Content

• What is the stock market?
• What it means to be a shareholder?
• What the AMF does
• Where can I get information?
• FAQ

• What is the stock market?

The stock market is one of the economy's sources of financing. It gives private and public companies, as well as local and central government, the opportunity to issue securities to the public, thus raising money to fund their investments in factories, machinery, roads, schools and other infrastructures. These securities are then listed and traded on a stock exchange.

In France, the markets are organised by Euronext. Initially, there were regulated markets (The Paris Bourse, comprising the Premier Marché, the Second marché and the Nouveau marché) and one unregulated market (the Marché Libre).

On Monday 21 February 2005, the regulated markets were amalgamated to form a single market, called Eurolist. French stocks are now listed to a single list and classified in alphabetical order. All companies quoted and traded on a regulated market are now subject the same listing requirements and disclosure rules.

A new identification criterion, the capitalisation segment, was added to the two existing critera (business sector, and inclusion in an index or eligibility for deferred settlement). Under this system, companies are assigned a letter - A, B or C - depending on their market capitalisation:

• A: more than €1 billion
• B: between €150 million and 1 billion
• C: less than 150 million

For more information about the overhaul of the listing system, go to FAQ, and check the question "Euronext a annoncé une refonte de la cote. En quoi cela consiste t-il et qu'est ce que cela va changer pour moi ?"

 

• What it means to be a shareholder?

When you buy and hold shares, you take a stake in the company, which gives you certain rights:

• the right to a dividend;
• the right to material information;
• the right to play a part in the life of the company).

Click here for more on shareholder rights (only available in French).

 

• What the AMF does

The Autorité des marchés financiers (AMF) has three main objectives: to protect savings and investment, to provide investors with material information, and to maintain orderly financial markets.

• Oversight of corporate disclosures
  
  
  • The AMF oversees the disclosures that companies are required to make in connection with a public offering of securities or a tender offer. The AMF's role here may be to register an offering document or to demand additional documents or information.
    
    
  • It also oversees the continuous disclosures that are a part of everyday life as a public company. Listed companies are duty-bound to inform the market of any material developments that could affect the price or their shares or the situation of people who hold them. They are then required to issue a news release to all sections of the press. They may also post these releases on a website - either their own or the AMF's (Decisions and disclosures, Companies news releases).

    In general, the AMF requires listed companies to have a disclosure policy that ensures equal treatment for all recipients. All users must have simultaneous acess to the same relevant information.
    

  • Periodic disclosures: the law requires French companies listed on a regulated market - meaning that those traded on the Marché libre are exempt - to publish the following in the legal gazette (Bulletin des annonces légales obligatoires -BALO):
    
    
    • annual report and accounts: approved annual accounts (balance sheet, profit and loss account and notes), the proposed appropriation of earnings, and consolidated accounts in the case of companies with subsidiaries or participating interests, followed by definitive accounts;
      
      
    • interim accounts: a statement of half-yearly operations and results, interim reports;
      
      
    • quarterly sales.
      
      

    The AMF checks to make sure that companies publish these documents without delay. The names of French companies that fail to meet publication deadlines are posted on the AMF's website (Decisions and disclosures/late publication, available only in French).

   

• What happens if a company issues inaccurate, imprecise or misleading information?

  The AMF has a range of possibilities:
  

  • it can order the company to publish corrections;
    
    
  • it can take it upon itself to issue a release containing the information the company has failed to disclose to the market;
    
    
  • it can request that trading in the company's shares be suspended until the requisite disclosure is made. In such cases, the stock exchange (Euronext Paris) issues notices announcing the suspension and resumption of trading (www.euronext.com);
    
    
  • it can make public the observations that it submitted to the company;
    
    
  • the AMF's Secretary General may at any time launch an investigation into the company's financial disclosures. This procedure is confidential. More on the possible outcomes of an investigation.

 

• Where can I get information?

It is essential that you find out about the stock market and about the company you want to invest in.

