Against a backdrop of declining interest in French stocks on the part of
French individual investors (less than 30% of shareholders), the AMF has
revived an erstwhile working group charged with the task of producing
recommendations for legal modifications to “protect our companies against
creeping takeovers”.
Has last summer’s “Poupart Lafarge report” already been swept under the
carpet? It is true that investors had an extremely hard job ensuring that their
wishes, and not just those of the companies they invest in, were taken into
consideration, as those very companies tended to turn a deaf ear to their
shareholders, as if they regarded them as mere fund providers rather than joint
owners by virtue of their stake in the company.
Once again in France, we are trying to find solutions to a problem caused
by previous solutions running in the opposite direction! What actually are we
talking about here?
We cannot really be surprised at the lukewarm interest in equities shown by
the French, when for the last 30 years we have been encouraging them to invest
in government bonds and the Livret A passbook savings account (check out the
latest measures adopted in this respect), when equity investments are taxed
much higher than investment in property or works of art (zero tax), when the
only pension fund currently in existence is the civil servants fund (PREFON),
and when this type of fund is prohibited for company employees but companies
are lambasted for seeking merely their own profit …
How can we expect international investors to buy shares in companies that
fail to comply with internationally accepted corporate governance standards
just because they are French, and therefore entitled to special treatment?
Our businesses are badly in need of long-term shareholders, both French and
international. Real changes in the legislation are needed in order to encourage
French people to invest in equities and promote corporate governance of the
highest calibre so as to attract foreign investment. If some “tweaking” is required
in view of the “special situation”, this must be done in consultation with
investors, so that their expectations are heeded, and without fundamentally
altering the basis of our legal system, recognised today as one of the most
advanced systems in the world in terms of respect for shareholder rights.
If we ignore these two fundamental principles, we could find ourselves in
dire straits in a few years’ time, with no more long-term shareholders and
hardly any of them French… is that what we want?
Olivier de Guerre, Chairman of PhiTrust Active Investors
