All of French Company Law: ordinary law of companies and specific regime for different types of companies

Company Law (en cours)

Modern companies, influenced by the rules of Common Law countries, increasingly delegate the production of norms to the companies themselves. They are indeed encouraged to establish internal organizational rules aimed at improving business conduct and ensuring the harmonious functioning of their various bodies. The first phase of this movement was marked by the adoption of codes of best practices, …

Self-generated sources

French Company Law is the branch of business law that encompasses the rules relating to the organization of a company's life, from its formation  to its dissolution, including its ordinary operation  and the management of crises and restructurings that may, in a more extraordinary manner, affect its continuity .

In accordance with the first paragraph of Article 1832 of the Civil Code, which constitutes the foundation of ordinary company law, a company is established by two or more persons who agree by contract to allocate assets or their industry to a common undertaking with the aim of sharing the profit or benefiting from the resulting savings. The company is therefore a fully-fledged contractual entity, to which the rules concerning the validity of any contract apply , such as the requirements relating to the parties' consent, their capacity to contract, and the necessity of containing a lawful and certain content. In addition to these general conditions, there is the requirement of affectio societatis, a concept developed by case law and doctrine, which expresses the intention of each member of the company to work together, on an equal footing, for the success of the common undertaking , and allows the company contract to be distinguished from other contracts. Finally, the company contract must comply with the validity conditions specific to the corporate form to which it relates, and the company must be registered in order to acquire legal personality .

Standards relating to the definition of the company name, the nature and accounting of contributions, the release of share capital and its amount, the drafting of the articles of association, registration...

Financing of the activity, rights and obligations of the partners, administrative and control bodies...

Capital increases and reductions, transformations, mergers, spin-offs, partial asset contributions, and formation of corporate groups.

Cass. com., 3 June 1986, LawLex202200003081JBJ, excluding the existence of affectio societatis in the partner of a joint venture company who, although having “taken an interest” in the management of the business, did not effectively collaborate in its operation in a common interest and on an equal footing with the other partner and did not participate in the profits and losses in the same spirit.

Definition

Originally, the Civil Code envisioned the company as a framework for bringing together people who seek, through a common activity, to achieve a profit or savings . This essentially profit-driven perspective of the company is now outdated. Indeed, over the past twenty years, under the influence of common law jurisidiction rules, the company has become a true agent of the general interest, now seeking, alongside its primary profitability objectives, to produce a positive impact on society as a whole. This corporate social responsibility (CSR) approach originated in France with the NRE Law of 15 May 2001 (responsabilité sociétale des entreprises - RSE) . Corporate social responsability involves the voluntary integration by companies of social and environmental concerns into their commercial activities as well as in their relationships with suppliers, customers, or subcontractors, while remaining profitable. A company that engages in such an approach commits, beyond its legal obligations, to adopt a transparent and ethical behavior that respects human rights and promotes sustainable development. The latest significant legislative development in this area , the Pacte law of 22 May 2019  inserted a new paragraph 2 within Article 1833 of the Civil Code, under which “[t]he company is managed in its social interest, taking into consideration the social and environmental issues of its activity” and amended Article 1835 to allow companies to specify in their statutes “a purpose, consisting of the principles that the company adopts and for the respect of which it intends to allocate resources in the performance of its activity.” The Pacte law also created a new status of “mission-driven company,” whose regime is set out in Articles L. 210-10 of the Commercial Code, allowing a commercial company that has adopted social and environmental objectives to highlight them in its communication, provided it implements an organization to fulfill its mission, under the control of independent bodies.

Beyond CSR, the role of employees in the company has continually strengthened through legislative developments, without, however, resulting in a German-style co-management system. The involvement of employees in company management was long limited to a requirement to consult the works council, now the social and economic committee, when making important decisions . Two of its members may also attend, with only a consultative voice, the deliberations of the board of directors or supervisory board of joint stock companies . The need to further involve employees in the company's success was subsequently reflected in the establishment of incentive mechanisms , profit-sharing , and today, value sharing in the event of an exceptional increase in net profit , in companies with more than 50 employees. It finds its ultimate expression in employee shareholding, which transforms the worker into an associate of the company, with the possibility of subscribing to stock option plans  or the distribution of free shares .

