Far from being a mere theoretical concept, action in concert is a legal and strategic reality at the heart of company and stock market law. It refers to the situation where several individuals or legal entities coordinate to implement a common strategy with regard to a company. Article L. 233-10 of the French Commercial Code provides the legal definition, a central text whose scope is much broader than it appears. Understanding its mechanisms is essential for any director or shareholder, as classification as acting in concert carries significant consequences, particularly in terms of joint and several liability and reporting obligations. The purpose of this article is to break down the constituent elements of action in concert as defined by law.
The legal framework: Article L. 233-10 of the French Commercial Code
General presentation of the text
Article L. 233-10 of the French Commercial Code is the cornerstone of the concept of concerted action. Its wording, which has undergone a number of changes, bears witness to its importance. historical originsis structured in three stages.
The first paragraph (I) sets out the general definition: "Persons are deemed to be acting in concert if they have entered into an agreement with a view to acquiring, disposing of or exercising voting rights, to implementing a common policy towards the company or to obtaining control of the company.
The second paragraph (II) sets out a series of situations in which such an agreement is presumed to exist, the so-called legal presumptions.
Finally, the third paragraph (III) sets out the main legal consequence of this classification: the solidarity of concert performers in meeting their obligations.
A primarily "teleological" concept
To grasp the substance of concerted action, we need to understand that it is an essentially "teleological" concept. This means that it is analysed more by its finality (its purpose) than by its precise content or form. The law does not seek to regulate a specific type of contract, but rather to understand an "action", i.e. a dynamic, concerted behaviour directed towards a strategic objective.
This deliberately flexible approach allows market authorities and judges to qualify a wide variety of situations, including complex arrangements that would otherwise escape regulation. The absence of a strict definition is a strength: it allows the ingenuity of operators to be embraced and adapted to economic realities.
The objective element: the existence of an agreement
The first pillar of concerted action, its objective element, is the existence of an "agreement". This is the starting point for any analysis.
Indifference as to the nature and form of the agreement
The law refers to "an agreement" without any further specification, which means that its nature and form are irrelevant. It may be a formal, named contract, such as a shareholders' agreement, but it may also be an unnamed agreement, a simple understanding or an informal arrangement.
This agreement may be a stand-alone document or included in a larger package, such as the articles of association of a société en participation (SEP) or a société par actions simplifiée (SAS), which can serve as a vehicle for shareholder consultation.
No requirement to be in writing: tacit agreement or agreement inferred from conduct
A fundamental difference with certain European approaches is that in French law, the agreement does not have to be in writing. It can be express or tacit. This distinction is crucial, as it allows the existence of an agreement to be inferred from a body of serious, precise and concordant evidence.
In practice, this means that evidence of concerted action may result from the systematically aligned behaviour of the persons concerned. The observation of parallel behaviour, although not sufficient proof in itself, may constitute a major indication of the existence of a cartel. Analysis of the mechanisms of concerted action shows that it is often the accumulation of these clues that convinces a judge or regulator.
The types of objects of the agreement: acquiring, transferring or exercising voting rights
The law specifies that the agreement must relate to one of the following three subjects:
- Acquiring voting rights : This refers to any agreement for the purchase or subscription of securities (usually shares) giving the right to vote at general meetings.
- Transferring voting rights : Symmetrically, these are agreements organising the sale of securities.
- Exercising voting rights : This concerns voting agreements, whereby the parties agree to vote in a common direction at meetings.
The first two categories are often referred to as "capital-intensive" agreements, while the last category is referred to as "political" agreements. In all cases, the object of the agreement must be linked to the life of the company and the expression of the power attached to it.
The subjective element: the dual strategic purpose
In addition to the agreement (the objective element), its purpose (the subjective element) is decisive in characterising concerted action. Article L. 233-10 distinguishes between two types, which may be alternative or cumulative.
Implementing a common policy towards the company
This is the broadest objective. The "common policy" is not limited solely to the management of the company. It may concern a multitude of strategic aspects: a dividend distribution policy, a specific commercial orientation, an investment or disinvestment strategy, etc.
The essential point is that the concert parties share a common vision and act in concert to impose or influence it. They behave as a homogeneous block of 'active' partners, seeking to influence the company's decisions beyond their individual shareholdings.
Obtaining control of this company
This second purpose, added later to the text of the law, clarified what was already a reality. The most successful "common policy" is often that of taking control of the company. Control may be exercised on a unitary basis or, more precisely, as part of joint control by concerted shareholders.
This purpose is often easier to demonstrate in practice, as it takes the form of stock market share-picking operations or the preparation of a "buy and sell" operation. takeover bid.
Who can act in concert?
Although the law refers to "persons", a number of specific situations need to be analysed to determine who qualifies as a concert performer.
The question of legal personality
In principle, only entities with legal personality (natural persons or companies) can be formally party to an agreement. However, practice has shown that this rule can be circumvented.
For example, if a fonds commun de placement (FCP), which has no legal personality, cannot act in concert, its management company, which represents it, can perfectly well commit it to an action in concert and assume the consequences.
The special case of joint ownership or company mutual funds (FCPE)
Similar questions have arisen in the case of groups with no legal personality, such as joint interests in inherited property. When heirs receive shares, they often vote via a single proxy. Case law and doctrine tend to consider them as presumed concert parties, because they act as a block.
Similarly, FCPEs (Fonds Communs de Placement d'Entreprise), which represent employee shareholders, may be considered to be acting in concert with other shareholders, particularly in the context of a defence against a hostile takeover bid. However, the law strictly regulates these possibilities, which are often analysed in the light of legal presumptions.
The concert performer without action and the actual beneficiary
Is it possible to be a concert performer without owning a single share? Being a shareholder is not formally required by the text. It can therefore be accepted that a concerted action exists prior to the actual acquisition of shares.
What is more, the modern concept of the "beneficial owner" is becoming increasingly important. The law is increasingly interested in the economic reality of power, seeking to identify the natural person who ultimately controls the chain of shareholdings. This 'economic' approach means that the status of beneficial owner may be sufficient to classify a person as a concerted action, even if that person does not directly hold the shares. Analysing these complex situations requires detailed expertise, and theassistance of a company law lawyer can be decisive in assessing the risks and obligations involved.
Action in concert is therefore a living and adaptable concept, whose contours are defined not only by the law, but also by a wealth of case law that constantly clarifies its application. For a company and its shareholders, ignoring its implications would be a potentially costly mistake.
For a more detailed analysis of your situation and the obligations you may have under a concerted action, please do not hesitate to contact our firm.
Sources
- French Commercial Code, in particular Article L. 233-10
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