Prospectus regulation: The remaining parts of the new EU Prospectus Regulation (PD3) are due to be implemented in July 2019. Key areas of change are the treatment of risk factors and the regime for secondary issuances. In a pragmatic approach, the French market authority has indicated that, starting from the first half of 2019, issuers can adapt their registration documents to the new requirements of the “universal registration document” in order to incorporate it by reference in its prospectus, base prospectus or supplement to the base prospectus for the purposes of issuing securities after July 2019.

Algorithms: In June this year, the FCA and the German Bundeskartellamt launched a new joint project on algorithms. This confirms that Big Data is one of the crucial concerns for competition enforcers and also illustrates the existing close cooperation between the French and German institutions, which had already worked together on a joint paper on “Competition Law and Data” in 2016. The two enforcers are going to develop a typology of algorithms and analyse their potential anti-competitive issues. Read more…

Settlement procedure: In March this year the FCA opened a public consultation regarding the draft of its new procedural notice on settlements. It is expected that the new guidelines will be published in the next few months. Read more…

More merger control procedural infringements expected: In July 2017, the European Commission issued Statements of Objection to Merck/Sigma-Aldrich and General Electric for allegedly providing incorrect or misleading information during a merger review, and to Canon for the alleged early implementation of Toshiba Medical Systems Corporation before notification and clearance. The long-awaited decisions are expected in all three of these cases next year. Read more…

Facilitating squeeze-out: The implementation of going private takeovers is expected to be facilitated as a result of the lowering of the minimum ownership threshold required to implement a squeeze-out following a takeover. This threshold should be lowered from 95 per cent to 90 per cent of the target by the law on the growth and transformation of companies currently examined by the Parliament (so-called “loi Pacte”). Read more…

Corporate law & corporate governance: Several changes to corporate law are expected from the so-called “loi Pacte” (see above). The obligation for companies and their management to take into account the social and environmental issues raised by their business would be explicitly included in the general provisions of corporate law. Corporate governance related changes should include the introduction of pay ratio disclosures comparing executive compensation with employee average compensation, increased obligations towards gender equality in management bodies and employee representation at Board level. Also, new forms of entities would be created, such as B-corp type companies or foundations holding shareholdings in companies.

Prospectus regulation: The remaining parts of the new EU Prospectus Regulation (PD3) are due to be implemented in July 2019. Key areas of change are the treatment of risk factors and the regime for secondary issuances. In a pragmatic approach, the French market authority has indicated that, starting from the first half of 2019, issuers can adapt their registration documents to the new requirements of the “universal registration document” in order to incorporate it by reference in its prospectus, base prospectus or supplement to the base prospectus for the purposes of issuing securities after July 2019.

Foreign investment control: The so-called “loi Pacte” currently examined by the Parliament will notably give French authorities much greater power to sanction non-compliance. A decree of 30 November 2018 considerably widened the scope for scrutiny of foreign investments. The European Commission has proposed a new regulation for investment screenings in the EU, which looks likely to become law in 2019.  Read more… 

Privatisations: The French State is contemplating privatising Aéroports de Paris (ADP) and Française des Jeux (FDJ), which would be authorised by the so-called “loi Pacte” currently being examined by the Parliament. As part of the privatisation of ADP, ADP will be granted a 70-year concession. Regarding FDJ, the draft bill limits the duration of the FDJ’s monopoly for the exploitation of gambling to 25 years. The government will adopt by ordinance provisions reinforcing the State’s power in the gambling sector, by creating amongst other, a dedicated authority to control the sector. Regarding Engie, the draft bill authorises the French State to hold less than 33 per cent of the shares on a permanent basis, which allows it to sell additional shares. 

Rewriting of the data protection act: When integrating GDPR into its national framework, the French legislator chose to symbolically update the existing data protection law (dating back to 1978) rather than drafting a new bill from scratch. However, by using the existing wording as a basis, it introduced a certain number of uncertainties that have been criticized. A complete rewrite of the French data protection act is expected in early 2019, which will aim to fix the legibility and interpretation difficulties of the current framework. 

Fintech regulations: We expect that the adoption of the anticipated legislative measures (see Year in review) in the course of 2019 will begin to catalyse activity in the fintech space. 

Reform of the judicial system: The Government has submitted to Parliament a bill to reform the judicial system which would increase the resources dedicated to the judicial system and simplify civil and criminal procedures. The bill is expected to result in an increase in the powers of the police and public prosecutors to investigate offenses and is very contested by lawyers and certain judges associations who worry notably that it will restrict defense rights. 

