[Last updated: 1 January 2025, unless otherwise noted]

6.1 Inside information

Inside information is governed by the Market Abuse Regulation which is directly applicable in France.

A French listed company is obligated to immediately disclose all of its "inside information" to the public.

• "Inside information" means information of a precise nature which has not been made public, relating, directly or indirectly, to one or more issuers of financial instruments or to one or more financial instruments and which, if it were made public, would be likely to have a significant effect on the prices of those financial instruments or on the price of related derivative financial instruments.
• Information shall be deemed to be of a "precise nature" if it indicates a set of circumstances or an event which occurred or may reasonably be expected to occur and if it enables a conclusion to be drawn regarding the possible effect of that set of circumstances or event on the prices of the financial instruments or the related derivative financial instruments.
• "Information which, if it were made public, would be likely to have a significant effect on the prices of financial instruments or related derivative financial instruments" shall mean information a reasonable investor would be likely to use as part of the basis of his/her investment decisions.

Disclosure may be delayed if the company considers that it is in its legitimate interests and provided confidentiality may be maintained. The company must promptly inform the AMF of any such delay following the actual disclosure and retain a record of how it determined that the delay in disclosure was in its legitimate interests.

It is up to the target company to determine if certain information qualifies as "inside information". This will often be a difficult exercise, and a large gray area will exist as to whether certain events will need to be disclosed or not.

6.2 In the event of a public takeover bid

In the event of a (potential) public takeover bid, the bidder is not required to inform the target company or the public prior to filing the takeover bid documentation with the AMF, provided that such non-disclosure is necessary to the preparation of the transaction and that secrecy can be maintained.

6.3 Insider dealing and market abuse

Insider dealing and market abuse are governed by the Market Abuse Regulation which is directly applicable in France. Other applicable rules are set forth in both the Monetary and Financial Code and the AMF General Regulation.

Any person who has knowledge of inside information should refrain from:

• using the information it possesses to acquire or dispose of, or to try to acquire or dispose of, for its own account or for the account of a third party, either directly or indirectly, financial instruments to which that information relates;
• disclosing such information to another person otherwise than in the normal course of its duties, or for a purpose other than that for which the information was disclosed to it; and
• advising another person to buy or sell, or to have another person buy or sell on its behalf, on the basis of inside information, the financial instruments to which such information pertains or related financial instruments.

The accumulation of administrative and criminal prosecutions has been replaced by a mechanism implementing a distribution between them. Consequently, the general attorney and the AMF (which are, respectively, the criminal and administrative prosecuting bodies) must consult each other prior to any act of prosecution related to insider dealing or market manipulation. In accordance with such mechanism, if either the general attorney or the AMF intend to prosecute then the relevant party must first notify the other of such intention. The other party will then have a two-month period to confirm whether it also intends to prosecute. Where the second prosecuting body also intends to prosecute, the attorney general of the Paris court of appeal will decide which of the two prosecuting bodies should proceed with the prosecution.

In principle, the rules on insider dealing and market abuse remain applicable before, during and after a public takeover bid, albeit that during a takeover bid additional disclosures and restrictions apply in relation to trading in listed securities.

6.4 Pre-offer contractual arrangements

The bidder may acquire blocks of shares from the target's significant shareholders before the launch of its offer.

Alternatively, the bidder may approach the target's significant shareholders to secure the tendering of the blocks to its offer. Undertakings to tender must be disclosed to the public and to the AMF. Irrevocable commitments must be carefully drafted to comply with the principle of fair competition between competing bidders and, as such, will provide that they cease to be binding in the event of an AMF-approved competing offer. Likewise, revocable commitments subject to a break-up fee are valid only to the extent that they do not breach the aforementioned principle of fair competition.

The bidder may also enter into a tender offer agreement with the target. Tender offer agreements are common in French market practice. The board of the target may undertake to recommend the offer provided that it acts in compliance with the corporate interests of the company. Provided that they are of limited duration, “no-shop” provisions providing that the target will not solicit discussions with other potential offerors are permissible. A matching right for the bidder may be provided as well, subject to certain limitations and to the disclosure to the public.

Break-up fee arrangements with the target's shareholders or the target itself are typical and must be disclosed. They cannot be so high that they impede any counter-offer; otherwise they would conflict with the principle of fair competition between competing bidders or, when agreed with the target, be regarded a misuse of corporate assets

6.5 Common anti-takeover defense mechanisms

The table below contains a summarized overview of the mechanisms that can be used by a target company as a defense against a takeover bid. These mechanisms take into account the restrictions that apply to the board and general shareholders' meeting of the target company pending a takeover bid.

A law dated 29 March 2014 (the "Florange Law") abandoned the target company's board neutrality requirement for unsolicited bids, reversing the position adopted by France in 2006 to opt in under the Takeover Directive. As a consequence, the board of the target company may take frustrating actions against the takeover bid without prior shareholders' approval, provided that such defense measures (i) do not fall within the competence of the shareholders' general meeting and (ii) are not contrary to the corporate interest of the target company.

Moreover, the company's articles of association may provide that the provisions of external agreements, i.e., shareholders' agreements, providing for (i) the restriction of the transfer of shares, (ii) the limitation of voting rights with respect to the collective decisions to be adopted in the context of a takeover bid, and/or (iii) the granting of particular veto and political rights are not enforceable in a takeover bid situation.