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

Company Law (en cours)

The completion of mergers and acquisitions is marked by the signing of a number of agreements.
The signing is the moment when the Share Purchase Agreement (SPA) or memorandum of understanding, previously negotiated by the various advisors, is signed. As a key document of the transaction, it occurs when the parties have agreed on the essential elements of the restructuring and specifies the terms o …

Passage from signing to closing.

The completion of mergers and acquisitions is marked by the signing of a number of agreements.

The signing is the moment when the Share Purchase Agreement (SPA) or memorandum of understanding, previously negotiated by the various advisors, is signed. As a key document of the transaction, it occurs when the parties have agreed on the essential elements of the restructuring and specifies the terms of their commitment as well as the conditions precedent that remain to be fulfilled. In practice, from this stage, the parties are no longer in negotiations .

Once the memorandum of understanding is established, the parties attach the various guarantees and clauses stipulated during the negotiations. These may include the asset and liability guarantee, potential earn-out clauses, or even material adverse change (MAC) clauses, which have been updated due to the health crisis. Highly protective of the buyer, they allow the buyer to be released from their commitment in the event of a previously defined occurrence that significantly alters the target's situation . Indeed, between the signing and the final completion of the operations, a long period during which upheavals may still occur is likely to elapse. Simpler to implement than force majeure, the MAC clause can prove to be the ideal tool in such circumstances.

After the signing, an intermediate step, known as pre-closing, may occur, during which renegotiations may be justified if the various audits reveal new information about the target's situation.

Finally, the closing constitutes the final stage of the operation. At this stage, no suspensive conditions should remain. All difficulties must have been resolved, and the only formality to be carried out is the transfer of funds from one bank account to another, marking the definitive transfer of shares. A general meeting is convened for this stage to record the resignation of the former governing bodies and to proceed with the appointment of the new structures. Finally, the articles of association must be updated, and the required publicity and registration formalities must be carried out by the new structure and its governing bodies.

Cass. com., 10 October 2018, LawLex202300002351JBJ, considering that the regularization of a transfer deed providing for the purchase by one party of 50% of the shares held by the other in the capital of a third-party company does not constitute a transfer if, after the signing, they remained in discussions, continuing to negotiate essential elements of the upcoming transaction.

Paris, 22 March 2018, LawLex202300002725JBJ, holding that a transfer agreement containing a suspensive condition of approval of the operation by the prudential supervisory authority and a MAC clause is validly terminated when the transferee relies on a significant adverse event occurring before its effective date, not contested by the transferor, even if the transferee has not otherwise submitted an approval file without which the suspensive condition could not be fulfilled.

Company Law (en cours)

245. Passage from signing to closing.

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245. Passage from signing to closing.

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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