities and communes and transferring them to less fortunate intercommunalities and communes. Depending on synthetic index calculations, an intercommunal bloc may be a contributor, recipient or both.
The FPIC is financed by a levy on the tax revenues of communal bloc entities which have an aggregate financial potential per inhabitant of greater than 90% of the average aggregate financial potential per inhabitant. For the purpose of distribution, the fund is shared between 60% of the intercommunal blocs the most in need, classified in decreasing order by an index of synthetic revenue and expenditure constituted by the tax potential, average revenue and fiscal burden.
FPIC proceeds are estimated at 18.95 million Euros in the 2017 primary budget.
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Allocation of negative compensation: the allocation of compensation paid to the communes is equal to the proceeds of the business tax (taxe professionnelle) received by the communes prior to the creation of the urban community (communauté urbaine), less the cost of the transferred expenditure calculated at the time of the transfer of powers. Where the allocation of compensation is negative, the commune is obliged to make a payment for such amount to the EPCI. An amount of 0.25 million euros in revenue is anticipated in 2017. This should change during the course of 2017 to take account of the newly transferred expenditure in particular resulting from the implementation of the law of 27 January 2014 for the modernisation of territorial public action and affirmation of métropoles (MAPTAM) and the law of 7 August 2015 on the new local authority organisation of the French Republic (NOTRe) and from metropolitan integration.
(b) Budgetary system
i) Review of the main public finance budgetary principles
The French Code général des collectivités territoriales (CGCT), together with the accounting classifications applicable to local authorities, set forth the budgetary and accounting principles.
These principles are as follows:
The annuality principle requires that the budget is set for a period of 12 months from 1st January to 31st December and that each local authority adopts its budget for the following year prior to 1st January. The law permits a grace period up to 15th April of the year to which the budget applies, or in local assembly election years, 30th April. However, order n° 2005-1027 of 26 August 2005 on the simplification and adaptation of budgetary and accounting rules applicable to local authorities greatly relaxes this principle by extending multi-year mechanisms.
The balanced budget principle: this principle means that, based on a fair assessment of revenue and expenditure, revenue must be equal to expenditure, in both the operating (ordinary activities) and investment sections.
The principle of unity requires that all revenue and expenditure items appear in a single budgetary document, the community's general budget. However, other budgets, so-called "ancillary" budgets, may supplement the general budget to record the activities of some services.
The universality principle implies that all revenue and expenditure operations shall be specified in full and without modification in the budget. This is in addition to the requirement of truth and accuracy of budgetary documents under which expenditure is financed by revenue without distinction.
The principle of speciality of expenditure under which an expenditure item is authorised for a particular service and purpose only. Accordingly, funds are allocated to a service, or group of services, and are specialised by chapter grouping together expenditure according to type or purpose.
The principles under which local authority budgets have been prepared are subject to control by the Prefect, in collaboration with the regional audit office (Chambre Régionale des Comptes or CRC).
ii) Budgetary and accounting instructions
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The budgetary and accounting instructions applicable to local authorities and in particular EPCI, differ depending on the relevant local authority. The Métropole follows budgetary instruction M54. These budgetary and accounting instructions have all recently been reformed to bring them into line with the general chart of accounts (plan comptable général) of 1982 by applying some of the main principles applicable to companies generally. It is an accrual basis double-entry (corresponding uses and sources of funds) accounting system kept by a Trésor accountant.
iii) The budgetary framework of local authorities and EPCI with autonomous taxation powers
Local authorities and EPCI have, as legal entities, their own assets and budget. To implement its multiple powers, each local authority and EPCI is legally recognised with financial autonomy.
This financial autonomy is reflected by the annual voting of its primary budgets ("PB") which specify and authorise revenue and expenditure. Recorded transactions are then entered in the administrative accounts ("AA") voted by the authority. Budgets are prepared by the authority's executive branch.
The budget is a document that specifies and authorises revenue and expenditure. During the course of a year, supplemental budgets ("SB") or rectificatory budgets may be necessary to adjust expenditure and revenue to their actual execution. The form of supplemental budgets is identical to that of the primary budget; in other words including two sections. Funding credits are presented by chapter and item. It thus replicates the primary budget. Although not mandatory since 1982, it is generally adopted around the month of October. The data for the 2015 AA of the merged former EPCI in the Métropole and the 2016 PB of the Métropole has been incorporated throughout the prospectus to provide a better overview of the Issuer’s situation in 2015 and 2016.
The budgets of all local authorities are structured in two sections: the operating section and the investment section:
The operating section includes:
All expenditure necessary for the operation of the authority (general expenditure, payroll, day-to-day management, debt interest, amortization expense, provisions);
All revenue receivable by the authority, from expenditure transfers, provision of services, Government endowments, taxes and duties, and, if any, reversals of amortisation expense and provisions that the authority has been able to make.
The investment section includes:
in expenditure: repayment of debt and the authority’s equipment expenditure (works in progress, transactions for third parties...);
in revenue: borrowings, Government endowments and public subsidies.
iv) Local financing rules
The Code général des collectivités territoriales imposes financial constraints on local authorities and EPCI by prohibiting them from borrowing to repay principal on debt.
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This restriction, set forth in article L 1612-4 of the Code général des collectivités territoriales, provides as follows: "The budget of the local authority is in true balance when the operating and investment sections voted are in balance, revenue and expenditure having been assessed truthfully, and when the transfer of revenue from the operating section to the investment section, added to the revenue specific to this section, and excluding revenue from borrowings and allocations to amortisation expense and provisions, provides sufficient funds to cover the repayment of annual loan principal instalments falling due during the year".
6.2 Issuer’s public debt
The following definitions are used in this section: - Consolidated debt = Main budget debt + Issuer's ancillary budget(s) debt; - Guaranteed consolidated debt = part of consolidated Debt in respect of which the Issuer guarantees the obligations of the entity that incurred the debt in the event of default; - Annuities = Debt interest payments + repayment of principal on the debt; - Total annuities relating to social housing or the "SDIS" (Departmental Fire and Emergency Service) = Part of total annuities relating to guarantees granted to satellite entities in connection with loans granted for the construction of social housing; - Debt currency = the euro (€).
It should be noted that information from the 2016 Administrative Accounts (as at 31 December 2016) will be shown in this section rather than information from the 2017 Primary Budget (as at 1 January 2017). The Primary Budget is based on estimates and forecasts for the forthcoming year, whereas the administrative accounts reflect the actual financial situation as at 31 December in that year, and are therefore more accurate.
(a) Consolidated debt of the Issuer (all budgets combined)
Consolidated debt of Métropole Aix-Marseille-Provence
31/12/2014 2,038.65 million euros
31/12/2015 2,267.88 million euros
31/12/2016 2,419.61 million euros
The outstanding debt of the Métropole, resulting from the consolidation of the outstanding debts borne by each of the six former EPCI, is 2,419.61 million euros as at 31 December 2016, at an average rate of approximately 2.49%. This includes the Métropole’s main budget debt and that of all of its ancillary budgets. This outstanding debt is detailed by budget in the table hereunder.
The outstanding debts indicated hereunder are provided for information purposes, as they are drawn from the restatement of accounting data which followed form the creation of the Métropole.
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Outstanding Debt per budget (in millions of euros)
Outstanding Debt 31/12/2014* 31/12/2015* 31/12/2016** Main Budget 1 294.60 1 431.4 1 534.94 Waste collection Budget 76.56 87.43 92.97 Transport Budget 413.1 473.98 501.97 Sewage and sanitation Budget 179.73 180.25 176.59 Water Budget 35.58 45.45 46.01 Ports Budget 12.41 14.02 18.54 Development operations Budget 22.91 32.19 45.55 Enterprise Budget 3.76 3.16 3.05 Total 2 038.65 million euros 2 267.88 million euros 2 419.61 million euros
*Information from the 2014 and 2015 Administrive accounts of the former EPCIs making up Métropole Aix-Marseille-Provence
**Information from Métropole Aix-Marseille-Provence 2016 Administrative Accounts
(b) Debt annuities per budget
Information as at 31 December 2016 shows an amortisation of 144.12 million Euros and an interest amount of 61.41 million Euros. The breakdown by budget is as follows:
Debt annuities of the Métropole in Capital amortised in millions of euros as at 31 December Interest paid in 2016 2016 2016 Main Budget 94.95 38.6 Waste collection Budget 6.90 2.49 Transport Budget 18.89 10.91 Sewage and sanitation Budget 14.65 6.64 Water Budget 4.17 1.35 Ports Budget 0.84 0.40 Development operations Budget 1.79 0.73 Enterprise Budget 0.42 0.13 Total 144.12 millions of euros 61.41 millions of euros
(c) Consolidated guaranteed debt in the 2016 Administrative Accounts
The majority of loan guarantees granted by the Métropole concern the social housing sector.
