Implementation of the Decree on Risk Control for European Works Councils

Written By Olivier LE MAROIS

Last updated About 1 month ago

In accordance withDecree No. 2022-1655 of December 26, 2022, known as the “Risk Control Decree” (which will be codified as Article R. 221-14-1 of the Energy Code), the C2E Market platform provides its members with tools to facilitate the implementation of their risk identification, assessment, and management systems, as referred to in the second paragraph of Article L. 221-8 of the Energy Code.

First, buyers may rely on this to describe “the internal procedures implemented that led to the selection of the seller ” (I-1° of the Decree) on the fact that, to become a member of C2E Market, one must meet the membership requirements (Article 3 of the Market Rules), including, in particular:

  • minimum length of time in the market,

  • no criminal, civil, or administrative convictions related to EECs,

  • maintaining, at all times, risk identification, assessment, and management systems compliant with the CEE Framework, in order to ensure that the CEEs it acquires have not been obtained fraudulently.

  • if the member is the primary filer, adherence to the principles set forth in the GPCEE’s Code of Ethics and the permanent maintenance of a system for monitoring transactions for which EECs are issued where the member is the primary depositor, along with compliance rates for these checks conducted at the time of issuance of the relevant EECs.

Second, the “required due diligence by the purchaser” prior to the purchase decision (Section II, Paragraph 1 of the Decree) is implemented, in particular, through the following mechanism (Article 10.2.3 of the market rules):

  1. The ability to execute transactions on C2E Market is contingent upon having established limits with the counterparty that has posted a sale offer.

  2. These limits are set after reviewing and analyzing the information contained in the potential seller’s “Member Profile” (as well as any other information the Member may request from their future counterparty).

  3. When information in the Member Profile is updated, it is no longer possible to proceed with the transaction with the seller until the buyer has reviewed and analyzed this new information.

In other words, no sale contract may be concluded on C2E Market unless the buyer has first reviewed the most recent information available regarding the seller.

The content of the Member Passport is set forth in Article 10.2.1 of the Market Rules and includes the following elements (referred to in paragraphs II 1°, 2°, and 3° of the decree):

  • the Member’s identification details;

  • equity interests of 25% or more between the selling Member and any principal holder, supervisory body, or professional involved in the transactions that led to the issuance of EECs;

  • the Member’s financial statements for the last three fiscal years;

  • a description of the procedures implemented by the Member for the purposes of applying the Risk Control Decree.

Article 12.2 of the Decree on the Control of Financial Instruments (market rules) provides that every Sales Agreement must include an annex specifying the legal form, name, registration number, and address of the registered office of the transferring party (I-1° of the Decree).

Article 12.3 of the Decree on the Control of Risks (market regulations) provides that this annex shall be replaced, prior to the actual transfer of the CEE certificates, by a final annex comprising (I-2° of the Decree):

  • the decision number for the issuance of the EEUs covered by the Sales Agreement;

  • the identification details of the selling Member and the First Depositor Passport(s) relating to the EEUs that are the subject of the Sales Agreement, as well as information regarding the deposited EEUs

The “First Depositor Passport” includes the identifying information of the first holder of the transferred CEE (Article 10.2.2 of the market rules).

The preliminary verification of the EECs delivered pursuant to the Sales Agreement, in particular under paragraphs II 4° and 5° of the decree, is performed by the Introducer of these EECs on the Marketplace (Articles 10.2.2, 15 and 16, and Annex I, Article 5 of the market rules). In particular, any Introducer:

  • shall ensure, with respect to the CEE it lists on the Marketplace, that it has previously received and evaluated the information referred to in the Risk Control Decree concerning (i) the Original Filing Party of the EECs in question and (ii) if different from the former, the transferor from whom it obtained them;

  • refrain from introducing any CEE onto the Marketplace if it has detected any signs of fraud regarding the issuance of said CEEs or suspects the existence of such fraud;

  • provide the Operator with a document titled “First Depositor Passport”

  • provide the Operator with a transfer form summarizing, for the delivered EECs, the information required by sections II 2° (specifically regarding EECs), II 4°, and II 5°

The cross-reference table between the new obligations arising from the decree and covered by the Market Rules and the provisions of the latter can be summarized as follows:

Article R. 221-14-2 of the Energy Code

market rules

Documents Filed with C2E Market

I-1. A document prepared under the responsibility of the purchaser indicating the legal form, name, registration number, and address of the registered office of the transferor...

Article 12.2

Confirmation Annex

I-1° ...and, if different, of the first holder of the transferred energy-saving certificates...

Article 12.3

Final Annex

I-1° ...and describing the internal procedures implemented that led to the selection of the transferor and the purchase decision.

Article 10.2.1

Description of procedures

I-2° A transfer agreement specifying the origin of the certificates being transferred, identified by their issuance decision number, as well as the verifications required of the purchaser pursuant to Section II of this article prior to the actual transfer of the certificates.

Article 12.3

Article 10.2.1

Final Annex and Description of Procedures

II. — The verifications referred to in paragraph 2 of Section I consist, for the purchaser, of gathering and evaluating information concerning:

“1° Financial data, ratings, or other indicators used to assess the risk of default by the transferor;

“2° Equity interests of 25% or more between the transferor, the primary holder, supervisory bodies …, and professionals …;

“3° The risk identification, assessment, and management procedures implemented by the primary holder and the transferor and, if applicable, a description of the quality management system of the primary holder and the transferor covering their activities related to energy savings certificates;

Article 10.2.1

Article 10.2.3

Member Passport

Digital proof of validation of offsets

II-...2° Equity interests of 25% or more between ... the initial holder, the inspection bodies involved in the issuance of the certificates, and the professionals involved in carrying out the operations that led to the issuance of the certificates;

4° The nature of the first holder’s active and incentivizing role, within the meaning of Article R. 221-22 and as defined by the order relating to the conditions for issuing energy savings certificates provided for in Article L. 221-7;

“5. The procedures for verifying the operations for which certificates are issued, carried out by the initial holder or, where applicable, by the transferring party, and the compliance rates of such verifications

Article 10.2.2

Annex I, Article 5

Transfer form provided by the seller upon the initial submission of an EEC

Final Annex