FRANCE Law and Practice Contributed by: Jean-Christophe Devouge and Kaïs Boussadia, Aurès
law in order to be enforceable, whereas require - ments issued from EU regulations are directly applicable to French companies. Recommendations Listed companies are subject to additional rec - ommendations issued by corporate governance codes to which they must refer (or explain why they decided not to), such as the AFEP-MEDEF Code, intended for large, listed companies, and the Middlenext Code, intended for small and medium-sized listed companies. They must also take into consideration recom - mendations issued by the Haut Comité au Gou- vernement d’Entreprise (HCGE) – a special com - mittee appointed to follow the implementation of the AFEP-MEDEF Code and interpret its rec - ommendations – the French Financial Markets Authority (AMF) and the Haut Comité Juridique de la Place financière de Paris (HCJP). To a lesser extent, listed companies may also take into account the voting policies issued by proxy advisers (Proxinvest, ISS), as they are followed by a majority of investors and give a guidance on satisfactory governance policies for investors. Internal Rules Finally, companies may adopt internal rules, such as by-laws, board internal regulations, codes of ethics or of conduct, which set forth specific corporate governance rules and require - ments. 1.3 Corporate Governance Requirements for Companies With Publicly Traded Shares Listed companies are subject to additional man - datory corporate governance requirements and recommendations.
First of all, only three corporate forms are author - ised to trade their shares on a regulated market: SA, Societas Europaea (SE) and partnerships limited by shares ( société en commandite par actions or SCA). Listed companies are subject to other manda - tory corporate governance requirements. • Composition of the board of directors ( conseil d’administration ) – the composition of listed companies’ boards of directors (or super - visory boards) is highly regulated. Listed com - panies are subject to gender balance require - ments (the proportion of directors of each gender must be at least 40%) and require - ments related to the appointment of directors representing employees and employee share - holders (please refer to 4.3 Board Composi- tion Requirements/Recommendations ). • Audit committee – listed companies are required to set up an audit committee whose purpose is to provide technical and critical support to management in monitoring the company’s accounting and financial policy (please refer to 4.1 Board Structure ). • Compensation of corporate officers ( “say-on- pay” ) – listed companies must comply with the “say-on-pay” requirements for the deter- mination and payment of corporate officers’ and directors’ compensation. The “say-on- pay” proceedings require a double sharehold - ers’ approval on compensations: the share - holders 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 implementa - tion of the approved compensation policy (ex-post vote). • Enhanced governance information – listed companies must include, in their manage - ment reports, additional corporate govern -
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