All of French Company Law: ordinary law of companies and specific regime for different types of companies

Company Law (en cours)

Under Directive No 2004/25 of 21 April 2004, a public takeover bid is defined as a public offer made to the holders of a company's securities to acquire all or part of said securities, whether the offer is mandatory or voluntary, provided that it follows or aims at acquiring control of the target company according to national law. The offer may consist of a single offer proposing the purchase of t …

Principle

Under Directive No 2004/25 of 21 April 2004, a public takeover bid is defined as a public offer made to the holders of a company's securities to acquire all or part of said securities, whether the offer is mandatory or voluntary, provided that it follows or aims at acquiring control of the target company according to national law. The offer may consist of a single offer proposing the purchase of the targeted securities, in which case it is a public purchase offer; or the exchange of these securities for securities issued or to be issued, in which case it is a public exchange offer . When the securities offered in exchange are not liquid securities admitted to trading on a regulated market of a Member State of the European Union or party to the Agreement on the European Economic Area, the offer must include a cash option. If the offer project provides for the delivery of securities to be issued, the irrevocability of the commitments made entails the obligation to propose to the general meeting of shareholders of the issuing company a resolution aimed at deciding or authorizing the issuance of the securities intended to remunerate the contributors to the offer under the conditions and clauses provided in the offer project, unless the management body has an express delegation for this purpose .

In order to ensure shareholder equality and market transparency, the general regulation of the Financial Markets Authority sets the rules for public offers concerning financial instruments issued by a company whose registered office is established in France and which are admitted to trading on a regulated French market . These rules also apply to public offers targeting financial instruments issued by a company whose statutory seat is established in the territory of a Member State of the European Union or another State party to the agreement on the European Economic Area other than France, when the equity securities of this company with attached voting rights are not admitted to trading on a regulated market of the State where the company has its statutory seat and have been admitted to trading on a regulated market of a Member State of the European Union or another State party to the European Economic Area for the first time in France .

In accordance with Article 231-3 of the regulation, all persons involved in an offer must respect the free play of offers and their overbids , equal treatment and information of the holders of the securities of the persons concerned by the offer, market transparency and integrity, and fairness in transactions and competition, to ensure an orderly conduct of operations in the best interests of investors and the market . A public exchange offer in which the initiator reserves the right to choose only shareholders who can contribute a minimum number of securities, to the detriment of small holders, disregards the principle of equal treatment provided by stock market regulations . The supervisory authority must verify the regularity of a public offer with regard to the fairness and transparency of the stock market, but not the industrial, commercial, and social purpose of the operation . A public exchange offer that specifies no negotiation period and leads to linking the prices of these two companies over a period of about six months, without offering shareholders any transparency or predictability and in violation of the principles of market integrity and fairness in transactions, violates Articles L. 433-1 of the Monetary and Financial Code and 231-3 of the AMF General Regulation . A company may simultaneously present two public exchange offers underpinned by a single economic or industrial project, as long as they are not linked, with the success of one not being conditioned by the success of the other . This situation certainly increases the inherent uncertainty of any public exchange offer for the investor at the time of decision-making, but does not affect the certainty of the object of each offer .

From the filing of the draft offer, any clause of an agreement concluded by the persons concerned by the offer, or their shareholders, likely to affect the assessment of the offer or its outcome, subject to the assessment of its validity by the courts, must be disclosed to the persons concerned by the offer, the AMF, and the public. If, due in particular to the date of conclusion of the agreement, the clause could not be mentioned in the information note(s), the signatories must publish, upon the conclusion of the agreement and according to the procedures provided for in Article 221-3, a statement specifying the content of said clause .

Pursuant to Article 231-13 of the AMF General Regulation, the draft offer must be filed by one or more investment service providers, authorized to engage in underwriting, acting on behalf of the initiator(s). The filing is made by letter addressed to the AMF, guaranteeing, under the signature of at least one of the presenting institutions, the content and irrevocable nature of the commitments made by the initiator. The letter is accompanied by the draft information memorandum prepared by the initiator, alone or jointly with the target company, and the prior declarations made to bodies authorized to approve the proposed transaction. Additionally, the electronic version of the draft information memorandum is sent to the AMF for online posting on its website. The AMF publishes the main provisions of the draft offer. This publication marks the beginning of the offer period , which extends until the publication of the offer results or, if applicable, the results of its reopening carried out pursuant to Article 232-4. It is obliged to inform the market when it considers that the announcement by which a person informs the public of their intention to file a takeover bid falls within the provisions of Article 223-34 of its General Regulation .