Consolidated guaranteed debt in millions of euros Outstanding guaranteed Date Interest guaranteed Amortised capital guaranteed amount 31/12/2015 543.56 million euros 11.84 million euros 21.41 million euros 31/12/2016 595.89 million euros 11.77 million euros 23.41 million euros
To protect its financial solvency and its ability to borrow on the most advantageous terms, the Métropole has introduced a rigourous prudential management framework for guarantees that it grants, through a regulation on the general terms for the granting of loan guarantees. This regulation defines, specifically, an annual ceiling of 200M€ for the guarantees. Between 1
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January 2016 and 31 December 2016, outstanding debt guaranteed increased by 53M€. This rise is well below the annual ceiling amount. There were no calls on the loan guarantees during the 2016 financial year.
(d) Additional consolidated debt indicator
The average rate is calculated on the basis of the following rates:
variable rate loans = the daily rate on the data extraction date;
for loans at a post-fixed rate (or other rates not known on the relevant date) = the anticipated daily rate;
for fixed rate loans = the fixed rate, each such rate being calculated on an actual/actual (i.e. 365/365) basis.
The average life (AL) corresponds to the average rate of repayment of a loan (expressed in years). The average life is the time necessary to repay half of the outstanding principal amount of the debt, through amortisation. AL = sum of (Pi x i) / sum of Pi where: Pi represents the principal amortised in i-th year;
The residual life (expressed in years) is the time remaining before repayment in full of a debt or loan;
The debt repayment capacity (DRC) is the main solvency ratio. It measures the following ratio: Outstanding debt / Gross savings. The debt repayment capacity (expressed in years) means the time necessary to repay outstanding debt in full using the entire amount of all savings generated.
Additional indicators relating to the Métropole's outstanding debt
Average Debt with Debt repayment Average Average life residual life residual life < capacity (in rate (%) (years) (years) 1 year (in K€) years)
Main Budget 2.41% 15.17 9.08 286.60 8.37 Waste collection Budget 2.66% 12.33 8.42 5.25 Transport Budget 2.39% 17.67 9.75 13.50 Sewage and sanitation Budget 3.48% 16.75 9.25 1,420.08 8.24 Water Budget 2.69% 15.67 8.25 35.86 2.26 Ports Budget 2.39% 15.00 10.33 - Development operations Budget 1.98% 14.25 10.08 59.57 - Enterprise Budget 3.80% 11.50 6.25 51.33 4.32
Total 2.49% 15.66 9.08 1,853.44 8.48 (*)
*excluding ancillary Development operations budget and ancillary Ports budget
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(e) Gissler Charter
The process of preparation of the "Best Practices Framework" as requested by the Government was completed on 7 December 2009 with the signing of a best practices Charter (the "Gissler Charter") between: - the four partner banks (foreign banks -Depfa, RBS… - that had sold structured products did not sign the Charter); - the associations of elected officials representing the communes and groupings of communes (neither the Association des Départements de France – ADF –, nor the Association des Régions de France – ARF – have as yet wished to become signatories).
Contents of the Charter
The Charter contains six commitments (four by the banks and two by the local authorities). - The aim of the first two commitments is to set limits in terms of "product" risk. The signatory banks agree not to offer local authorities products based on certain high-risk indices (for example, exclusion of financial products linked to certain indices, such as indices relating to commodities, equities, currencies, etc.) and snowball-type products. - The aim of the third commitment is to promote clearer presentation and comparability of products offered by requiring banks to present their products in a common classification matrix (including rankings of risk by reference to the underlying indices and of product structure by level of complexity). - The fourth commitment is to define the formal content of commercial offers.
The signatory banks, while recognising that local authorities are not financial professionals, undertake to provide commercial information that is as clear as possible together with analysis on product structures and underlying indices, stress scenarios, and valuations of derivative products as at 31 December in year N-1 during the first quarter of year N. - The fifth and six commitments are undertakings on the part of local authorities: their aim is to improve the information provided by the executive branch of the deliberative assembly and to ensure greater transparency, as regards the elected officials, of decisions taken by the executive (with, in particular, a presentation by the executive of an annual report on the local authority's debt management policy).
The table below shows that 96.73% of the Métropole’s outstanding debt is sound and therefore falls within category 1A of the Gissler scale. This classification is in the lowest risk debt category. It represents fixed rate and simple variable rate loans in particular, all denominated in €.
0.86% of the Métropole’s outstanding debt represents a structured product (in category F6 of the Gissler charter), i.e. a remaining capital amount of €20,797,365 due at 31/12/2016.
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BALANCE SHEET ITEMS – STATUS OF DEBT as at 31/12/2016
DISTRIBUTION OF CONSOLIDATED OUTSTANDING DEBT (BY TYPE) (i.e. all Métropole budgets combined)
Structures (4) (2) Non- French or Eurozone (5) (3) Eurozone indices and Non (6) (1) inflation Euro-zone index Euro- Underlying indices Other Euro indices indices or index spreads one zone indices spreads spreads of which index between such indices is a spreads indices non Euro- zone index (A) Plain vanilla fixed rate; Number of 429 1 - - - - plain vanilla floating rate; products Fixed-for-floating rate swap or vice versa. Structured-for- % of 96.73% 1.10 % - - - - fixed / floating rate swap indebted- (one-way). Plain vanilla ness floating rate with cap / tunnel Amount in 2,339,571,420.51 24,739,366.60 - - - - euros € € (B) Plain vanilla barrier. No Number of 2 1 - - - leverage products % of 0.11% 1.20% - - - indebted- ness Amount in 2,375,276 € 28,965,517 € - - - euros (C) Swaption Number of ------products % of indebted------ness Amount in ------euros (D) Multiplier up to 3; Number of ------multiplier up to 5 capped products % of indebted------ness Amount in ------euros (E) Multiplier up to 5 Number of ------products % of ------indebted- ness Amount in ------euros (F) Other types of structure Number of - - - - - 1 products % of - - - - - 0.86% indebted- ness Amount in - - - - - 20,797,365 € euros
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(f) Presentation of structure of consolidated debt stock
Structured rate loans are loans whose interest-rate is defined by reference to a formula that may include an option mechanism. This type of loan may include a hedging arrangement, involving the payment of a premium or rate surcharge or discount, in consideration of acceptance by the local authority of a risk of loss as a result of index level fluctuations. Structured loans such as spread products, simple or knock-out barrier products are examples of this.
The structured loans figuring in the diagrams below in the column "structured rate" form a generic category that includes all types of structured products, including fixed rate products which involve less risk.
Breakdown of the Métropole's outstanding debt by type of rate at 31/12/2016
60.89%
1,600 70%
) € 1,400 60% 1,200 38.24% 50% 1,000 40% 800 Amount (Millions Amount 30% 600 20% 400 10%
200 0.87% Proporrtion of the outstanding debt (%) debt outstanding theof Proporrtion 0 0% Fixed Variable Structured Type of rate
For information, the breakdown of outstanding debt as at 31/12/2015, at the establishement of the Métropole was as shown in the graph below.
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Breakdown in the outstanding debt of the
1,400Métropole by type of rate at 31/12/201570%
1,200 57.42% 60%
1,000) 50% € 40.25% 800 40%
600 30% 400 20% 200 10%
2.33% (%) debt 0 0% Volume (Millions (Millions Volume Fixed Variable Structured
Type of rate of outstanding Percentage
6.3 Issuer’s financial situation and resources
Article 26 of the organic finance law (LOLF) n° 2001-692 of 1st August 2001 provides that "unless expressly provided otherwise in a finance law, local authorities and their public establishments are obliged to deposit all of their available funds with the Trésor". Furthermore, article 47 of decree n° 2012-1246 dated 7 November 2012 concerning public accounting and budgetary management requires that local authorities and their public establishments are obliged to deposit their funds with the Trésor.
The purpose of active treasury management is to decrease the opportunity cost resulting from the inability to invest in available funds. For this purpose, the balance on the Trésor account must be as low as possible. To face their financing needs, local authorities use credit lines they use gradually during their expenditures and as their cashflow needs arise.
Once drawn upon, the credit line will top up the Trésor current account to cover the day’s expenditure. In practice this policy requires a close collaboration between the instructing party and the public auditor. The public auditor determines each day's anticipated deposits and disbursements. Any gap between revenue and expenditure is covered by drawdown or repayment, as the case may be, of the credit line.
The Métropole Aix-Marseille-Provence has short-term liquidity of 150 million euros in 2017.