Law 2001-2001-420 of 15 May 2001 on new economic regulations, OJ 16 May 2011, Art. 116, which requires listed companies to indicate in their annual report how they take into account the social and environmental consequences of their activity.

Also see Law 2009-967 of 3 August 2009 on the implementation of the Grenelle de l'environnement, OJ 5 August 2009, Art. 53; L. 2010-788 of 12 July 2010 on the national commitment for the environment, OJ 13 July 2010, Art. 224 and 225; L. 2015-992 of 17 August 2015 on the energy transition for green growth, JO 18 August 2015 and D. 2016-1138 of 19 August 2016 issued for the application of Article L. 225-102-1 of the Commercial Code and related to environmental information included in the management report of companies; Ord. 2017-1180 of 19 July 2017 on the publication of non-financial information by certain large companies and certain groups of companies, OJ 21 July 2017 and D. 2017-1265 of 9 August 2017, OJ 11 August 2017.

Law No 2019-486 of 22 May 2019 on the growth and transformation of undertakings, OJ 23 May 2019.

Labor Code, Art. L. 2312-8, L. 2312-17, and L. 2312-22 et seq.

Commercial Code, Art. L. 3346-1, introduced by Law No 2023-1107 of 29 November 2023.

Object

The concept of a company (société) is distinguished from several other concepts or legal forms.

1) Company and undertaking (société and entreprise)

A société constitutes an entity established by two or more persons who agree by contract to allocate to a common undertaking assets or their industry with a view to sharing the profit or benefiting from the savings that may result . The undertaking is considered the smallest combination of legal units that constitutes an organizational unit for the production of goods and services, enjoying a certain autonomy of decision, particularly for the allocation of its current resources . To this end, the undertaking brings together various means, whether human, material, or financial, implemented to achieve a goal. The undertaking is a more economic and social concept than a legal one. It does not possess legal personality, unlike the company, which acquires it upon registration with the trade and companies register . Consequently, the undertaking does not have its own and autonomous assets, nor the legal capacity to contract and initiate legal action, nor the capacity to be represented. Several branches of law use the notion of undertaking: competition law, labor law, insolvency law. In competition law, Articles 101 and 102 TFEU and L. 420-1 et seq. of the Commercial Code refer to the notion of undertaking without defining it. According to case law, an undertaking is characterized by its economic autonomy: an entity constitutes an undertaking within the meaning of these texts when it engages in economic activity and appears as an independent operator in the market. It is the activity of offering goods or services in a given market that characterizes the undertaking . In the absence of economic activity, a natural person cannot, by their sole status as an associate or holder of shares, be classified as an undertaking .

Under the first article of the law of 1 July 1901 concerning the association contract, an association is the agreement by which two or more persons permanently pool their knowledge or activity “for a purpose other than sharing profits.” This characteristic of the association distinguishes it from the purpose pursued by the partners of a company, which is to share the profit or benefit from the resulting economy .

The Economic Interest Grouping is an entity formed between two or more natural or legal persons, whose purpose is to facilitate or develop the economic activity of its members, to improve or increase the results of this activity . It is therefore not intended to make profits for itself, unlike a company. Its activity must be related to the economic activity of its members and can only have an ancillary character in relation to it . Unlike a company, the Economic Interest Grouping can be formed without capital .

Decree No 2008-1354 of 18 December 2008 on the criteria for determining the category to which an undertaking belongs for the purposes of statistical and economic analysis, Art. 1, OJ of 20 December 2008.

See, notably, in EU law, CJEC Case C-41/90 Höfner v. Macrotron (GmbH), Judgment of 23 April 1991, LawLex200400002917JBJ. Also see, in French law, Cass. crim., 12 February 1990, LawLex200200003099JBJ; 21 October 1997, LawLex200200000242JBJ.

Case C-189/02 P Dansk Rørindustri, Judgment of 28 June 2005, LawLex200600002415JBJ.

Related concepts

Companies can be classified into several major categories.

1) Civil companies and commercial companies

Under the second paragraph of Article L. 210-1 of the Commercial Code, general partnerships (sociétés en nom collectif - SNC), limited partnerships (sociétés en commandite simple - SCS), limited liability companies (sociétés à responsabilité limitée - SARL), and joint stock companies (sociétés par actions - SA) are commercial by virtue of their form, regardless of their purpose. Additionally, companies that engage in activities deemed commercial acts by law, as listed in Articles L. 110-1 and L. 110-2 of the Commercial Code, are commercial by virtue of their purpose. Conversely, all companies to which the law does not attribute another character by virtue of their form, nature, or purpose are civil in nature . Included in the category of civil companies by law are real estate civil companies, professional civil societies, civil holding companies, agricultural civil companies, agricultural land groups , and forestry groups .

Other elements help distinguish civil companies from commercial companies. Indeed, the provisions applicable to all civil companies are Articles 1845 et seq. of the Civil Code, whereas those applicable to commercial companies are, apart from Articles 1832 to 1844-17 of the Civil Code, relating to the general provisions applicable to all companies, Articles L. 221-1 to L. 22-10-78 of the Commercial Code. Furthermore, civil companies are, in principle, subject to tax on non-commercial profits, whereas commercial companies are subject to corporate tax, unless an alternative option is chosen by the company . Finally, in case of a dispute, the Judicial Courts handle disputes related to civil companies , while the Commercial Courts handle those related to commercial companies .

The distinction between partnerships and capital companies is primarily based on the presence or absence of a strong intuitus personæ among the partners. Historically, partnerships preceded capital companies, the latter only appearing when there was a need to mobilize larger amounts of capital, particularly to finance maritime transport. In partnerships, the identity of the partners is most important, as they are indefinitely and jointly liable for the company's debts. Consequently, partnerships are considered closed companies due to the necessary trust that must exist among the partners. In practice, the classification of “unlimited liability companies” is used to refer to these companies. This strong intuitus personae also justifies that the most important decisions, such as those related to the transfer of ownership interests, are subject to the rule of unanimous consent of all partners. Partnerships include general partnerships (sociétés en nom collectif - SNCs), limited partnerships (SCS), and civil companies.

Conversely, capital companies are those in which the identity of the partners matters the least, and only the contributions of each are taken into account. Furthermore, in these companies, partners bear losses only up to the amount of their contributions. Capital companies are thus referred to as “limited liability companies.” This category includes joint stock companies and simplified joint-stock companies.

Certain companies, such as limited liability companies (SARLs) and partnerships limited by shares (SCAs), combine both qualities. Indeed, in the vast majority of cases, the transfer of SARL shares requires prior approval , under penalty of invalidity of the transfer . Similarly, partnerships limited by shares include general partners, who are indefinitely and jointly liable for the company's debts, and limited partners, who bear losses only up to the amount of their contributions .

Beyond the limitation of liability, another criterion for choosing between the two types of companies lies in the attractions or drawbacks of the tax regime specific to each. In partnerships, the result of the fiscal year is taxed in the name of the partners, who are liable for income tax, in proportion to their share in the company's capital. The tax rate can reach 45%. The deficit, if applicable, is deductible from the partner's income, provided they are “active.” The profits made by capital companies, on the other hand, are subject to corporate tax, at a maximum rate of 25%. Any potential deficit is deductible from subsequent profits, within certain limits. Under certain conditions, a partnership can opt for the taxation of capital companies, and vice versa.

3) Listed companies and unlisted companies

Listed companies are commercial companies whose securities, shares, or bonds are admitted to trading on a regulated market or a multilateral trading system , and which can make a public offering. This ability is only recognized for joint stock companies and partnerships limited by shares. Simplified joint-stock companies cannot make a public offering of financial securities or have their shares admitted to trading on a regulated market , and fall into the category of unlisted companies, just like civil companies, general partnerships (SNCs), limited liability companies (SARL), and limited partnerships (SCS), since their share capital is divided into ownership interests, which are not negotiable .

Since the ordinance of 16 September 2020 , Articles L. 22-10-1 to L. 22-10-78 of the Commercial Code govern listed companies. These are also regulated by Articles L. 211-1 and following of the Monetary and Financial Code. Finally, since regulated markets and multilateral trading systems are subject to the control of the Financial Markets Authority, which is the supervisory body of financial markets , the provisions of the AMF General Regulation also apply to listed companies.

Rural and Maritime Fishing Code, Art. L. 322-1.

Commercial Code, Art. L. 221-13, para. 1, concerning SNC and SCS, and L. 223-12, concerning SARL.

Ordinance No 2020-1142 of 16 September 2020 on the creation, within the Commercial Code, of a chapter relating to companies whose securities are admitted to trading on a regulated market or on a multilateral trading system, JO of 17 September 2020.

Code of Judicial Organization, Art. L.211-3.

Cass. com., 21 March 1995, LawLex202200006224JBJ; 21 January 2014, LawLex202200006225JBJ, holding that the shares of an SARL can only be transferred to third parties outside the company under the conditions and in the manner prescribed by Article L. 223-14 of the Commercial Code, which provides that the proposed transfer is notified to the company and to each of the partners for approval, without the nullity of the transfer being remedied by a subsequent decision of the general meeting.

Cass. com., 21 January 1997, LawLex202300003661JBJ, holding that the transfer of shares of an SARL by a partner to his mother, lacking affectio societatis, who then transferred them to her daughter, a third party to the company, is fraudulent and must be annulled, as it aims to circumvent the approval procedure.

Classification of companies

Under domestic law, French Company Law is governed by provisions of the Civil Code, the Commercial Code, and the Monetary and Financial Code.

In the Civil Code, the rules concerning companies are found in Title IX ("Of the company") of Book III ("Of the different ways of acquiring property"), under Articles 1832 to 1873. The first chapter, relating to general provisions, includes Articles 1832 to 1844-17, some of which have been amended by the PACTE Law  and the Law of 19 July 2019 . These texts establish the rules applicable to all companies, whether civil or commercial, unless otherwise provided by law due to their form or purpose , thus constituting the “ordinary law of companies.” These are the rules concerning the corporate contract, lawful purpose, establishment of the articles of association, duration of the company, acquisition of legal personality, contributions, rights and obligations of partners, dissolution, invalidity of the company, as well as the invalidity of acts or resolutions of the company's bodies. The second chapter, relating to civil companies, includes Articles 1845 to 1870-1, which set the rules applicable to all civil companies, unless derogated by the specific legal status to which some of them are subject . Finally, the last chapter, which includes Articles 1871 to 1873, relates to the partnership.

The Commercial Code contains the legislative and regulatory rules applicable to commercial companies. Introduced in 1807, it has been profoundly modified by various reforms, notably Law No 66-537 of 24 July 1966 on commercial companies, supplemented by Decree No 67-236 of 23 March 1967 on commercial companies . In 1994, the simplified joint-stock company was established . Most of the texts applicable to commercial companies were then codified by Ordinance No 2000-912 of 18 September 2000 , which gave rise to the “new” Commercial Code. Numerous reforms followed, often driven by a spirit of simplification, including the one resulting from the Law of 15 May 2001 on new economic regulations (known as NRE) , which brought profound changes to existing texts towards a rebalancing of powers within management bodies, moralization of the conduct of corporate affairs, and strengthening of shareholders' prerogatives, the Law of 4 August 2008 on the modernization of the economy, known as the LME law , which further facilitated the use of the SAS, especially in the presence of a single shareholder, or the Law of 22 May 2019, known as the Pacte Law , which eases the administrative procedures for companies, raises the thresholds for account certification, and provides companies with new purposes beyond purely profit-driven ones.

Certain provisions of the Monetary and Financial Code, established by Ordinance No 2000-1223 , are applicable to companies, notably those relating to marketable securities , financial markets , and their supervision by the Financial Markets Authority .

Law No 2019-486 of 22 May 2019 on the growth and transformation of undertakings, OJ of 23 May 2019.

Law No 2019-744 of 19 July 2019 on the simplification, clarification, and updating of French Company Law, OJ of 20 July 2019.

Ordinance No 2000-1223 of 14 December 2000 relating to the Legislative part of the Monetary and Financial Code.

Monetary and Financial Code (abbrv. CMF - Code Monétaire et Financier), Art. L. 211-1 et seq.

Civil Code, Article 1845, para. 1 and Article 1105.

Decree No 67-236 of 23 March 1967 on commercial companies.

Law No 94-1 of 3 January 1994 establishing the simplified joint-stock company.

Ordinance No 2000-912 of 18 September 2000 relating to the legislative part of the Commercial Code, OJ of 21 September 2000.

Law No 2001-420 of 15 May 2001 on new economic regulations, OJ of 16 May 2001.

Law No 2008-776 of 4 August 2008 on the modernization of the economy, OJ of 5 August 2008.

Law No 2019-486 of 22 May 2019 on the growth and transformation of companies, OJ of 23 May 2019.

National sources

European company law finds its source in Article 54 TFEU. The principle of freedom of establishment allows any company formed in accordance with the legislation of a Member State and having its registered office, central administration, or principal place of business within the Union to establish itself in another Member State. By “company,” Article 54, para. 2, TFEU means “companies of civil or commercial law, including cooperative companies, and other legal persons governed by public or private law, with the exception of companies that do not pursue a profit-making purpose.”

However, the general principle of mutual recognition not being sufficient to ensure the coordination of national regulations, the Council adopted a series of directives based on Article 50, para. 2, point g, TFEU. Currently, European legislation covers issues as diverse as advertising, the validity of commitments and the invalidity of capital companies , the incorporation of joint stock companies, the maintenance and modification of their capital , national and cross-border mergers  of joint stock companies, national divisions of joint stock companies , the annual accounts of capital companies , the consolidated accounts of capital companies , and the statutory audits of annual and consolidated accounts .

Major players in the internal market, companies must operate in a legal environment with reduced administrative burdens. In March 2007, recognizing that the burdens imposed by European legislation limited the competitiveness of Union undertakings, the Council initiated a movement to simplify the legal and accounting environment of companies, resulting in several texts, including Directive No 2007/63 , which exempts companies from the requirement to use an independent expert for the assessment of merger or division projects, or Directive No 2009/109 , which simplifies the publicity formalities of corporate documents by allowing the use of electronic communication methods, or Directive No 2019/1151 , which promotes the use of digital tools and processes in company law.

These texts aim to achieve limited harmonization: the company directives set minimum requirements for publicity or control while allowing Member States to choose the means, with the main objective being the protection of third parties and the legal certainty of the relationships established by the company with them or its associates. Although they achieve some convergence of substantive rules, the objective of freedom of movement continues to play an important role alongside the desire for integration and the imposition of a common standard.

It is different for regulations adopted to unify the rules applicable to companies, such as the regulation of 8 October 2001 on the statute for a European company (SE) , the regulation of 25 July 1985 on the establishment of a European Economic Interest Grouping (EEIG) , and the regulation of 22 July 2003 on the statute for a European Cooperative Society (SCE) . In practice, however, the scope of unification remains limited. The regulation on the European company aims to create a company that, alongside those governed by national law, is governed by a uniform European law. However, national attachment prevails: companies are subject to national, not European, control since publicity and registration take place in the state of the registered office according to its law. A true code of the European company, the regulation contains numerous references to the law of the state of the registered office and essentially incorporates the substantive rules contained in the harmonization directives. Similarly, the EEIG was created to provide individuals, companies, and other legal entities with an instrument allowing them to cooperate across borders. As with the European company, the law applicable to the EEIG contract is the internal law of the state of the registered office, subject to the provisions of the regulation. In other words, the European standard prevails over the national rule in matters covered by the regulation. Furthermore, relations with third parties are excluded from the domain of the law of the registered office and are subject to the law designated by the conflict rule under Regulation No 593/2008 of 17 June 2008 (Rome I). Finally, like the two previous structures, the European Cooperative Society only enjoys legal personality from the time of its registration in a register designated by the state of the registered office. European social forms have only met with limited success. In 2020, the number of European companies created was limited to 3,300, and France accounted for only 43 .

