The preference shares, a vector of growth for SMES / ETI

on October 12, 2017 – AP WRITING – Corporate

© DR – Didier Kling, president of the CCI, has entrusted to Laurent Pfeiffer the drafting of a report on the preferred shares.

In the framework of its action in favour of enterprises, the CCI Paris – Île-de-France has found that the preference shares, that are often unknown or perceived as too complex, could be particularly useful to many projects. However, despite the reforms already initiated in 2008, and then in 2014, many locks techniques continue to cripple the mechanism, which makes it widely perfectible.

The preference shares are sometimes excessively framed, which does not encourage international investors. It is, for example, impossible to guarantee the remuneration of the preference shares, like other foreign rights “, stresses Didier Kling (photo), president of the CCI Paris – Île-de-France.

The preference shares offer multiple opportunities for businesses : rethinking the logic of own funds ; to allay fears of dilution in de-linking the ownership of capital and power ; adapt to the challenges of the transfer of business and offer the keys to an innovative corporate culture. Moreover, this legal tool could find a place of choice as a vector of growth of the start-up, for which the place of Paris wants to establish itself as a european leader.

A flexible instrument, open and contractual

“The preference shares are not reserved only to the legal arrangements are complex for large companies, but find their interest with companies of the size smaller (SME, ETI). It is a tool extremely convenient and so easy to use “, says the rapporteur, Laurent Pfeiffer, elected member of the CCI Paris – Île-de-France.

The CCI Paris – Île-de-France wishes to attract the attention of business leaders on the levers of growth offered by the actions preferably. It makes a number of technical proposals and calls on the Government to pay particular attention to this subject in order to make preference shares an instrument that is flexible, open and contract.

“Such a reform is consistent with the objective of the president of the Republic to support the creation and growth of enterprises through the development of their own funds. It is a matter of contemporary competitiveness for our country by allowing him to bring his law to the international standards, known and valued by investors, ” adds the president.

What is preferred stock ?

Introduced into French law in 2004, the preference shares are financial instruments that allow the dissociation between power and capital within joint-stock companies, as well as the allocation of particular rights of any nature, temporary or permanent.

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