Escrow Services & Fiducie
Our Escrow Services provide secure and adaptable solutions for businesses, ensuring transparency, fair value and trust in every transaction in accordance with the FCA recommendation. From M&A deals to Commercial Real Estate Development through pre-funding transactions, we offer tailor-made options that comply with regulatory requirements. Whether safeguarding funds or facilitating complex financial operations, our team delivers a seamless process designed to meet your specific needs enhancing the features of our Digital platform for transparency, ALTRIUM Connect.
Specifically for the French market, we can set –up Fiducie transactions, the Queen of Security.
No “double-dipping” : our FCA‑aligned escrow with shared interest
Escrow Services are too often considered as a dead-cash cost solution and a hindrance while they are designed to facilitate the completion of the transaction.
1. FCA GUIDANCE TRANSPARENCY
The FCA has clearly stated its expectations regarding the Escrow Services industry : it must deliver fair value to the clients and provide full transparency. With minimum legacy and maximum clients’ needs awareness, real time dashboard, audit-trails and AML processes are the cornerstone of our Escrow Service.
2. CLIENT-aligned returns
Many firms retain very high (sometimes 100%) percentages of the interest produced by client balances, a practice known as “double dipping” and criticised by the FCA. We return earned interest to your account, providing fair value for our clients
3. 48 hours kyc turnaround
This may come as an obvious statement, but often the reality of the KYC handling is a real hindrance. When building our own KYC / AML process for our ACPR regulation in France, we solely focused on efficiency and reliability with limited legacy issues. We created an AI-assisted due diligence process enabling us to meet regulatory rigor – fast-track compliance without shortcuts.
Seller’s Warranties / Indemnities for M&A deals
In M&A transactions, escrow services are used to hold a portion of the purchase price to cover potential breaches of the seller’s warranties or indemnities. The seller’s warranties are assurances regarding the condition of the business, and indemnities cover specific risks.
If the seller breaches these warranties or if post-transaction liabilities arise, the buyer can claim compensation from the escrowed funds. This provides both parties with security, ensuring that funds are available to cover any issues that may arise after the deal closes.
ALTRIUM’s touch: We offer unmatched security and efficiency, ensuring funds are available for claims without delays, and fostering confidence for both buyers and sellers.
Securing Funds / Proceeds
We secure funds in transactions, ensuring that the agreed-upon money is held safely until all conditions of the deal are met. For example, in an M&A transaction, the buyer may deposit the purchase price into an escrow account.
The funds remain there until both parties fulfil their obligations, after which the funds are released. This process protects both parties by ensuring the payment is only made once all terms are satisfied, reducing risks for both the buyer and the seller.
ALTRIUM’s touch: With rigorous checks and advanced safeguards, we provide beneficiaries with peace of mind by ensuring that funds remain protected and accessible only under agreed conditions, while receiving interests on the funds held securely to offset some of the fees.
Pre-Funding Requirements
In some transactions, pre-funding is required to deposit funds into an escrow account before the deal is finalized. This might apply to real estate deals, where the buyer pre-funds the escrow account to cover closing costs or deposits. In this context, we make sure that these funds are held securely and only used for the specified purpose, assuring both parties that the necessary funds are available and properly allocated.
ALTRIUM’s touch: Fully aware of the whole regulatory and compliance requirements, we tailor pre-funding solutions in full transparency, reducing risk and streamlining the transaction process for all stakeholders, while serving back most interest on the funds held in the escrow account.
P to P Transactions
In Public to Private (P2P) transactions, escrow services play a crucial role by securely holding the acquisition funds provided by the private acquirer until all transaction conditions are met, such as shareholder approvals and regulatory clearances.
We ensure that funds are only released when the terms of the deal, including contingencies and compliance requirements, are fulfilled. This protects both the buyer and the seller, ensuring a smooth and secure transition from a public to a private company.
ALTRIUM’s touch: Our expertise in handling complex and high-value transactions, ensures secure fund transfers and strict adherence to legal and regulatory standards, while delivering fair value through interest payment.
Segregating or Warehousing of Funds
We hold funds in separate accounts for specific purposes, ensuring they are used only for designated transactions. For instance, in a construction project, funds may be segregated to ensure they are used strictly for project phases.
This provides transparency and accountability, ensuring that the funds are not misused. Segregating funds is also useful in investment scenarios, where the funds are released only once certain conditions are met, protecting both the investor and the recipient.
ALTRIUM’s touch:
The regulation of CREATRUST and their experience enables us to deliver bespoke solutions for fund segregation, coupled with robust
tracking and reporting with full transparency.
A Fiducie is the French equivalent of an English law trust, where a company transfers ownership of specific assets, rights, or security interests to a trustee. Shares and cash can be transferred into a Fiducie, with the agreement outlining enforcement provisions, including how these assets may be transferred to the beneficiaries, such as lenders or bondholders.
The trustee holds these assets in a separate, segregated estate created solely for the purpose of the fiducie, until the obligations under the underlying financing agreement are fulfilled. The beneficiaries of the fiducie are typically the company (before any default), and after a default, the security agent representing the lenders or bondholders.
The Fiducie structure is advantageous because it transfers legal ownership of the assets to the trustee, ensuring they are segregated from the company’s general estate. This means that in the event of insolvency, the transferred assets are protected and excluded from the company’s insolvency proceedings, providing an additional layer of security for the beneficiaries.
Focus
ALTRIUM provides its Fiducie service in partnership with a management company fully regulated by the AMF.
From the onboarding stage of the Fiducie including the KYC process, the digital platform facilitates and secures the whole process in a single source of truth for all stakeholders.