France Updates Securities Laws

by Ulrika Lomas, for LawAndTax-News.com, Brussels

21 July 2004

The French government recently announced that it has updated the country's securities laws to remove restrictions on the issue of new shares by French firms, and to simplify the use of preferred shares.

The legislation adopted late last month removes the so-called '10 out of 20 rule', which stipulated that issuers must price new shares at a level at least equal to the opening prices of 10 consecutive business days out of the twenty which preceded the issue.

In a bear market, however, this sometimes meant that the required issue price for the new shares would be higher than the price of existing shares, which often led firms to undertake rights issues or warrant offerings instead.

Regarding the use of preferred shares, the ordinance sought to bring together the laws for all preferred shares, to allow for preferred shares to be redeemable or convertible, and to limit non-voting shares to 25% of capital in listed firms.

The legislation also unified all the rules applicable to equity-linked securities, and boosted protections for holders of equity-linked securities through improved anti-dilution rules.

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