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

Company Law (en cours)

The implementation of a partial asset contribution operation involves the prior conclusion of a contribution agreement between the parties, which defines the general framework of the operation as well as its various conditions . This must include, in particular, information on the characteristics of the contributed asset, the exchange ratio, any issuance premium... The parties must take particular care in drafting the contribution agreement because it establishes their intention. Ambiguous drafting can indeed lead to harmful consequences for them. This is the case when the parties are not sufficiently clear about opting for the regime of spin-offs: the judge then dismisses the universal transfer of assets and liabilities .

Once the agreement is signed, steps must be taken by both the contributing company and the beneficiary company of the contribution.

For the contributing company, the decision to make a partial asset contribution constitutes a management act. Therefore, the assessment of the appropriateness of the proposed operation falls to the governing bodies. If the contribution involves a central element of the activity, it is necessary to comply with the conditions for amending the articles of association, which may establish the competence of the general meeting, as well as the provisions of Article L. 2312-8 of the Labor Code, which requires the parties concerned to inform or consult the Social and Economic Committee. Finally, it is not excluded that capital links may already unite the contributing and beneficiary companies, in which case the contribution constitutes for one of them a regulated agreement subject to the related control procedure.

Due to the consequences it entails, the partial asset contribution operation holds significant importance for the beneficiary company of the contribution. Thus, the procedures are more burdensome for the latter, starting with the general principle of the extraordinary general meeting's competence to make the decision. Two main scenarios must be distinguished, depending on whether the partial asset contribution leads to the creation of the beneficiary company or if the latter preexisted the operation, in which case the contribution results in a capital increase.

In the first case, all company formation formalities must be observed. In the second, the beneficiary company must follow the procedure applicable to capital increases by contributions in kind. In addition to these requirements, the obligation to inform and consult the Social and Economic Committee must be respected. Similarly, the presence of a contribution auditor responsible for assessing the value of the contributions and preparing a report made available to shareholders or partners is required. The additional obligation to disseminate a document containing information describing the transaction and its impact on the issuer is established for the benefit of listed companies . This exemption document exempts the company from preparing a prospectus. When the transaction results in the admission to trading on a regulated market of a number of financial securities representing at least 20% of the financial securities of the same category already admitted, the document prepared on this occasion, serving as a derogation from the obligation to publish a prospectus, is transmitted in advance to the Financial Markets Authority and then made available to the public, in accordance with Article L. 621-8 IV of the Monetary and Financial Code.

Paris, 8 December 2022, LawLex202200011298JBJ, considering that the partial asset contribution agreement may provide that the enumeration of the assets and liabilities of the transferred branch of activity it mentions is not exhaustive but merely indicative.

Cass. soc., 8 January 2020, LawLex202200011258JBJ, holding that the lack of sufficient evidence of the parties' intention in the partial asset contribution operation to place the operation under the regime of spin-offs prevents the transfer of liability from the contributing company to the beneficiary company.

Reg. No 2017/1129 of 14 June 2017, known as the "Prospectus Regulation," Art. 1, para. 4, point g and para. 5, point f, OJ L 168 of 30.6.2017, 12.

257. Conduct of the operation.