6.4 The Issuer’s budget
For an overview of the Issuer's financial situation, the following are presented for each of them: expenditure and revenue for the investment and operating sections (for the administrative accounts and primary budgets); self-financing; year-end results.
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These accounting items are presented for the main budget and the ancillary budgets as part of the 2017 primary budget and the 2016 administrative accounts.
Remarks: The accounting classifications applicable to métropoles describe transactions between the investment and operating sections which do not constitute actual disbursements. These transactions, known as "for-order transactions", are ignored for the purposes of financial analysis. The total excluding for-order transactions is clearly indicated in the ‘Balance’ table below; Data is presented in Euros, unless specified otherwise.
6.5 Métropole Aix-Marseille-Provence budgetary data
The 2017 primary budget (PB) of the Métropole was approved on 15 December 2016 and the administrative accounts were approved on 18 May 2017. The following financial information is presented per activity for the reader’s convenience. It should be noted that the entity's recent establishment means that it is not possible to make a direct comparison between data in the 2014-2015 administrative accounts which have been consolidated with those of the 2016 administrative accounts, which are the first Administrative Accounts of the Métropole.
The following tables show the financial situation of the Métropole identifying the income and expenditure per consolidated budget of the six territoires.
Expenditure and revenue in the Métropole's budgets fluctuated widely between 2015 and 2016 due to the change in the scope of the Métropole and the transfer of powers to local areas. The analysis of 2016 financial results and management is therefore presented in this document based solely on the scope of the Métropole as created on 1 January 2016 and replicates the use of appropriations over the financial year.
The implementation of the 2016 budget shows the preliminary results of the integration of the management of the former-EPCIs and the budgetary harmonisation of the Métropole as well as the measures taken during the financial year to streamline and improve the Métropole's savings ratio, in spite of a restrictive financial context and the substantial increase in the tax revenues to the communes over the previous financial years.
Gross savings, also referred to as "gross self-financing capacity in the investment section" after repayment of interest on debt, is the difference between actual operating income and expenditure, i.e. management savings after subtracting the balance of financial and exceptional income and expenses from the operating section. It therefore expresses the Métropole's ability to generate revenue to fund its investments, once its operating expenses are covered. Gross savings reached 279.87 million euros despite the burden of repaying the interest on the Métropole's debt (18% of management savings), enabling the repayment of € 142.34 million in debt principal and generating additional self-financing from operations of € 137.54 million ("net self-financing capacity", corresponding to gross savings less the amount of the debt capital repayment), which is an improvement of 98 million euros compared to the provisional budget.
In total, repayments of the Métropole's debt represent 60% of the authority's management savings. Thus, despite positive results allowing the authority to retain flexibility to fund investment, the debt burden remains substantial and requires appropriate measures to guarantee the financial sustainability of future investment projects, which would not be covered by the authority's current self-financing capacity.
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Self-financing and capital revenue allowed the authority to spend € 528.15 million in capital expenditure in 2016. Indeed, only 60% of capital expenditure in the provisional budget was implemented, due to the gradual establishment of the Métropole and its use of appropriations. This level of capital expenditure combined with self-financing enabled the authority to limit its use of borrowing to € 242.16 million (excluding the "development operations" ancillary budgets), i.e. € 225.06 million less than forecast.
The dynamic debt reduction capacity (CDD) is the ratio of outstanding debt as at 31 December of a given year to gross savings generated during the year. It indicates how long it would theoretically take a local authority to repay the entirety of its debt with gross savings.
This debt repayment duration was 8.5 years on 31 December 2016. The dynamic debt reduction capacity in 2016 is therefore below the 10-year threshold set by the Metropole in the Financial and Fiscal Governance Pact (adopted in June 2016 pursuant to Article L.5218-8 of the Code général des collectivités territoriales, the purpose of which is to define the strategy for the exercise of powers and financial relations between Métropole Aix-Marseille-Provence and its Conseils de territoire). This enabled the authority to retain its "A +" financial rating from the rating agency Fitch Ratings.
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Main Budget - Investment Section
* 138: Other non-transferable investment subsidies ** 165: Deposits and advances received; 166 debt refinancing; 16449 Credit line drawdowns
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Main Budget - Operating Section
*Results carried forward from 2015 in the main budget of the AA 2016 were corrected by resolution following differences noted when compared with the public auditor's management accounts.
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Transport Budget - Investment Section
* 138: Other non-transferable investment subsidies ** 165: Deposits and advances received; 166 debt refinancing; 16449 Credit line drawdowns
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Transport Budget - Operating Section
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Waste Collection and Treatment Budget - Investment Section
* 138: Other non-transferable investment subsidies ** 165: Deposits and advances received; 166 debt refinancing; 16449 Credit line drawdowns
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Waste Collection and Treatment Budget - Operating Section
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Water Budget - Investment Section
* 138: Other non-transferable investment subsidies ** 165: Deposits and advances received; 166 debt refinancing; 16449 Credit line drawdowns
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Water Budget - Operating Section
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Sewage and sanitation Budget - Investment Section
* 138: Other non-transferable investment subsidies ** 165: Deposits and advances received; 166 debt refinancing; 16449 Credit line drawdowns
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Sewage and sanitation Budget - Operating Section
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Urban Development Zones Budget - Investment Section
* 138: Other non-transferable investment subsidies ** 165: Deposits and advances received; 166 debt refinancing; 16449 Credit line drawdowns
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Urban Development Zones Budget - Operating Section
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Consolidated Ancillary Budgets - Investment Section: Leisure Ports, National Interest Markets, Crematorium, Picasso Exhibition, Urban Heating Network, Enterprises and Social Action
* 138: Other non-transferable investment subsidies ** 165: Deposits and advances received; 166 debt refinancing; 16449 Credit line drawdowns
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Consolidated Ancillary Budgets - Operating Section: Leisure Ports, National Interest Markets, Crematorium, Picasso Exhibition, Urban Heating Network, Enterprises and Social Action
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BUDGETARY BALANCE OF THE METROPOLE’S 2017 PRIMARY BUDGET
Actual expenditure Actual revenue In millions of euros at 01/01/2017 at 01/01/2017 Main Budget 2,327.67 2,327.67 operating 1,705.66 1,843.78 investment 622.01 483.89 Transport 778.49 778.49 operating 613.93 640.46 investment 164.56 138.03 Waste collection 335.014 333.004 operating 294.094 310.034 investment 40.92 22.97 Sewage and sanitation 67.89 67.89 operating 22.00 38.82 investment 45.89 29.073 Development zone 24.4 24.43 operating 21.94 1.63 investment 2.46 22.8 Water 60.68 57.01 operating 20.51 35.49 investment 40.17 21.52 Crematorium 1.83 1.83 operating 1.17 1.83 investment 0.66 0 National interest 1.96 1.96 markets operating 1.86 1.96 investment 0.1 0 Ports 13.08 13.08 operating 9.57 11.24 investment 3.51 1.84 Heating network 0.27 0.31 operating 0.12 0.14 investment 0.15 0.17 Enterprises 1.74 1.74 operating 1.28 0.74 investment 0.46 1 Social action 1.82 1.82 operating 1.82 1.82 investment 0 0
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6.6 Audit and control procedures applicable to the Issuer’s accounts
The law n° 82-213 of 2 March 1982 abolished all upstream control of acts of local authorities. The budgets voted by local authorities are henceforth automatically effective and enforceable upon publication and notification to the Prefect, the representative of the State in the département.
Budgetary acts of local authorities are subject to two ex post facto control mechanisms: as administrative acts, they are subject to control of legality under the general law; as budgetary acts, they are subject to special budgetary, jurisdictional and management control procedures conducted by the regional audit offices (chambres régionales des comptes).
(a) Laws applicable to the Issuer
The legislative and regulatory framework applicable to the Issuer is set out in: the Code général des collectivités territoriales; the organic law n° 2001-692 of 1 August 2001 concerning finance laws and decree n° 2012- 1246 of 7 November 2012 on public budgetary and accounts management; the Finance Laws; applicable accounting instructions: . instruction M57: accounts of communes, governed by the Order of 21 December 2015 relating to budgetary and accounting instruction M57 applicable to single local authorities, metropoles and their administrative public establishments; . as from 1st January 2016, the M57 budgetary and accounting basis is extended to metropoles; . instruction M4: accounts of Local Industrial and Commercial Public Services (SPIC). This comprises several separate classifications, including M43 which sets the framework for SMTC (accounts of local urban public transport services); . the codifying instruction n°11-022-M0 of 16 December 2011 on the collection of revenue of local authorities and local public institutions.
(b) Control by the Public Auditor
The public auditor executes financial transactions and keeps management accounts in which all of the local authority's revenue and expenditure are recorded.
