French Commercial code
In forceI.-The Extraordinary General Meeting of shareholders has sole authority to decide on the issue and conversion of preference shares in the light of a special report by the statutory auditors. It may delegate this power under the conditions set out in Articles L. 225-129 to L. 225-129-6.
The terms and conditions for the conversion of preference shares may also be set out in the Articles of Association.
At any time during the current financial year and at the latest at the first meeting following the end of the financial year, the Board of Directors or the Management Board shall note, if applicable, the number and nominal amount of shares resulting from the conversion of preference shares, during the past financial year, and shall make the necessary amendments to the clauses of the Articles of Association relating to the amount of the share capital and the number of securities comprising it.
The Chairman of the Management Board or the Chief Executive Officer may, by delegation of the Management Board or the Board of Directors, carry out these operations at any time during the financial year and at the latest within the period set by decree in the Conseil d'Etat.
II.-Preference shares may be bought back under the terms and conditions set out in articles L. 225-204 to L. 225-214.
III.-Where the Articles of Association creating a class of preference shares have provided for the principle of redemption prior to their subscription and have organised the terms and conditions thereof, in addition to the conditions mentioned in articles L. 225-210 to L. 225-212, the conditions set out below:
1° The acquisition may only be made using distributable sums within the meaning of article L. 232-11 or of the proceeds of a new issue of equity securities made with a view to this buyback;
2° The value of the reserve referred to in the third paragraph of Article L. 225-210 is calculated by reference to the nominal value of the preference shares bought back alone. Except in the event of a reduction in subscribed capital, this reserve may not be distributed to shareholders. It may only be used to increase the capital by capitalising reserves;
3° Where the Articles of Association provide for the payment of a premium to shareholders following the buyback, this premium may only be deducted from distributable sums within the meaning of Article L. 232-11 or from a reserve set aside for this purpose other than that provided for in the previous paragraph. Except in the event of a reduction in subscribed capital, this reserve may not be distributed to shareholders. It may only be used to increase the subscribed capital by capitalisation of reserves, to cover the costs of issuing preference shares or to pay a premium in favour of the holders of redeemable preference shares;
4° In companies whose shares are admitted to trading on a regulated market, redemption is at the sole initiative of the company or at the joint initiative of the company and the holder of the preference share. In companies whose shares are not admitted to trading on a regulated market, the Articles of Association shall determine, prior to subscription, whether the repurchase may take place on the sole initiative of the company, on the joint initiative of the company and the holder or on the sole initiative of the holder, in accordance with the conditions and time limits they specify;
5° In no case may these transactions affect the equality of shareholders who are in the same situation.
