The Admissibility of Shareholder Proposals under French Law and Its Control by the Market Authority: A Functional Approach

Abstract

Board of directors’ ability to decide on the inclusion of climate-related shareholder proposals to the agenda of the general meeting of shareholders of listed companies has recently received particular attention in France. This question is at the heart of the concerns that have driven recent legislative initiatives aimed at promoting environmental issues by French and European companies. However, French law does not give any clear indication as to the respective areas of competence of the shareholders and the board of directors. This paper relies on a functional approach, distinct from the doctrinal approach that usually prevails in France, to determine to what extent the board of directors should be able to accept or reject shareholder proposals. We first show that the objective of the separation of powers between the board of directors and the general meeting is first and foremost the pursuit of the interests of the company’s shareholders. We then discuss the best way for the board of directors to fulfil its mission of pursuing shareholders’ interests, and the extent to which this mission can justify an exclusive competence of the board to decide on the implementation of some policies. We then determine how this division of powers is to be defined and the impact it has on the agenda of the general meeting, with a specific focus on climate-related shareholder proposals. Finally, we discuss the control that the French market authority should exercise.

Keywords: Climate, shareholder proposals, France, Autorité des marchés financiers, general meeting