Certain provisions of the Banking and Financial Regulation Act (LRBF) of 22 October 2010 came into force on 1 February 2011, supplemented by an order of 31 January 2011 amending the General Regulations of the AMF ("RGAMF").
The new provisions relate in particular to (1) the lowering of the threshold for triggering the mandatory takeover bid required in companies listed on a regulated market, (2) the temporary permission to cross the threshold, (3) the removal of price guarantees, (4) the extension of the compulsory takeover bid system to companies listed on “non-regulated” markets, and (5) expanding the notion of a merger liable to lead to a compulsory delisting offer (OPR).
- Lowering the threshold for triggering the mandatory takeover bid
Public takeover bids, which were compulsory under the previous system once a shareholding of one third (33.33%) of the capital or voting rights was exceeded, are now mandatory when crossing the threshold of 30% (Article L 433-3 of the Monetary and Financial Code (CMF), amended; article 234-2 of the RGAMF).
It is recalled that the obligation to file a draft takeover bid applies to shareholders acting alone or in concert and who directly or indirectly exceed the threshold described above.
The method of calculating the 30% threshold follows the same rules that are used to calculate the statutory thresholds for making mandatory information filings.
It should be noted that the reform initiated by the LRBF, in terms of threshold crossing declarations, simply adds the new 30% threshold, without removing the obligation to make an information filing when the threshold of one third is exceeded (article L. 233-7 of the Commercial Code, amended ).
The law refers in part to the former version of the RGAMF to establish transitional arrangements for responding to the situation of shareholders who on 1 February 2011 already had a holding of between 30 and 33.33% of the capital or voting rights. The "grandfather clause" allows shareholders who on 1 January 2010 held between 30 and 33.33% of the capital or voting rights of a company to remain under the old regime (the threshold of one third) as long as their holding remains between these two thresholds. As for the shareholders who brought their shareholding to between 30% and 33.33% between 1st January 2010 and 1st February 2011, they have until 1st February 2012 to comply with the new system, either by reducing their holding below the 30 % threshold, or by launching a takeover bid.
It is recalled that crossing the threshold of one third also led to the application of so-called “speed limit” rules. Any shareholder with a shareholding of between one third and one half of the capital or voting rights was required to file a proposed takeover bid in the event of an increase in its stake of at least 2% of the total capital or voting rights in the company over a period of less than twelve consecutive months. The law has logically ensured that lowering the threshold for triggering the mandatory bid is also taken into account in the "speed limit" system, which is now applied as from a threshold of 30%.
- Temporary authorisation to cross the threshold
The option that the AMF has to grant temporary permission to cross the threshold which triggers the mandatory bid is subject to the following two conditions: (a) that the threshold crossing is not part of a project whose goal is to take control of the company or to increase control and (b) that the threshold excess does not last more than 6 months (article 234-4 of the RGAMF). The condition of a maximum percentage was abandoned following the reform. Investors can therefore in principle seek a waiver of the mandatory takeover bid rule even if there is an excess involving more than 3% of the capital.
- Removal of the price guarantee procedure.
The price guarantee procedure, which required the purchaser of a block of securities which granted it the majority of the capital or voting rights of a listed company to acquire all the shares up for sale, has been removed, pursuant to the order of 31 January 2011 which amends part of articles 235-1 et seq of the RGAMF. These amendments to the RGAMF provide simultaneously for the implementation of the new system of public bids on multilateral organised trading systems (i.e., lightly regulated stock markets such as Alternext) .
- Public offers on the multilateral organised trading systems (Alternext)
As regards financial instruments admitted to trading on Alternext, the mandatory takeover bid procedure now replaces the price guarantee procedure. The new procedure applies globally, under the same conditions as those prevailing for instruments traded on a regulated market, with the notable exception of the triggering threshold, which is 50% (and not 30%) of the capital or voting rights.
Companies listed on Alternext are now also subject to the provisions referred to in articles 236-1, 236-3 and 236-7 and Title VII of the RGAMF. These include provisions relating to:
- public delisting offers (OPR), with the exception of OPRs following the transformation of a joint stock company (société anonyme or SA) into a partnership limited by shares (société en commandite par actions or SCA) or following a merger and
- squeeze-outs (RO) at the end of an OPR or within three months following the closure of a mandatory takeover bid. It is now also possible to launch an OPR with RO on the securities of a company which has previously been delisted, leading to the cessation of trading on the Alternext market.
- The concept of merger leading to a mandatory OPR
Article 236-6 of the RGAMF creates an obligation to inform the AMF when certain decisions are taken by people controlling a company, especially decisions involving the principle of an intra-group merger. Following the changes made by the order of 31 January 2011, it is provided that the mergers covered by this article are those which are to take place between the company concerned and the company that controls it or "another company controlled by it". The consequence of such information for the notifying party, depending on the assessment by the AMF, may be a requirement to initiate a public delisting offer. A project to merge a company with its sister companies or parent company is likely to result in a mandatory OPR when both companies are controlled by the same person, as defined in Article L.233-3 of the Commercial Code.