He verifies that expenditure is recorded in the correct budgetary chapter and that the source of all revenue is legal. He has no power to verify appropriateness. Indeed he may not judge the appropriateness of political choices made by local authorities since they are administratively autonomous. Otherwise, the instructing party (ordonnateur) may "require" the public auditor, in other words oblige him to make a payment.
If the public auditor uncovers an unlawful act, he rejects the payment decided by the instructing party.
Public auditors are personally and financially liable for payments that they make. If a problem arises, the Finance Minister can issue a reversal order that forces the public auditor to pay the relevant sum immediately out of his own pocket.
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These provisions from chapter VII of the single section in book VI of part one of the Code général des collectivités territoriales concerning the public auditor, apply to EPCI.
(c) Prefect’s control of legality
Article L. 2131-6 of the Code général des collectivités territoriales provides that the Prefect shall refer to the administrative Tribunal acts which it considers to be unlawful within two months of their notification to the Préfecture. Control of legality relates to the manner of preparation, adoption or presentation of budgetary and ancillary documents.
The provisions of the Code général des collectivités territoriales relating to control of legality and the enforceability of acts of communes, départements and régions also apply to EPCI in accordance with article L. 5211-3 of the Code général des collectivités territoriales.
(d) The role of the regional audit office (Chambre Régionale des Comptes)
The law n° 82-213 of 2 March 1982 established regional audit offices (chambres régionales des comptes or "CRC"), run by magistrates appointed for life: this is the quid pro quo of the abolition of State supervision of local authority acts which previously involved upstream control of their acts. The powers of the CRC are defined by law and have been codified under articles L.211-1 et seq. of the French financial jurisdictions Code.
The powers of the CRC extend to all local authorities within its geographical jurisdiction, whether communes, départements or régions, and also to their public establishments (including EPCI).
CRC are invested with triple powers of control. First, budgetary control, which replaced that exercised by the Prefect prior to the law n° 82-213 of 2 March 1982. Secondly, jurisdictional control whose purpose is to ensure the regularity of transactions actioned by the public auditor. Thirdly, management control the purpose of which is to control the regularity of a commune's revenue and expenditure.
Budgetary control
Pursuant to articles L. 1612-2 et seq. of the Code général des collectivités territoriales, the CRC controls the primary budget, amending decisions and the administrative account.
The CRC may act in four situations: o where the primary budget is adopted out of time (after 31 March, except for deliberative assembly election years, in which cases the period is extended to 15 April), after a fifteen (15) day period for transmission, the Prefect must instruct the CRC which shall formulate its proposals within one month; o if the approved budget is not in true balance (revenue not equal to expenditure), three monthly periods are triggered: one month for the Prefect to instruct the CRC, one month for the CRC to formulate its proposals, a third month for the deliberative assembly of the local authority to rectify the situation, failing which the Prefect settles the budget itself; o if a mandatory expense is not entered in the budget, the same time periods apply but the CRC, which may also be instructed by the public auditor, issues a formal notice to the local authority in question; o lastly, when execution of the budget is in deficit (where the sum of the results of the two sections of the administrative account is negative) by more than 5% or 10% of operating section revenue, depending on the size of the local authority, the CRC
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proposes restorative measures within a period of one month from the date of its instruction. Furthermore, it approves the primary budget for the following financial year.
Jurisdictional control
The CRC controls all accounts of the public auditors of local authorities and their public establishments. This jurisdictional control was the original purpose of the CRC. The purpose is to control the regularity of transactions carried out by public auditors. It involves verifying not only that the accounts are regular, but above all that the public auditor has properly carried out all of the controls that it is obliged to perform. Conversely, the law n° 2001-1248 of 21 December 2001 on CRCs and the public accounts court (Cour des Comptes) prohibits any control of appropriateness.
Management control
CRCs also have a duty to control the management of local authorities. The purpose of this control is to verify the regularity and quality of their management. It concerns not only the financial equilibrium of management operations and the methods chosen for their implementation, but also the results achieved by reference to such methods and the results of measures undertaken. CRCs judge the regularity of management operations and the financial soundness of the methods used, and not the appropriateness of the actions taken by local authorities. CRCs aim above all to help and encourage local authorities to comply with the law to avoid any penalties.
Impact of CRC observation letters
Observation letters raise three major areas of consideration: o balanced use of public finances; o controlled management of public services; o compliance with the broad principles of the civil service.
This function may however not be fit for purpose because CRCs issue their final observation letters two to five years after the budgetary year-end. These letters are available to any citizen requesting a copy.
New forms of control
The way CRC’s operate has changed.
The law n° 88-13 of 5 January 1988 on improving decentralisation imposed a preliminary interview between the reporting magistrate and the head of the local authority at the time of the control, but also with those responsible of the control during the period indicated. These provisions are aimed at improving external controls (consistent practices throughout the country, confidentiality).
CRCs pay particular attention to the verification of the public policy effectiveness. While it is not their role to form opinions on the local authorities' decisions, they ensure that these authorities have implemented an organised structure with clear objectives, providing services and a system of monitoring and control using management dashboards to evaluate the measures implemented.
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7. DISPUTES
During the normal course of its activities, the Issuer is involved in a number of judicial, governmental, arbitration and administrative proceedings. Such disputes are not material, regarding the Issuer’s budget, and are usual for all entities employing staff or owning assets. The issues raised by disputes in which the Métropole is currently involved do not require any particular comment.
8. FINANCIAL RATING OF THE ISSUER
On 9 June 2017, the credit rating agency Fitch Ratings confirmed, for foreign currency and local currency, the long-term Issuer Default Ratings (IDR) of “A+” and the short-term IDR of “F1” attributed to the Métropole. The perspective applied to the long-term IDR is stable. The Programme rating, as well as those of the unsubordinated senior bonds, were confirmed as “A+”.
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TAXATION
The following is a summary of certain tax considerations concerning withholding taxes applicable in France to payments in respect of Notes made to any Noteholder.
This summary is based on French tax laws in force at the date of the current Base Prospectus, which are subject to modification (potentially with a retroactive effect). This summary is provided by way of general information and does not purport to be a comprehensive analysis of all tax considerations that may be relevant to holders of Notes. It is therefore recommended that prospective investors should consult with their usual tax adviser to examine their individual circumstances in detail.
FRANCE
The payments of interest and other revenues made by the Issuer with respect to Notes are not subject to the withholding tax set out under article 125 A III of the French Code général des impôts, unless such payments are made outside France in a non-cooperative State or territory within the meaning of article 238-0 A of the Code général des impôts (a Non-Cooperative State). If such payments in respect of the Notes are made in a Non-Cooperative State, a 75% withholding tax will be applicable (subject to certain exceptions and to the more favourable provisions of any applicable double taxation treaty) by virtue of article 125 A III of the Code général des impôts.
Notwithstanding the foregoing, the 75% withholding specified in article 125 A III of the French Code général des impôts shall not apply in respect of an issue of Notes if the Issuer can prove that the principal purpose and effect of such issue of Notes was not that of allowing the payments of interest or other revenues to be made in a Non-Cooperative State (the Exception).
Pursuant to the Bulletin Officiel des Finances Publiques– Impôts BOI-INT-DG-20-50-20140211, BOI- RPPM-RCM-30-10-20-40-20140211 and BOI-IR-DOMIC-10-20-20-60-20150320, an issue of Notes will benefit from the Exception without the Issuer having to provide any proof of the purpose and effect of such issue of Notes, if such Notes are:
(a) offered by means of a public offer of financial securities within the meaning of article L.411-1 of the French Code monétaire et financier or pursuant to an equivalent offer in a State other than a Non- Cooperative State. For this purpose, an "equivalent offer" means any offer requiring the registration or filing of an offer document with a foreign securities market authority; or
(b) admitted to trading on a regulated market or on a French or foreign multilateral securities trading system provided that such market or system is not located in a Non-Cooperative State, and the operation of such market is carried out by a market operator or an investment services provider, or by such other similar foreign entity, provided further that such market operator, investment services provider or entity is not located in a Non-Cooperative State; or
(c) admitted, at the time of their issue, to the clearing operations of a central depositary or of a securities clearing and delivery and payments systems operator within the meaning of article L.561-2 of the French Code monétaire et financier, or of one or more similar foreign depositaries or operators provided that such depositary or operator is not located in a Non-Cooperative State.
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Pursuant to article 125 A of the General Tax Code, where the paying agent is established in France then, subject to certain limited exceptions, interest and assimilated revenues received by individuals who are fiscally domiciled (domiciliés fiscalement) in France are subject to a 24% withholding tax, which is deductible from their personal income tax liability in respect of the year in which the payment has been made. Social contributions (CSG, CRDS and other related contributions) are also levied by way of withholding tax at a global rate of 15.5% on such interest and assimilated revenues paid to individuals who are fiscally domiciled (domiciliés fiscalement) in France.
