Franchissement de Seuil: Navigating Threshold Crossings in French Finance

In French finance, “franchissement de seuil” refers to the legal requirement for investors to declare their ownership stakes in listed companies when certain thresholds are reached or crossed. This regulatory framework aims to provide transparency in corporate ownership, allowing market participants to understand who controls significant portions of a company’s capital and voting rights. The core principle is to prevent hidden influence and maintain fair market practices.

Key Thresholds and Declarations

The AMF (Autorité des Marchés Financiers), the French financial markets regulator, sets the thresholds triggering declaration obligations. These thresholds are generally based on the percentage of a company’s capital or voting rights held by an investor. Common thresholds include:

• 5%
• 10%
• 15%
• 20%
• 25%
• 30%
• 33.33% (one-third, triggering a mandatory takeover bid in some cases)
• 50%
• 66.66% (two-thirds)
• 90% (triggering a squeeze-out procedure if the minority shareholders don’t sell their shares)
• 95% (triggering a simplified squeeze-out procedure)

When an investor crosses one of these thresholds, either upward or downward, they are obligated to declare this change to both the AMF and the company in question. The declaration must be made within a specific timeframe, typically a few trading days, as defined by the AMF regulations. The declaration must include information such as the identity of the investor, the number of shares and voting rights held, the reasons for the crossing, and the investor’s intentions regarding future acquisitions or disposals of shares.

Calculation and Attribution of Ownership

The calculation of ownership stakes is not always straightforward. It includes not only shares directly held but also shares held indirectly through subsidiaries, controlled entities, and agreements with other shareholders. Voting rights are also considered, even if not directly linked to the number of shares held. Agreements like shareholder pacts, which can grant certain parties preferential voting rights or control, also need to be accounted for. Moreover, holdings of similar instruments such as bonds convertible into shares may be considered.

Consequences of Non-Compliance

Failure to comply with the “franchissement de seuil” regulations can result in significant penalties. The AMF has the authority to impose financial sanctions, and in some cases, even suspend voting rights attached to the undeclared shares. More broadly, non-compliance damages an investor’s reputation and credibility in the market.

Importance and Market Impact

The “franchissement de seuil” rules are crucial for maintaining market integrity and protecting minority shareholders. By providing transparency regarding ownership structures, the regulations enable informed investment decisions and prevent potential market manipulation. This framework promotes fair competition and helps ensure that significant changes in company control are conducted in a transparent and regulated manner.

In conclusion, understanding the “franchissement de seuil” rules is essential for anyone investing in French listed companies. By adhering to these regulations, investors contribute to a transparent and stable financial market, benefitting both themselves and the wider investment community.