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

The recent French June 24, 2004 Ordinance significantly reforms the regulation on securities issued by certain commercial companies (Socieacute;teacute;s anonymes or joint-stock companies, Socieacute;teacute;s en commandite par actions or partnerships limited by shares, Socieacute;teacute;s par actions simplifieacute;es or simplified joint-stock companies). It establishes a new general type of security called action de preacute;feacute;rence 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