On its 2018 AGM, Innate Pharma, a French company specialized in the research and development of immunological-based drugs for cancers and infectious diseases treatment, proposed to its shareholders to create a double voting right for shares held in registered form for 2 years as of the AGM date. Proxinvest recommended its clients to oppose this proposal, which was ultimately widely rejected by 69% of votes cast.
In 2015, following the introduction of the Florange Bill, Innate Pharma proposed to its shareholders to maintain the “One share – One vote” principle and this resolution was 99.6% supported. Hence, this is the second time Innate’s shareholders expressed their preference for equal treatment of shareholders and reject the double voting right provision.
Proxinvest recommended shareholders to oppose this provision as it breaches equal treatment of shareholders.
First of all, holders of registered shares and holders of bearer shares are no longer treated equally as holders of bearer shares cannot benefit from the double voting right, even if they are long-term shareholders.
The double voting right can also allow for a creeping takeover by a shareholder with no obligation to launch a public offer. This would weaken governance bodies as they would have to endure the disproportionate influence of some of the main shareholders.
Finally, the double voting right is a breach of the One Share-one vote principle which corrupts the voting results of the general meeting of shareholders to the detriment of institutional and non-national shareholders. Over 2015-2017, 205 resolutions were rejected in France; without the double voting right, 98 more resolution would have also been rejected. Recently, in France, many were astonished that the departure package of Georges Plassat, former Chairman and CEO of Carrefour, was approved by the AGM. The influence of the double voting right, mainly held by main shareholders who sit on the Board and support its decisions, cannot, in such case, be underestimated.
Unfortunately, the double voting right is common on the Paris market. It impairs its image and its attractiveness to the market without alarming the French legislator or the AFEP-MEDEF (main code of governance in France). Here are some statistics about the respect of the “one share – one vote ” rule in Europe :
Some Chairmen, mindful of the equal treatment of all their shareholders, asked their shareholders to delete this poisonous provision. One of them is Guillaume Robin, Chairman and CEO of Thermador Group and former Chairman of MiddleNext (second main code of governance in France). He proposed in 2016 to delete this double voting right. He will be one of Proxinvest’ guests to our annual seminar on voting guidelines and shareholders engagement which will be held in Lyon on October 4 and 5, 2018.