First Directive No 68/151 of 9 March 1968, on co-ordination of safeguards which, for the protection of the  interests of members and others, are required by Member States of  companies within the meaning of the second paragraph of Article 58 of  the Treaty, with a view to making such safeguards equivalent throughout  the Community, OJ L 65 of 14 March 1968, 8, repealed and replaced by Directive No 2009/101 of 16 September 2009, OJ L 258 of 1 October 2009, 11, itself repealed and Directive No 2017/1132 of 14 June 2017 relating to certain aspects of company law (codification), OJ L 169 of 30 June 2017.

Second Directive No 77/91 of 13 December 1976, aion coordination of safeguards which, for the protection of the interests  of members and others, are required by Member States of companies  within the meaning of the second paragraph of Article 58 of the Treaty,  in respect of the formation of public limited liability companies and  the maintenance and alteration of their capital, with a view to making  such safeguards equivalent, OJ L 26 of 31 January 1977, 1; replaced and consolidated by Directive No 2012/30 of 25 October 2012, OJ L 315 of 14 November 2012, 74; itself repealed and codified by Directive No 2017/1132 of 14 June 2017 relating to certain aspects of company law, OJ L 169 of 30 June 2017.

Regulation No 2157/2001 of 8 October 2001 on the Statute for a European Company (SE), OJ L 294 of 10 November 2011, 1.

Regulation No 2137/85 of 25 July 1985 on the establishment of a European Economic Interest Grouping (EEIG), OJ L 199 of 31 July 1985.

Regulation No 1435/2003 of 22 July 2003 on the Statute for a European Cooperative Society (SCE), OJ L 207 of 18 August 2003, 1.

Source: statistics from the European Trade Union Institute (ETUI).

Third Directive No 78/855 of 9 October 1978, based on Article 54(3)g) of the Treaty concerning mergers of public limited liability companies, OJ L 295 of 20 October 1978, 36, codified by Directive No 2011/35 of 5 April 2011, OJ L 110 of 29 April 2011, itself repealed and codified by Directive No 2017/1132 of 14 June 2017 relating to certain aspects of company law, OJ L 169 of 30 June 2017.

Sixth Directive No 82/891 of 17 December 1982 based on Article 54(3)(g), of the Treaty concerning the division of public limited liability companies, OJ L 378 of 31 December 1982, 47; repealed and codified by Directive No 2017/1132 of 14 June 2017 relating to certain aspects of company law, OJ L 169 of 30 June 2017.

Fourth Directive No 78/660 of 25 July 1978, based on Article 54(3)(g) of the Treaty on the annual accounts of certain types of companies. OJ L 222 of 14 August 1978, 11; repealed and replaced by Directive No 2013/34 of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, OJ L of 29 June 2013, 19.

Seventh Directive No 83/349 of 13 June 1983, based on Article 54(3)(g) of the Treaty concerning consolidated accounts, OJ L 193 of 18 July 1983, 1; repealed and replaced by Directive No 2013/34 of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, OJ L of 29 June 2013, 19.

Eighth Directive No 84/253 of 10 April 1984 on the approval of persons responsible for carrying out the statutory audit of accounting documents, OJ L 126 of 12 May 1984, 20; now repealed and replaced by Directive No 2006/43 of 17 May 2006 on statutory audits of annual accounts and consolidated accounts, OJ L 157 of 9 June 2006, 87.

