Over the past 10 years, the French M&A market has seen the rise of a powerful new player: the French state. Although the latter has always been a long-term investor in significant French companies, the French state has recently diversified its investment strategy by setting up vehicles which invest on a medium-term basis with an approach regarding the returns of its investment, similar to the one used by private equity funds, and which competes with such funds.

A new bill introduced by the government would expand the state's ability to oppose the sale or transfer of assets by certain strategic companies in which it holds shares. The changes, which are of particular interest to the French M&A community, are part of an omnibus reform of French corporations law known as the Action Plan for Business Growth and Transformation (PACTE), which was introduced in the National Assembly on 19 June 2018 and will likely be voted on this autumn.


The current system, created by a 2014 ordinance, allows the government to transform any ordinary share it holds in a private company into a 'golden' or 'special share' if a planned sale would bring the government's ownership stake in the company below certain statutory thresholds.

Depending on the circumstances, the special share may grant the state the power to:

  • veto certain changes in the ownership of the company's share capital;
  • appoint a non-voting representative to company decision-making bodies; and
  • veto sales or changes in use of certain company assets or types of assets.

The transformation is made by decree and must be justified with reference to essential national interests relating to public order, public health, public security or national defence. Currently, the only companies potentially affected are those in which the government holds a certain minimum statutory percentage of the share capital and in which it intends to decrease its holdings below that percentage.

Proposed changes

The changes expand the possibilities for the government to use the 'special share' mechanism in two ways:

  • by increasing the number of companies potentially affected; and
  • by allowing the government to use the mechanism in contexts other than a sale of its shares.

Article 56 of the proposed law provides that the government may now create a special share in any publicly traded company in which the public investment bank (Bpifrance), its affiliates or an investment fund in which it is the majority shareholder owns more than 5% of the share capital, directly or indirectly. This would also apply to foreign companies, in which case the special share could be created in the company's French subsidiary.

In light of Bpifrance's numerous investments since its creation in 2012, this change means many more companies could now fall within the scope of the law.

The mechanism may now also be used at any time when essential national interests as defined above require it – and no longer just in connection with a planned sale of government shares. However, French and European courts require that the creation of the special share be objectively justified as well as necessary and proportionate to achieve the interest pursued.

The reform also introduces a five-yearly review process during which the government re-evaluates the ongoing necessity and appropriateness of the rights attached to its special shares and may issue further decrees to alter or relinquish those rights.


The French M&A community will be closely monitoring the implementation of PACTE and will observe whether the proposed changes might act as a deterrent against Bpifrance when it competes with other private equity sponsors in open bid transactions.

Companies – including foreign companies – in which more than 5% of the share capital is held by Bpifrance, its affiliates or its investment vehicles should also be aware of the possibilities created by PACTE and should monitor the legislative process as the proposed law moves forward.

For further information please contact Alain Levy, Gwenaëlle de Kerviler or Linda Erlandsson at AyacheSalama by telephone (+33 1 58 05 38 05) or email (, or The AyacheSalama website can be accessed at

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