FRANCE: Final transposition of the Transparency Directive Amending Directive for France major shareholdings

Wednesday December 9 2015

The French regulator the AMF has published the final changes implementing the Transparency Directive Amending Directive, which was required to be transposed by Member States by 26th November 2015. The changes concern the disclosure of major shareholdings.

The provisions of The Transparency Directive Amending Directive were implemented in several successive stages in France, which included changes to the Monetary and Financial Code and the Commercial Code as regards financial reporting by companies. Additionally, changes to the AMF’s General Regulations at Book II were published in the official journal on September 16 (“Wagon 1”) as regards the definitions of “issuer” and “home Member State”.
The following changes to the Monetary and Financial Code and the Commercial Code were published in the Official Journal on 3rd December 2015:

Order No. 2015-1576 of December, 2015, transposing the revised Transparency Directive 2013/50/EU, made the following changes to The Monetary and Financial Code as well as the Commercial Code, detailed below:

Monetary and Financial Code

• Article 621-15 of The Monetary and Financial Code imposes a fine which can exceed 5% of total annual turnover for breach of Article L233-7 and L.233-8-11 regarding major shareholding disclosures for any person or entity who owns or directly or indirectly acquires securities admitted to trading on a regulated market. There are also new provisions on public censure of offenders under Article 621.14.
• Exemptions from the disclosure rules are provided for in Article L. 225-126 and following the TDAD were extended to shares acquired for stabilisation purposes in accordance with Regulation (EC) No. 2273/2003.
• The definition of “issuer” has been updated in Article 451-1-1 to provide as follows: “an issuer is a person or an entity whose securities are admitted to trading on a regulated market or whose securities, whether or not admitted to trading, are represented by certificates admitted to trading on a regulated market. Article 451-2-1 has also been amended to clarify that Article 233-7 paragraph I applies to non-EEA issuers who have their securities listed on a regulated market in France.

Commercial Code

Changes to the Commercial Code are as follows:

• There have also been some linguistic changes to Article 233-7 and Article 233-9 to clarify that the disclosure requirements apply to direct and indirect acquisitions and to financial instruments with economic effects similar to holding shares (note that there has been a requirement to disclosure these instruments in France since 01 October 2012.
• Changes have also been made as regards exemptions – in particular, the trading book exemption and a new exemption for shares acquired for stabilisation purposes.

Further, a number of changes to the AMF General Regulation were published in the Official Journal at the same time concerning the disclosure of major shareholdings:

Decree of 03 December, 2015, concerning approval of changes to The AMF General Regulations

The Decree has made the following changes:

• In relation to reporting languages, Art 221-2 was amended to require reporting to be in “French or another language customary in the field”
• Under Art 223-11, the instruments which must be monitored and reported on against relevant thresholds have been amended to reflect those instruments specified under TDAD and in ESMA’s indicative list. It also reflects the provisions on delta-adjustment for cash-settled instruments as detailed in the EU Regulatory Technical Standard and as required under TDAD. The treatment of index derivatives and baskets of shares has also been codified into Article 233-11.:
• Clarification on netting of long and short positions (not permitted) has also been codified here.Article 233-13 has been amended to clarify that there is an aggregation requirement for shares and financial instruments, including those held through assimilation of voting rights under Article 233-9 of the Commercial Code.
• Article 223-14 has been amended to provide for revised information requirements when reporting positions on derivatives.

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