Capital Increase and Shareholder Implications

Extract

[...] It will however be necessary to ensure that we do not infringe, by too advantageous stipulations, the prohibition of leonine clauses provided for in Article 1844-1 of the Civil Code. III. Identification of clauses contrary to the interests of historical shareholders The fund in question could try to introduce, logically through a shareholders' agreement, certain clauses unfavorable to historical shareholders. It could in this regard be the contractual elements listed below: - A forced exit clause (also known as a Drag along clause) by which the majority shareholder, wishing to sell their shares, will force minority shareholders to sell their participation to the buyer they have chosen; - A profit distribution clause strongly unfavorable to historical shareholders; - A clause known as 'buy or sell' by which allowing one of the shareholders to sell their shares at the price they propose. [...]

[...] com). It should be noted, in accordance with Article L225-129 of the Commercial Code, that a delegation of this competence is possible. In the absence of further clarification, it does not seem opportune to devote further developments to this question. In accordance with the provisions of Article L225-96 of the Commercial Code, the assembly in question must, in order to deliberate validly, meet the following requirements: - Conditions of quorum: On the first convocation, the shareholders present or represented must represent ¼ of the shareholders, then 1/5 on second convocation. [...]

[...] D. The bond issue Is the realization of a bond issue conducive to protecting the rights of historical shareholders, in the context of a search for financing? The option of a bond financing could also be considered, again with the aim of limiting the dilutive effect of the proposed operation. The aforementioned bonds corresponding to the issue of debt securities conferring on their holders a right to repayment and, if applicable, the payment of the agreed-upon interest between the parties (Article L213-1 A of the CMF). [...]

[...] E. The issuance of preference shares What rights can be granted or withdrawn from shareholders in the context of the issuance of preference shares known as? The issuance of preference shares could also be considered insofar as such shares can be accompanied by a limited or even null voting right (Article L228-11 C. com). Such shares would represent a double advantage. They would allow preventing any dilution of historical shareholders' political rights, the entry into the capital of the fund could thus be made for 1,350,000 euros entirely at the capital account of the balance sheet. [...]

[...] The current account mechanism Under what conditions could an investment fund agree to an investment in a current account in place of an investment in capital? The investment of the fund in question in the partner's current account would seem to represent a certain advantage. By this mechanism the social capital would not be increased by the total amount of the envisaged contribution, namely 1.350.000 euros, but by a more modest amount that the parties would determine by distribution between the capital account and the partner's current account on the balance sheet. [...]