Florange law gives French state the upper hand

The adoption of double voting rights by state-controlled French companies could allow the cash-strapped government to raise money by selling shares while maintaining similar levels of influence.

The Florange law passed last year automatically gives shares registered for more than two years double voting rights unless two-thirds of shareholders vote otherwise.

From 2016 this will give a more powerful voice to the French state in many of the more than 70 companies in which it has long owned shares.

In the case of GDF Suez, for example, this extra influence could allow the government to sell some of its 33.3 per cent stake while maintaining the third voting stake it is required to have by law.

A 10 per cent sale would raise about €5bn at current prices for a government under pressure from Brussels to reduce the deficit.

Last October the government announced plans to sell state holdings worth €5bn to €10bn over 18 months, with ministers saying the energy sector is likely to be one of the first in line.

The government owns an 85 per cent stake in EDF, which is also set to move to a double voting system from 2016. But selling shares in a nuclear power company such as EDF is considered more politically sensitive than doing so in GDF Suez, a utility.

There is speculation the state could also end up selling some of its 25 per cent stake in Orange, in which double voting rights are also likely to come into force. The state sold a €583m stake last September.

In March, the state sold about 4 per cent of its stake in Safran, the defence and aerospace group, which was worth about €1bn at then market prices.

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