FRANCE Law and Practice Contributed by: Karl Hepp de Sevelinges, Nicolas Martin, Cyril Deniaud and Benjamin Cohu, Jeantet
• taking into account shares and voting rights underlying instruments or agreements that provide economic exposure similar to direct shareholding, whether settled physically or in cash; and • taking into account shares and voting rights held by any party with whom the disclosing entity has a temporary sale agreement. Sanctions Failure to comply with these disclosure require - ments results in the automatic suspension of voting rights for shares exceeding the relevant threshold until proper disclosures are made. Additionally, voting rights may remain suspend - ed for two years following compliance with this disclosure requirement. Other penalties may be imposed based on the specific circumstances of non-compliance. Notification of Intent (déclaration d’intention) In addition to the notification of threshold cross - ing, when an investor or group of investors crosses, in an upward direction, the 10%, 15%, 20% and/or 25% threshold(s) in the share capital or voting rights of any company listed on the regulated market of Euronext Paris, a notifica - tion of intent for the following six months must be filed with the AMF and the company within five trading days as per Article L. 233-7 of the French Commercial Code. Such notification must include information about: • whether the investor is acting alone or in concert; • the methods of financing the acquisition; • whether the investor intends to continue buy - ing shares and to acquire the control of the issuer;
• whether the investor intends to request the appointment of one or several members of the board of directors, the management board or the supervisory board; • the strategy the investor intends to pursue in relation to the issuer; • any agreements on a securities financing transaction involving the shares or voting rights of the issuer; and • the investor’s intentions regarding the settle - ment of financial futures that it may hold, on the issuer’s shares. If the investor’s intention changes within six months from the notification of intent, an updat - ed notification must be filed. These requirements aim at maintaining market In France, listed companies often use the option to impose additional disclosure obligations in their articles of association. These additional thresholds for reporting share capital or voting rights can be set as low as 0.5%. The articles of association typically specify that the same cal - culation rules apply as those used for statutory reporting thresholds, in accordance with Article L.233-7 of the French Commercial Code. Moreover, listed companies may limit the total number of voting rights that a shareholder can exercise at general meetings, which serves as a deterrent to stakebuilding. Although this option is less commonly employed, it can effectively limit the influence of large shareholders, as allowed under Article L.225-125 of the French Commercial Code. Stakebuilding efforts may also face challeng - es due to specific sector regulations or for - integrity and investor confidence. 4.3 Hurdles to Stakebuilding
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