Cross-border operations in France

21 May 2024

The French legal framework for cross-border operations (mergers, spin-offs, partial contributions of assets, transformations) within the European Union has been greatly modified when France transposed the Directive (EU) 2019/2121 by the Ordinance n°2023-393 of May 24th, 2023 and the Decree n°2023-430 of June 2nd, 2023.

The purpose of the Directive (EU) 2019/2121 was mainly to (i) harmonize the laws within the European Union on cross-border mergers while introducing three other cross-border operations (spin-offs, partial contributions of assets, and transformation) and to (ii) strengthen the protection of shareholders, creditors, and employees. The Law n° 2024-364 dated April 22nd, 2024, while ratifying the Ordinance n°2023-393, has introduced some adjustments which impact, at local level, the qualification and timetable of the cross-border operations. The three main adjustments are the following :

In a cross-border merger, the shareholders, creditors and employees (directly or through their representatives) may submit observations on the contemplated operation. The notice sent to them, which is mandatory, will be filed before the clerk (greffier) of the registered office of the French company. The shareholders, creditors and employees may submit their observations at the latest five business days before the shareholder’s meeting approving the operation or, in the event of a simplified cross-border merger where the approval of the sole shareholder is not required, before the completion of the operation. We may question the impact of this notice to protect the shareholders, creditors and employees, since the French regulation doesn’t impose to take into consideration the latter’s’ observations,

The protection of creditors of companies participating in a spin-off or in a partial contribution of assets has increased since a joint and several liability (solidarité) between the participating companies has been reinstated. However, the companies, at their sole discretion, may now expressly decide to limit the beneficiary’s liability to the amount of transferred liabilities, valued on the effective date of the operation. Considering the purpose of Directive (EU) 2019/2121 to strengthen the protection of creditors, this adjustment is questionable, and

The definition of cross-border partial contribution of assets, in Article L. 236-48 of the French Commercial Code, has been amended and now insists on the fact that it’s an operation resulting in a French company contributing to or benefiting from a contribution of a portion of both the contributor’s assets and liabilities. However, in the event only assets are contributed (and no liability) and therefore the operation cannot be automatically considered as a cross-border partial contribution of assets, the parties, at their sole discretion, will decide if the operation falls under either the cross-border spin-off regime or the local regime of partial contribution of assets.