"AMF Recommendations - improving shareholder meetings and the dialogue between French listed companies and investors"

The French Financial Markets Authority, or Autorité des Marchés Financiers ("AMF"), in its investor protection role, pays particular attention to the ability of shareholders to exercise their voting rights at meetings.  In this context, the AMF decided to set up a joint-working committee in May 2011 composed of internal and external experts in order to articulate proposals to improve shareholders' meetings and dialogue between companies and shareholders.  The outcome of the committee's work has been recorded in a report which lists 33 proposals.

Based on the final version of the report released on 2 July 2012 (No. 2012-05), the Amf published a formal recommendation in relation to general shareholders' meetings of listed companies.  The AMF recommends the implementation of most of the report's proposals addressed directly to relevant market participants (notably the issuers) for meetings taking place from 1 January 2013.  In addition, the implementation of other proposals in the report addressed to the public bodies and professional associations will be closely followed by the AMF in the coming months.

The proposals are divided into 4 categories, the main principles of which are summarised below.

  1. Develop permanent dialogue between shareholders and companies
  • encourage pre-and post-meeting discussions;
  • facilitate the right of shareholders to include an item or resolution on a meeting's agenda;
  • explain the key issues and challenges of each proposed draft resolution; and
  • publish a summary report of the meeting on the company's website within two months of the meeting.
  1. Improve the significance of the shareholders' vote during general meetings
  • implement procedures specifically designed for non-resident shareholders (e.g. translation of the meeting's related documents and the appointment of an interlocutor in charge of relations with non-resident investors in all matters related to the general meeting);
  • clarify non-resident shareholder information on voting procedures through clear and complete communication; and
  • provide to shareholders, upon request, proof that their vote has been taken and counted.  
  1. Enhance the legitimacy and the functioning of le Bureau (the committee monitoring the general meeting, which is composed of a president and two scrutineers)
  • identify in advance the persons who are likely to be scrutineers to familiarise them with their functions; and
  • avoid conflicts of interest by prohibiting members of le Bureau from participating in decisions within the jurisdiction of le Bureau which concern him (e.g. suspension of a member's voting rights and ability to suggest a resolution affecting such member's interests) and by appointing a substitute for this member in such cases.
  1. Upgrade the "regulated agreements" (conventions réglementées) voting procedures

Regulated agreements are related-party agreements which are subject to specific voting procedures under French law in order to avoid conflicts of interest (i.e. pre-authorization from the board, report from the company's auditor and final ratification by the shareholders).  The AMF recommended the implementation of the following measures:

  • establish or clarify the company's internal charter in order to classify whether an agreement is considered regulated or not;
  • agreements entered into with wholly-owned subsidiaries should not be considered regulated agreements;
  • justify pre-authorization of regulated agreements by the board in minutes of the board meeting and inform the company's auditor of such explanations in order for him to make observations in his report to the shareholders; and
  • review the current regulated agreements by the board annually.