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

Company Law (en cours)

Articles 1844-4, para. 4, of the Civil Code and L. 236-2, para. 2, of the Commercial Code provide that the decision to proceed with the merger must be made by each meeting under the same conditions as those provided for statutory amendments. According to the Court of Cassation, when the absorbing company is an SAS, the merger decision must be made unanimously .

In order to decide on the next steps for the merger project, the body of partners must have sufficient information . The observations of the merger auditor may thus lead it to carry out the operation on terms different from those of the project .

When the steps of the merger process are not followed, the operation is subject to invalidity. This is the case when the resolution by which partners decide on a merger by absorption has not been preceded by any publication of the draft merger, has not been voted on by the required majority of 75% of the shares, and was adopted at an ordinary general meeting, contrary to the statutes, even if this resolution was not followed by effect . However, the action for invalidity can only succeed if it is not time-barred  and it is established that the operation caused harm to the claimant .

The merger has significant consequences for third parties. Therefore, to be enforceable against them, it must comply with certain publicity requirements. The absorbed company, dissolved as a result of the operation, must adhere to the publicity rules inherent in a classic dissolution. Before Decree No 2024-251 , this publicity took the form of an insertion in a legal announcements journal at the location of the registered office and in the BALO if applicable, a filing with the registry of the commercial court of the dissolution decision, a request for a modification registration in the trade and companies register for the purpose of deregistration, and an insertion in the BODACC at the request of the registrar. Now, when the operation involves a procedure of universal transfer of assets and liabilities, the dissolution must be published only in the BODACC and no longer in a legal announcements journal, to enhance the publicity given to the procedure and the information provided to creditors.

Furthermore, the acquiring company must comply with the publicity rules required for capital increases.

The judge ensures the scrupulous application of publicity rules. He thus considered that the publication of a simplified merger in the RCS is not sufficient to allow the absorbing company to act as a lender in the context of a loan granted to a third party by the absorbed company, if the dissolution of the latter has not been mentioned in the RCS with the indication of its cause, corporate name or designation, legal form, and registered office of the legal entities involved in the operation . Similarly, the dissolution of the absorbed company following a merger by absorption is only enforceable against third parties if it is mentioned in the RCS with the indication of its cause as well as its corporate name or designation, legal form, and registered office of the legal entities involved in the operation, even if the merger has been published in a legal announcements journal and if the removal of the absorbed company has been published in the BODACC .

Cass. com., 19 December 2006, LawLex202200009386JBJ. - Cf. CA Rennes, 19 June 2007, LawLex202300002180JBJ, considering that if, in positive law, the unanimity required for the transformation of a company into an SAS is transposable to the merger-absorption of an SARL by an SAS, the process of restructuring and simplification, which consisted, under the old law, of proceeding with a merger decision taken by majority instead of a transformation, does not necessarily characterize a fraud on the law with the intent to circumvent the unanimity rule.

Cass. com., 3 June 1998, LawLex202200009498JBJ, considering that the non-disclosure to a general meeting of shareholders deliberating on a merger project, of the negotiation of a contract in the field of armament, covered by defense secrecy, does not constitute fraud as long as the elements related to this contract, necessary for the evaluation of the companies and the determination of the exchange ratios, have been communicated to the persons responsible for carrying out this task and taken into consideration by them as well as by the auditors tasked with overseeing their work.

Cass. com., 6 October 2015, LawLex202200009502JBJ.

CA Versailles, 22 October 2019, LawLex202300002178JBJ.

CA Rennes, 19 June 2007, LawLex202300002180JBJ.

Cass. com., 7 July 1980, LawLex202200009057JBJ, specifying that the decision by which the extraordinary general meeting of the shareholders of the absorbed company authorized the "merger-contribution" of the company's assets to the majority shareholder is not subject to invalidity, as long as there is no proof that this decision was made solely to favor the majority shareholder to the detriment of the minority members.

D. 2024-751 of 7 July 2024 amending Article R. 237-7 of the Commercial Code and Decree No 78-704 of 3 July 1978 relating to the application of Law No 78-9 of 4 January 1978 amending Title IX of Book III of the Civil Code, JORF 0161 of 8 July 2024.

Cass. com., 31 March 2015, LawLex202200009505JBJ.

Cass. com., 23 January 2007, LawLex202200009503JBJ; 29 June 1993, LawLex202200009507JBJ, considering that the amending acts affecting a company, related to a merger operation, are only enforceable against third parties if they have been published in the RCS, even if they have been subject to another legal publicity.

224. Conduct of operations