FRANCE Law and Practice Contributed by: Jean-Christophe Devouge and Kaïs Boussadia, Aurès
appointed to follow the implementation of the AFEP- MEDEF Code and interpret its recommendations), the French Financial Markets Authority (AMF) and the Haut Comité Juridique de la Place financière de Paris (HCJP). In this respect, the AMF prepares a report on corporate governance and executive remunera - tion each year, based on the information disclosed by the issuers whose registered offices are in France. This report is highly anticipated as it may include any recommendations the AMF deems appropriate. Listed companies may also take into account the voting poli - cies issued by proxy advisers, as they are followed by a majority of investors and give guidance on satisfac - tory governance policies for investors. Internal Rules Finally, companies may adopt internal rules, such as by-laws, board internal regulations, codes of ethics or codes of conduct that set forth specific corporate governance rules and requirements. Specific Rules In addition, certain sectors are subject to specific gov - ernance requirements that supplement the general framework described above. In the banking sector, for example, credit institutions, finance companies and investment firms are subject to enhanced gov - ernance rules. 1.3 Companies With Publicly Traded Shares Listed companies are subject to additional mandatory corporate governance requirements and recommen - dations. First, only three corporate forms are authorised to trade their shares on a regulated market: • SA; • Societas Europaea (SE); and • partnership limited by shares ( société en comman- dite par actions or SCA). Listed companies are subject to other mandatory cor - porate governance requirements. • Composition of the board of directors ( conseil d ’ administration ) – the composition of listed com - panies’ boards of directors (or supervisory boards)
is highly regulated. Listed companies are subject to gender balance requirements (the proportion of directors of each gender must be at least 40%) and requirements related to the appointment of directors representing employees and employee shareholders. • Audit committee – listed companies are required to set up an audit committee, whose purpose is to provide technical and critical support to manage - ment in monitoring the company’s accounting and financial policy. • Compensation of corporate officers (“say-on-pay”) – listed companies must comply with the “say- on-pay” requirements for the determination and payment of corporate officers’ and directors’ com - pensation. The “say-on-pay” proceedings require double shareholders’ approval on compensation: the shareholders shall vote on the compensation policy determined by the board of directors (ex- ante vote) and on the amounts payable to corpo - rate officers and directors upon implementation of the approved compensation policy (ex-post vote). • Enhanced governance information – listed compa - nies must include additional corporate governance and ESG information in their management reports, as well as all relevant information on factors that are likely to have an impact in the event of a tender offer. Listed companies must also publish relevant information regarding related-party agreements. Listed companies are also subject to various recom - mendations, including: • the appointment of independent directors; • setting up specialised committees; and • limiting allowances granted to directors and/or officers – listed companies shall subject these allowances to performance criteria and limit their overall amount. Recommendations applicable to listed companies mostly derive from corporate governance codes. Although these codes are deemed to be non-binding (soft law), listed companies choosing not to follow their recommendations must publicly explain why and justify their choice to the market (comply-or-explain principle). In addition, companies choosing not to follow recommendations issued by the AMF may be
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