Over the past few years, the internationalisation of many French
companies has led them to develop successful strategies that have enabled them
to be among the best performers in their category. Several of these companies now find themselves in a paradoxical
situation: even though they are still considered as
French, they have operations in a large number of countries on every continent,
none of which accounts for more than between 10 and 15% of their revenues. At the same time, their French shareholders account for between 20 and
25% at most of their shareholder base, and this percentage is declining
steadily, due to the policies implemented by various governments for many
years.
To meet the demands of their employees and their customers, the
management teams are increasingly international, while some companies adopt the
culture of every country where they operate; they are Chinese in China, Indian in India, and American in the US, etc.
Meanwhile, digital technologies enable executives to manage an international
group by conference call without being there (Jean-Pascal Tricoire, the
Chairman and Chief Executive of Schneider Electric, who is based in Hong Kong,
describes himself as a “nomad”).
Some of these companies, which have no regional or national roots, no
longer have any major shareholders from one country or region. Their Board of Directors’ meetings are naturally held in the various
countries where the company operates (in order to gain a better understanding
of the company’s challenges and risks, and to be closer to customers), while
General Meetings will be held on the Internet in the near future, so that all
shareholders can take part.
At this point, a company will naturally become supranational; it will
have no nationality and will naturally seek to operate in an environment that
is as favourable as possible, whether from a tax standpoint (which is the case
now) or from a corporate governance standpoint (which will be the case
tomorrow). There is a major risk of abuse for the
benefit of a minority shareholder, the company’s management team, suppliers or
customers, etc. In such a situation, only the Board of Directors will be able
to act as a counterweight. But will it be able to?
In fact, this movement is already underway; where investors and even
legislative authorities are concerned, it does not matter that a company’s
listing is now separate from its status or registered office. Who worries that the rights of Arcelor
Mittal’s shareholders in Luxembourg are infinitely more restricted than
the rights of shareholders in companies listed in Paris?
Germany and Switzerland understand this issue well; the first country
has imposed a sizeable proportion of employee representatives on Boards of
Directors, while the second requires that companies that want to be listed in
Switzerland hold at least half their Board Meetings in Switzerland. France and
Europe urgently need to set simple rules so that companies that are listed in
Europe hold their Board Meetings in Europe, and comply with corporate
governance best practices in order to avoid abuses that will otherwise
inevitably occur.
Olivier de Guerre
PhiTrust Active Investors
olivier.deguerre@phitrust.com
