2011 Country Commercial Guide - FRANCE Mergers and Acquisitions: Although French laws regarding takeovers do not discriminate against foreign investors, a hostile takeover in France by a foreign investor could face public and even official scrutiny. Provisions of the company takeover law are designed to limit hostile takeovers of publicly traded companies. For example, according to a regulation passed by the Parliament on December 15, 2005, stockholders are required to notify company management and AMF when they have decided to prepare a takeover. France extended its public offering rules by imposing some additional obligations on investors taking control of a company listed on a French market depending on the level of voting rights in the targeted company and the nature of the proposed acquisition. In April 2009, AMF added 2 new thresholds of 15 percent and 25 percent of shares or voting rights to the existing 33 percent threshold that obliges a company to launch a mandatory tender offer. The 2010 banking and financial regulation bill replaced the 33 percent threshold by a 30 percent threshold. For companies listed on Alternext, regulations include mandatory tender offer thresholds of 50 percent and 95 percent of shares or voting rights. To date, nothing indicates the proposed measures are anything other than an attempt to increase transparency of all market participants. In transposing the European takeover directive, France has tried to reconcile its objectives of reestablishing its credentials as an investor-friendly country, while allowing companies to defend themselves against “predators”. French companies may suspend implementation of a takeover if they are targeted by a foreign company that does not apply reciprocal rules. The government also introduced an amendment allowing a U.S.style “poison pill” takeover defense, including granting existing shareholders and employees the right to increase their leverage by buying more shares through stock purchase warrants at a discount in case of an unwanted takeover. New provisions include a reform of the French Financial Markets Authority‟s supervisory procedures. Procedures cover declaration of conformity, offer price, declaration of a bid in relation to takeover rumors and nomination of an independent appraiser when conflicts of interests exist. Competition from State Owned Enterprises (SOEs)
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SOEs dominate common carrier transportation (rail, bus, air) and are also active in energy, defense, and the media. Companies owned or controlled by the state behave largely like other companies in France and are subject to the same laws and tax code. The Boards of SOEs operate according to accepted French corporate governance principles as set out in the (private sector) AFEP-MEDEF Code of Corporate Governance updated in 2008. SOEs are required by law to publish an annual report. The French Court of Audit conducts financial audits on all entities in which the state holds a majority interest. The French government appoints representatives to the Boards of Directors of all companies in which it has significant share holdings and manages its portfolio interests through a special unit attached to the Economics Ministry. France's 2010 industrial policy measures strengthened the state's shareholding role in industry. GOF representation increased on corporate boards in which the GOF holds stakes. The executive board will have two GOF representatives, one from the government ministry related to the firm's sector (ecology, energy, defense), another from the Economy Ministry. CEOs of these companies are expected to meet annually with Last updated: 5 April 2011 INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, © 2011. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.
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