Governance, Risk, and Compliance Handbook: Technology, Finance, Environmental, and International Guidance and Best Practices

CHAPTER 54

CORPORATE GOVERNANCE: FRANCE

Anthony Tarantino, PhD

54.1 INTRODUCTION

54.2 CURRENT STATE OF CORPORATE GOVERNANCE

54.3 MEDEF AND AFEP CONSOLIDATED CODE

54.4 LOI DE SÉECURITÉE FINANCIÉERE (LSF) INTRODUCTION

54.5 LSF AND AMF PUBLICATION REQUIREMENTS SUMMARY

54.6 INTERNAL CONTROLSÉAFEP AND MEDEF RECOMMENDATIONS

54.7 WHISTLE-BLOWER VERSUS PRIVACY PROTECTION

54.8 CONCLUSION

NOTES

54.1 INTRODUCTION

The French model of corporate governance has undergone a major transformation in the past ten years. This was facilitated by the following developments:

Foreign Investors: The CAC 40 is named after the Paris Bourse's early automation system called the Cotation Assistée en Continu, or Continuous Assisted Quotation. It is the leading stock market index in France, consisting of a capitalization-weighted measure of the 40 highest capitalized corporations. The CAC-40 is a subset of the larger SBF 250 (Societe des Bourse Francais). Ironically, about 45 percent of CAC 40 shares are now owned by foreign investors. The leading investors come from Germany, Japan, the United States, and Britain. Many of these investors represent UK and US pension funds and a majority of CAC 40 employees live outside of France. The foreign ownership of CAC 40 and other leading French firms represents a major shift in ownership over the last ten years. In the past ownership was concentrated in domestic owners who were more friendly to company management and not as demanding in terms of corporate governance.