(AMF Position Paper 2012-09 dated 25 July 2012)

Since 1 July 2012 , the maximum number of investors that may be targeted by an offer of financial securities by way of a private placement (pursuant to Article L. 225-136 of the French Commercial Code) has increased from 100 to 150.

The Autorité des Marchés Financiers (French Financial Markets Authority or “AMF”) has issued a position paper defining the characteristics of the beneficiaries of this type of offer made to less than 150 investors.

By way of reminder, this type of offer allows a listed company to raise funds via a capital increase without being subject to the stricter rules on public offerings, or to the provisions of Article L.225-138 of the French Commercial Code.

The AMF recalls in this paper that Article L.225-138 of the said Code prohibits the beneficiaries of any such offer from exercising their voting rights due to the potential conflict of interest situation in which they find themselves (setting of the subscription price, amount).

The AMF’s position is that such a potential conflict of interest situation would arise, and the private placement would be abusive when the shareholders or directors are the sole or principal beneficiaries of an issue by way of a private placement.

The AMF thus considers that the shareholders or directors of a company may not be the sole or principal beneficiaries of an issue made by way of a private placement.