Corporate

/Corporate
2020-05-06T14:48:09+01:00

Adaptation of rules of meeting and deliberation of the assemblies and governing bodies of legal persons and entities without legal personality under private law due to the Covid-19 epidemic

Order n°2020-321 of March 25, 2020 (*) : application to the assemblies and meetings of the collegiate administrative, supervisory and management bodies held from 12 March 2020 until 31 July 2020, unless this period is extended until a date set by decree and no later than 30 November 2020:

*  These measures apply in particular to (i) civil and commercial companies, (ii) masses of holders of securities and financial securities, (iii) EIGs and EEIGs, (iv) cooperatives, (v) mutuals, mutual unions and federations of mutuals, (vi) mutual insurance companies and mutual insurance group companies, (vii) provident institutions and social protection insurance group companies, (viii) municipal credit unions and mutual agricultural credit unions, (ix) endowment funds, and (x) associations and foundations.

Rules for convening meetings and information:

  • meetings are not null and void simply because a notice of meeting could not be sent by post due to circumstances external to the company for companies whose shares are admitted to trading on a regulated market or a multilateral trading facility of an EU Member State or party to the EEA Agreement or on a market considered equivalent to a regulated market by the European Commission
  • where an entity is required to comply with a request to provide a document/information to a member of a meeting prior to the meeting, the document/information may be provided electronically, provided that the member indicates in the request the electronic address to which it may be provided

Rules of participation and deliberation:

  • when an assembly is convened in a place affected on the date of the convocation or on the date of the meeting by an administrative measure restricting or prohibiting collective gatherings on health grounds, possibility for the body competent to convene it or the legal representative acting on delegation from that body to decide that it is to be held without the members and other persons entitled to attend being physically present or by means of a telephone or audiovisual conference. Decisions shall then be duly taken. The members of the meeting and other persons entitled to attend shall be notified by any means which ensures that they are effectively informed of the date and time of the meeting and of the conditions under which they will be able to exercise all the rights attached to their capacity as members or persons entitled to attend
  • the possibility for the competent body to decide that members of meetings who participate by means of a telephone or audiovisual conference call allowing their identification are deemed to be present for the calculation of the quorum and the majority. Other persons entitled to attend meetings may attend by the same means.

The technical means used shall transmit at least the voice of the participants and shall satisfy technical characteristics allowing continuous and simultaneous retransmission of the deliberations. As an exception, for meetings subject to the provisions of Article L. 225-107 II of the Commercial Code or Article L. 228-61 of the same Code, the nature of the technical means allowed and the conditions for the application of the preceding paragraph shall be those determined by the decree of the Conseil d’Etat (French Administrative Supreme Court) provided for in the said articles.

These provisions are applicable regardless of the subject matter of the decision on which the meeting is called to rule.

  • where the law provides that decisions of the meetings may be taken by written consultation of their members, the competent body may use this option without any clause in the Articles of Association or in the contract of issue being necessary for this purpose or being able to oppose it.

This provision shall apply irrespective of the subject matter of the decision on which the meeting is called upon to take a decision.

  • where the competent body decides to apply the aforementioned provisions and where all or part of the formalities for convening the meeting have been completed prior to the date of such decision, the members of the meeting shall be informed thereof by any means capable of ensuring that they are effectively informed at least three working days before the date of the meeting, without prejudice to the formalities still to be completed on the date of such decision. In this case, a change in the place of the meeting or in the means of participation shall not give rise to a renewal of the formalities for convening the meeting and shall not constitute an irregularity in the convening of the meeting.

By way of derogation, in companies whose shares are admitted to trading on a regulated market or a multilateral trading facility of an EU Member State or party to the EEA Agreement or on a market considered equivalent to a regulated market by the European Commission, where the competent body decides to apply the above provisions and where all or some of the formalities referred to in the first paragraph of Article L. 225-104 of the French Commercial Code have been completed prior to the date of this decision, shareholders shall be informed as soon as possible by means of a press release, which shall be disseminated effectively and in full by the company, without prejudice to the formalities that remain to be completed on the date of this decision. In such a case, a change in the venue of the meeting or in the methods of participation shall not give rise to a renewal of the formalities for convening the meeting and shall not constitute an irregularity.

