After the Florange bill against which local and foreign owners of French shares will take action, after a revealing test on the identification of shareholders by French companies, Proxinvest had some satisfaction in the recent French bill on related party transactions. However, likely acting on behalf of AFEP MEDEF, Mr. MOHAMED SOILIHI, a French Senator from the very remote island of Mayotte, near Madagascar, has recently presented a proposal for further « simplifications » of the Company Law here.
Both issues are quite technical.
There is first an attempt to allow companies not to include the previously authorized related party transactions (RPTs) in the annual auditors special reports on these conflicting deals. The new Julv 31 bill forces the Board to reconsider these previously authorized deals each year. But the AFEP suggested to the Senator to invite companies to withdraw them these « old » transactions from the sharehodlers vote and encourage further companies like Euro Disney to withdraw the RPTs from the auditors report. See how it is inteded to mislead the reader of the law : it would request to includes all « authorized RPTs » in the report, would request now that the mentioned transactions be both « authorized ans concluded »… Tricky, as one might perceive in English as in French that talking about an annual diligence the requirement that the RPTs were not only previously authorized but also concluded clearly sounds like « concluded this year »…
We, at Proxinvest, see a clear danger here while no one has ever complained like this Senator about any problematic inclusion of any « authorized but finally not concluded transactions »… as suggested by the distinguished member of Parliament.
The second topic relates to the computation of a majority at a French company AGM. Until now the « abstain » votes we treated as a No vote and a resolution still needs a majority of Yes votes by participating shareholders to be adopted. The Senator, in line with the Poupart Lafarge report of AMF here, consider that is is unfair, that it would be better if the Abstains vote be substracted. Under the current system the resolution need a majority of Yes to be adoped and Abstain vote are counted against. But the Mayotte Senator was possibly jetlagged when he suggested that his reform (substracting for each resolution the number of Abtain votes to compute the majority) would be a simplification. Poupart Lafarge added a major argument when he said that management resolution would more easily be adopted.
The unclear shareholders instead of voting « Not but » will be voting « Yes despite of me »
We at Proxinvest consider that responsible shareholders ready for dialogue should rather say : » »Not but » to management !
