Voters’ rights are about to change significantly in France at the beginning of next month. The Florange Act, which was adopted on 29 March 2014, provides for the automatic granting of double-voting rights to stock held by shareholders who have owned it continually for at least two years. These “long-term” holdings are known as “loyalty shares.” Companies can either opt out of the Act’s provisions through a management or shareholder resolution, or may already prohibit double voting rights in their bylaws; although many French companies already have double voting rights. The two-year holding period triggering automatic double voting rights started on 1 April 2014 so these rights will automatically apply on 31 March this year, unless companies opt out.
There is some support for long-term shareholders receiving more voting power; it is seen as an encouragement to long-termism. However, much of this support is found mainly among shareholders who already hold large swathes of a company’s vote, which, in the case of France, often means the State—the very agency which introduced the Act. On the other hand, the Act’s provisions created a storm of protest among many other shareholders and their advisory groups, where there is a firm commitment to the one share—one vote principle.
