Many French enterprises have undergone worldwide growth, most of which have successfully done so, our country being today known as a “nursery” for the creation and development of MNEs. The governance of these enterprises has largely changed with time, with increasingly international Board of Directors and in some flagship cases, non-French directors. Some groups are present in several countries with no more than 10/15% of their turnover in each country, learn to manage multicultural enterprises, often with a largely spread and varied share ownership, without any dominant shareholding allowing for an “anchoring” of the enterprise in a country. The development of teleconferencing allows for acceleration of their international growth with managing teams that may be global, spread across the planet in order to be closer to their markets, and to be able to react with increased speed during the accelerated development stages where competition is very hard.
These Multinational Enterprises become Supranational, and are then free to relocate production centres, research centres, teams, cash flows, or even governance in light of interests of the Enterprise and of all of its components, without any component being able to exert a major influence (the directors then become the ultimate decision-makers…).
Belgium is currently in this situation with most of its enterprises no longer having their registered office in Belgium or having been bought out… A few examples can be found in France, in particular when the Chairman of Arcelor Mittal came to see the President of the Republic who was unable to come up with arguments against the decision to shut down sites which were presented as being non-profitable…
The trend seems inevitable but still!
Enterprises that become Supranational become de facto stateless. Without a strong anchoring of the shareholding or without anchoring in a country/region, they will not be able to resist takeover bids as the shareholders will only see the potential upside. It is an illusion to believe that this status will protect them on the long run since States will not wish to defend enterprises having played a selfish game rather than that of the community. The RSE policies that they may certainly have developed will not offset the decisions that may have been taken in the interests of the Enterprise alone.
The underlying question is then a matter of governance: which governance is suited for such enterprises? How can one anchor them in a country, a region so that they can grow and consider both their own interests and the interests of the community having allowed them to grow, so as to allow that community to partake in the results of this success, namely through taxation?
This fundamental question is at stake today for many enterprises, their Board of Directors and their shareholders. Shareholders, what do you think?
Olivier de Guerre
PhiTrust Active Investors
PhiTrust Active Investors