The National Assembly definitively adopted, Wednesday June 5, the law on financial attractiveness, a text proposed and defended by the Renaissance deputy Alexandre Holroyd. The text of the law includes several details desired by the Senate during its vote on May 3, and above all includes new measures concerning the capping of dismissal compensation for traders, the main point of disagreement between two chambers.
The objective of this law aims to boost the financial center of Paris in the face of competition from other financial centers, such as London, New York or even, within the euro zone, Amsterdam or Frankfurt. “ It is a stone in the building of French attractiveness, which has been the subject of a fairly broad consensus between the Assembly and the Senate – as evidenced by the speed of adoption of the bill. We all agree: we must continue to modernize while preserving French specificities, and strengthen the link between available European savings and investment in our businesses. commented Alexandre Holroyd to AFP.
Voting rights taboo lifted
“ The attractiveness of the Paris market is one of the key elements of our strategic orientations. The AMF is therefore mobilized to support this initiative,” recalled Marie-Anne Barbat-Layani, president of the Financial Markets Authority, during the presentation of the supervisor’s annual report.
The AMF notably has one of the flagship measures of the law, namely the possibility for a company listing on the stock market to benefit from shares with multiple voting rights, a measure to which many asset managers have shown themselves. hostile in the name of investor protection.
This possibility, quite common in the United States, particularly in the Tech sector, allows the founders of a company to raise capital on the stock market while still ensuring control. And therefore to prevent certain unicorns from going to be listed in New York or Amsterdam to benefit from these shares with multiple voting rights. It is therefore a whole section of corporate governance but also the protection of minority shareholders which is disrupted, even if a certain number of safeguards are provided for in the law.
However, the text goes quite far, even further than London: no limit on the number of voting rights on regulated markets and a limit of 25 voting rights per share on trading platforms.
Capped compensation for traders
This measure could encourage IPOs, especially for larger amounts. In 2023, the average capital raising during an IPO was… 10 million euros, which remains ridiculously low. In addition to the law, the AMF has also taken the initiative of making the portion reserved for individuals optional, and no longer compulsory, which complicates the operation and lengthens the timetable. The two recent IPOs in Paris were thus able to be carried out in a few days, without this reserved tranche.
Another flagship measure, a controversial subject par excellence, and on which American banks, which have strengthened their teams in Paris since Brexit, have exerted strong pressure in its favor, the capping of compensation ultimately limited only to traders and their managers, as a basis for compromise between the Senate and the National Assembly.
Semi-victory for the banks
The amount of monthly remuneration taken into account in the calculation of compensation in the context of a dismissal procedure will be capped at 46,000 euros, an amount which “takes seniority into account and targets less experienced traders”specifies MP Holroyd.
The big names worth a million or more euros per year (often those who take the most risks) are therefore excluded from the scope of the law, as are other bankers, such as investment bankers. In the end, the heavyweights of Wall Street – JP Morgan, Goldman Sachs and others – will not have completely won their case.
Finally, other more technical measures, such as the extension of venture capital funds to companies with up to 500 million euros in turnover or the digitization of securities, general meetings or commercial operations at the international to facilitate transactions, complete the system.
This law, like the AMF initiatives, shows the importance now given to financial centers, which have become an issue of competition and sovereignty. At a time when TotalEnergies is talking about a double listing in New York, these subjects are no longer taken lightly.
