Reference Document

Risk Factors
4.3. Regulatory and Legal Risks 4
The Group may be involved in legal proceedings with clients,
partners, subcontractors, employees and tax or regulatory
authorities.
The Group is occasionally involved in legal proceedings with clients,
partners and subcontractors its normal course of business. It could
also be involved in proceedings initiated by (i) employees with
occupational disease claims related to certain activities (divers
for instance) or to exposure to hazardous substances (such as
asbestos), and/or (ii) tax or regulatory authorities or any third
parties. Technip cannot exclude if this risk materializes it may
have an impact on the Company’s image and/or its fi nancial
condition.
The double voting rights and change of control provisions,
which are included in certain agreements to which Technip
is a party, can limit the amount of the premium that could
be offered by a potential acquirer.
Since the Shareholders’ Meeting of November 24, 1995, the
Company’s articles of association (statuts) have provided that
shareholders who have held fully paid-up shares in registered form
in their name for at least two years have the right to two votes
for every share thus held. As a result, a new shareholder of the
Company must keep his or her shares in registered form for two
years prior to receiving double voting rights. Double voting rights
are automatically lost in the event such shares are converted
into bearer form or are transferred. Double voting rights can only
be cancelled where approved by the Company’s Extraordinary
Shareholders’ Meeting following the approval of a special assembly
of holders of such double voting rights.
As of February 28, 2010, 4,888,168 shares carried double voting
rights, representing approximately 4.45% of the share capital and
approximately 4.40% of the voting rights in the Company.
A takeover could potentially trigger the relevant provisions of
certain commercial contracts having an “intuitu personae” dimension,
especially regarding license contracts. The direct effect of
these provisions which give, for example, a licensor the option
to challenge granted rights, should not result in the prevention
or delay of a change in control but could, as the case may be,
decrease the Group’s access to certain markets.
Double voting rights as well as the change of control provisions
discussed above may make it more difficult for a potential
acquirer to acquire a percentage of the Company’s share capital,
or even impede such an acquisition, and therefore provide a
defense against hostile takeovers and may delay or even prevent
a change in control in which the Company’s shareholders might
have received a premium in relation to the market price of the
shares.
One or more of Technip’s contracts for projects in Iran may
be subject to US sanctions, which could limit its ability
to obtain credit from US financial institutions and restrict
its ability to make sales in the United States, potentially
increasing its cost of borrowing and reducing its business
opportunities.
As a multinational corporation organized outside the United
States and with operations throughout the world, Technip operates
in certain countries where US persons or entities and, in some
cases, non-US persons and entities, are prohibited from doing
business. Pursuant to the Iran and Libya Sanctions Act of 1996,
as amended in 2001 and 2006 (the “ILSA”), the President of
the United States may impose a certain number of sanctions
on any person or company, regardless of nationality, that makes
an investment in Iran exceeding US$20 million or that directly
contributes to improving Iran’s ability to develop its petroleum
industries. Technip is seeking to complete projects in Iran and
generated revenues in Iran representing 0.04% of the Group’s
revenues. If the United States government were to determine
that some or all of Technip’s activities in Iran are “investments”
as defined by the ILSA, the President of the United States could
apply a range of sanctions, which can include restricting Technip’s
ability to obtain credit from US financial institutions or support
from the United States Export-Import Bank or prohibiting Technip
from doing business in the United States. The application of such
sanctions to Technip could increase its cost of borrowing and
reduce its business opportunities.
TSKJ
Technip is one of four shareholders of TSKJ, which carried out the
construction of a natural gas liquefaction complex in Nigeria for
Nigeria LNG Limited (“NLNG”) from 1994 onwards. The companies
KBR (formerly a subsidiary of the US Group Halliburton),
Snamprogetti Netherlands BV (a subsidiary of the Italian Group
ENI) and JGC Corporation (Japan) each hold 25% of TSKJ’s share
capital.
The United States Securities and Exchange Commission (“SEC”)
and the United States Department of Justice (“DOJ”) have since
2004 been conducting formal investigations into payments made
in connection with the construction by TSKJ of a natural gas
liquefaction complex for NLNG. A similar investigation by a French
magistrate against “unidentified persons” which also commenced
in 2004 is still ongoing.
During the summer of 2004, the SEC requested Technip (which
registered its shares with the SEC between October 2001 and
November 2007) to voluntarily provide information relating to
the implementation of this Project. Technip has fully cooperated
on a voluntary basis with both formal and informal requests from
the SEC and the DOJ since this request.
On February 11, 2009 KBR, which was at all relevant times,
between 1994 and 2007, a domestic issuer under US securities
laws, pleaded guilty to a five count criminal information in the
United States District Court involving charges related to the
United States Foreign Corrupt Practices Act (“FCPA”) for conduct
arising from its participation in TSKJ. In its plea agreement,
KBR asserted that it had conspired to pay bribes to Nigerian
Government Officials. As part of its plea agreement, KBR agreed
to pay a criminal fine of US$402 million. Contemporaneously,
KBR and its former parent company Halliburton also reached a
settlement of a related civil complaint filed by the SEC alleging
civil violations of the FCPA. KBR and Halliburton jointly agreed
to pay US$177 million in settlement of the civil complaint. The
US Government has also brought criminal charges against certain
individuals for conduct related to the Project.
A person or entity found in violation of the FCPA could be
subject to criminal fines and civil penalties of up to US$500,000
per violation and equitable remedies including disgorgement
(if applicable) of profits including pre-judgment interest on such
profits. Criminal penalties could range up to US$2 million per
violation or twice the pecuniary gain or loss from the violation.
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