CONTENTS - Capgemini

48 ANNUAL
MANAGEMENT REPORT
Capgemini
manage the resulting risk, particularly through regular hedging
of intercompany flows. These hedges mainly take the form of
forward purchases and sales of currencies (see Note 18.B).
Financial instruments: financial instruments are used to hedge
in particular interest rate and currency risks. All hedging positions
relate to existing assets or liabilities and/or operating or
financial transactions. Gains and losses on financial instruments
designated as hedges are recognized on a symmetrical basis with
the loss or gain on the hedged items. The fair value of financial
instruments is estimated based on market prices or data supplied
by bank counterparties.
VII – FINANCIAL AUTHORIZATIONS
Pursuant to the delegations of authority given to the Board of
Directors by the Extraordinary Shareholders’ Meeting of May 11,
2006, the Board was granted a 26-month authorization to:
increase the share capital by capitalizing reserves;
issue new shares and/or securities convertible, redeemable,
exchangeable or otherwise exercisable for new shares of the
Company or granting a right to allocation of debt instruments,
with or without pre-emptive subscription rights;
increase the amount of the issues if the requests for shares exceed
the number of shares on offer, up to 15% of the initial issue
at the same price as for the initial issue (“Greenshoe” options);
issue shares and/or securities convertible, redeemable, exchangeable
or otherwise exercisable for new shares of the Company, or
granting a right to allocation of debt instruments, as payment for
shares tendered to a public exchange offer made by the Company
or contributions in kind to the Company of shares and/or
securities convertible, redeemable, exchangeable or otherwise
exercisable for new shares of the Company.
The overall limits on the amounts of the issues that could be
decided pursuant to the delegations of authority granted to the
Board were set at:
a maximum nominal amount of €1.5 billion for capital increases
paid up by capitalizing reserves;
a maximum nominal amount of €450 million for capital increases
with pre-emptive subscription rights, enabling the share capital
to be increased to a maximum nominal amount of approximately
€1.5 billion, and a maximum of €3 billion in total issuance
amounts;
a maximum nominal amount of €200 million for capital increases
without pre-emptive subscription rights, enabling the share capital
to be increased to a maximum nominal amount of approximately
€1.25 billion, and a maximum of €1.5 billion in total
issuance amounts;
a maximum aggregate nominal amount of €450 million and aggregate
issuance amount of €3 billion for securities convertible, redeem-
REPORT 2006 Capgemini
able, exchangeable or otherwise exercisable for new shares of the
Company, or granting a right to allocation of debt instruments.
On November 29, 2006, the Board decided to issue shares for cash
without pre-emptive subscription rights or priority subscription
period for existing shareholders, further to a delegation of authority
without pre-emptive subscription rights. The total amount
of the issue was €507 million, represented by 11,397,310 new
shares with a nominal value of €8 each (i.e., a total nominal issue
amount of €91 million).
The additional report required by law on the final terms and
conditions applicable to this capital increase was drawn up on
December 6, 2006 by Paul Hermelin, Chief Executive Officer, and
is available to shareholders at this Meeting.
Accordingly, the Board of Directors has used almost half of the
maximum nominal amount of €200 million set for capital increases
in the event of elimination of pre-emptive subscription rights.
Taking into consideration the fact that the current delegations of
authority are valid up until July 11, 2008, the Board of Directors
has decided not to submit their renewal to your approval at this
Meeting.
A table summarizing the delegations of authority and powers
granted by the Shareholders’ Meeting to the Board of Directors
with regard to share issues is provided on page 128 and 129 of
the Registration Document.
VIII – COMMENTS REGARDING THE
EXTRAORDINARY SHAREHOLDERS’
MEETING
8.1 Authorization to cancel shares acquired
under the buyback program
As stated above, the Board of Directors is seeking shareholders’
authorization to cancel some or all of the shares purchased pursuant
to articles L.225-209 et seq. of the French Commercial Code
(the authorization to buy back shares is described in section 4.8
of this report), for up to 10% of its capital by 24-month period.
8.2 Allocation of shares free of consideration
Pursuant to article 83 of the 2005 Finance Act (amended by the
French law of December 14, 2006 on employee profit-sharing
and share ownership), the Group has set up a scheme under
which it may allocate existing shares or shares to be issued free
of consideration to its employees. In accordance with this Act,
the allocation of such shares to their beneficiaries shall only be
definitive at the end of a minimum vesting period of two years,
with the minimum period for retention set at two years.
This scheme is not generally intended to supplement stock option
awards but to replace such awards whenever the tax legislation