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Global Trustee and Fiduciary Services News and Views
| Issue 47 | 2017
49
the introduction of founder shares (
parts
bénéficiaires
) with voting rights, the suspension
or waiver of voting rights and the “authorised
share capital” concept and also confirms that
a SARL may publicly issue debt instruments,
just to mention a few of the new key features.
Secondly, the Company Law Reform introduces
a new legal form for the simplified limited
company (
société par actions simplifiée
or SAS)
that will substantially enhance governance
structuring flexibility at manager and
shareholder levels when compared with the
ordinary limited company form. This new legal
form will be available for the implementation of
non-regulated AIFs in particular.
Structuring flexibility and legal certainty combined
The Company Law Reform offers new
opportunities in the structuring of shareholders’
participations. It legalises voting agreements and/
or unilateral undertakings in the exercise of voting
rights which may prove useful in the structuring of
coinvestment arrangements. It also legalises the
use of tracking shares that have long been used in
practice with no express legal basis.
Non-voting shares
A noteworthy development for the investment
funds industry is the possibility of issuing
shares of unequal value with limited voting
rights. The rules on the issue of non-voting
shares have also been substantially relaxed.
The latter development, in particular, offers new
opportunities for the investment funds industry.
On the one hand, it might prove interesting for
fund initiators (AIFs and to a lesser extent UCITS)
wishing to retain control over the structure. On
the other hand, the non-voting shares could
be issued for the benefit and on the request of
investors not wishing to be seen to be acquiring
control for consolidation or reporting purposes.
Why so? Although the possibility of issuing non-
voting shares was introduced into the 1915 Law
in 1983, the conditions applicable thereto, such
as the fact that non-voting shares could not
represent more than half of the share capital of
the company and preferential dividend rights
as well as voting rights on a number of matters,
have been considered to be too restrictive for
certain companies and an obstacle to the free
organisation of their governance.
The Company Law Reform eases the restrictions
and conditions applicable to the issuance of non-
voting shares. In particular, there is no limit to
the maximum number of such non-voting shares
fixed by law. It is left up to the general meeting of
shareholders to fix such number. This means that
in practice all shares but one may be non-voting
shares. The conditions for the issue of non-voting
shares, in particular the economic rights attached
to such shares, although freely determinable,
must be laid down in the articles of association.
The circumstances in which non-voting shares
must bear the right to vote are limited to cases
of the dissolution of the company, reduction of
its share capital and amendments of the rights
attached to such shares.
Transfers
Another interesting development for the
investment funds industry as a whole is
the new rules on the transfer of shares,
according to which any transfer of shares
of the company made in breach of the
restrictions set forth in the articles of
association of the company would be void.
This development brings legal certainty and
is useful for funds that need to control the
eligibility of their investors, e.g. where the
fund is restricted to well-informed investors
or limits the access of US persons.
The new provisions would bring reassurance
to the management bodies of the funds that
are vested, in accordance with the fund specific
legislation, with an obligation to ensure the
eligibility of investors and are ultimately liable
for the breach of law. It would permit the
directors of the fund to ignore the transfer
made in breach of the restrictions of the
articles of association and consider the
transferor to be a shareholder.
Governance: solutions and more options
As a second pillar of modernisation, the
Company Law Reform touches on the
governance feature applicable to the SA,
a legal form that can be used for the
formation of UCITS and AIFs as well as their
management companies or AIFMs.
It provides for real flexibility in structuring
management arrangements. All types of
management setup, be they individual or
collegial, are permitted. In addition, the law
provides a legal basis for various delegation
models of management powers, e.g. the
use of a management committee and the
concept of “general manager” have now
been included in the law.