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SUBSCRIPTION AND SALE
Subject to the terms and conditions contained in an amended French language dealer agreement dated 4 October 2017 entered into between the Issuer, the Permanent Dealers and the Arranger (the Dealer Agreement), the Notes will be offered by the Issuer to the Permanent Dealers. However, the Issuer reserves the right to sell Notes directly on its own behalf to Dealers that are not Permanent Dealers. The Notes may be resold at prevailing market prices, or at prices related thereto, at the time of such resale, as determined by the relevant Dealer. The Notes may also be sold by the Issuer through the Dealers, acting as agents of the Issuer. The Dealer Agreement also provides for Notes to be issued in syndicated Tranches that are jointly and severally underwritten by two or more Dealers.
The Issuer will pay each relevant Dealer a commission as agreed between themselves in respect of Notes subscribed by such Dealer. If appropriate, the commissions in respect of an issue of Notes on a syndicated basis will be specified in the applicable Final Terms. The Issuer has agreed to reimburse the Arranger for the expenses incurred by them in connection with the updating of the Programme and the Dealers for certain expenses in relation to their role under this Programme.
The Issuer has agreed to indemnify the Dealers against certain types of liability it may incur in connection with the offer and sale of Notes. The Dealer Agreement entitles the Dealers, under certain circumstances, to terminate any agreement they may enter into for the subscription of Notes prior to payment for such Notes being made to the Issuer.
1. GENERAL
These selling restrictions may be amended by mutual agreement between the Issuer and the Dealers in particular following any change to any applicable law, regulation or directive. Any such amendments shall be set out in a supplement to this Base Prospectus.
Each Dealer has undertaken to comply, to the fullest extent of the information in its possession, with all relevant laws, regulations and directives in each country in which it buys, offers, sells or delivers Notes or in which it holds or distributes the Base Prospectus, any other offer document or any Final Terms and neither the Issuer nor any of the other Dealers shall incur any liability in respect thereof.
2. UNITED STATES OF AMERICA
The Notes have not and will not be registered pursuant to the US Securities Act. Subject to certain exceptions, Notes may not be offered or sold or, in the case of Materialised Notes, delivered in the territory of the United States of America. Each Dealer has undertaken and each new Dealer will be required to undertake, not to offer or sell any Note, or in the case of bearer Materialised Notes, to deliver such Notes in the territory of the United States of America except in compliance with the Dealer Agreement. The Notes will be offered and sold outside the United States in compliance with Regulation S.
Bearer Materialised Notes with a maturity of greater than one year are subject to US tax rules and may not be offered, sold or delivered in the territory of the United States of America or any of its possessions or to U.S. Persons, with the exception of certain transactions which are permitted under US tax laws. Terms used in this paragraph shall have the meaning given to them in the U.S. Internal Revenue Code of 1986 and regulations made thereunder.
In addition, the offering or sale by any Dealer (whether or not participating in the offering) of any identifiable tranche of Notes within the United States of America within the first forty (40) calendar days after the commencement of the offering, may violate the registration requirements under the US Securities Act.
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3. UNITED KINGDOM
Each Dealer has represented and agreed and each new Dealer will be required to represent and agree that:
(a) in relation to any Notes having a maturity of less than one year, (i) it is a person whose ordinary activities involve acquiring, holding, managing or selling financial products (as principal or agent) for the purposes of its business and (ii) it has not offered or sold and will not offer or sell any Notes to persons in the United Kingdom, other than to persons whose ordinary activities involve acquiring, holding, managing or selling financial products (as principal or agent) for the purposes of their business or to persons who may reasonably be expected to acquire, hold, manage or sell financial products (as principal or agent) for the purposes of their business, where the issue of the Notes would otherwise constitute a violation of Section 19 of the Financial Services and Markets Act 2000 (the FSMA);
(b) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of any Notes in circumstances in which Section 21(1) of the FSMA does not and will not apply to the Issuer; and
(c) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to any Notes in, from or otherwise involving the United Kingdom.
4. ITALY
This Base Prospectus has not been and shall not be published in the Republic of Italy in connection with the offering of Notes. The offering of Notes has not been registered with the Commissione Nazionale per le Società e la Borsa (the Consob) in the Republic of Italy in accordance with the Legislative Decree No. 58 of 24 February 1998 as amended (the Financial Services Law) and the Consob regulation No. 11971 of 14 May 1999 as amended (the Issuer Regulation) and, accordingly, the Notes may not be and shall not be, offered, sold or delivered, directly or indirectly, in the Republic of Italy in connection with an offer to the public, and no copy of this Base Prospectus, the applicable Final Terms or any other document relating to the Notes may be, nor shall be, distributed in the Republic of Italy, except (a) to qualified investors (investitori qualificati), as defined in article 100 of the Financial Services Law and article 34-ter, paragraph 1(b) of the Issuer Regulation, or (b) pursuant to any other public offer exemption in accordance with article 100 of the Financial Services Law and article 34-ter of the Issuer Regulation.
Any offer, sale or delivery of Notes and any distribution of this Base Prospectus, the applicable Final Terms or any other document relating to the Notes in the Republic of Italy in accordance with paragraphs (a) and (b) above must and shall be made in compliance with applicable Italian laws, in particular those relating to securities, taxation and trade and all other applicable laws and regulations and more specifically:
(a) must and shall be made by an investment firm, bank or financial intermediary authorised to conduct such activities in the Republic of Italy in accordance with the Financial Services Law, Consob regulation No. 16190 of 29 October 2007 (as amended) and Legislative Decree No. 385 of 1st September 1993 as amended (the Banking Law); and
(b) must and shall be made in accordance with article 129 of the Banking Law and related directives to the Bank of Italy, as amended, pursuant to which the Bank of Italy may request information on the issue or sale of securities in the Republic of Italy; and
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(c) must and shall be made in accordance with all laws and regulations or requirements and restrictions imposed by the Consob and/or any other Italian authority.
It is the sole responsibility of Investors who subscribe for an offering of Notes to ensure that the Notes subscribed in connection with the offer have been offered and sold in accordance with applicable Italian laws and regulations. No person residing or located in the Republic of Italy, other than original addressees of this Base Prospectus, may rely on this Base Prospectus, the applicable Final Terms or any other document relating to the Notes.
5. FRANCE
Each of the Dealers and the Issuer has represented and agreed that in connection with their initial placement, it has not offered or sold and will not offer or sell, directly or indirectly, Notes to the public in France; it has not distributed or caused to be distributed and will not distribute or cause to be distributed to the public in France, the Base Prospectus, the applicable Final Terms or any other offering material relating to the Notes and such offers, sales and placements of Notes in France will be made only to (i) providers of portfolio management-related investment services for the account of third parties (prestataires de services d'investissement relatifs à la gestion de portefeuille pour le compte de tiers), and/or (ii) qualified investors (investisseurs qualifiés) acting for their own account and/or (iii) a restricted circle of investors (cercle restreint d'investisseurs), all as defined in and in accordance with, articles L.411-1, L.411-2, D.411-1 and D.411-4 of the French Code monétaire et financier.
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FORM OF FINAL TERMS
Set out below is the Form of Final Terms which will be completed for each Tranche of Notes:
Final Terms dated []
METROPOLE D’AIX-MARSEILLE-PROVENCE
Euro Medium Term Note Programme €400,000,000
SERIES No: []
TRANCHE No: []
[Brief description and aggregate nominal amount of Notes]
Issue Price: [] %
[Name(s) of Dealer(s)]
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PART A
CONTRACTUAL TERMS
This document constitutes the Final Terms in respect of the issue of notes described below (the Notes) and contains the final terms of the Notes. These Final Terms complete the base prospectus dated 4 October 2017 (in respect of which the Autorité des marchés financiers (the AMF) has granted visa No. 17-531 dated 4 October 2017) [and the supplement[s] to the base prospectus dated [] (in respect of which the AMF has granted visa No. [] dated [])], relating to the €400,000,000 debt instrument issuance programme of the Issuer which [together] constitute[s] a base prospectus (the Base Prospectus) for the purposes of article 5.4 of Directive 2003/71/EC of the European Parliament and Council dated 4 November 2003, as amended (the Prospectus Directive) and must be read in conjunction therewith. Terms used below shall have the meaning given to them in the Base Prospectus. The Notes shall be issued in accordance with the provisions of these Final Terms together with the Base Prospectus. The Issuer accepts responsibility for the information contained in these Final Terms which, together with the Base Prospectus, contain all material information in connection with the issue of Notes. Full information on the Issuer and the offer of Notes is available solely on the basis of these Final Terms and the Base Prospectus which together constitute the Prospectus. The Final Terms and the Base Prospectus are available on the websites of (a) the AMF (www.amf-france.org) and (b) the Issuer (http://www.marseille-provence.fr/index.php/la-metropole/emissions-obligataires), [and] during normal business hours at the registered office of the Issuer and the specified offices of the Paying Agent(s) from which copies may be obtained. [The Base Prospectus is also available [on/at] [].]1
[The following language applies (and replaces that set forth above) if the first Tranche of an issue which is being increased was issued under a prospectus or base prospectus with an earlier date.]
