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Janvier 2017
Is the State a good shareholder? To answer this question using a strictly pragmatic approach,
the Cour des comptes reviewed State shareholdings in companies over the period 2010-2016. It
defined State Shareholder in a broad sense to include: the
Agence des participations de l’État
(APE), the Caisse des dépôts et consignations (CDC), and Bpifrance. In France, public
shareholdings in companies have long been a well-developed way of participating in the
The State’s presence as a company shareholder is justified no
t only for ownership or
financial reasons, but also on public policy grounds. As a result, there are contradictions
between multiple objectives that the State has difficulty overcoming. The reviews done by the
Cour des comptes show that the State has difficulty being a good shareholder. Despite
undeniable improvements, chronic weaknesses remain, notably in the area of governance.
Public shareholding rarely proves the best-adapted means of contending with the decline in
competitiveness and the shrinking industrial sector in the French economy. Moreover, the
growing financial needs of state-owned companies are going to place a heavy burden on public
budgets in the next few years.
The Cour des comptes calls for clarification of the objectives pursued, a commitment to radically
transforming corporate governance, and a limitation of investments by the State to what is
strictly necessary.
A vast and diverse array of companies, major challenges
In France, corporate investment is commonly used as a public policy tool in many different sectors. The
total value of State
shareholdings was about €100 billion at
end-2015, with the holdings in 62 publicly
listed companies
valued at €77.
4 billion at end-2016. The APE is the largest shareholder, followed by the
CDC and Bpifrance. This scattered and diverse portfolio, which is not widely publicised, owes more to
history than to any particular investment approach. Except for the Bpifrance holdings, the portfolio
changes very little.
With competition increasing, the companies in question are facing serious challenges and need to
demonstrate strategic flexibility. The State
responsibility as a shareholder is to anticipate and support
these transformations, which it is capable of doing, as proven by the examples of La Poste and Orange.
A worrisome financial situation
The financial results of the companies in which the State is a shareholder were inconsistent between 2010
and 2015, but the Cour des comptes did find an overall net decrease for those companies in which the
APE is a shareholder (the
largest portion of the State’s portfolio
). Despite good results in the defence,
industrial and telecommunications sectors, the APE recorded a very substantial loss (
1 billion) in
2015, due to structural problems at the railways and major energy companies. The overall outcome for
the public finances was negative in the 2010-2015 period. The financial needs of companies in which the
State has shareholdings are very large, and in the short term, it appears that the only way to provide the
additional capital required is either by expanding the programme of disposals or by taking funds from the
general budget.
The contradictions of State shareholding
The State is an atypical shareholder that exercises diverse roles, all of them legitimate. It must reconcile
numerous objectives, many of which are in contradiction with its own financial interests or with the
corporate interests of the companies in which it is a shareholder. This situation creates persistent tensions
and chronic difficulties that it has trouble overcoming. These tensions are seen mainly in the sectors
where the State is either the dominant or exclusive shareholder, i.e. the rail transport, nuclear energy, and
public audiovisual sectors.
The budget framework, which draws a distinction between capital transactions and dividends, is poorly
adapted to investment portfolio management and not conducive to dynamic management.
Significant improvements in governance, persistent shortcomings
The Cour des comptes notes the lack of a rigorous justification for public equity investments and of a clear
division of the APE, CDC, and Bpifrance
’s roles
. Although improvements to company governance have
been made, shortcomings persist, particularly when the State is the exclusive or majority shareholder, as
witnessed by failures of supervision that have had serious consequences, notably in the nuclear sector
with Areva.
Although real improvements are observed, the State has not managed to adequately resolve the
contradictions it faces, which weakens it as well. It still often ignores the importance of autonomous
management of public companies. The Cour des comptes has found
that the State’s
practices must be radically changed and improved, as the State exercises too much power in
management, but is not vigilant enough as a shareholder.
The Cour des comptes has formulated fifteen recommendations to address three priorities:
Set clear strategic objectives
and diligently pursue them, particularly by coordinating
investment policies among the three main State shareholders and by shifting APE holdings to
Supervise the shareholder role more closely,
ensuring the autonomy of companies, changing
railways’ status from a public institution to a corporation
, adopting a governance code for
relations with State shareholders, and transforming the APE into an autonomous agency;
Limit capital investments to what is strictly necessary
by modifying the size of the portfolio
to better adapt it to the targeted objectives.
The Cour des comptes recommends either reducing
the percentage of each shareholding without diminishing influence or governance rights, or
significantly tightening the scope of State shareholding.
Read the report
Ted Marx
Head of communication
+33 (0)1 42 98 55 62
Denis Gettliffe
Head of Press Relations
+33 (0)1 42 98 55 77