Singapore Convention: The UN Convention on International Settlement Agreements Resulting from Mediation (known as the Singapore Convention) will be signed in August. Once it is into force, settlements reached through mediation will be enforceable internationally just like arbitral awards. Read more…

Protection of French companies facing extraterritorial or administrative proceedings: In the upcoming weeks, two French Parliament members will hand over to the French Prime Minister their proposals to improve the protection of French companies facing extraterritorial judicial or administrative proceedings. They are expected to make concrete legislative proposals concerning, in particular, the French Blocking Statute. The question of the application of legal privilege to in-house lawyers should also be addressed.

Draft amendments to the ICSID Rules and Regulations: ICSID released its proposed amendments to its rules and regulations in August 2018. A revised proposal is expected in 2019, further to comments from states and the public to be received by December 2018. Read more…

Further reforms of employment law to reinforce France’s attractiveness: The so-called “loi Pacte” aims at enhancing France's attractiveness on an employment standpoint. Bad leaver/clawback provisions applicable to bonuses already granted/paid out related to the employee’s misbehaviour will be enforceable for material risks takers. Bonuses will be excluded from the material risks takers’ reference remuneration for the calculation of severance indemnities and other termination-related indemnities. In addition, impatriated employees (to France) would have the ability to ask, through a joint request with their employer, not to be affiliated to the French mandatory social security schemes related to base and complementary pension, under certain conditions (possibly with retroactive effect to impatriation as from July 2018). Finally, the law intends to simplify headcount thresholds, i.e. the thresholds at which obligations apply, based on the company's headcount, which would affect a wide number of labour, social security, and fiscal payments and entitlements.

Fintech regulations: We expect that the adoption of the anticipated legislative measures (see Year in review) in the course of 2019 will begin to catalyse activity in the fintech space. 

Foreign investment control: The so-called “loi Pacte” currently examined by the Parliament will notably give French authorities much greater power to sanction non-compliance. A decree of 30 November 2018 considerably widened the scope for scrutiny of foreign investments. The European Commission has proposed a new regulation for investment screenings in the EU, which looks likely to become law in 2019. Read more… 

Privatisations: The French State is contemplating privatising Aéroports de Paris (ADP) and Française des Jeux (FDJ), which would be authorised by the so-called “loi Pacte” currently being examined by the Parliament. As part of the privatisation of ADP, ADP will be granted a 70-year concession. Regarding FDJ, the draft bill limits the duration of the FDJ’s monopoly for the exploitation of gambling to 25 years. The government will adopt by ordinance provisions reinforcing the State’s power in the gambling sector, by creating amongst other, a dedicated authority to control the sector. Regarding Engie, the draft bill authorises the French State to hold less than 33 per cent of the shares on a permanent basis, which allows it to sell additional shares. 

New tax treaty between France and Luxembourg:  France and Luxembourg have entered into a new double tax treaty, reflecting the new international conventional trends consistent with the OECD Model Tax Convention and the Multilateral Convention to Implement Tax Treaty Related Measures, signed by both jurisdictions. The new treaty significantly impacts certain real estate investment structures involving a combination of a French REIT (OPCI) and of a Luxembourg company. It will come into force after the ratification made by both countries, the process of which has just started in France.

New set of interests deductibility limitation rules: The draft 2019 Finance Bill, currently being discussed in the Parliament, transposes article 4 of the Anti-Tax Avoidance Directive (ATAD), by providing a new set of interest deductibility limitation rules, pursuant to which the deduction of net financial charges would, in substance, be limited to the higher of (i) 30 per cent of the taxpayer’s EBITDA and (ii) EUR 3 million per financial year (reduced to 10 per cent and EUR 1 million in case of thin-capitalised companies). This new set of rules would repeal certain former rules regarding interest payment deductibility, such as the 25 per cent general reduction (Rabot), some elements of the current thin-capitalisation rules, as well as the so-called Amendement Carrez. 

Payment of personal income tax: The entry into force of the payment of personal income tax by way of withholding tax (prélèvement à la source) on 1 January 2019 has been confirmed by the Government.

New tax treaty between France and Luxembourg:  France and Luxembourg have entered into a new double tax treaty, reflecting the new international conventional trends consistent with the OECD Model Tax Convention and the Multilateral Convention to Implement Tax Treaty Related Measures, signed by both jurisdictions. The new treaty significantly impacts certain real estate investment structures involving a combination of a French REIT (OPCI) and of a Luxembourg company. It will come into force after the ratification made by both countries, the process of which has just started in France.

Reduction of CIT rates: Corporate income tax rates will be gradually reduced to 25 per cent in 2022.