COMPETITION • FRENCH LAW • MERGERS
An undertaking has sole control when it alone has decisive influence over the activities of another undertaking. An undertaking has control over another where:
– it alone has the power to take strategic decisions for the undertaking in question;
– it is the only shareholder able to block the other undertaking’s strategic decisions, although without the ability to impose those decisions on its own (referred to as “negative sole control”).
Sole control is generally acquired by operation of law when an undertaking obtains a majority of the capital and voting rights of a company or of the parent company of a group of companies. It can however also arise from a minority shareholding where special voting rights are attached to the minority shareholding, such as double voting rights, or where the minority shareholder has specific veto rights under the articles of incorporation or a shareholders’ agreement, or where the articles of incorporation allow the minority shareholder to have a majority in the undertaking’s governing bodies. The undertaking may also have de facto sole control when it is virtually certain to obtain a majority at the general meeting in view of the level of its interest and the actual presence of shareholders at the general meeting in previous years – generally the three years preceding the change in the capital holding liable to result in the acquisition of control.