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Company Law (en cours)

When sanctioning a breach of the rules of the Monetary and Financial Code, the AMF must adhere to the steps of a multi-stage procedure, as well as the criteria for determining the amount of the fine set by Article L. 621-15 of the Monetary and Financial Code.

1) Procedure

In accordance with Article R. 621-38 of the Monetary and Financial Code, when the board decides to initiate sanction proceedi …

Principle

When sanctioning a breach of the rules of the Monetary and Financial Code, the AMF must adhere to the steps of a multi-stage procedure, as well as the criteria for determining the amount of the fine set by Article L. 621-15 of the Monetary and Financial Code.

In accordance with Article R. 621-38 of the Monetary and Financial Code, when the board decides to initiate sanction proceedings, the notification of grievances is sent by registered letter with acknowledgment of receipt, delivered in person against a receipt, by bailiff's act, or by any other means ensuring its date of receipt, to the person concerned, accompanied by the investigation or control report or the request made, if applicable, by the chairman of the Prudential Supervision and Resolution Authority. The notification of grievances must specify that the person concerned may review and copy other documents in the file with the sanctions commission and be assisted or represented by any counsel of their choice. The person concerned has a period of two months to submit their written observations on the grievances notified to them to the chairman of the sanctions commission.

The notification of grievances is also transmitted to the chairman of the sanctions commission, who appoints a rapporteur from among its members. The commission cannot be seized of facts dating back more than six years if no act has been taken during this period to investigate, establish, or sanction them. The starting point of this limitation period is set on the day the breach was committed or, if the breach is hidden or concealed, on the day the breach became apparent and could be established under conditions allowing the Financial Markets Authority to exercise its investigative or control missions. In the latter case, the limitation period cannot exceed twelve full years.

A member of the panel is summoned to the hearing, which they attend without voting rights. They may be assisted or represented by the services of the Financial Markets Authority. They can present observations in support of the notified grievances and propose a sanction.

The sanctions commission rules by a reasoned decision , in the absence of the rapporteur. No sanction can be imposed without the person concerned or their representative having been heard or, failing that, duly summoned . The sessions are public. However, ex officio or at the request of a person implicated, the president of the panel hearing the case may prohibit public access to the room for all or part of the hearing in the interest of public order, national security, or when the protection of business secrets or any other secret protected by law requires it .

The decision of the sanctions commission is made public in the publications, newspapers, or media it designates, in a format proportionate to the offense committed and the sanction imposed. The related costs are borne by the sanctioned persons . The commission may decide to postpone the publication of a decision or to publish it in an anonymized form  or not to publish it when the publication could cause the person concerned serious and disproportionate harm, particularly in the case of a sanction imposed on an individual, when it includes personal data or when it could seriously disrupt the stability of the financial system, as well as the progress of an ongoing investigation or control . Conversely, the publication of a decision without anonymization may be ordered when it does not pose any of these risks .

2) Determination of the amount of the penalty

The list of persons against whom the sanctions commission may, after an adversarial procedure, impose a sanction is set out in II of Article L. 621-15 . This includes investment service providers other than portfolio management companies authorized or operating under the freedom to provide services in France, as well as legal entities under their authority or acting on their behalf, persons authorized to engage in the custody or administration of financial instruments, central depositories, members of regulated markets who are not investment service providers, market undertakings, clearing houses for financial instruments, collective investment schemes, collective investment management companies, for any breach of their professional obligations defined by European regulations, laws, regulations, and professional rules approved by the Financial Markets Authority in force, as well as natural persons under the authority or acting on behalf of any of these persons . It may also include any person who, in France or abroad , has engaged or attempted to engage in insider trading or market manipulation, as defined in Articles 8 or 12 of Regulation No 596/2014 of 16 April 2014 on market abuse, who has engaged in unlawful disclosure of inside information, as defined in Article 10 of said regulation, or who has committed any other breach mentioned in the first paragraph of II of Article L. 621-14.

The applicable sanctions may be administrative, including a warning, reprimand, or temporary or permanent prohibition from exercising all or part of the services provided for the persons mentioned in points 1° to 8°, 10° bis, 11°, 12°, 15° to 19°, 21°, and 22° of II of Article L. 621-9 . The sanctions commission may impose, either in place of or in addition to these sanctions, a financial penalty not exceeding 100 million euros or ten times the amount of the benefit derived from the breach if it can be determined . For individuals under the authority of or acting on behalf of one of the persons mentioned in points 1° to 8°, 10° bis, 11°, 12°, and 15° to 22° of II of Article L. 621-9, or holding managerial positions within one of these persons, possible sanctions include a warning, reprimand, temporary or permanent withdrawal of the professional card, temporary prohibition from trading on their own account, and temporary or permanent prohibition from exercising all or part of the activities or management functions within one of these persons. The sanctions commission may impose, either in place of or in addition to these sanctions, a financial penalty not exceeding 15 million euros or ten times the amount of the benefit derived from the breach if this amount can be determined, for individuals under the authority of or acting on behalf of one of the aforementioned persons . In the case of multiple offenses, the AMF sanctions commission is not required to impose a separate sanction for each breach committed .

