FRANCE Trends and Developments Contributed by: Saam Golshani, Diane Lamarche, Félix Thillaye and Victoire Segard, White & Case LLP
on shareholder dialogue. This non-binding guide sets out the best practices for “private” shareholder engagement, including regular communication, trans- parent reporting and appointing a board member ded- icated to investor dialogue. Transparency on stakebuilding One of the most significant amendments discussed by the various working groups concerned lowering the first legal threshold for the disclosure of stakeholdings in the market. The threshold is currently set at 5% of the share capital or voting rights, which is the high- est threshold allowed by the Transparency Directive (Directive 2004/109/EC). Although the president of the AMF had suggested lowering this threshold to 3% (in line with the legisla- tion of the most comparable EU member states), the AMF did not incorporate this recommendation in its 20 April 2020 report. The AMF justified its position by recalling that “activists readily disclose their acquisi- tion of a stake in an issuer, whatever the level of their holding”. No change in the AMF official doctrine or in the legislation has occurred since then. From a practical perspective, many French-listed companies already impose additional internal dis- closure obligations in their by-laws, often starting at 0.5%, which significantly mitigates the importance of the legal threshold. However, from a general perspective, the AMF’s posi- tion seems legitimate, since disclosing the presence of an activist investor too early can put pressure on both the issuer and the investor to go public, or under- mine informal shareholder dialogue, with a potentially negative impact on relations between the parties and on the issuer’s share price. The 2022 report of the Club des juristes highlighted precisely that risk, indicating that lowering manda- tory legal thresholds “would risk discouraging some investors, insofar as this would prematurely move the dialogue between issuers and activists into the public sphere and may prevent measured dialogue”. In the same way, the Club des juristes expressed some reservations on the AMF’s proposal to allow issuers to
publish shareholder threshold-crossing notifications on their websites, warning that this could undermine confidential dialogue. However, an exception could be made in takeover contexts, where the AMF has reiterated the impor- tance of strict disclosure and signalled a tougher stance on late or inaccurate filings, especially by activ- ist investors. The AMF ultimately refrained from making any amend- ments on these points, but its official doctrine none- theless echoes its will to improve transparency, as it now reminds investors in general terms to be “particu- larly vigilant” when carrying out their declarations in takeover situations. Investors should therefore expect the AMF to be more inclined in the future to sanction late or wrong filings, especially when made by activist investors. Finally, the Club des juristes reiterated that the current sanction for non-compliance with the obligation to file a statutory threshold-crossing declaration (ie, the suspension of voting rights) was not effective against activists, as they can run campaigns without voting power. It recommended exploring alternative deter- rents, but no reform has yet been implemented. Shareholder dialogue In order to improve shareholder dialogue, the AMF contemplated several amendments in its report of 20 April 2020, many of which resulted in an update of its official doctrine in 2021. While the AMF initially promoted the setting up of dedicated shareholder dialogue platforms, this rec- ommendation was not included in its official doctrine. However, it did re-emphasise the importance of con- sistent investor dialogue throughout the year, and not only prior to annual general meetings. In that regard, it endorsed the recommendation provided in the non- binding corporate governance code, AFEP-MEDEF, that issuers should appoint a member of their board of directors to be in charge of shareholder dialogue specifically, with a duty to report to the board. It also incorporated in its doctrine a new request for activist shareholders to first attempt a dialogue with the issuer before launching a campaign.
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