The Florange Act was adopted by the Socialist French Parliament, on March 29, 2014. It imposed a dual voting structure on the shares of all French domiciled companies such that their voting power doubled when held for more than two years. Florange came into effect automatically in March 31, 2016, and companies who wished to opt out required a supermajority vote from their share-holders.
In 2015 Renault was 15% state owned, while Nissan held a 15% non-voting share. Under Macron’s behest as the phony head of the Economics Minister, the state proceed to purchase a further 5% shares, with the intent of vetoing any attempt by Renault to opt out of Florange.
Did common owners of Renault stock have any say in the matter? 61% voted against the Act, but with a sudden 20% of the shares, the government, and an undisclosed 8% of the public helped defeat the opt-out.
Macron was still a suckling. Brash, insular, arrogant, and a wrecking ball. His perpetually clueless self. When Ghosn protested that Florange would lead to a Japanese backlash he goaded Ghosn to swallow up Nissan entirely. Macron didn’t care about the Renault Nissan alliance and had no qualms about derailing it. He didn’t care about Ghosn’s experience, knowledge, or warnings. He wanted to impose himself on Renault. On Ghosn. On Japan. He had his nails to do. He had an election to run
Ghosn was stuck with the impossible task of explaining to the Japanese what had just transpired. The robotic Japs were perplexed. Wasn’t Ghosn a Kami? Didn’t French presidents respect the “Icebreaker’s” wishes? Who was Japan dealing with, if a 37 economics minister filing his nails could show-up the legendary “Mr. Fix-It?” A dirty gaijin?!
Nissan went into negotiation mode. It asked Ghosn for concessions, and to avoid a corporate melt-down, he granted them. Renault’s voting rights within Nissan were curbed, robbing Renault of power, and depreciating its shares.
By the time the government re-sold its extra 5% it had doubled its voting share in Renault to the detriment of both common holders, and the dismay of Japan’s Nissan. The French government’s 15% was now worth 30%, granting it automatic veto powers over any measures requiring a supermajority. Like any future Florange Acts, that might irk Carlos Ghosn.
The turn-out was low, and the “state’s holding was magnified by the low shareholder participation rate on Thursday, with just 72.5 percent of shares voted.”
It’s one thing when a company decides to sell shares of different classes, it’s entirely another when a government imposes this by a writ of law. A partial nationalization, the vote effectively rendered politically worthless nearly 62% of Renault’s shares. Where votes can be purchased, democracy can be swayed. Where their value is stipulated by administrative fiat, there is nothing to purchase.
“One big shareholder, endowed with double rights, “can block practically any resolution they like,” including things like capital increases that would lessen their control.”
In some respect, Renault got caught in a trap of its own making. Nissan’s shares were already second class, since they were non-voting. The asymmetry was justified as the price Nissan paid for Renault bailing it out in 1999. Non-voting shares were preferable to outright bankruptcy. French capital had saved a Japanese company. Daimler, who did have voting shares, opposed Florange. Nissan, no doubt, would have done the same, and so Renault’s own terms with Nissan, precipitated its fall, regardless of the saviors nationality.
“Georges Daverat, a Renault shareholder who attended the meeting on Thursday, said he was “totally furious” about the government’s intervention, particularly the fact that the state had used the options to but its stake, what he said amounted to insider trading.”
“The only interest of double voting rights is to allow the taking control of companies without having to own a majority of the shares,” Xavier Huillard, chief executive of concessions and construction company Vinci, said in a Bloomberg interview this week.”
From another point of view, the Florange Act, allowed the French government to raise money on the sale of its stakes while retaining control of the companies in question.
Nothing about Florange was novel. Twenty two of France’s biggest corporations in CAC40 (France’s S&P500) had dual share structures. The number rose by four with the law’s passing. As the FT reported, one of its biggest boosters was Vincent Bolloré, since it increased influence in his media holdings.
At its heart, Florange was an attempt to prevent outsourcing and the de-industrialization of France. A noble and legitimate concern, reduced to a caricature by Holland-Macron’s semi-criminal regime.
It was Arnaud de Montebourg who had wrote the first draft of the Act. Montebourg wanted companies owning assets in France but intent on selling them, to actively solicit offers from investors who would keep their factories open and employ French nationals. Dual-shares do not appear to have been mentioned in this draft. It was Macron who later amended the law, although the full extent of these amendments are also unknown.
Macron owns both Ghosn’s arrest, the decline in Renault shares, and the destruction of the world’s third largest automobile group.