Before investing in the stock market, there are a few things that you should learn about. The more you know, the better protected you will be. First, you should find out whether the shares of the company you are buying are listed on a regulated market, where specific safeguards exist, or in an unregulated market such as the Marché Libre. You should also know whether your money is going into equities or bonds, or into derivatives, which are more complex and often riskier. Similarly, find out about the types of orders that can be placed, and how to read a trade confirmation slip.

It is important to remember, once you become a shareholder, to keep track of your investment. You should remain abreast of current events through:

• the company in which you hold shares

Companies have a duty to publish information on their activities and financial position on an annual, half-yearly and quarterly basis. Be watchful for major developments that affect the company. These will be covered in press releases, usually in a daily newspaper with nationwide circulation.

You can also contact the person appointed by the company to handle relations with investors.

In addition, you would be wise to put yourself on the list of people to whom the company sends its disclosures. For this, you will have to become a registered shareholder. Note that before selling registered shares, you will have to convert them to bearer form, which usually takes a few days.

• the national French financial press
  
  
• the legal gazette (Bulletin des annonces légales obligatoires)
  • Hardcopy version
  • Internet: www.journal-officiel.gouv.fr
  • Minitel: 3615 / 3617 BALO
    
    
• Euronext
  
  You can contact Euronext Paris with questions about share trading (e.g. suspensions or share splits) or other market activities (IPO timetables, results of public tender offers, etc.). Call + 33(0)1-4927-1010 or check its website: www.euronext.com. You can also use the Internet to track share prices (a word of warning, prices are usually posted with a 15-minute delay), and if you are in France, you can use Minitel or the Audiotel server on 08-9268-8400 or 08-3668-8401 (be sure to have the Euroclear code to hand).
  
  
• your broker
  
  
• the AMF
  
  
  • The Section Decisions and disclosures disclosure database allows you to download disclosure documents submitted for AMF control. The disclosure database contains a wide range of documents, including registration documents, IPO prospectuses, mandatory buy-out offers, public tender offers and exchange offers. The AMF also releases a daily statement of decisions, to keep investors up to speed on its latest decisions.
    
    
  • The Ombudsman's office is available to help with queries on disclosures from companies in which you own shares as well as questions about the way in which your orders have been executed. You can contact the Ombudsman's Division by:
    
    

    • phone, Tuesdays and Thursdays, from 2 pm to 4 pm
    • email: mediation@amf-france.org
    • post:
      Service de la médiation
      Autorité des marchés financiers
      17 place de la Bourse,
      75082 Paris Cedex 02
      France
      

    
    More on the Ombudsman's Division.
    
  More on the role and rights of shareholders (only available in French).

 

• FAQ

• Do I have to tender my shares to a takeover bid?

  No, you are under no obligation to tender your shares. Before deciding what to do, carefully read the AMF-registered disclosure document that has been prepared for the bid. The only exception to this rule is a mandatory buy-out offer followed by a "squeeze-out", where the majority shareholder has the right to buy up outstanding shares from minority shareholders.

• How long an order is valid for?

  Unless otherwise stated, an order on a cash market - that is, a market where trades are settled immediately - is valid until the last trading day of the month.
  If you have any questions about stock market orders, go to Euronext's website (www.euronext.com) and read the section (in French) "Tools & services/general documentation/educational information".

• What do I need to know to trade options?

  In Paris, options are traded on an exchange called MONEP. New clients receive a AMF-registered fact sheet about MONEP, either when they open an account or when they place their first order. If the client is not a professional investor, the first order will not be accepted until seven days after the fact sheet has been sent out - and even then, only if the client has sent back a signed statement acknowledging that he or she is aware of the risks involved in derivatives trading.

• What are pro forma accounts?
  

  Pro forma accounts are prepared to reflect a change - in accounting methods, scope of consolidation, financial yearend, etc. - that would make it impossible to compare a company's financial statements from one year to the next. Pro forma accounts are drawn up on the basis of historical data, using conventions that reflect the event's impact on the financial statements. See the website of France's Institute of Statutory Auditors, the Compagnie nationale des commissaires aux comptes, for its standard on reviewing pro forma accounts (http://www.cncc.fr).

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Updated: 7 June 2006