AMF updates its stance on activism

Last year, during the initial Covid lockdown, the AMF published its long awaited stance on shareholder activism - setting out some suggestions for future changes (please see our publication from last April).

The AMF has now updated its position as follows:

Quiet periods: The AMF has suggested that issuers refrain from providing any information to the market or analysts for two weeks prior to the publication of any results. However, this rule would not prevent the issuer from publishing a response to an activist investor during any such quiet period.

Activist campaigns: As set out in point 5 of our initial publication, the AMF wants activists to make all projects and intentions publicly available in a 'white paper' (including arguments justifying the activist's approach). However, the AMF has now issued a recommendation that an activist must attempt a dialogue with the issuer before launching any such campaign.

Recalling lent-out stock: The AMF has confirmed its intention, as set out in point 6 of our initial publication, and now recommends that, prior to any general meeting, all fund manager recall loaned stock (and vote them).

Notifications in takeover situations: The AMF had considered imposing further reporting obligations on activists in such circumstances. Fortunately, they have now dropped this plan. However, they have issued a recommendation to remind investors to be particularly vigilant when carrying out their notifications. In our view, this likely signals that the AMF is going to be more willing to sanction late or inaccurate filings (particularly by activists).

Investor dialogue: the AMF has insisted on the importance of good investor dialogue throughout the year, and so will clarify its doctrine to ensure that this is made clearer (some authors thought that the AMF's stance was limited to the period immediately prior to general meetings). Building on this stance, the AMF is recommending that the boards of issuers be more involved in communicating with investors, and wants the board to be more involved on matters of interest to shareholders, citing, performance and strategy on ESG matters as a particular area of interest.

At this stage, we have no further information on the AMF's initial proposals to reduce the major shareholding notification threshold to 3% (from 5%) or their proposals in relation to additional disclosure obligations in articles (see points 1 to 4 of our initial publication).