FRANCE: Amendments to French takeover rules approved by Senate

Friday March 7 2014

Further to the update of 25th October, the French Senate has approved amendments to the takeovers regime in France. The amendments concern the Monetary and Financial Code and will require amendments to the AMF’s General Regulation.

The revision to the takeovers regime concern the following matters:

• Works councils – the introduction of an information-consultation in the event of a change of control. The board of the target cannot deliver an opinion on the offer and the approval of the AMF cannot be issued until the target’s works council has given its opinion. The council may also seek the assistance of a qualified accountant. The works council must give its opinion within one month of the draft offer being filed;
• Acceptance thresholds – the Introduction of an automatic minimum acceptance threshold (sunset clause) of 50% for both voluntary and mandatory takeover bids. Until such time as the offer reaches the threshold, voting rights may not be exercised beyond a certain threshold – voting rights attaching to shares acquired in the block disposal that led to the 30% threshold being exceeded will be suspended for the fraction in excess of the threshold. In addition, where the bidder has exceeded the mandatory bid threshold, it shall no longer be permitted to acquire any shares in the target unless it initiates a new offer. Voting rights attached to the shares held in excess of the 30% threshold will be reinstated only in the event that the new offer is successful (i.e. where the minimum acceptance threshold of 50% threshold is reached.)
• “Speeding” rules – lowering the mandatory bid threshold governing the accumulation of shares by shareholders holding between 30% and 50% of the share capital of a listed company. Natural or legal persons, acting alone or in concert, who directly or indirectly hold between 30% and one-half of the total number of equity securities or voting rights of a company who, within a period of less than twelve consecutive months, increase such holding by at least 1% (previously 2%) of the company`s total equity securities or voting rights shall now be required to launch a bid; and
• Abandonment of the board neutrality principle during the offer period – under the amendments, boards may now take any measure to frustrate an unsolicited bid, provided that this is not contrary to the company’s corporate interest or the powers of the general meetings of shareholders.

Many of the provisions will enter into force on their publication in the official journal; however, the measures on “speeding”, the role of the works councils and board neutrality require amendments to the General Regulation by the AMF and will come into force at a later date, expected in the summer.

Click on the above link for the final text adopted by the Senate (in French).