DANONE - Registration document 2015

Share capital and share ownership

7.6 Voting rights, crossing of thresholds

DANONE

REGISTRATION DOCUMENT 2015

314

Exceptions to limitations on voting rights

In accordance with Article 26 II of the Company's by-laws, the afore-

mentioned limitations shall become null and void if any individual or

corporate entity, acting alone or in concert with one or more individ-

uals or corporate entities, were to come into possession of at least

two-thirds of the total shares of the Company as a result of a public

tender offer for all the Company's shares. TheBoard of Directors shall

formally acknowledge that the limitations have become null and void

and shall complete the corresponding modifications to the by-laws.

In addition, in accordance with the general regulations of the French

Financial Markets Authority, the effects of the limitations provided for

in the preceding sections shall be suspended at the first Shareholders'

Meeting following the close of a takeover bid if the bidder, acting alone

or in concert, were to come into possession of more than two-thirds

of the total shares or total voting rights of the company concerned.

Lastly, following adoption of the 16

resolution by the Shareholders'

Meeting of April 22, 2010, the limitations on voting rights shall be sus-

pended for a Shareholders' Meeting if the number of shares present

or represented at such meeting reaches or exceeds 75% of the total

number of shares carrying voting rights. In such event, the Chairman

of theBoard of Directors (or any other personwho is presiding over the

meeting in his absence) shall formally acknowledge the suspension of

said limitation when the Shareholders' Meeting is opened.

Reasons for the limitation of voting rights for

shareholders

The Board of Directors has, on several occasions, reviewed this

clause limiting voting rights at Shareholders' Meetings and, notably

following discussions with its shareholders, has concluded that

this voting rights limitation is in the interest of all the Company's

shareholders. Thus:

•

considering the effective participation rate at Shareholders'

Meetings (which remains far below the average participation

rate to the CAC 40's shareholders' meetings), this limitation

prevents shareholders from influencing corporate decisions

in a manner that would be disproportionate to the actual size

of their shareholding, particularly in the event of a low quorum

or when a simple majority is sufficient for the adoption of a

corporate decision (with a quorum for Shareholders' Meetings

of 50%, 25% of the votes could be sufficient to adopt or reject a

corporate decision);

•

considering Danone's disperse shareholding, in case of absence

of such a limitationmechanism, a shareholder could take control

of the Company “by stealth”, i.e. without being obliged to launch

a public tender offer, and to enable existing shareholders to

dispose of their shareholdings in the Company under satisfac-

tory conditions. Therefore, the clause limiting voting rights is

indeed aimed at requiring at any time, any shareholder wishing

to take control of the Company, to launch a takeover bid over all

the Company's shares, to offer a control premium, and, when

required, to respect price conditions as set by the French Market

Authority. In this regard, this provision provides protection for

all the shareholders and guarantees them the best valuation

for their shares;

•

this clause of the by-laws does not, under any circumstances,

constitute an obstacle to a takeover bid on the Company, since

the clause becomes automatically null and void for the first

General Meeting subsequent to a takeover bid resulting in, one

or more shareholders acting in concert, to come to own more

than two-thirds of the Company's share capital or voting rights;

•

the validity of clauses limiting voting rights has been recog-

nized by the French commercial code and, the fact that several

CAC 40 companies, having also a disperse shareholding, have

implemented a similar mechanism in their by-laws, illustrates

that it is useful;

•

the limitation clause does not affect, in any ways, the economic

rights of the shareholders that would be concerned by themeasure

in the sense that such shareholder can receive the full dividend

attached to the shares he holds.

Like other CAC 40 companies, in 2007, the Shareholders' Meeting

rejected a resolution aimed at removing this statutory clause limiting

voting rights at Meeting.

In 2010, following discussions with its shareholders, the Board

considered it would be appropriate to amend the terms of the voting

rights limitation mechanism in order to introduce the automatic

suspension of the limitation process for any Shareholders' Meeting

at which a sufficiently high quorum is achieved. Indeed, whereas

this limitation appears appropriate and justified in the event of a low

quorum, it appears superfluous in the event of a high quorum, since

such a quorum would ensure all shareholders could express their

opinion without the risk of distortion. For this reason, this limitation

is suspended, in respect of any Meeting at which the number of

shares whose shareholders are present or represented reaches or

exceeds 75% of the total number of shares with voting rights. This

suspension mechanism based on the quorum, offers an additional

guarantee to Danone's shareholders, as it ensures the voting rights

limitation would be objectively activated.

In the event that a shareholder acquires a significant non-controlling

interest in the Company's share capital, the quorum should auto-

matically increase and would facilitate the suspension of the clause,

while ensuring that said shareholder was not able to influence pro-

ceedings at the Shareholders' Meeting in amanner disproportionate

to his or her shareholding.

The quorum achieved at the Shareholders' Meeting of April 29, 2015

was 52.5%.

Crossing of thresholds

In addition to the legal obligation to inform the Company and the

French Financial Markets Authority in the event of a crossing, in ei-

ther direction, of any of the following thresholds: 5%, 10%, 15%, 20%,

25%, 30%, one-third, 50%, two-thirds, 90% or 95% of the Company's

share capital or voting rights, within four trading days of crossing such

shareholding threshold (Article L. 233-7 of the French commercial

code), any individual or entity that comes to acquire or ceases to hold

in any manner whatsoever, within the meaning of Articles L. 233-7 et

seq. of the French commercial code, a fraction equivalent to 0.5% of

the voting rights or a multiple thereof must, within five trading days

of crossing such threshold, notify the Company of the total number of

shares or securities giving future access to the capital and the total

number of voting rights that said individual or entity holds alone, or

indirectly, or in concert, by registered mail with return receipt to the

Company's registered office. If the threshold is crossed as a result of a

purchase or sale on themarket, the period of five trading days begins

as from the date of trade and not the date of delivery.

In the event of failure to comply with this notification requirement, upon

the request of any holder or holders of 5%or more of the voting rights,

the voting rights inexcess of the fraction that shouldhavebeendeclared

may not be exercised or delegated by the non-complying shareholder

at any Shareholders' Meeting held during a period of two years as from

the date on which the shareholder makes the corrective notification.