Hughes Hubbard & Reed updates

New law introduces ethical accountability for corporates
Hughes Hubbard & Reed
  • Company & Commercial
  • France
  • November 27 2017

The new law on the duty of vigilance for parent companies and principal contractors aims to improve the accountability of multinational companies, prevent serious incidents in France and abroad and allow parties to obtain compensation for losses which they suffer as a consequence of non-compliance. To achieve these aims, the law requires companies to draft an awareness plan and implement a monitoring and whistleblowing system. It also introduces penalties for non-compliance.

Impact of Sapin II Law on company law
Hughes Hubbard & Reed
  • Company & Commercial
  • France
  • July 03 2017

The Sapin II Law aims to support transparency, modernise business activity and combat corruption. It introduces measures to regulate executive pay in listed companies, simplify company law and modernise bond issues. Among other things, it has simplified the procedure for contributions of goodwill, abolished the prior authorisation requirement for certain transactions and simplified the procedure for issuing bonds.

Supreme Court ruling reinforces corporate veil
Hughes Hubbard & Reed
  • Company & Commercial
  • France
  • March 06 2017

The concept of de facto management makes it possible to hold a parent company liable for its subsidiary by requiring that it make up any shortfall in its assets if the subsidiary is insolvent. This ultimately leads to a piercing of the corporate veil. A recent Supreme Court ruling points to a shift in case law towards a more restrictive interpretation of de facto management, thereby reinforcing the corporate veil.

Sudden termination of established commercial relationship in international context: lessons from recent EU ruling
Hughes Hubbard & Reed
  • Company & Commercial
  • France
  • November 28 2016

A recent landmark European Court of Justice (ECJ) ruling calls into question the type of liability incurred when an established commercial relationship is suddenly terminated. According to the ECJ, the liability is contractual, whereas for the French Supreme Court, tortious liability arises. The practical consequences of this ruling are significant in that EU law on jurisdiction differs substantially, depending on whether the liability in question is tortious or contractual.

Law of obligations reform: six takeaways
Hughes Hubbard & Reed
  • Company & Commercial
  • France
  • August 22 2016

The long-awaited reform of the law of obligations was recently issued by the Ministry of Justice. Even though the reform is mostly a codification of existing case law, it establishes a number of innovations, such as hardship and anticipatory non-performance. Legal advisers should pay close attention to the changes introduced by the reform when drafting, interpreting or enforcing contracts.

Continuation of established commercial relationships in context of business sales
Hughes Hubbard & Reed
  • Company & Commercial
  • France
  • June 13 2016

As the sale of a business does not automatically involve a transfer of the seller's rights and obligations to the buyer, this raises the issue of whether commercial relationships entered into by the seller must be continued by the buyer or whether they constitute new relationships created when the business is taken over. A recent Supreme Court decision clarified the law in this area.

New information measures to boost employee buy-outs of SMEs
Hughes Hubbard & Reed
  • Company & Commercial
  • France
  • March 28 2016

Article 18 of Law 2014-856 has introduced a new requirement for small and medium-sized companies to provide employees with information every three years about buying out their company. The main aim of the legislation is to improve employee awareness of the benefits and difficulties of buying their company and to provide information about the aid packages that are available.

Tougher environmental information disclosure obligations for sociétés anonymes
Hughes Hubbard & Reed
  • Company & Commercial
  • France
  • January 18 2016

New legislation requires certain limited liability companies to include social and environmental and corporate responsibility information in their annual reports. While it should help to foster greater transparency and social and environmental responsibility, it also increases red tape and thus sits uneasily with the government's ambition of boosting economic growth by simplifying rules and regulations for businesses.

Supreme Court ruling clarifies parent company liability
Hughes Hubbard & Reed
  • Company & Commercial
  • France
  • July 06 2015

Within a group of companies, the principle that a company is autonomous and independent provides the basis for the legal independence of a subsidiary in relation to its parent company or the other companies within the group, and for the fact that a parent company cannot be held liable for the actions of its subsidiaries. However, the courts and the legislature have created exceptions to this principle in order to protect third parties.