Terms used below shall be deemed to have been defined for the purposes of the Conditions of the Notes included in the base prospectus dated [initial date] in respect of which the Autorité des marchés financiers (AMF) has granted its visa under n° [] dated [] [and in the supplemental base prospectus dated [] in respect of which the AMF has granted its visa under n° [] dated [] relating to the €400,000,000 debt instrument issuance programme of the Issuer] ([together,] the Initial Base Prospectus) which [together] constitute] a base prospectus as defined in Directive 2003/71/EC of the European Parliament and Council dated 4 November 2003, as amended (the Prospectus Directive). This document constitutes the Final Terms in respect of the issue of Notes described below for the purposes of article 5.4 of the Prospectus Directive and must be read in conjunction with the base prospectus dated 4 October 2017 (in respect of which the AMF has granted visa n° 17-531 dated 4 October 2017) [and the supplemental Base Prospectus dated [] (in respect of which the AMF has granted visa n° [] dated [])] ([together,] the Current Base Prospectus), other than the Conditions of the Initial Base Prospectus incorporated by reference into the Current Base Prospectus. Full information on the Issuer and the offer of the Notes is available solely on the combined basis of these Final Terms, the Initial Base Prospectus and the Current Base Prospectus. The Final Terms, the Initial Base Prospectus and the Current Base Prospectus are available on the websites of (a) the AMF (www.amf-france.org) and (b) the Issuer (http://www. marseille-provence.fr/index.php/la- metropole/emissions-obligataires), [and] during normal business hours, at the registered office of the Issuer and the specified offices of the Paying Agent(s) from whom copies may be obtained. [Furthermore, the Final Terms, the Initial Base Prospectus and the Current Base Prospectus are available [on/at] [].]1]
[Include whichever of the following apply or specify as "Not Applicable" (N/A). Note that the numbering should remain as set out below, even if "Not Applicable" is indicated for individual paragraphs or sub-paragraphs. Italics denote directions for completing the Final Terms.]
1 If the Notes are admitted to trading on a Regulated Market other than Euronext Paris. 1 If the Notes are admitted to trading on a Regulated Market other than Euronext Paris.
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1. Issuer: Métropole d’Aix-Marseille-Provence 2. (a) Series: [] (b) Tranche: [] (c) Date on which the Notes will be [The Notes shall be consolidated (assimilable) and consolidated and form a single form a single Series with [describe the relevant Series: Series] issued by the Issuer on [insert the relevant date] (the "Existing Titles") as of [insert the relevant date]. Once the Notes are admitted to trading, they shall be fully fungible with the Existing Notes, and shall form a single Series.] [Not Applicable] 3. Specified Currency: Euro (€) 4. Aggregate Nominal Amount: [] (a) Series: [] [(b) Tranche: []] 5. Issue Price: [] % of the Aggregate Nominal Amount [plus accrued interest since [insert the date](in case of fungible issues or first broken coupon, if any) 6. Specified Denomination(s): [] (only one Denomination for Dematerialised Notes) 7. (a) Issue Date: [] (b) Interest Period Commencement [] [Specify / Issue Date / Not Applicable] Date: 8. Maturity Date: [Specify the date or (for the Floating Rate Notes) the Coupon Payment Date of the relevant month and year or the nearest date from the Coupon Payment Date of the relevant month and year] 9. Interest Basis: [Fixed Rate of [] %] [EURIBOR or EONIA][TEC10] +/-[] % of the Floating Rate] [Zero Coupon Note] (other details indicated below) 10. Redemption/Payment Basis: Subject to repurchase and cancellation or anticipated redemption, the Notes will be redeemed at the Maturity Date at [100]/[] % of their nominal amount. [Redemption by Instalments] 11. Change of Interest Basis: [Applicable (for the Fixed/Floating Rate Notes)/Not Applicable] (If applicable, specify details related to the conversion of the Fixed/Floating Rate interest under Article 4.4) 12. Redemption at the option of the [Redemption at the option of the Issuer/Noteholders: Issuer]/[Redemption at the option of the Noteholders][Not applicable] [(other details indicated below)]
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13. (a) Status of the Notes: Senior (b) Authorisation date for the issue of [] the Notes: 14. Distribution Method: [Syndicated/Non-syndicated] PROVISIONS RELATED TO INTERESTS (IF ANY) TO BE PAID 15. Provisions related to the Fixed Rate Notes: [Applicable/Not Applicable] (If this paragraph is not applicable, delete other sub-paragraphs) (a) Interest Rate: []% per year [payable [annually/half- yearly/quarterly/monthly] at maturity] (b) Coupon Payment Date(s): [] in each year [adjusted in accordance with [specify Business Day Convention and any relevant Business Centre(s) for the "Business Day" definition]/not adjusted (c) Fixed Coupon Amount[(s)]: [] per Specified Denomination of [] (d) Broken Amount[(s)]: [Include information relating to the initial or final Broken Amount which are different to the Fixed Coupon Amount(s) and Interest Payment Date(s) to which they relate][Not Applicable] (e) Day Count Fraction (Article 4.1): [Actual/365 / Actual/365-FBF / Actual/Actual- [ICMA/FBF] / Actual/365 (Fixed) / Actual/360 / 30/360 / 360/360 / Bond Basis / 30/360 FBF / Actual 30A/360 (American Bond Basis) / 30E/360 / Euro Bond Basis / 30E/360 - FBF.] (f) Determination Date(s) of the [] in each year (specify the regular Coupon Coupon (Article 4.1): payment dates, excluding the Issue Date and the Maturity Date in the case of a first or last long or short Coupon.[Not Applicable] N.B.: only applicable where the Day Count Fraction is Actual/Actual (ICMA) Basis). 16. Provisions relating to Floating Rate Notes: [Applicable/Not Applicable] (If this paragraph is not applicable, delete other sub-paragraphs). (a) Interest Period(s)/ Interest Accrual [] Period Date: (b) Coupon Payment Date(s): [] (c) First Coupon Payment Date: [] (d) Business Day Convention: [Floating Rate Business Day Convention/Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention] /[Not adjusted] (e) Business Center(s) (Article 4.1): []
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(f) Manner in which the Interest Rate[s] is/[are] to be determined: [Screen Rate Determination/FBF Determination] (g) Party responsible for calculating the [][Not Applicable] Interest Rate(s) and Coupon Amount(s) (if other than the Calculation Agent): (h) Screen Rate Determination (Article [Applicable/Not Applicable] 4.3(c)(ii)): (If this sub-paragraph is not applicable, delete the remaining sub-paragraphs) Relevant Rate: [] Screen Page: [] Relevant Time: [] Coupon Determination [[] [TARGET] Business Days in [specify the city] Date: for [specify the currency] before [the first day of each Interest Period/each Interest Payment Date]] Primary source for the [Specify the relevant Screen Page or "Reference Floating Rate: Banks"] Reference Banks (if the [Specify four entities/ Not Applicable] primary source is "Reference Banks"): Relevant Financial Centre: [The financial centre most closely connected with the Benchmark– specify, if other than Paris] Benchmark: [EONIA, EURIBOR, TEC10] (If the Interest Rate is determined through a linear interpolation in respect with the [first/last] [long/short] Interest Period, insert the relevant interest period(s) and the two applicable interest rates used for the aforementioned determination) Representative Amount: [Specify if quotations published on a Screen Page or offered by Reference Banks must be given for a transaction of a specific amount] Effective Date: [Specify if quotations are not to be obtained with effect from commencement of Interest Period] Specified Duration: [Specify period for quotation if other than duration of Interest Period] (i) FBF Determination (Article [Applicable/Not Applicable] 4.3(c)(i)) (If this sub-paragraph is not applicable, delete the remaining sub-paragraphs) Floating Rate: [] (If the Interest Rate is determined through a linear interpolation in respect with the [first/last] [long/short] Interest Period, insert the relevant interest period(s) and the two applicable interest rates used for the aforementioned determination)
