French Financial Regulator Tightens Disclosure Rules for Significant Shareholdings

France's Financial Markets Authority (AMF) has implemented stricter disclosure rules for significant capital or voting rights holdings in publicly listed companies. The new rules require disclosure within four trading days of crossing the 3% threshold, aiming to increase transparency and prevent market abuse.

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French Financial Regulator Tightens Disclosure Rules for Significant Shareholdings

French Financial Regulator Tightens Disclosure Rules for Significant Shareholdings

The French Financial Markets Authority (AMF) has implemented stricter requirements for the notification of significant capital or voting rights holdings in publicly listed companies. Under the new rules, any individual or entity that acquires or disposes of shares or voting rights equal to or exceeding 3% of a company's total must disclose their holdings within four trading days of crossing the threshold.

Why this matters: This increased transparency will help prevent potential market abuse and enable investors to make more informed decisions, contributing to a more stable and efficientfinancial market. As France aligns its disclosure rules with those of other major financial centers, it reinforces its position as a leading European capital market.

The AMF's decision aims to enhance transparency in the French financial markets and ensure that all market participants have timely access to information about significant changes in the ownership structure of listed companies. The 3% threshold applies to both direct and indirect holdings, and the disclosure obligation extends to any subsequent crossings of multiples of 1% above the initial 3% level.

The new requirements are codified in Article L. 233-8 II of the French Commercial Code and Article 223-16 of the AMF's General Regulation. Failure to comply with the disclosure obligations can result in financial penalties and the suspension of voting rights attached to the undisclosed shares. The AMF has emphasized that timely and accurate disclosure is crucial for maintaining orderly and efficient financial markets.

In addition to the legal thresholds, some French companies have adopted even stricter disclosure requirements in their articles of association. For example, Nexans S.A., a leading player in the cable and optical fiber industry, requires its shareholders to declare any crossings of the 2% threshold or any multiple thereof. "In addition to the legal obligation to inform the company when certain fractions of the share capital are held, any natural or legal person and/or shareholder owning a number of shares in the company equal to or greater than 2 % of the share capital or voting rights must notify the company of the total number of shares held, within a period of fifteen days from the time the threshold is crossed, by registered letter with acknowledgement of receipt," states Article 7 of Nexans S.A.'s articles of association.

The AMF's stricter disclosure rules have already impacted the French financial sector. On April 29, 2024, The Goldman Sachs Group, Inc. notified Permanent TSB Group Holdings Public Limited Company and the Central Bank of Ireland that it had crossed the 8% threshold in the company's voting rights. Thedisclosurerevealed that Goldman Sachs International held 4.23% of voting rights attached to shares and 4.45% through financial instruments, totaling 8.68% of the Irish bank's voting rights.

The AMF's enforcement of tightened disclosure requirements will bring increased transparency and a more level playing field in the French financial markets. The timely disclosure of significant shareholdings will enable investors to make more informed decisions and help prevent potential market abuse. The new rules also align France with best practices in other majorfinancial centers, reinforcing its position as a leading European capital market.

Key Takeaways

  • France's AMF introduces stricter disclosure rules for significant capital or voting rights holdings.
  • Threshold for disclosure is 3% of a company's total shares or voting rights.
  • Disclosure must be made within 4 trading days of crossing the threshold.
  • Failure to comply can result in financial penalties and suspension of voting rights.
  • New rules aim to increase transparency and prevent market abuse in French financial markets.