Collegiate administrative, supervisory and management bodies:

– members who participate in meetings of these bodies by means of a telephone or audiovisual conference call enabling them to be identified and guaranteeing their effective presence are deemed to be present at the meetings of these bodies. These means transmit at least the voice of the participants and comply with technical characteristics allowing the continuous and simultaneous retransmission of the deliberations. The provisions of this Article shall apply irrespective of the subject of the decision on which the body is called upon to take a decision;

– the possibility of adopting the decisions of these bodies by written consultation of their members under conditions ensuring the collegiality of the deliberations.

The provisions of this paragraph shall apply whatever the subject of the decision on which the body is called upon to take a decision.

Decree n°2020-418 of 10 April 2020 adapting the rules of meeting and deliberation of the assemblies and governing bodies of legal persons and entities without legal personality under private law due to the Covid epidemic19:

The decree clarifies the measures adopted under the terms of Ordinance No. 2020-321 and thus applies to the persons and entities referred to in that ordinance:

  • when the body competent to convene the meeting delegates this power to the legal representative in application of Article 4 of the aforementioned Ordinance 2020-321, the delegation shall be established in writing and shall specify the duration for which it is granted as well as the identity and capacity of the delegate
  • in the event of a “postal vote” or “mandate” authorised by the legislative or regulatory provisions or the Articles of Association, the body competent to convene the meeting or the legal representative acting on delegation from this body may decide that the members of the meeting may send their voting instructions or mandates, where applicable in the form provided for by the legislative or regulatory provisions governing the meeting or the Articles of Association or by electronic message to the electronic address indicated for this purpose in the convening notice.

The decree also specifies the procedures for drawing up the minutes of the general meeting, which must mention the use of in camera sessions and the nature of the administrative measure affecting the place where the meeting is convened or held. In the event of a general meeting being held in camera, this procedure de facto removes, on an exceptional and temporary basis, the right of shareholders to ask oral questions or to amend draft resolutions during the meeting.

However, the measures introduced by the Ordinance and Decree have no effect on other rights (voting rights, right to ask written questions, right to propose items or draft resolutions for inclusion on the agenda).

  • special provisions for limited liability companies and certain joint stock companies:

– without a clause in the Articles of Association being necessary for this purpose, the body competent to convene the meeting or the legal representative acting by delegation of this body may decide that the partners or shareholders may vote at meetings of limited liability companies or joint stock companies governed by Article R. 225-61 of the French Commercial Code by electronic means of telecommunication under the conditions provided for in these articles ;

– when the provisions of the first paragraph of Article 4 of the aforementioned Order 2020-321 are applied and a shareholder gives a proxy to one of the persons mentioned in I of Article L. 225-106 of the French Commercial Code:

1° Mandates with an indication of the proxy holder, including those given by electronic means, may validly be received by the company up to the fourth day prior to the date of the general meeting;

2° The proxy holder sends his instructions for the exercise of the mandates he holds, to the company or to the intermediary authorized by it, by electronic message to the electronic address indicated by the company or the intermediary, in the form of the form mentioned in Article R. 225-76 of this code, no later than the fourth day prior to the date of the meeting.

– when the provisions of the first paragraph of Article 4 of the aforementioned Ordinance 2020-321 are applied:

1° If the shareholders’ meeting cannot be chaired by the Chairman of the Board of Directors or the Supervisory Board or, in his absence, by the person provided for in the bylaws, it shall be chaired by the person appointed for this purpose by the Board of Directors or the Supervisory Board from among its members or, in the event of unavailability, from among the corporate officers (applicable to public limited companies, limited partnerships limited by shares, European companies, special meetings of holders of investment certificates and meetings of holders of non-voting preference shares) ;

2° The body competent to convene the meeting or its delegate appoints two scrutineers, whom it shall endeavour to choose from among the shareholders. Failing this, the tellers may be chosen from outside the shareholders (applicable to companies and meetings designated in 1° as well as to meetings of bondholders, meetings of holders of equity securities and meetings of holders of securities giving access to the capital).

Members of the meetings shall be informed, as soon as possible and by any means, of the identity and capacity of the designated persons.

Preparing, closing, auditing, reviewing, approving and publishing the accounts and other documents and information

Order No. 2020-318 of 25 March 2020 adapting the rules relating to the establishment, decree, audit, review, approval and publication of accounts and other documents and information that legal persons and entities without legal personality under private law are required to file or publish in the context of the Covid-19 epidemic:

  • extension by 3 months of the deadline set pursuant to the fifth paragraph of Article L. 225-68 of the French Commercial Code for the Management Board to present to the Supervisory Board the documents mentioned in the second paragraph of Article L. 225-100 of the same Code. This extension does not apply to entities that have appointed a statutory auditor when the latter has issued its report on the financial statements before March 12, 2020. This provision is applicable to entities closing their accounts between 31 December 2019 and the expiry of a period of one month after the date of cessation of the state of health emergency declared by Article 4 of the Act of 23 March 2020
  • extension by 2 months of the period of 3 months from the closing date, granted by the first paragraph of Article L. 237-25 of the Commercial Code to the liquidator to prepare the annual accounts and the written report mentioned in this article. This provision is applicable to entities closing their accounts between 31 December 2019 and the expiry of a period of one month after the date of cessation of the state of emergency
  • extension by 3 months of the time limits imposed by laws or regulations or by the articles of association of the entity concerned to approve the accounts and the documents attached thereto, if applicable, or to convene the meeting responsible for such approval. This extension does not apply to entities that have appointed an auditor where the auditor has issued its report on the accounts before 12 March 2020. This provision shall apply to entities closing their accounts between 30 September 2019 and the expiry of a period of one month after the date of cessation of the state of health emergency
  • extension by 2 months of the deadlines imposed on the board of directors, the management board or the managers pursuant to Article L. 232-2 of the French Commercial Code to prepare the documents mentioned in the first paragraph of this article. This provision is applicable to documents relating to the financial statements or half-year periods closed between November 30, 2019 and the expiration of a period of one month after the date of cessation of the state of health emergency
  • extension by 3 months of the time limit imposed on private law bodies by the sixth paragraph of Article 10 of the aforementioned Law of 12 April 2000 to produce the financial report mentioned in the same paragraph. This provision is applicable to financial reports relating to accounts closed between 30 September 2019 and the expiry of a period of one month after the date of cessation of the state of health emergency

Commitment of responsibility for large companies benefiting from cash support measures

A large company requesting a deferral of tax and social security payments or a state-guaranteed loan undertakes to:

  • not to pay dividends but also all other forms of distribution in cash or in shares (including, in particular, interim dividends and exceptional distributions of reserves) in 2020 to its shareholders in France or abroad (excluding entities with a legal obligation to distribute a fraction during the year 2020)
  • not to buy back shares during the year 2020.

For groups, this commitment covers all French entities and subsidiaries of the group in question, even if only some of these entities or subsidiaries would benefit from cash support.

All companies that have taken such measures before March 27, the date of the Government’s announcement of the scheme, or that have a legal obligation to pay a dividend, are not affected by this commitment.

In the event of non-compliance with this commitment, and in particular a decision by the company’s administrative bodies that does not comply with these rules, the deferred social security contributions or tax installments or the State-guaranteed loan will have to be repaid with the application of penalties for late payment under ordinary law. These increases will be deducted from the normal due date of the deferred payments.

A large company is either an independent company or a group of several related entities that employ, during the last financial year, at least 5,000 employees or have a consolidated turnover in excess of 1.5 billion euros in France. The definition of the group may be taken with reference to the definition used for the CVAE (Article 1586 quater I bis of the French General Tax Code) or tax consolidation (Article 223 A of the French General Tax Code).