The just released AMF implementation report on general meetings, is a welcome revision of the working report chaired by Olivier Poupart Lafarge commented several times on this site.
This “implementation” has recevez little critique from Proxinvest because the French markets’ regulator has consulted and ultimately took into account many amending suggestions from the investor side. These debates have demonstrated the power of the business lobby braced on all possible comfort arrangements for issuers at the expense of the interests and equality of shareholders as of corporate integrity.
It was this employers activism that will ultimately produced an awkward bill in August 2014 adding length to the French Code de Commerce requesting a new double reporting of the related party transactions, instead of encouraging better implementation of law for better minority investors protection. .
The power of the issuers lobby was attested by a point discreetly omitted by the AMF report, a point unfortunately not recognized early enough by Proxinvest: a full liberalization of “free related party transactions” when they are deemed to be current and at normal price. The bill followed various modifications of the 2001 text : the business lobby obtained in several steps that no written qualification of thsese private dealings was longer to be made.
The NRE law of 2001 in its article L225 -39 had submitted these free agreements associating one insider , when concluded at common and normal conditions, to a simple declarative procedure: their list and their content has to be communicated by the CEO to the members of the Board of and to the company Auditors. Their list was also to she be kept available to any shareholder prior to the general meeting.
The auditors were deprived in 2011 of their access to the text of each conventions and the shareholders were deprived of access to the list (though it was very rarely asked) … The remaining supervision on the list just be completely removed for the auditors in 2014. Until 2014 Article L 225-39 amended by the 2014 Ordonnance provided that the list of current “free agreements” was presented by the CEO to the auditors. This article is repealed today : hidden arrangements will remain hidden.
The debate on the Shareholder Rights Directive will be an opportunity left for investors to better communicate their analyzes, and the French AMF was seized late 2014 by a group of investors for an intervention on various points not covered by this Poupart Lafarge report in the spirit of a true modernization of general meetings, an improvement in efficiency, comfort as well as integrity of the voting process.
