Pierre-Henri Conac

The New French Preferred Shares: Moving Towards a More Liberal Approach

Abstract The recent French June 24, 2004 Ordinance significantly reforms the regulation on securities issued by certain commercial companies (Sociétés anonymes or joint-stock companies, Sociétés en commandite par actions or partnerships limited by shares, Sociétés par actions simplifiées or simplified joint-stock companies). It establishes a new general type of security called action de préférence or preferred share. This new type of security replaces the former different types of priority shares that could be established before with one single and more flexible regime. Besides, the Ordinance allows the suppression of voting rights in joint-stock companies, which French lawmakers had been reluctant to allow so far. By doing so, the French lawmakers offer more freedom and have reduced the importance of the equality among shareholders principle which was the usual keystone of French corporate law. Besides, once again, French corporate law get its inspiration from the United States. However, the French approach to preferred shares keeps some specificities, both good or bad, compared to its American model.

The Societas Unius Personae (SUP): A Passport for Job Creation and Growth

The proposal by the European Commission of a directive on single-member private limited liability companies of 9 April 2014 is designed to facilitate cross-border activities of enterprises, especially small and medium-sized enterprises (SMEs) by requesting Member States to provide a company form called the Societas Unius Personae (SUP) that would be set up online and would follow harmonised rules on key issues. Therefore, the SUP is a “passport” to facilitate the establishment of companies in other Member States. By facilitating exports and activities in other Member States, the SUP would contribute to job creation and growth in Europe. It would also be an internal “passport” as it would facilitate the creation of companies within Member States since it liberalises the rules on capital and forces online creation. The SUP would also significantly facilitate the cross-border functioning of groups, exactly like the Societas Privata Europea (SPE) – which the SUP replaces – was designed to achieve. However, the approach adopted by the Commission is innovative as it does not seek to create a supranational company like the SPE. Criticism of the SUP focuses on its innovative legal basis and content. However, these criticisms, even while addressing valid concerns, are exaggerated or simply unfounded. For example, critics of the option to separate the statutory seat from the real seat is understandable, at least from a political perspective, and has been addressed. The November amended version in the Council has introduced the right for the Member States to impose the real seat. This should help alleviate concerns that the SUP would be used to circumvent co-determination.