Commercial agents: to be or not to be?
Hughes Hubbard & Reed
  • Company & Commercial
  • France
  • March 09 2015

Manufacturers and service providers often have recourse to third-party companies or individuals, commonly referred to as 'agents', to promote their products or services in France. However, even when a relationship is regulated by an agreement which clearly sets out each party's obligations and rights, disputes can arise regarding the qualification of the relationship as a commercial agency.

New rules for shareholders under crowdfunding legal framework
Hughes Hubbard & Reed
  • Company & Commercial
  • France
  • December 08 2014

The government recently introduced legislation to regulate crowdfunding and protect investors. If a simplified joint stock company offers securities to the public through crowdfunding, it must now comply with a number of rules that apply to public limited companies. The changes are designed to give shareholders better information and more say over the company's affairs.

Initiative to cut red tape continues
Hughes Hubbard & Reed
  • Company & Commercial
  • France
  • September 08 2014

A new presidential order, which implements a number of measures previously announced in Law 2014-1, affects regulated agreements, the time limit for holding annual general meetings and the enforceability of share transfers in certain companies. Further, as part of an ongoing initiative to boost competitiveness by simplifying business rules and regulations, the Senate is debating a draft law on the simplification of business rules.

Terminating a business relationship? Plan ahead
Hughes Hubbard & Reed
  • Company & Commercial
  • France
  • June 02 2014

France has specific, mandatory rules governing the termination of commercial relationships. Foreign business partners who have dealings in France or with French partners are often unaware that terminating their business relationship could lead to liability in tort under French law, even if there is no breach of contract or the business relationship has been performed outside of France.

Initiative to cut red tape gathers pace
Hughes Hubbard & Reed
  • Company & Commercial
  • France
  • February 24 2014

New legislation aims to simplify the rules and regulations applicable to companies. The government's objective is to help businesses by reducing bureaucracy and relaxing the multitude of regulations that affect them. The legislation also seeks to modernise administrative procedures, allowing companies to focus on their core activities, in order to boost competitiveness.

Employees get a bigger say in the boardroom
Hughes Hubbard & Reed
  • Company & Commercial
  • France
  • October 14 2013

A recent law has brought about greater employee involvement in corporate governance by introducing a new system of employee representation on boards of directors and supervisory boards. It takes a cautious approach, applying only to groups that employ a relatively large workforce, and does not address whether employee-appointed directors should be entitled to sit on key committees, such as remuneration or audit committees.

Shareholders' right of action - a growing trend
Hughes Hubbard & Reed
  • Company & Commercial
  • France
  • July 29 2013

Shareholders are increasingly resorting to legal action to protect their investments not only when they have suffered a loss directly, but also when the company in which they hold shares has suffered the loss. However, their scope of action remains limited in the latter case: their only remedy is to take action against the company executives who fail to defend the company properly against third parties for the company's loss.

Having a say on pay the French way
Hughes Hubbard & Reed
  • Company & Commercial
  • France
  • April 22 2013

France has so far lagged behind efforts to give shareholders a greater say on remuneration for corporate officers. However, the government has indicated that it may propose legislation later in the year, possibly before the summer, to modernise legislation on corporate executive pay. To this end it is consulting stakeholders on the shape that future changes could take.

Intra-group management agreements: beware the pitfalls
Hughes Hubbard & Reed
  • Company & Commercial
  • France
  • October 08 2012

Management agreements have become a useful tool for the effective organisation of management structures within group companies. However, their implementation is far from risk free. The most sensitive area is the provision by the holding company of core executive management functions, such as general leadership, supervision and strategy, as opposed to more technical or accessory functions, such as finance or IT.

Share transfer duty - all change (again)
Hughes Hubbard & Reed
  • Company & Commercial
  • France
  • July 09 2012

Hot on the heels of the changes introduced by the 2012 finance law, further amendments have now been made to transfer duties due on the transfer of securities. Under the new provisions, share transfers in listed and unlisted companies will be subject to a single rate of 0.1% instead of the previous three-band scale.

Reducing the company law burden
Hughes Hubbard & Reed
  • Company & Commercial
  • France
  • April 30 2012

The legislature recently introduced a diverse package of measures designed to modernise French company law by introducing simplified procedures and removing constraints across a wide range of areas. Among other things, the rules on the preparation and filing of annual accounts have been simplified; but the Commercial Court has gained more powers to require companies to comply with their filing requirements.

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