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

Company Law (en cours)

In accordance with Article L. 228-35-6 of the Commercial Code, priority dividend shares without voting rights could be created through a capital increase or by converting already issued ordinary shares. They could not represent more than a quarter of the share capital amount, and their nominal value had to be equal to that of ordinary shares or, if applicable, ordinary shares of one of the categor …

Principle

In accordance with Article L. 228-35-6 of the Commercial Code, priority dividend shares without voting rights could be created through a capital increase or by converting already issued ordinary shares. They could not represent more than a quarter of the share capital amount, and their nominal value had to be equal to that of ordinary shares or, if applicable, ordinary shares of one of the categories previously issued by the company. Although the issuance of such shares is no longer possible since the ordinance of 24 June 2004, those issued beforehand remain valid and can be converted into ordinary shares.

Holders of priority non-voting shares enjoy the rights granted to other shareholders, except for the right to participate and vote, in respect of these shares, at the company's general meetings of shareholders. In the event of the creation of priority non-voting shares by conversion of already issued common shares or in the event of conversion of non-voting piority dividend shares into common shares, the extraordinary general meeting determines the maximum number of shares to be converted and sets the conversion conditions based on a special report from the statutory auditor.

Priority non-voting shares entitle holders to a priority dividend taken from the distributable profit of the fiscal year before any other allocation. If it appears that the priority dividend cannot be fully paid due to insufficient distributable profit, it must be proportionally distributed among the holders of priority dividend shares without voting rights. The right to payment of the priority dividend that has not been fully paid due to insufficient distributable profit is carried forward to the following fiscal year and, if applicable, to the two subsequent fiscal years or, if the statutes provide, to subsequent fiscal years. This right is exercised with priority over the payment of the priority dividend due for the fiscal year.

The priority dividend cannot be less than either the first dividend  or an amount equal to 7.5% of the paid-up capital represented by the non-voting priority dividend shares. These shares cannot entitle the holder to the first dividend . After the deduction of the priority dividend as well as the first dividend, if provided for in the statutes, or a 5% dividend for the benefit of all ordinary shares calculated under the conditions set out in Article L. 232-16, the non-voting priority dividend shares have, in proportion to their nominal value, the same rights as the ordinary shares . Finally, if the ordinary shares are divided into categories that confer unequal rights to the first dividend, the aforementioned first dividend refers to the highest first dividend .

Pursuant to Article L. 228-35-5, when priority dividends due for three fiscal years have not been fully paid, the holders of the corresponding shares acquire, in proportion to the portion of capital represented by these shares, a voting right equal to that of the other shareholders. This right remains until the end of the fiscal year during which the priority dividend has been fully paid, including the dividend due for previous fiscal years.

In accordance with Article L. 228-35-6, holders of priority non-voting shares are convened in a special meeting under conditions set forth in Articles R. 228-40 and following of the Commercial Code. Any shareholder holding priority dividend shares without voting rights may participate in the special meeting. Any contrary clause is deemed unwritten. The special meeting of non-voting priority shareholders may issue an opinion before any decision of the general meeting. It then decides by a majority of the votes cast by the shareholders present or represented. In the event of a ballot, blank votes are not counted. The opinion is transmitted to the company. It is brought to the attention of the general meeting and recorded in its minutes. The special meeting may appoint one or, if the statutes provide, several representatives responsible for representing the non-voting priority shareholders at the general meeting of shareholders and, if applicable, for presenting their opinion before any vote of the latter. This opinion is recorded in the minutes of the general meeting.

Commercial Code, Art. L. 225-35-4, para. 2.

Commercial Code, Art. L. 225-35-4, para. 3.

Commercial Code, Art. L. 225-35-4, para. 4.

Company Law (en cours)

91. Principle

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Les notions juridiques connexes

91. Principle

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Les notions juridiques connexes

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