France: Buy-outs

Last Updated: 5 June 1995
Buy-outs are subject to the regulations governing simplified tender offers (CBV General Regulations, Art. 5-5-1) except in certain details discussed below. (see "Simplified Tender Offers").

The procedure enables shareholders with a substantial majority stake to take complete control of a listed company and grants minority shareholders the right to be bought out. Buy-outs are generally used to take a company private.

Buy-out at the request of minority shareholders

Any minority shareholder of a company whose securities are listed on the official stockmarket or second market (or since 9 June 1994, traded over the counter) and in which one shareholder or several shareholders acting in concert hold at least 95% of the share capital of the company may ask the CBV to require the majority shareholder(s) to file a buy-out offer ("offre publique de retrait" or OPR) (CBV General Regulations, Art. 5-5-2). Minority shareholders do not have an automatic right to be bought out. Their only right is that of referring their case to the CBV; it is for the CBV to decide whether the request is justified and whether or not to pursue the matter. In its decision "Caves & Producteurs Reunis de Roquefort", the CBV has considered that the article 5-5-2 enables it to appreciate where the filing of a buy-out is necessary or not (decision no 93-3489, Dec. 8, 1993). In this case, the request of the minority shareholders was dismissed, being considered by the CBV that the liquidity of the market was allowing the minority shareholders to trade their shares in normal conditions of time and recurses; which was confirmed by the Court of Appeal (Paris Appeal Court, "Societe Financiere CIRCE", Feb. 25, 1994).

The cost of the buy-out offer will be borne by the majority shareholder(s). The conditions of the offer are negotiated by the CBV and the company in question. If the decision is made to proceed, the offer must be for the company's entire stock capital and securities giving access to stock capital.

The procedure is relatively little used. There were only three cases in 1993 where minority shareholders meeting the above requirements successfully availed themselves of their right (see COB Annual Report 1993, Annex 6 p. 96).

Buy-out at the request of majority shareholders

Majority shareholders holding at least 95% of the securities of a listed company may file an offer with the CBV to buy out the company's entire equity (CBV General Regulations, Art. 5-5-3). As mentioned previously, the majority shareholders' offer in no way obliges minority shareholders to sell and they remain free to keep their shares. They will however be strongly encouraged to sell if they know that the company will be delisted and that their securities will lose most of their transferability. The bidder is required to notify minority shareholders of this eventuality.

Buy-outs at the request of majority shareholders are more frequent than buy-outs at the request of minority shareholders, the procedure having being used twenty-nine (29) times in 1993 (see COB Annual Report 1993, Annex 6 p.96).

Buy-outs have occasionally given rise to disputes regarding the most sensitive aspect of the operation, namely the setting of the price for the shares (see Paris Appeal Court, April 18, 1991, PABIM v. Lazard Freres, Rev. Soc. 1991-765 and annotation by D. Carreau and J.Y. Martin).

Squeeze out

The possibility to squeeze out minority shareholders representing less than 5% of the capital or the voting rights have been introduced by the law of December 31, 1993. The conditions of application of squeeze out have been determined by the CBV (Articles 5-6-1 to 5-6-3 of General Regulation ratified by Decree of June 18, 1994, and General Decision No. 94-04).

The squeeze out can only take place after a buy-out in the form of an OPR has been completed. The application for the squeeze out procedure must be filed by the bidder upon filing the OPR with the CBV (Article 5-6-1).

This mechanism can take place in two different ways :

-either the person filing the OPR requests that the squeeze out take place automatically at the closing of the offer, in which case the OPR and squeeze out procedure are subject to the approval of the CBV; the CBV's decision is published by the SBF. The price offered for the securities must be equal to that of the OPR; or

-the person filing the OPR requests to reserve a right to initiate the squeeze out, depending upon the results of the OPR, in which case such person must indicate its decision to the CBV within 10 trading days following the closing date of the OPR. Such person must indicate the price at which it will purchase the securities, which price must be at least equal to the OPR price and is subject to CBV approval.

The person filing the OPR must furnish to the CBV an assessment of the securities of the target company. Such assessment must be presented by an independent expert. The choice of the expert is submitted to the CBV, but the COB has a right to refuse such designation.

The role of the expert and the appreciation of his independence are not defined accurately. Consequently, some difficulties arose in connection with the first cases of squeeze out. (For example, Carnaud Metalbox's offer for AMS Packaging in August 1994 where the independent expert was approved by the CBV but the proposed price was rejected by reason of insufficiency of the justifications).

Following the squeeze out procedure, the target company's securities are delisted from the stock exchange or, as the case may be, they are removed from the over the counter market's daily list.

For further information contact Herve Letreguilly on +33 1 4471 1717.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions