AyacheSalama updates

Private M&A deals: recent case law strengthens shareholders' agreements
AyacheSalama
  • Corporate Finance/M&A
  • France
  • 12 December 2018

In the context of the acquisition of group companies, the parties will carefully select what to insert in the bylaws of the company, whereas in separate private agreements, which are confidential, the parties may include further, more detailed information. If the advantage of such private agreements is their confidentiality, the drawback is their lack of enforceability against third parties. The Supreme Court recently held that a sale made in violation of a shareholders' agreement was void by application of the bylaws.

Protecting the state's interest in strategic companies: a 'golden touch'
AyacheSalama
  • Corporate Finance/M&A
  • France
  • 05 September 2018

Over the past 10 years, the French M&A market has seen the rise of a powerful new player: the French state. A newly introduced bill would expand the state's ability to oppose the sale or transfer of assets by certain strategic companies in which it holds shares. The changes, which are of particular interest to the M&A community, are part of an omnibus reform of French corporations law known as the Action Plan for Business Growth and Transformation.

Duration of shareholders' agreements in private M&A deals: perils of uncertainty
AyacheSalama
  • Corporate Finance/M&A
  • France
  • 09 May 2018

A recent Supreme Court decision has confirmed previous case law and explicitly recalled the importance that should be given to the drafting of provisions governing the duration of shareholders' agreements. The court highlighted the fact that shareholders' agreements concluded for as long as the signatories remain shareholders are considered concluded for an indefinite period and may be terminated by any party thereto at any time.

Blockchain revolution in private M&A deals: transferring unlisted securities in the 21st century
AyacheSalama
  • Corporate Finance/M&A
  • France
  • 28 February 2018

Ordinance 2017-1674 of December 8 2017 introduced into French law the legal framework for the use of a blockchain in order to record the ownership and transfer of unlisted securities. This groundbreaking reform is an essential step towards the modernisation of the existing rules governing the transfer of unlisted securities. Blockchain technology will considerably facilitate and secure the transfer of securities and will undoubtedly have an impact on private M&A deals.

New obligations for disclosure of beneficial owners in private M&A transactions
AyacheSalama
  • Corporate Finance/M&A
  • France
  • 29 November 2017

Following the introduction of Ordinance 2016-1635 and Decree 2017-1094, non-listed companies which previously were not required to disclose the identity of their shareholders and maintained confidentiality through shareholders' agreements must now disclose their beneficial owners not only when a company is set up, but also on a continuous basis. However, the definition of a 'beneficial owner' remains unclear.

Simplification of French foreign investment procedures
AyacheSalama
  • Corporate Finance/M&A
  • France
  • 20 September 2017

The foreign investment rules provided under the Monetary and Financial Code were recently amended. M&A practitioners have welcomed the reform of the foreign investment rules, as it reduces the paperwork for foreign investments not falling within the scope of the prior authorisation regime. In addition, this reform has removed a cumbersome administrative procedure considered redundant.

Extension of scope of intercompany loans
AyacheSalama
  • Corporate Finance/M&A
  • France
  • 31 May 2017

The Macron Law and its implementation decree constituted breakthrough legislation for intercompany loans as they provide new exemptions to the French banking monopoly. The reform allows companies to overcome the difficulties faced when trying to secure a loan from banks and credit institutions. However, the newly authorised intercompany loans remain subject to several conditions that may significantly narrow the impact of this reform.

Multiple signing authorities in M&A agreements following recent contract law reform
AyacheSalama
  • Corporate Finance/M&A
  • France
  • 22 March 2017

New rules on signing authorities were recently introduced in Article 1161 of the revised Civil Code in order to prevent direct and indirect conflicts of interest. However, the application of Article 1161 has become a source of concern for M&A practitioners and the impact of the new rules of representation of multiple parties in M&A agreements is a complex issue subject to ongoing legal debate.

Supreme Court affirms validity of bad leaver provisions
AyacheSalama
  • Corporate Finance/M&A
  • France
  • 21 December 2016

In leveraged buyout transactions, institutional investors that retain the management team in order to continue to run the business often set up put and call options over the managers' shares, which are generally exercisable over any managers exiting the target. These put and call options often include good and bad leaver mechanisms. The Supreme Court recently affirmed the validity of bad leaver provisions, including price discounting mechanisms in the context of an employee's departure.

Supreme Court rules on purchaser claims under seller warranties
AyacheSalama
  • Corporate Finance/M&A
  • France
  • 12 October 2016

The Supreme Court recently ruled that the court of appeals had rightfully, and in accordance with its sovereign power of interpretation, decided that the purchaser was entitled to make a claim under the warranties ‒ even though he had not complied with some of the contractual provisions ‒ and that the amount to be paid by the seller should be reduced to account for the loss of chance.

Changes to contract law: impact on M&A and private equity
AyacheSalama
  • Corporate Finance/M&A
  • France
  • 06 July 2016

French contract law will soon face a disruption with serious consequences for corporate finance practice following the issuance of Order 2016-131. The introduction of new principles to the Civil Code will significantly alter the way that negotiations and deals are structured. Among other things, the revised Civil Code will include new confidentiality and disclosure duties, as well as provisions on preferential treatment and specific performance of contracts.

New rules for put and call options
AyacheSalama
  • Corporate Finance/M&A
  • France
  • 27 April 2016

Put and call options commonly refer to unilateral undertakings to sell or purchase securities pursuant to predetermined terms and conditions, but the actual enforcement of such options has long been questioned by tribunals and even Supreme Court jurisprudence. To address this issue, the legislature has replaced the binding force of contracts at the centre of transactions and proposed to strengthen the enforceability of put and call options.

Assignment of seller warranties to sub-purchaser falls under the spotlight
AyacheSalama
  • Corporate Finance/M&A
  • France
  • 17 February 2016

A share purchase agreement usually provides for seller warranties whereby the seller undertakes to indemnify the purchaser against the potential loss of value suffered by the target. A recent decision clarifies that parties to an agreement should expressly clarify their intentions regarding the possibility or prohibition of the assignment of the seller's warranties to a third party in the event of subsequent transfers of the target's shares.

New Hamon Law developments: a legal black hole
AyacheSalama
  • Corporate Finance/M&A
  • France
  • 02 December 2015

The Hamon Law imposed a far-reaching obligation on small and medium-sized enterprises to provide information to their employees regarding the transfer of majority shareholdings and businesses. However, two recent developments – a Constitutional Court ruling and the recently passed Macron Law – have somewhat alleviated the burdens imposed on prospective sellers by the Hamon Law.

Can purchaser make claim under warranties while being aware of risk?
AyacheSalama
  • Corporate Finance/M&A
  • France
  • 30 September 2015

The Supreme Court recently confirmed that, in the context of a share purchase, the beneficiary of seller's warranties is entitled to make a claim under such warranties even if, prior to the transaction, it was aware of facts affecting the warranted assets. The case concerned a purchaser's claim to be indemnified under the warranties for the malfunction of software commercialised by the target.

Liability of parent companies in carve-outs
AyacheSalama
  • Corporate Finance/M&A
  • France
  • 29 July 2015

The Court of Cassation recently held that a parent company cannot be held liable for failing to provide a subsidiary with equity commensurate to cope with transferred liabilities in a spin-off, with a few narrow exceptions. The decision provides a framework for a parent company approaching a spin-off, as the court held that the parent will not be held responsible for an unforeseen increase in liabilities unless a specific threshold is reached.

Coexistence of contractual and statutory warranties in M&A deals
AyacheSalama
  • Corporate Finance/M&A
  • France
  • 03 June 2015

The Supreme Court recently confirmed that seller's warranties granted under a securities sale and purchase agreement do not deprive a purchaser of the right to seek remedy pursuant to statutory warranties. This decision confirms earlier rulings and its publication affirms the coexistence in security transfers of contractual and statutory warranties.

New rules to determine transfer price of securities
AyacheSalama
  • Corporate Finance/M&A
  • France
  • 04 March 2015

The French M&A community has welcomed the publication of an order significantly amending Article 1843(4) of the Civil Code relating to the determination of the transfer price of securities by an independent expert in case of disagreement between the seller and the buyer. However, some uncertainties still remain and will need to be clarified by case law.

New obligations for SMEs to inform employees before share sales and business transfers
AyacheSalama
  • Corporate Finance/M&A
  • France
  • 17 December 2014

The Hamon Law has introduced a new obligation for small and medium-sized companies to provide information to employees in case of a contemplated sale of shares or of an ongoing business. The law aims to promote and encourage the acquisition of businesses by their employees, in order to avoid the failure of healthy businesses due to the lack of a buyer.

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