In March 2006, a new law on hostile takeovers of French companies was issued in application of an EU directive and proposed by the French finance minister Thierry Breton. The changes were seen by the market as a direct result of the country's growing protectionism.

Following this new law, companies subjected to a hostile bid would be able to issue free warrants convertible into shares at a potentially discounted price to existing shareholders. These poison pill measures can be used only if approved by shareholders at a general meeting, by a simple majority. Since April 2006, 15 companies, including big names such as Suez, Bouygues, and Compagnie De Saint Gobain, have requested shareholder approval for the issuance of free warrants during a takeover.

The resolution was approved by 55% of Saint Gobain shareholders and 63% of Suez shareholders. This means that in both cases, the resolution would have been rejected had an extraordinary majority been required. In Bouygues, 49.7% of which is held by three strategic shareholders, 85% of votes were cast in favor of the resolution. But based on the 59.7% quorum participating in the meeting, this corresponds to only 50.5% of total voting rights in the company.

Another recurring agenda item since April 2006, consists in authorizations to the Board to issue shares in the event of a public tender offer. This is a takeover defense with respect to the Law of Reciprocity (as for issuances of free warrants). It was submitted to shareholder approval by 15 companies as well, all small caps except for Bouygues.

Currently, we are not aware of any of these resolutions being rejected by the required simple majority. What are your thoughts on economic nationalism as an answer to globalization? We welcome your comments.