French CEOs may quake in their boots when they hear lawyer Sophie L’Helias is on the phone – but they always take her call. Who could afford to ignore L’Helias, who has over ten years’ experience of going in to bat for investors against the boards of some of France’s top companies? As a shareholder-rights advocate, L’Helias has represented funds and independent investors in battles at Gemplus, Schneider Legrand, Générale de Santé, Eurazeo, Vivendi and Eurotunnel.
She first came to prominence in the early 1990s as a partner at Déminor, the Belgium-based shareholder rights firm, which she left in 1994 to set up her own practice. Usually, however, the French-born lawyer who spent her formative years in Canada fights her battles behind the scenes. With law degrees from both the US and Europe, and with an almost American-style edge to her, she moves effortlessly between the formal French boardroom and the mainly US-based funds that hire her.
‘I think I have an absence of fear that is very American,’ L’Helias explains. ‘I build constructive relationships with executives that allow me to achieve investor objectives.’ She also never targets a company, becoming engaged in an issue only on behalf of investors who approach her. And she refuses to take on clients seeking deals that do not treat all shareholders equally. ‘I try to align the interests of all [independent] shareholders,’ she says.
Although L’Helias says France is at the front of the European class in terms of rules that protect shareholders, she also feels investors in France are too passive and don’t often take advantage of their legal rights. An incestuous French business climate means all the challenges to the corporate oligarchy have come from hedge funds and activist funds originating outside of France.
Big battles
Some of L’Helias’ biggest accomplishments include launching the first-ever independent proxy solicitation in the battle over the Eurotunnel restructuring in 1997. She also successfully fought an unequal payout to independent shareholders of French electrical equipment maker Legrand when rival Schneider Electric bought it in 2001. But the battles of the future will be different, L’Helias predicts, mainly because many companies in Europe are getting their houses in order. Several of the more flagrant corporate governance violations are fading away – but that doesn’t mean all the battles have been won.
L’Helias expects to see an increasing number of lawsuits filed by independent investors who feel they are not being treated fairly or who want more say in how their company is being run. ‘Investors are becoming more savvy, and they have a much lower tolerance for bad behavior,’ she notes, adding that these suits might not initially be filed by the kinds of funds she represents but, rather, by retail investors and advocacy groups she says are popping up all over Europe. Media-shy institutional investors will support these actions behind the scenes at first before eventually following suit, L’Helias predicts.
Another area of particular concern is the increasing number of European companies that are listing in the US but not adopting the same openness as US firms. ‘For the moment, these dual-listed companies are complying with only the lowest level,’ she explains. ‘In the case of DaimlerChrysler, for instance, the CEO is accepting US-level compensation, but offers only German opacity.’
Fierce competition between exchanges to get companies to list leads them to dilute rules to attract listings, and L’Helias fears new accounting rules in Europe and other legislative fixes won’t solve the problem. ‘There’s a big difference between box-ticking and real substantive changes,’ she says, pointing to a new rule in France requiring funds to vote their shares. While this looks good on paper, L’Helias wonders whether the funds have the manpower to make informed decisions; previously, these proxies were simply handed to management. She’s no more hopeful about calls for mandatory independent directors: ‘It’s one thing to appoint a director without any conflicts on paper; it’s quite another for him or her to act independently.’
