AMF, essential asset and disappointment of minority shareholders


The takeover of a parent company holding a stake of more than 30% in a listed subsidiary must in principle lead to the implementation of a mandatory public offer on the latter, unless it does not constitute an “essential asset”. from the mother.

On the basis of this apparently clear principle, the shareholders of listed subsidiaries regularly anticipate the implementation of mandatory public offers – which clearly emerges from the evolution of the share price of the listed subsidiaries covered by a request for derogation – which are not in fact almost never introduced. The principle seems to be reversed in practice since, due to a particularly restrictive assessment of the notion of essential asset, the granting of the derogation is more the rule than the exception. Over the 2020-2021 period, the AMF has thus granted no less than six exemptions from the obligation to file a public offer by dismissing the qualification as an essential asset: Faurecia, Malteries Franco-Belges, Union Financière de France Banque, PCAS, Proactis and Adux.

The concept of “essential asset“, which is not defined by the legislator or by the general regulations of the AMF, must be assessed with regard to the decision-making practice of the regulator, which bears witness to a very restrictive assessment. The latter conducts a dual analysis at the both qualitative and quantitative in order to analyze the “essential” or ancillary character of the listed subsidiary.

L’quantitative analysis aims to determine the contributory share of the listed subsidiary within the parent, with regard to several indicators (not only financial).

Since the relevant indicators are not determined, they can be freely chosen by the company requesting the derogation. Decision-making practice nevertheless stresses that reference is regularly made to the same indicators as those considered relevant by the AMF to qualify the distinct notion of “significant asset”: turnover, market capitalization, net book value , the current result, the number of salaried employees. It being specified that the “essential asset” is distinct from the “significant asset”, the AMF having recourse to this second concept for the implementation of a separate regime: in order to recommend that issuers consult the general meeting of shareholders before any disposal of a “significant asset”. Other usual financial indicators are also frequently targeted (EBITDA, EBIT, balance sheet total, shareholders’ equity, account value of the investment) as well as some more targeted according to the specificities of the company (for example the amount of commercial inflows in decision Financial Union of France Bank). The diversity of indicators likely to be used runs the risk that the applicant company makes a selection in order to refer only to those allowing it to rule out the qualification of essential asset.

Beyond the criteria used, the recent exemptions granted by the regulator provide us with information above all on the threshold considered relevant for carrying out the quantitative analysis. As such, the decisions Proactis and adux indicate that the 30% threshold is likely to characterize an essential asset if it is crossed by several criteria, and the decision PCAS specifies that the 40% threshold is “decisive” to qualify an essential asset.

L’qualitative analysis relates to the strategic nature of the listed subsidiary, which may represent a limited contribution for the parent company but nevertheless constitute an essential asset. The AMF also seems to control the purpose of the operation, in order to assess whether the change of control was a desired effect or only an indirect one. The applicants therefore regularly seek to demonstrate that obtaining control of the listed subsidiary did not motivate the operation (for example in the decisions Faurecia, Proactis Where PCAS). The AMF and the Paris Court of Appeal seem to attach less importance to the qualitative analysis, which would only constitute an additional indication to confirm the quantitative analysis.

Due to the absence of a definition of the notion of essential asset, it is easy for companies requesting an exemption to submit to the regulator a focused and restrictive analysis in order to unduly rule out the implementation of a mandatory public offer. Minority shareholders who consider that the listed subsidiary constitutes an essential asset of the parent can nevertheless put forward their analysis in order to try to force the implementation of a public offer.

First of all, when the request for exemption is announced, the minority shareholders can submit their observations to the AMF in order to demonstrate the essential nature of the subsidiary with regard to the dual quantitative and qualitative analysis referred to above. These observations are indeed taken into account by the regulator, and regularly sent to the applicant company so that it can justify itself. Such exchanges are for example mentioned in the derogations PCAS and Proactis.

Then, if the derogation is granted, any shareholder has 10 days from its publication on the AMF website to file a possible appeal before the Paris Court of Appeal. This option has notably been exercised – without success – by minority shareholders against the derogation PCAS. The more regular exercise of this type of recourse would allow the judicial judge to specify the criteria making it possible to qualify an essential asset, and possibly to sanction the too restrictive and imprecise assessment of the regulator.

These developments complement a legal article published in the Bulletin Joly Bourse May June 2022 review.

Julien Visconti and Quentin Bertrand, Lawyers at the Paris Bar, Visconti & Grundler



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