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Determination Date for [] Floating Rate: FBF Definitions: [] (j) Margin(s): [[+/-] [] % per annum/ Not Applicable] (k) Minimum Interest Rate: [] % per annum (l) Maximum Interest Rate: [[] % per annum/ Not Applicable] (m) Day Count Fraction (Article 4.1): [Actual/365 / Actual/365-FBF / Actual/Actual- [ICMA/FBF] / Actual/365 (Fixed) / Actual/360 / 30/360 / 360/360 / Bond Basis / 30/360 FBF / Actual 30A/360 (American Bond Basis) / 30E/360 / Euro Bond Basis / 30E/360 - FBF.] (n) Rate Multiplier: [] 17. Provisions relating to Zero Coupon Notes: [Applicable/Not Applicable] (If this paragraph is not applicable, delete the remaining sub-paragraphs) (a) Amortisation Yield: []% per annum (b) Day Count Fraction: [Actual/365 / Actual/365-FBF / Actual/Actual- [ICMA/FBF] / Actual/365 (Fixed) / Actual/360 / 30/360 / 360/360 / Bond Basis / 30/360 FBF / Actual 30A/360 (American Bond Basis) / 30E/360 / Euro Bond Basis / 30E/360 - FBF.] PROVISIONS RELATING TO REDEMPTION 18. Issuer Call: [Applicable/Not Applicable] (If this paragraph is not applicable, delete the remaining sub-paragraphs) (a) Optional Redemption Date(s): [] (b) Optional Redemption Amount(s) for [] per Note [of Specified Denomination []] each Note: (c) If redeemable in part: (i) Minimum redemption [] amount: (ii) Maximum redemption [] amount: (d) Notice period: [] 19. Noteholder Put: [Applicable/Not Applicable] (If this paragraph is not applicable, delete the remaining sub-paragraphs) (a) Optional Redemption Date(s): [] (b) Optional Redemption Amount(s) for [] per Note [of Specified Denomination []] each Note: (c) Notice period (Article 5.3): []
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20. Final Redemption Amount for each Note: [[] per Note [of Specified Denomination of []]] 21. Instalment Amount [Applicable/Not Applicable] (If this sub-paragraph is not applicable, delete the remaining sub-paragraphs) (a) Instalment Date(s): [] (b) Instalment Amount(s) for each Note: [] 22. Early Redemption Amount (a) Early Redemption Amount(s) for [Pursuant to the Terms]/[] per Note [of each Note paid on redemption for Specified Denomination []] tax reasons (Article 5.6), for illegality (Article 5.9) or on Event of Default (Article 8): (b) Redemption for tax reasons on dates [Yes/No] other than Interest Payment Dates (Article 5.6): GENERAL PROVISIONS APPLICABLE TO THE NOTES 23. Form of the Notes: [Dematerialised Notes/Materialised Notes] (Materialised Notes are issued in bearer form only) (Delete as appropriate) (a) Form of Dematerialised Notes: [In bearer form/ registered form/Not Applicable] (b) Registration Agent: [Not Applicable/[] (if applicable name and information] (N.B. a Registration Agent may be appointed in respect of Dematerialised Notes in pure registered form (au nominatif pur) only). (c) Temporary Global Certificate: [Not Applicable/Temporary Global Certificate exchangeable for Physical Notes on [] (the Exchange Date), forty calendar days after the issue date, unless postponed, as specified in the Temporary Global Certificate.] 24. Financial Centre(s) (Article 6.6): [Not Applicable/Specify]. (N.B. this relates to the date and place for payment and not the Interest Payment Dates referred to in paragraphs 15(ii) and 16(i).) 25. Talons for future Coupons or Receipts to be [Yes/No/Not Applicable]. (If yes, specify) (Only attached to Physical Notes: applicable to Materialised Notes.) 26. Masse (Article 10): [Full Masse] /[Contractual Masse] is applicable. Note that (i) in respect of any Tranche of Notes issued outside France, the Issuer shall apply Article 10. (b) (Contractual Masse) and (ii) in respect of any Tranche of Notes issued inside France, Article 10. (a) (Full Masse) shall apply. (Specify details relating to the initial and alternate Representatives and their remuneration) Name and contact details of the initial
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Representative are: [] Name and contact details of the alternate Representative are: [] The Representative of the Masse [shall receive a remuneration [of/not exceeding] €[] per year with respect to its functions/shall not receive compensation with respect to its functions] [The Representative’s expenses and disbursements will be limited to € []]
[For as long as the Notes are held by one single Noteholder, the relevant Noteholder shall exercise all of the powers bestowed upon the Representative and the General Meeting under the Terms and Conditions. The single Noteholder shall keep (or shall cause any authorised agent to keep) a register of all decisions taken by it in such capacity and make it available, upon request, to any subsequent Noteholder. A Representative shall be appointed whenever the Notes of any Series are held by more than one Noteholder.]
PURPOSE OF THE FINAL TERMS
These Final Terms comprise the final terms required for issue [and] [admission to trading of the Notes on [Euronext Paris/other (specify)]] described herein pursuant to the €400,000,000 Euro Medium Term Note Programme of the Métropole d’Aix-Marseille-Provence.]
RESPONSIBILITY
The Issuer accepts responsibility for the information contained in these Final Terms. [(Relevant third-party information) has been extracted from (specify source). The Issuer confirms that such information has been accurately reproduced and that, so far as it is aware and is able to ascertain from information published by (specify source), no facts have been omitted which would render the reproduced information inaccurate or misleading.]2
Signed on behalf of the Issuer:
By: ......
Duly authorised
2 To be included if information is provided by a third party.
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PART B
OTHER INFORMATION
1. ADMISSION TO TRADING
(a) Admission to trading: [An application for admission of the Notes to trading on [Euronext Paris/other (specify)] as from [] has been made.]
[An application for admission of the Notes to trading on [Euronext Paris/other (specify)] as from [] shall be made by the Issuer (or on its behalf).]
[Not Applicable]
(in the case of fungible issues, specify that the original Notes have already been admitted to trading.)
(b) Total estimated costs relating to [[]/Not Applicable] admission to trading:
2. RATINGS
Ratings: The Programme has been assigned an A+ rating by Fitch Ratings (Fitch).
Fitch is established in the European Union and is registered in accordance with Regulation (EC) No. 1060/2009 relating to credit rating agencies as amended (the CRA Regulation). Fitch is included on the list of rating agencies published by the European Financial Markets Authority on its website (https://www.esma.europa.eu/supervision/credit- rating-agencies/risk) in accordance with the CRA Regulation.
Notes to be issued [have not been assigned any rating][have been assigned the following rating: [Fitch: []] [[Other]: []]
(The rating assigned to the Notes issued under the Programme must be specified above or, if an issue of Notes has been assigned a specific rating, such specific rating should be specified above.)
3. [NOTIFICATION
[The Autorité des marchés financiers has been requested to provide/The Autorité des marchés financiers has provided (use the first alternative for Notes issued contemporaneously with the updating of the Programme and the second alternative for subsequent issues)] to (insert the name of the relevant authority in the host Member State) [a] certificate[s] of approval certifying that the prospectus and the supplement[s] [has]/[have] been prepared] in accordance with the Prospectus Directive.]
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4. [INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE ISSUE
The purpose of this section is to describe any interest, including any conflict of interest that may have a material impact on the issue of Notes, identifying each person concerned and the nature of such interest. This may be satisfied by inserting the following statement:
["Except commissions related to the issue of Notes paid to the Dealer(s), to the knowledge of the Issuer, no other person involved in the issue of Notes has any interest material to it. The dealer(s) and its/their affiliate(s) have engaged and may engage in investment banking and/or commercial banking transactions with the Issuer, and may perform other services for it in the ordinary course of business."]]
5. REASONS FOR THE OFFER AND USE OF PROCEEDS
[Reasons for the Offer: []
6. [FIXED RATE NOTES ONLY - YIELD
Yield: [] The yield is calculated at the Issue Date on the basis of the Issue Price. It is not an indication of future yield.]
7. [FLOATING RATE NOTES ONLY – HISTORICAL INTEREST RATES
Details of historical interest rates [EURIBOR, EONIA] achieved [Reuters].
