Loreal 2011 Annual Report Download - page 214

212 REGISTRATION DOCUMENT − L’ORÉAL 2011
7Stock market information andsharecapital
Shareholder structure
7.3.3. Employee share ownership
The employees of the Company and its affiliates held
4,404,950shares as at December31st, 2011, that is 0.73% of the
share capital, through the Company S avings P lan (PEE).
At that date, this stake in the capital is held by 9,649employees
participating in the Group Company S avings P lan.
7.3.4. Disclosures to
theCompany oflegal
thresholds crossed
During 2011, the Company was not informed of any crossing of
the legal thresholds with regard to the holding of its shares or
voting rights.
7.3.5. Shareholders’ agreements
relating to shares in the
Company’s share capital
The Company is not aware of any shareholders’ agreements
relating to shares in its share capital other than the agreement
described below.
A memorandum of agreement was signed on February3rd, 2004
between Mrs.Liliane Bettencourt and her family, and Nestlé,
providing for the merger of Gesparal into L’Oréal. It contains the
following clauses:
7.3.5.1. Clauses relating to the management
ofthe L’Oréal shares held
Clause limiting the shareholding
The parties agreed not to increase their shareholdings or their
voting rights held in L’Oréal, either directly or indirectly, in any
manner whatsoever, for a minimum period of three years as from
April29th, 2004, and in any case not until six months have elapsed
after the death of Mrs.Bettencourt.
Lock-up clause
The parties agreed not to transfer any or all of their L’Oréal
shares either directly or indirectly, for a period of five years as
from April29th, 2004.
Exceptions to the undertaking to limit the
shareholding and the lock-up clause
a) The undertaking to limit the shareholding does not apply if
the increase in the shareholding results from a reduction in
the number of L’Oréal shares or voting rights, the acquisition
by the Company of its own shares, or the suspension or
removal of the voting rights of a shareholder.
b) The undertaking to limit the shareholding and the lock-up
clause will no longer apply in the event of a takeover bid
for L’Oréal shares, as from the date of publication of the
clearance decision ( avis de recevabilité ) and up until the
day after the publication of the notice of results ( avis de
résultat).
c) In the event of an increase in the share capital of L’Oréal, the
parties may, provided that the other party has voted in favour
of the capital increase, acquire shares or subscribe for new
shares, in order to maintain their holding at the percentage
existing prior to the said transaction.
d) The parties are free to carry out transfers of L’Oréal shares,
in the case of individuals, in favour of an ascendant,
descendant or spouse in the form of a gift, and in the case
of individuals or legal entities, in favour of any company in
which the individual or legal entity carrying out the transfer
holds over 90% of the share capital or voting rights.
Pre-emption clause
The parties have reciprocally granted each other a pre-emption
right concerning the L’Oréal shares they hold since the date of
the merger, and those they will hold after such date.
This pre-emption right will come into force on expiry of the lock-
up clause for a period of five years; as an exception, it will come
into force before the expiry of the lock-up period in the event of
a takeover bid for L’Oréal shares for a period beginning on the
day of the clearance decision and ending the day after the
publication of the notice of results.
“No concert party” provision
The parties have agreed for a period of ten years from the
effective date of the merger not to conclude an agreement with
any third party and not to form a concert party relating to the
shares making up the share capital of L’Oréal.
Breach of such undertaking entitles the other party to exercise
its pre-emption right with regard to the shareholding of the party
having committed such breach, for a price per share equal to
the average of the share prices for the last thirty trading sessions
prior to notification of exercise of the pre-emption right.
7.3.5.2. Board of Directors
The memorandum of agreement did not provide for any change
to the composition of the Board of Directors as compared to
its composition at the date of signing, but did stipulate an
undertaking by the parties to vote in favour of the appointment
as Directors of three members proposed by the other party.
The Bettencourt family and Nestlé also agreed to vote in favour of
the appointment of two Vice-Chairmen of the Board of Directors,
one proposed by the Bettencourt family, and the other by Nestlé.
The parties provided for the creation on the Board of Directors of
L’Oréal of a committee
called the Strategy and Implementation
Committee which has six members, and is chaired by the