France: Rules for corporate takeovers; companies considering plant closures

France: Rules for corporate takeovers; plant closures

A decree implementing the “Florange Act” has been published. The implementing decree—n° 2015-1378 (31 October 2015)—specifies the scope of activities and considerations by an acquiring entity in instances when a plant closure is being considered.

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Legal requirements

The “Florange Act” was established by law 2014-384 (29 March 2014), and amended French law in matters concerning takeover bids and listed companies. Among the measures in the legislation are requirements that generally provide:

  • Companies employing more than 1,000 individuals in France (or in Europe)—when considering closing an “entity” that is deemed to be “economically viable” and that set up a “collective dismissal” for economic reasons—to make “best efforts” to seek a buyer before the planned closure
  • Provisions reinforcing involvement of “works councils,” with the introduction of an information-consultation procedure (procédure d’information-consultation) in the event of a change of control
  • A minimum “acceptance threshold” of 50% for voluntary and “mandatory” takeover bids
  • A reduction to the mandatory bid threshold governing the accumulation of shares by shareholders holding between 30% and 50% of the share capital of a listed company
  • An automatic “double voting” for those shares held for more than two years
  • Repeal of the “board neutrality” principle during the offer period

Clarifications

The implementing decree clarifies:

  • The concept of “entity”—every economic entity subject to the requirement to establish a “works council,” at the entity level
  • The concept of “collective redundancy” caused by a closing—i.e., establishing a “jobs-saving plan” following a collective dismissal for economic reasons, at the entity level or the company level

Noncompliance with the requirement to seek a buyer could be subject to various sanctions, such as the jobs-saving plan not being validated. Also, the French authorities could seek to re-claim all public aid previously provided the company.

 

For more information, contact a tax professional with KPMG’s French tax center in New York:

Gilles Galinier-Warrain | +1 212-954-8605 | gillesgalinierwarrai@kpmg.com

 

Or contact a tax professional with Fidal* in Paris:

Olivier Ferrari | +33 (0)1 55 68 14 76 | olivier.ferrari@fidal.com   

Olivier Schmitt | +33 (0)1 55 68 15 92 | olivier.schmitt@fidal.com 

 

* Fidal is a French law firm that is independent from KPMG and its member firms.

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