In accordance with Article 231-16 of the regulation, from the beginning of the offer period, the draft information memorandum is made available free of charge to the public at the registered office of the initiator and at the premises of the institution(s) presenting the offer. When it has been jointly prepared with the target company, it is also made available at the registered office of the target company and with the organizations responsible for ensuring the financial service of its securities. If the registered office of the initiator or the presenting institution is not located in France, the availability must be ensured through an investment service provider located in France and designated, as appropriate, by the initiator or the presenting institution. The draft information memorandum is also published on the initiator's website and, if jointly prepared with the target company, on the latter's website, if they have such a site. In all cases, a copy of the draft information memorandum must be sent free of charge to anyone who requests it. Finally, the draft offer is subject, at the latest upon its filing with the AMF, to a press release whose dissemination is ensured by the initiator according to the modalities set out in Article 221-3. The press release provides the main elements of the draft information memorandum and specifies the modalities for making the draft information memorandum available. The target company may, from the publication of the aforementioned press release, issue a press release, according to the modalities set out in Article 221-3, to disclose the opinion of its board of directors or supervisory board, or, in the case of a foreign company, the competent body, on the interest of the offer or its consequences for the target company, its shareholders, and its employees . The draft information memorandum prepared by the initiator must mention, in particular, the identity of the initiator, the content of its offer, its intentions for a period covering at least the next twelve months regarding the industrial and financial policy of the companies concerned, where applicable, its specific commitments and intentions formalized within the framework of the information and consultation procedure of the social and economic committee of the target company provided for in Article L. 2312-46 of the Labor Code, as well as the maintenance of the admission of the capital securities or securities giving access to the capital of the target company to trading on a regulated market, the applicable law to the contracts concluded between the initiator and the holders of the target company's securities following the offer, as well as the competent jurisdictions, etc .

During the public offer period, the initiator and the target company ensure that their actions, decisions, and statements do not compromise the corporate interest and the equal treatment or information of the holders of securities of the companies concerned . If the board of directors or the management board, after authorization from the supervisory board of the companies concerned, decides to make a decision whose implementation is likely to thwart the offer, it informs the AMF .

The AMF has a ten-day negotiation period following the start of the offer period to assess the compliance of the offer project with the legislative and regulatory provisions applicable to it .

The duration of the offer is 25 trading days. When the draft response note is filed after the publication of the compliance decision, the period from the day after the dissemination of the response note to the closing of the offer is 25 trading days and cannot exceed 35 trading days from the opening of the offer .

Finally, the company targeted by a public acquisition offer may appoint an independent expert when the operation is likely to generate conflicts of interest within its board of directors, supervisory board, or competent body, which could harm the objectivity of the reasoned opinion mentioned in Article 231-19 or challenge the equality of shareholders or holders of the financial instruments subject to the offer . This is particularly the case when the targeted company is already controlled, within the meaning of Article L. 233-3 of the Commercial Code, before the operation is launched, by the initiator of the offer, when the executives of the targeted company or the persons controlling it have entered into an agreement with the initiator of the offer that could affect their independence, when the controlling shareholder does not tender its shares to a public buyback offer launched by the company on its own shares, when there are one or more operations related to the offer that could have a significant impact on the price or parity of the public offer in question, when the offer involves financial instruments of different categories and is expressed under price conditions likely to undermine equality among shareholders or holders of the financial instruments subject to the offer, or when the acquisition of the targeted company is compensated by financial instruments granting or potentially granting, directly or indirectly, access to the capital or voting rights of the initiator or a company belonging to the initiator's group, other than shares .

A company cannot, following a final decision of non-compliance concerning its public exchange offer project related to the securities of a third-party company, pursue, under the guise of “contribution agreements,” described as an “alternative method,” a securities exchange that serves the same purpose and relies on the same exchange ratio, while bypassing the rules to which the implemented public exchange offer was subject .

AMF General Regulation, Art. 231-8. See, for an illustration, CA Paris, 22 April 2021, LawLex202300006368JBJ.

CA Paris, 11 February 2021, LawLex202300006336JBJ.

AMF General Regulation, Art. 231-17, para. 1.

AMF General Regulation, Art. 231-7, para. 1.

Commercial Code, Art. L. 233-32, I and AMF General Regulation, Art. 231-7. See, for an illustration, Cass. com., 3 May 2018, LawLex202200007241JBJ, considering that a public exchange offer project targeting all shares, convertible bonds, and redeemable subscription and/or purchase warrants of the target company must receive an unfavorable opinion from the AMF when, given the significant discounts proposed on the various securities of the latter, the offer does not present an equitable character for the holders.

AMF Gen Reg, Art. 261-1. - See, for an application, Cass. com., 3 May 2018, LawLex202200007241JBJ, specifying that the appointment of an independent expert is required for both public tender offers and exchange offers, as Article 261-1 of the AMF General Regulation refers to public acquisition offers in general, meaning offers of any nature and all modalities, whether the consideration offered consists of a cash payment or the delivery of securities according to a determined ratio.

CA Paris, 22 April 2021, LawLex202300006368JBJ.

See CA Paris, 27 April 1993, LawLex202300006346JBJ, holding that the supervisory authority cannot approve a public tender offer project that is part of agreements granting its author a decisive advantage likely to prevent the free play of offers and overbids in advance; 17 June 1999, LawLex202300006347JBJ, considering that simultaneously submitting two distinct offers, one of which aims to acquire the shares of a company itself initiating a competing offer, does not undermine the principle of the free play of offers and overbids and does not inherently present an unfair character.

CA Paris, 27 October 1993, LawLex202300006340JBJ; 17 June 1999, LawLex202300006347JBJ, considering that in the context of examining the admissibility of an offer, the supervisory authority is not required to assess the feasibility of the industrial or economic project, but only to evaluate its coherence, meaning its compliance with the takeover operation submitted to it.

CA Paris, 17 June 1999, LawLex202300006347JBJ.

Company Law (en cours)

149. Principle

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149. Principle

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