FRANCE Trends and Developments Contributed by: Sophie Vermeille and Jens Waldner, Vermeille & Co
sion, improves liquidity, and lowers the cost of capital. Where minority protection is weak, investors cluster around controlling shareholders as a substitute for legal protection – reducing free float and market depth. Weak enforcement also creates an environment in which accounting manipulation and misleading com - munication can persist with limited consequences, distorting capital allocation across the market. The central weakness of the French system is not the absence of rules, but the absence of meaningful pri - vate enforcement. Public authorities – however active – cannot alone ensure accountability for governance failures. In contrast to the United States, where class actions and contingent fee structures create a pow - erful system of shareholder litigation, France has long offered investors no effective path to collective redress. The exclusion of securities litigation from the 2014 action de groupe – the French class action regime, which provides for an opt-out mechanism – further entrenched this structural gap. The consequence has been a governance culture in which directors could reasonably assume that the risk of personal accountability through shareholder litiga - tion was remote. Soft law recommendations and regu - latory guidance, however detailed, cannot substitute for the disciplining effect of credible legal exposure. The prospect of litigation operates ex ante: it shapes behaviour before failures occur.
There are, however, signs of change. The shareholder proceedings brought against the boards and/or audi - tors of Atos, Orpea, and Casino mark a break with past inertia. For the first time, large groups of investors have organised to assert governance failures before the courts. These actions remain procedurally com - plex and face structural obstacles, but they signal a shift in expectations. If this dynamic consolidates, private enforcement may become one of the most significant drivers of change in French corporate governance. The knowledge that boards and auditors can be called to account by shareholders themselves – not only by regula - tors – alters incentives fundamentally. It strengthens oversight, reinforces independence, and encourages greater prudence in financial communication. In that sense, private enforcement is not merely a remedial tool for investors. It is also a forward-looking governance mechanism. Its development may prove essential to ensuring that French corporate govern - ance evolves from formal compliance to genuine accountability.
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