8. DISTRIBUTION
If it is syndicated, names of the [Not applicable/give names] Placement Syndicate Members: (if this paragraph is not applicable, please delete the following subsections) (a) Members responsible for the [Not applicable/give names] Regularisation Transactions (if any):
(b) Date of the underwriting [] agreement: If it is not syndicated, names of the [Not applicable/give name] Dealer: Sale restrictions – United States of [Regulation S Compliance Category 1: Rules TEFRA C / America: Rules TEFRA D / Not applicable] (Rules TEFRA are not applicable to the Dematerialised Notes)
9. OPERATIONAL INFORMATION
(a) ISIN Code: []
(b) Common Code: []
(c) Depositary:
(i) Euroclear France acting as Central Depositary: [Yes/No]
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(ii) Common Depositary for Euroclear and Clearstream, Luxembourg: [Yes/No]
(d) Any clearing system other than Euroclear France, Euroclear and Clearstream, Luxembourg and the relevant identification numbers: [Not Applicable/give name(s) and number(s)]
(e) Delivery: Delivery [against/free of payment]
(f) Names and addresses of initial Paying Agents appointed for the Notes: []
(g) Names and addresses of additional Paying Agents appointed for the Notes: [[]/ Not Applicable]
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GENERAL INFORMATION
1. The Issuer has obtained all consents, approvals and authorisations necessary in France in connection with the establishment and updating of the Programme. Any issue of Notes shall be authorised by a resolution of the Metropolitan Council (Conseil de la Métropole) of the Issuer. Pursuant to the report examined during the meeting held on 28th April 2016, the Conseil de la Métropole of the Issuer authorised its Président, by deliberation HN 013-146/16/CM dated 28th April 2016, to raise financing of any nature, subject to compliance with certain conditions, notably bonds issue including under an EMTN programme until the end of his term subject to the authorised limits set forth in the budget and to enter into necessary acts, contracts and amendments in that respect.
2. No material change in the public finances and external trade (information provided in the sections entitled “The Economy of the Issuer” and “Public Finances” of the Description of the Issuer) has occurred since 31 December 2016.
3. There has been no material adverse change in the prospects of the Issuer since 31 December 2016.
4. This Base Prospectus and any eventual supplement of such Base Prospectus will be published on the websites of (a) the AMF (www.amf-france.org), (b) the Issuer (http://www.marseille- provence.fr/index.php/la-metropole/emissions-obligataires) and (c) any other relevant regulatory authority and shall be available for inspection and obtaining copies, free of charge, during normal office hours, at any day of the week (except Saturdays, Sundays and public holidays) at the office of the Fiscal Agent or the Paying Agents. So long as any Notes are admitted to trading on a regulated market in the EEA or offered to the public in a Member State other than France, in each case in accordance with the Prospectus Directive, the applicable Final Terms shall be published on the websites of (i) the AMF (www.amf-france.org) and (ii) the Issuer (http://www.marseille- provence.fr/index.php/la-metropole/emissions-obligataires).
5. Save as disclosed under the heading “Disputes” of the Description of the Issuer, the Issuer is not involved in, nor are there any governmental, legal or arbitration proceedings pending or threatened, of which the Issuer is aware, which may have or have had a material effect on the financial position of the Issuer during the twelve (12) months prior to the date of this Base Prospectus.
6. An application for acceptance of the Notes for clearance through Euroclear France (66, rue de la Victoire – 75009 Paris – France), Euroclear (boulevard du Roi Albert II – 1210 Bruxelles – Belgique) and Clearstream, Luxembourg (42 avenue JF Kennedy – 1885 Luxembourg – Grand- Duché de Luxembourg) may be made. The Common Code and ISIN number (International Securities Identification Number) or the identification number of any other relevant clearing system for each Series of Notes shall be specified in the applicable Final Terms.
7. So long as any Notes issued under this Base Prospectus remain outstanding, copies of the following documents shall be available, upon publication, free of charge, electronically at the address http://www.marseille-provence.fr/index.php/la-metropole/emissions-obligataires or during normal office hours, at any days of the week (except Saturdays, Sundays and public holidays) at the specified offices of the Fiscal Agent and the Paying Agent(s):
(a) the Fiscal Agency Agreement (which includes the form of accounting letter (lettre comptable), the Temporary Global Certificates, Physical Notes, Coupons, Receipts and Talons);
(b) the two most recent initial budgets (as amended, if applicable, by any supplemental budget) and the published administrative accounts of the Issuer;
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(c) all Final Terms relating to any Notes admitted to trading on Euronext Paris or any other regulated market of the EEA;
(d) a copy of this Base Prospectus and any supplement to this Base Prospectus or any new base prospectus;
(e) the documents incorporated by reference in this Base Prospectus; and
(f) all reports, correspondence and other documents, appraisals and statements issued by any expert at the request of the Issuer, any extracts of which, or references to which, are contained in this Base Prospectus relating to any issue of Notes.
8. The price and the amount of the Notes issued within the Programme shall be determined by the Issuer and each relevant Dealer at the time of the issue in accordance with the market conditions.
9. For any Tranche of Fixed Rate Notes, an indication of the yield in respect of such Notes shall be specified in the applicable Final Terms. The yield is calculated at the Issue Date of the Notes on the basis of the Issue Price. The specified yield shall be calculated as the yield to maturity as at the issue date of the notes and shall not be an indication of future yield.
10. Each of the Dealers and their affiliates may, now or in the future, in the normal course of business, conduct business with, or act as financial adviser to, the Issuer in connection with notes issued by the Issuer. Each of the Dealers and their affiliates conducts or may, in the normal course of business, (i) conduct investment, trading or hedging operations, including brokerage or transactions on derivative products, (ii) act as underwriter for financial instruments offered by the Issuer or (iii) act as financial adviser to the Issuer. In connection with any such transactions, each of the Dealers and their affiliates holds or may hold financial instruments issued by the Issuer, in which case each of the Dealers or their affiliates shall or may receive the usual commissions in respect of such transactions. Furthermore, the Issuer and each of the Dealers may be involved in transactions relating to an index or derivative products based upon or relating to Notes, which may affect the market price, liquidity or value of the Notes and may have an adverse effect on the interests of Noteholders.
11. In connection with the issue of each Tranche, one of the Dealers may act as stabilisation manager (the Stabilisation Manager). The entity acting as Stabilisation Manager shall be specified in the applicable Final Terms. For the purposes of an issue, the Stabilisation Manager (or any person acting on behalf of the Stabilisation Manager) may over-allot Notes or take action with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail in the absence of such action. However, stabilisation may not necessarily occur. Such stabilisation action may only commence after the date on which the final terms of the issue of the relevant Tranche have been made public and, once commenced, may cease at any time and must end no later than the earlier of the following two dates: (a) thirty (30) calendar days after the issue date of the relevant Tranche and (b) sixty (60) calendar days after the date of allotment of the Notes of the relevant Tranche. Any stabilisation action taken must comply with all applicable laws and regulations.
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RESPONSIBILITY FOR THE BASE PROSPECTUS
Person assuming responsibility for this Base Prospectus
On behalf of the Issuer
I confirm, having taken all reasonable care to ensure that such is the case, that the information contained in this Base Prospectus is, to my knowledge, in accordance with the facts and contains no omission likely to affect its import.
Marseille, 4 October 2017
METROPOLE D’AIX-MARSEILLE-PROVENCE
DGA Finances et Budget Les Docks, Atrium 10.7 10, place de la Joliette BP 48014 13567 Marseille Cedex 02 France
Represented by: Jean-Claude Gaudin
President of the Métropole d’Aix-Marseille-Provence
In accordance with Articles L. 412-1 and L. 621-8 of the French Code monétaire et financier and with its Réglement Général, the Autorité des marchés financiers has granted to this Base Prospectus the visa No. 17- 531 dated 4 October 2017. This prospectus was prepared by the Issuer and its signatories assume responsibility for it.
In accordance with Article L. 621-8-1-I of the French Code monétaire et financier, the visa was granted following an examination by the AMF of "whether the document is complete and comprehensible, and whether the information it contains is coherent". It does not imply that the AMF considers the transaction appropriate nor that it has verified the accounting and financial data set out in it.
In accordance with article 212-32 of the Réglement Général of the AMF, the final terms of any issue or admission to trading of Notes on the basis of this base prospectus must be published.
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Issuer
Métropole d’Aix-Marseille-Provence
Arranger
HSBC FRANCE 103, avenue des Champs Elysées 75008 Paris France
Dealers
BARCLAYS BANK PLC CREDIT AGRICOLE CORPORATE & 5 the North Colonnade INVESTMENT BANK Canary Wharf 12 place des Etats-Unis London E14 4BB CS 70052 United Kingdom 92547 Montrouge Cedex France
HSBC FRANCE NATIXIS 103 avenue des Champs-Elysées 30, avenue Pierre Mendès-France 75008 Paris 75013 Paris France France
SOCIÉTÉ GÉNÉRALE 29 Boulevard Haussmann 75009 Paris France
Fiscal Agent, Principal Paying Agent and Calculation Agent BNP Paribas Securities Services Les Grands Moulins de Pantin 9, rue du Débarcadère 93500 Pantin France
Legal advisers To the Issuer To the Dealers Gowling WLG (France) Allen & Overy LLP AARPI 38, avenue de l’Opéra 52, avenue Hoche 75002 Paris 75008 Paris France France
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