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07 November 2008

AMF report on notification of major holdings and declarations of intent

The 20 recommendations aimed at the increase of transparency about share ownership. Many of the report’s recommendations will require changes to existing legislation.

The AMF issued a report with some 20 recommendations aimed at the increase of transparency about share ownership. Many of the report’s recommendations will require changes to existing legislation.


The proposals were approved by a majority of the group’s members, but not all of them won unanimous support, particularly those on the treatment of cash-settled derivatives and the threshold for triggering a mandatory bid.


The consultation period on the report ends on 14 November 2008


The recommendations deal with the following points:

Notification of major holdings

Ø       Greater transparency about share ownership in listed companies will mean that shares acquired by shareholders on their own initiative under the terms of a financial instrument, such as an option, are treated as directly owned shares, along with instruments, such as contracts for difference or equity swaps, that provide economic exposure to the issuer’s shares. The system could also be improved by lowering the first statutory threshold for the notification requirement and by shortening the time limit for giving notification.


Declarations of intent

Ø       Declarations of intent should be specific enough to be of use to the market, the company and other shareholders. Information like that required by the Schedule 13D in the USA should be published, in exchange for cutting the time horizon applying to the reporting entity’s projected intent from twelve months to six months. If the intent changes, a fresh declaration providing the reasons for the change should be published immediately. The new declaration should also cover a further six-month time period.


Trigger thresholds for mandatory bids

Ø       The group’s members made a proposal for reforming the threshold that triggers a mandatory bid so that is it is more in line with the notion of de facto control. However, they could not reach agreement on the appropriate level for this threshold. It could be set at 25% of the voting rights or at 30%, in which case it would be calculated using the same procedures as for notifiable holdings. A legal system for capping voting rights could also be planned in order to prevent de facto takeovers, unless the acquiring shareholder files a plan for making a bid for all the shares. In addition, the rule on “breaking  the acquisition speed limit” should be changed to limit acquisitions to 1% in 12 consecutive months, instead of 2%.


Press release

Report (French only)


© AMF - Autorité des Marchés Financiers

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