Double voting rights: what is it? Why this is disputed? – The World

The economy minister, Emmanuel Macron and his counterpart of Finance, Michel Sapin announced on Wednesday, April 8, “the acquisition of up to 14 million Renault shares (approximately 4.73% of capital) “. Following the transaction, which is expected to close in the coming days, the state will hold nearly 20% stake in the automaker.

He does this is by no means the first step of a renationalisation. The operation is both a political and tactical signal: the state wants to enforce in one of the companies of which he is still a shareholder, Florange law he enacted – it was passed March 29, 2014 .

In this case, Bercy wants to ensure that the double voting rights mechanism under that Florange law is well established at Renault. However, without the intervention of the state, the implementation of this device would have been canceled, a two-thirds majority of shareholders prior to being unfavorable.

• What does the Florange law?

Since the adoption 29 March 2014 of the “legislation to reclaim the real economy” , the voting rights . double, which were an exception, became law in listed companies

Article 7 of the Act provides: “In companies whose shares are admitted to trading on a regulated market, double voting rights under the first paragraph are right, unless the Articles of Association adopted after the promulgation of the law (…) to all fully paid shares for which it is justified to have been registered two years by the same shareholder. It is the same for double voting right granted from issue to registered shares allocated under the second paragraph. “

Clearly, shareholders who hold their shares for at least two years, are rewarded by the granting of double voting rights. Unless the General Assembly adopts a resolution which cancels this device.

• What should serve the double voting rights?

For the Government, this provision is intended to promote the long-term shareholders. “I deeply believe in the long-term shareholding, Emmanuel Macron recalled at a dinner with the bosses of public companies, organized on April 1 by the Agency of the interests of the State . The Double voting rights are the instrument and I can not accept that public capital groups do the advocates of short termism of markets. “

During the examination of the bill, parliamentarians had noted that ” 52.5% of CAC 40 companies and 68% SBF 250 companies use the double voting rights. ” It was also emphasized that “ multiple voting rights are possible in 53% of the country” of the European Union, “and actually used in 50% of them. “

• Who and why is it disputed the device?

Investors , their representatives and their counsel critical of this reform, first, because it goes against the principle of “one share, one vote”.

“Investors, in Anglo-Saxon especially hate everything that can resemble a takeover defense mechanism “ says about this Bénédicte Hautefort, editor of the” Weekly of AG “.

Critics also believe Text there are other ways to promote the long-term ownership, such as tax incentives or dividends increased beyond two years.

Before the examination of the text parliament, the Autorité des marchés financiers (AMF) has, meanwhile, assured that “the automatic application of double voting rights would, at best, no significant real effect, and at worst, could lead to adverse effects or perverse effects “.

According to the “policeman” of the Exchange, the reform may affect the image of the Paris “already renowned for sprains with generally accepted principles of shareholder democracy, the principle of equality between shareholders in particular. “

The AFEP-MEDEF, who took over in part the criticism, urged listed companies to submit the question double voting rights to shareholders. Also Renault, GDF Suez example also opted for this route, for example. But not Orange.