FRANCE Law and Practice Contributed by: Karl Hepp de Sevelinges, Nicolas Martin, Cyril Deniaud and Benjamin Cohu, Jeantet
long-term strategy disclosures as soft defences to align stakeholders against hostile approaches. In this context, the directors’ role remains a delicate balance between protecting the com - pany’s strategic vision and ensuring sharehold - ers’ rights to evaluate offers on their merits. 9.3 Common Defensive Measures In France, defensive measures against hostile takeovers must strike a balance between pro - tecting the company’s long-term strategy and preserving shareholder rights. Several measures are commonly used to deter unsolicited bids. • Multiple voting rights: Encouraged by the Florange Law and the PACTE Law, multiple voting rights may apply to shares held for more than two years in the registered form ( forme nominative ). This mechanism strength - ens the influence of long-term shareholders and makes it harder for hostile bidders to gain control. • Voting and ownership caps: Some companies include statutory limitations on voting rights or share ownership, capping the percentage of votes or shares a single investor can hold, regardless of their economic stake. • Golden shares: Companies listed on the regulated market of Euronext Paris can issue golden shares with enhanced voting rights for long-term shareholders, reinforcing stability and discouraging opportunistic takeovers. • Shareholders’ agreements: Long-term inves - tors often enter into agreements granting them pre-emption rights, tag-along rights or voting commitments, making hostile takeo - vers more difficult. • Seeking white knights: The board can solicit competing offers from more favourable
bidders, often leading to a bidding war that maximises value for the shareholders. • Asset restructuring: In some cases, the com - pany may consider divestitures or strategic acquisitions to alter its profile and reduce its attractiveness to the hostile bidder. However, such measures must be justified by busi - ness rationale rather than purely defensive motives. “Pac-Man” defence: The board of directors can propose to initiate a tender offer on the initial bidder. • Capital increases: Subject to the appropriate delegation(s) being granted by the share - holders, the board can propose issuing new shares, and/or share subscription warrants which may be exercised at a discounted price ( bons Breton ) for companies listed on the French regulated market, to dilute the hostile bidder’s stake and make the transaction more expensive. This approach requires careful alignment with minority shareholder interests. The AMF closely monitors defensive measures to ensure they comply with principles of fairness, transparency and shareholder protection. These defensive strategies, while effective, require careful implementation to balance the interests of the board, management and share - holders. It has to be noted that since the Florange Law of 2014, the neutrality principle ( principe de neu- tralité ) of the board of directors once an offer has been made public has been reversed, so that, except if the by-laws state otherwise, the board of directors of any company listed on the regulated market is allowed to take any measure in order to cause the offer to fail.
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