Stated Capital Rules in French Security Offerings

27 Pages Posted: 9 Nov 2006  

Omer Tene

International Association of Privacy Professionals (IAPP)

Date Written: November 2006

Abstract

The corporate finance provisions of the French Commercial Code are grounded on the assumption that stated capital is an essential measure of corporate solvency. To ensure the integrity of stated capital as a reliable gauge for creditors, French corporate law narrowly restricts contributions of capital to French corporations, the issuance of new equity rights, and distributions by corporations to their shareholders. French corporate law also applies stricter capital maintenance rules than those mandated by European legislation. This article explores the stated capital rules of the French Commercial Code and the problems they pose for practitioners structuring corporate finance transactions. It critically appraises the theoretical basis for this corporate doctrine and suggests repealing certain rules to improve the efficiency of French capital markets.

Keywords: stated capital, par value, corporate finance, issuance, shares, capital maintenance

JEL Classification: k10, k22, k33

Suggested Citation

Tene, Omer, Stated Capital Rules in French Security Offerings (November 2006). Available at SSRN: https://ssrn.com/abstract=943522 or http://dx.doi.org/10.2139/ssrn.943522

Omer Tene (Contact Author)

International Association of Privacy Professionals (IAPP) ( email )

Pease International Tradeport
75 Rochester Ave., Suite 4
Portsmouth, NH 03801
United States

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