In addition to breaches of financial regulations, it is also sanctioned for any person subject to an investigation or control conducted pursuant to I of Article L. 621-9 to refuse to provide access to a document, regardless of its medium, and to provide a copy, subject to the preservation of a legally protected secret that can be asserted against the Financial Markets Authority, to refuse to communicate information or respond to a summons, or to refuse to grant access to professional premises.

The determination of the amount of the sanction must be made taking into account several criteria: the seriousness and duration of the breach, the quality and degree of involvement of the person concerned , the financial situation and capacity of the person concerned , the significance of either the gains or advantages obtained , or the losses or costs avoided by the person concerned, insofar as they can be determined, the losses suffered by third parties due to the breach, insofar as they can be determined, the degree of cooperation with the Financial Markets Authority demonstrated by the person concerned, without prejudice to the need to ensure the restitution of the advantage gained by this person, previous breaches committed by the person concerned  and any circumstances specific to the person concerned, including measures taken by them to remedy the dysfunctions identified , caused by the breach attributable to them and, where applicable, to repair the damage caused to third parties, as well as to prevent any recurrence of the breach.

CE, 20 March 2013, LawLex202300000695JBJ and CE, 2 July 2015, LawLex202300000523JBJ, considering that the AMF's sanction decision must be deemed sufficiently reasoned, as long as it includes the statement of legal and factual considerations that form its basis, without necessarily having to address all the arguments raised. - Also see CE, 28 November 2014, LawLex202300000645JBJ, emphasizing that if the decision by which the sanctions commission makes the pronounced sanction public constitutes a supplementary sanction, it does not require specific reasoning separate from the overall reasoning of the main sanction.

Cons. constit., 2 June 2017, LawLex202200011549JBJ, considering that this amount is not disproportionate.

Paris, 29 June 2010, LawLex202300000975JBJ.

Cass. com., 27 April 2011, LawLex202300000702JBJ.

See notably, Paris, 22 April 2021, LawLex202300006368JBJ, holding that a company that disregards a decision of non-compliance with its public tender offer presents a certain gravity, justifying the imposition of a sanction of 750,000 EUR.

Cf. CA Paris, 30 January 2014, LawLex202300001611JBJ, considering that the director of a company may be held liable for a breach of the obligation to inform the public, as long as they do not ensure that the information disseminated is accurate and precise, regardless of their personal involvement in the commission of the alleged acts.

Paris, 16 June 2016, LawLex202300000899JBJ, holding that the determination of the fine amount must take into account the group's severe financial difficulty; CE, 12 March 2014, LawLex202300000692JBJ, considering that, when faced with a request against a financial penalty imposed by the AMF's sanctions commission, the administrative judge must verify that its amount was, at the date it was imposed, proportionate to both the violations committed and the financial situation of the sanctioned person, but also take into account the latter's situation at the date of ruling to assess if the fine amount, which it substitutes for that imposed by the sanctions commission, is proportionate to this situation.

See CA Paris, 27 November 2014, LawLex202300000551JBJ, specifying that the realization of a profit or obtaining an advantage does not constitute a condition for the pecuniary sanction but is an element for assessing its amount; 26 November 2008, LawLex202300000700JBJ, considering that in the absence of specifically demonstrated profit or advantage, the requirement for a relationship between the amount of the pecuniary sanction and such profits or advantages is irrelevant. - Cf. AMF, 5 July 2018, LawLex202300000570JBJ, considering that the absence of gain or advantage derived from the observed breaches justifies a reduction in the amount of the sanction.

Paris, 16 June 2016, LawLex202300000899JBJ, considering that determining the amount of the fine involves taking into account, to the increase, the company's repeat offense status.

AMF, 25 July 2013, LawLex202300000943JBJ, holding that the involuntary nature of the undeclared crossing of thresholds and the undertaking's efforts to improve its financial information management justify a reduction in the amount of the sanction; Paris, 16 June 2016, LawLex202300000899JBJ, considering that determining the amount of the fine involves taking into account, to the downside, the correction of errors made.

See AMF, 23 December 2008, LawLex202300000560JBJ.

AMF, 5 July 2018, LawLex202300000570JBJ. - Also see AMF, 1 March 2007, LawLex202300000945JBJ.

AMF, 4 December 2015, LawLex202300001159JBJ, considering that the sanctions commission can sanction both market undertakings and members of regulated markets who are not investment service providers for any breach of their professional obligations defined by laws, regulations, and professional rules approved by the AMF.

See CA Paris, 24 June 2014, LawLex202300000978JBJ, specifying that the sanction for failure to declare a crossing of thresholds can only affect the natural and legal persons who come to hold the shares in question and not the de facto manager of the legal person, even if he holds the majority of its capital and is its "economic beneficiary."

AMF, 4 December 2015, LawLex202300001159JBJ, emphasizing that the breach of market manipulation, notified to an undertaking, which involves 27 securities admitted to trading on Euronext, can be sanctioned by the AMF, whether the transactions took place in France or abroad.

Company Law (en cours)

167. Principle

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167. Principle

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Les notions juridiques connexes

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