Directive No 2007/63 of 13 November 2007, amending Council Directives 78/855/EEC and 82/891/EEC as regards the requirement of an independent expert's report on the occasion of mergers or divisions of public limited liability companies, OJ L 300 of 17 November 2007, 47; repealed and codified by Dir. No 2017/1132 of 14 June 2017 on certain aspects of company law, OJ L 169 of 30 June 2017

Dir. 2009/109 of 16 September 2009, amending Council Directives 77/9/EEC, 78/855/EEC, and 82/891/EEC as well as Directive 2005/56/EC regarding reporting and documentation requirements in the event of mergers or divisions, OJ L 259 of 2 October 2009, 14; implicitly repealed by Dir. 2017/1132 of 14 June 2017 relating to certain aspects of company law, OJ L 169 of 30 June 2017.

Dir. No 2019/11/51 of 20 June 2019 regarding the use of digital tools and processes in French Company Law, OJ L 186 of 11 July 2019, 80.

European sources

Modern companies, influenced by the rules of Common Law countries, increasingly delegate the production of norms to the companies themselves. They are indeed encouraged to establish internal organizational rules aimed at improving business conduct and ensuring the harmonious functioning of their various bodies. The first phase of this movement was marked by the adoption of codes of best practices, primarily targeting the management of publicly traded companies, referred to as corporate governance codes. Among these are the AFEP-MEDEF code  and the Middlenext corporate governance code .

A second phase, known as the compliance phase, favors a mixed approach that combines the aim of encouraging companies to adopt codes of good conduct composed of objectives they set for themselves and are free to achieve at their discretion, as well as an internal organization aimed at preventing, reporting, or even sanctioning the violation of state or supranational norms. The objectives that a company may pursue through the development of these private rules are varied: they may include combating corruption, money laundering, and the financing of terrorism, as well as broader goals such as environmental protection, personal data protection, or promoting greater diversity. Implementing a compliance program, or “compliance,” not only allows the company to avoid facing crisis situations that threaten its activity or existence but also gives it the positive image of a company that integrates certain values now supported by an increasing number of citizens. Since the Law of 9 December 2016, known as Sapin II , the implementation of compliance programs has become a legal obligation for certain companies, whether to prevent the commission of offenses or to sanction an offense already committed.

In line with the Sapin II law, the law of 27 March 2017 on the duty of vigilance of parent companies and contracting undertakings  requires companies that meet certain thresholds to establish and effectively implement a vigilance plan, very similar to a compliance program. This plan aims to identify risks and prevent serious violations of human rights and fundamental freedoms, the health and safety of individuals, as well as the environment, resulting from the activities of the company and those of the companies it directly or indirectly controls, as well as the activities of subcontractors or suppliers with whom an established commercial relationship is maintained, when these activities are linked to this relationship.

Corporate Governance Code of Listed Companies issued by the French Association of Private Companies (Afep) and the French Business Confederation (Medef), available at https://hcge.fr/le-code-afep-medef/

Available at https://www.middlenext.com/IMG/pdf c17__cahier_14_middlenext_code_de_gouvernance_2021-2.pdf

Law No 2016-1691 of 9 December 2016 on transparency, the fight against corruption, and the modernization of economic life.

Law No 2017-399 of 27 March 2017 on the duty of vigilance of parent companies and ordering companies, JO 28 March 2017.

Commercial law, the law governing the activities of merchants, has  gradually become business law, applicable to civil, public and physical  persons, and even to entities deprived of any legal personality. From  the law of a human group, business law today appears to be the law of a  category of organization, the company, and beyond that, the law of the  legal framework in which this organization evolves, the market. Entire  areas of business law are designed to regulate the market and its  players. They constitute economic law (droit économique).

The shift beyond the strictly legal framework of the corporate structure towards economic analysis is particularly illustrated by the consideration of corporate groups in law. The recognition of this economic grouping of a set of legal entities results in the application of exceptions to certain rules and, in some cases, the waiver of the principle of the autonomy of legal personality to protect creditors and employees. Competition law also moves beyond the shield of legal personality to consider that several companies may constitute a single undertaking, allowing them, in some cases, to escape competition law , or conversely, to be sanctioned more heavily .

Since an agreement, for example, can only be concluded between a plurality of undertakings.

In certain cases, group affiliation may be treated as an aggravating factor in setting the fine, or may justify attributing the subsidiary’s infringing conduct to the more solvent parent company.

Company Law (en cours)

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