The change is intended to ensure a closer match between the actual market position of component stocks and the index. It will also reduce the risk of peaks in volatility that may result from an excessive discrepancy between the weighting of a stock in the index and the number of shares actually available to the market.
The Scientific Committee defines free float as the total share capital issued by the companies considered less shares held directly or indirectly by companies in the same group, shares held by the founders and/or the State, controlling interests, shares subject to a shareholders' agreement not covered by one of the above categories, and shares representing what are otherwise considered stable holdings.
Free float will be reassessed once a year on the basis of information then publicly available, and will systematically be rounded up to the nearest multiple of 5%. It may also be adjusted at other dates in the event of a transaction or transactions reducing or increasing free float by five percentage points or more. The weighting of any one stock in the CAC 40 index will be capped at 15%, ensuring that no single stock carries too much weight and that the sample remains representative.
The Scientific Committee will continue to meet four times a year on average to rebalance the CAC 40 index. Liquidity and capitalization will remain the criteria for selection, although the latter will be assessed on the basis of free float rather than total capitalization.
The exact date and technical details of the change will be published at a later date.
Appendix: Definition of free float
Free float is taken to mean total share capital after deduction of the shares in the six categories listed below.
- Shares held by group companies
Shares of the listed company held by companies that it controls within the meaning of Article 233/3 of the French Commercial Code. - Shares held by founders
Shares held directly or indirectly by the founders (individuals or family group) when these founders have managerial or supervisory influence (management positions, control by voting rights, influence that is a matter of public knowledge, etc.). - Shares held by the State
Interests held directly by the State, by public-sector companies and by companies themselves controlled by the State. - Shares within the scope of a shareholders agreement
Shares subject to a shareholders' agreement within the meaning of Article 233/10 and 11 of the French Commercial Code, and other than those held by founders or the State. - Controlling interest
hares held by juridical persons (other than founders or the State) exercising control within the meaning of article 233/3 of the French Commercial Code. Interests considered stable
Interests exceeding 5% and which have not declined significantly (i.e., by one percentage point or more, excluding the impact of dilution) in the three preceding years.
This category also includes shareholders that, in addition to or in association with the link represented by share ownership, have recently entered into significant industrial or strategic agreements with the company.
