Trends in French corporate governance in 2021 have, once again, been influenced by the COVID-19 pandemic. They focus, on the one hand, on the preservation of shareholder dialogue and the protection of shareholder rights, and, on the other hand, on the accountability of management bodies, in particular with respect to the determination of their compensation package and the consideration of environmental, social and governance (ESG) issues. Beyond such developments, a new tendency has been observed: targets subject to hostile takeovers are relying on corporate governance principles to obtain the removal of directors deemed to be in a conflict of interests situation with the bidder.
Activism, Shareholder Dialogue and Shareholder Rights
As sanitary measures, enforced in France to prevent the spread of the pandemic, compelled companies to adapt the format of their annual general meetings, concerns about the ability of shareholders to continue exercising their rights arose, provoking debate around the need for digital tools.
At the same time, the recent surge in activist campaigns, some of them having been highly publicised, and resulting proposals to regulate activism and reinforce shareholder dialogue in France eventually resulted in increased supervision by the regulator.
Development of new digital tools to the benefit of shareholder rights protection
Since 2020, companies have faced the challenge of protecting shareholder rights while having to hold their general meetings “behind closed doors”, as in-person meetings have been severely restricted because of lockdown measures. A decree adopted in 2020 has taken these restrictions into account and allowed companies to use alternative options more easily to preserve shareholders’ basic rights. Advance remote voting and live broadcasting of general meetings have been used by a majority of large-scale companies, at least among listed issuers. The adequacy and sufficiency of these measures to allow shareholders to exercise all of their prerogatives has, however, been questioned.
Practice Guide Chambers 2021