Lawyers Applaud COB Rule Changes
Byline: Guy Paisner in Paris
Lawyers in Paris have welcomed the latest changes to the French takeover code, which were ratified last week by Laurent Fabius, the French finance minister. They argue that the new rules will increase the transparency of mergers and acquisitions in the French market, and remove some of the confusion surrounding France's notoriously complex takeover rules. The new rules update the existing French takeover code which was drawn up in 1989 by the Commission des Operations de Bourse (COB), the French market regulator. That code did not require companies or advisers to disclose details such as takeover price, the existence of shareholders agreements or golden parachutes at the time of launching an offer.
In the absence of this information, trading in a target company's shares was often suspended for days, and even weeks, until the full details of the offer were made available. Target companies and their shareholders have long complained that the absence of this information delays their ability to fully evaluate takeover bids.
The regulatory reform was triggered by the notorious three-way takeover battle between BNP, Paribas and Societe Generale in 1999. When BNP filed its draft prospectus, which the public could not access, it was not required to draw up pro forma accounts until the COB had published an information note on the bid three weeks later.
Dominique Bompoint, an M&A partner at Clifford Chance in Paris, says: 'Between making the bid and the COB's information note, the market had no idea what BNP would look like if it only succeeded in acquiring Paribas and not Societe Generale. This will not happen under the new rules.'
These rules keep the framework of the main body of the regulation from 1989 but oblige the company making the offer to release a short-form prospectus stating the most critical pieces of information regarding its offer on the same day as it files the offer.
Information, including the bid price, the bidders' intentions, any shareholder agreements and golden parachutes, would be in the public domain from day one.
'This is a rare example of innovative stock exchange law rather than retrospective modifications that merely fill in holes arising from previous cases,' says Bompoint. …