07 February 2012

AMF: Publication of the report by the working group on general meetings held by listed companies and launch of a public consultation

The AMF working group, which consists of experts from a variety of backgrounds, focused on the following subjects: dialogue between shareholders and issuers at general meetings, the functioning of general meetings, and voting on regulated agreements.

The AMF’s working group on general meetings, which was launched in May 2011 and is chaired by Board member Olivier Poupart-Lafarge, has recently issued its conclusions. Its report is subject to public consultation until 7 March 2012.

In general terms, the report delivers a positive overall verdict as to the functioning of general meetings in France, and proposes avenues for improvement in specific areas. On the basis of this observation, the working group has issued a series of proposals aimed directly at the relevant parties, primarily listed companies. It has also suggested legislative and regulatory changes. Its proposals are based around four themes:

Dialogue between shareholders and issuers: the group reiterates the need for ongoing dialogue both before and after general meetings. It notes that the opportunity for shareholders to express their concerns is an important component of dialogue. Such expressions of concern may take the form of proposed resolutions, agenda items, or written or oral questions. The group also emphasises the need to make more effort to explain the content and purpose of proposed resolutions made by the board of directors at general meetings.

Voting: the group proposes firstly that shareholders be given a third option by way of the official recognition in French law of “abstention” as distinct from voting “against”, and secondly that the mechanism by which non-resident shareholders submit their votes be improved. This mechanism is relatively complex, more because of the channels used than because of the applicable law. The group also proposes various concrete measures linked to the possibility of electronic voting, which would be of benefit to all shareholders, whether resident or non-resident.

General meeting’s executive committee: the group’s discussions have focused on clarifying and formalising certain currently observed practices, particularly in relation to executive committee’s powers. The group is keen that the role played by the centralising institution in determining the completeness of the attendance register be formally recognised. Finally, it has proposed measures to prevent conflicts of interest with which members of the general meeting’s executive committee might be faced.

Voting on regulated agreements: the group considers that the roles of the various players involved in the process of approving and ratifying such agreements need to be reiterated and occasionally reinforced. To this end, boards of directors are encouraged to provide reasons for their decisions to approve regulated agreements. It is also proposed that the scope of such agreements be more clearly defined and that agreements entered into with wholly-owned subsidiaries be excluded from this scope. Conversely, agreements entered into between a senior executive or director and a subsidiary should be notified to the parent company’s shareholders and should, in certain cases arising from de facto circumstances, be subject to the procedure governing regulated agreements within the parent company.

Following the public consultation, the group’s proposals – which do not entail any amendments to existing legislation or regulations – should normally enter into force at the AMF’s recommendation and be applicable to general meetings held with effect from 1 January 2013 at the latest.

Press release

Full report (French)

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