The action in concert is a concept of stock market law used by L. 233-3 of the Commercial Code to define control : ” two or more persons acting in concert are considered as jointly controlling another when they in fact determine, within the framework of an agreement with a view to implementing a common policy, the decisions taken in the general assemblies of the latter.
|The notion of concerted action was enshrined in directive 88/627 of 12 December 1988 ] relating to the information to be published during the acquisition and the closing of a significant shareholding in a listed company (directive on threshold crossings).
The European definition of concerted action is based on a written agreement. This agreement can be of two types
– or an agreement under which two or more persons agree to exercise their voting rights in concert. In this case, the concerted exercise of the voting rights must have as an aim the definition or the implementation of a sustainable common policy of the management of the company.
– or an agreement allowing a person to exercise voting rights by virtue of a provisional and remunerated transfer thereof.
The consecration in French law was made by the law n 89-531 of August 2, 1989 relating to the security and the transparency of the financial market.
The notion of concerted action is used as an ancillary criterion for legal thresholds. Its objective is the protection of investors.
Definition of concert action
Article L 233-10 of the Commercial Code defines the action in concert: ” Are considered as acting in concert the persons who have entered into an agreement with a view to acquiring or selling voting rights or with a view to exercising voting rights, to implement a policy vis-à-vis the company ”.
Paragraph 2 of Article L 233-10 indicates that such an agreement is presumed to exist:
1 ° Between a company, the chairman of its board of directors and its general managers or the members of its management board or its managers;
2 ° Between a company and the companies it controls within the meaning of Article L. 233-3;
3 ° Between companies controlled by the same or the same persons;
4 ° Between the partners of a simplified joint stock company with regard to the companies that it controls.
Having noted that the act of separation constitutes an agreement under the terms of which two shareholders have agreed to acquire and exercise voting rights of a listed company in order to implement a common policy vis-à-vis this company, and specified that this consists in carrying out a series of operations, including a proposed public buyback offer, with the aim of achieving the separation of the group made up of two other companies by the distribution of the assets of these two companies for the benefit of two separate groups of shareholders, the two shareholders having the vocation of concentrating most of their investment in the listed company, the Court of Appeal, which notes that this common policy, by itself exclusive of a one-off agreement, ifincluded in the strategy explicitly announced by the preamble of this agreement, it is not important that it is implemented only temporarily, exactly deduced that the shareholders should be considered as actingconcert within the meaning of the provisions of Article L. 233-10 of the Commercial Code Cass. com October 27, 2009
Effects of concert action
The concert action leads to a solidarity which is imposed by law on concert performers. The third paragraph of Article L. 233-10 of the Commercial Code which enacts ” Persons acting in concert are jointly and severally bound by the obligations imposed on them by law and regulations “.
Persons acting in concert are jointly and severally bound by certain obligations. It is a question of passive solidarity which implies that each co-debtor of the obligation “can be constrained for the whole”.
Obligations imposed on concert performers
Certain obligations are imposed on persons acting in concert. The latter are jointly and severally bound, as stated in article L 233-10 in fine of the French Commercial Code.
These obligations are codified in the Commercial Code, in Articles L 233-6 et seq. They are of three types, declarations relating to the crossing of thresholds, those relating to declarations of intent and those requiring the publication of certain shareholders’ agreements.
obligations in the event of stock market transactions
When filing a public offer with the AMF, various obligations are imposed on the initiator.
Article 231-20-4 ° -d) of the AMF General Regulation provides that the draft prospectus referred to in Article 231-14 in fine which accompanies the draft offer, must contain ” the number of shares in the target company that it already holds, directly, indirectly, or in concert ”.
Likewise, from the filing of this draft offer, article 231-5 of the regulation states that “ any other agreement clause concluded by the persons concerned (…) likely to have an impact on the assessment of the public offer or its outcome (…) must be brought to the attention of the persons concerned, the AMF and the public ”.
In addition, article 232-21 of the general regulations throughout the duration of the offer, to persons who hold at least 5% of the capital or voting rights and to legal entities acting in concert with them, to declare each day ” The purchase and sale transactions that they have carried out on the securities concerned by the offer, as well as any operation having the effect of transferring, immediately or in the future, the ownership of the securities or voting rights, to the ‘AMF ‘.
Certain obligations are also aimed at informing the public and the AMF within the framework of a share buyback program.
This is the case with article 241-2- II-14 ° of the general regulations, which requires that the information note submitted for approval by the AMF be indicated “ the intentions of the controlling person, alone or in concert. , the issuer ”. This declaration of intent should not be confused with that provided for in Article L 233-7 paragraph 7 of the Commercial Code.
Article 241-6 of the general regulations provides that ” persons holding, alone or in concert, more than 10% of the capital of the issuer as well as the directors of the latter inform the AMF on a monthly basis of the number of securities they sold to the issuer ”.
Article 234-5 paragraph 2 of the general regulations sets out an information obligation for persons who, alone or in concert, hold a number of between one third and one half of the capital or voting rights. These must keep the AMF informed of changes in their participation and this information is made public.
This involves the obligation to file a draft public takeover bid, a price guarantee project and a draft public buyout offer.
Faculties open to concert performers
Concert action opens up possibilities for concert performers. They can first of all request a modification of their obligation to file a public takeover bid, but also, by virtue of the 95% threshold possibly reached in concert, the possibility of forcing the withdrawal of minority shareholders.
Right to request a temporary authorization to cross a threshold
Article 234-4 of the general regulations provides that the AMF may authorize “ the temporary crossing of the threshold of one third (…) if the overrun involves less than 3% of the capital and voting rights and if its duration does not exceed not six months ”.
However, the person (s) concerned may not, during this period, exercise the corresponding voting rights.
It is expected that as long as the balance of the respective holdings within the concert is not significantly modified by reference to the situation observed during the initial declaration, there is no place for a public offer. The revelation of the concert by the concert performers can therefore enable them to be able to show, by declaring their concert action, that there is no place for a public offer.
Article 234-8 RG AMF sets out the cases in which the AMF may grant an exemption. In this text two provisions concern the concerted action: one concerns the combination of a merger and a concerted action (art. 234-8-4 °), the other the relevant holding of the majority of shares. voice (art. 234-8-6 °)
Right to file a public buyout offer.
Concert performers who hold at least 95% of the voting rights of a listed company or whose shares have ceased to be traded on a regulated market may file with the AMF a draft withdrawal offer targeting the equity securities. or voting rights or giving access to capital held by minority shareholders (art. 236-3 of the general regulations). This possibility is also open for the benefit of concert performers who hold at least 95% of the voting rights of a company whose investment certificates and, where applicable, voting rights certificates are admitted to trading on a regulated market or ceased to be so (art. 236-4).
Right to demand withdrawal.
Article L 433-4-II of the Monetary and Financial Code empowers the AMF to set the conditions for squeeze-out, which are currently set out in Articles 231-1 to 237-13 of the General Regulations. If, following a public buyout offer, the majority group has not obtained all the securities or voting rights, it can initiate the squeeze-out procedure and force the recalcitrant minority shareholders to transfer their shares to them in return for compensation ( art. 237-1 of the AMF general regulations). The expression “majority group” implicitly refers to concert performers who are also directly named in the withdrawal request procedure.