Interest global rate: a single civil penalty: An Ordinance of July 2019 standardised the civil penalties applicable to error or omission of the effective global rate. Irrespective of the nature of the loan and the status of the borrower, the lender may be deprived of its right to interest in a proportion fixed by the court, having regard to the prejudice suffered by the borrower.

Relaxation of banking monopoly rules: The Pacte law relaxed two exceptions to the banking monopoly rules. Holding at least a 5% interest is no longer required for a shareholder's current account advance and the list of officers who may grant such advances is extended. The term of a loan which can be granted through intercompany lending is extended from two years to three years, and can be granted by any commercial company.

Merger control activity remains high in 2019: In 2019, the French Competition Authority remained particularly active in merger control with the publication of numerous opinions. The French Competition Authority also kicked off its merger control modernisation plan with the simplification of its notification process and continued to consider the best way to catch transactions falling outside the current turnover thresholds but that are likely to impact competition (e.g. killer acquisitions).

Squeeze-out: The minimum ownership required to implement a squeeze-out following a takeover was lowered to 90% of the shares and voting rights of the target company (vs. 95% previously). 

“Social role” of businesses: A remarkable change in corporate law was the adoption of measures aimed at, according to the Government, “rethinking the role of businesses in society”. In addition to a general requirement for the management of any company to consider its social and environmental impact, the Pacte law allows any company to state in its by-laws what constitutes its fundamental purpose (a new concept of raison d’être). Finally, a new status of “mission-driven company” (société à mission) inspired by the US B-corp model was created.

Related-party agreements (conventions réglementées): The Pacte law requires companies listed on a regulated market to publish information on their website in respect of related-party agreements as soon as they are concluded. The content of such information was specified by a Decree published on 28 November 2019 and includes the identity of the parties, the financial terms of the agreement and information necessary to assess the interest of this agreement for the company and its shareholders, including minority shareholders. Those companies must also set up a Board procedure to regularly review related party agreements which are not subject to the Board, auditors and shareholders’ control procedures, because they are “business as usual” and at “arms’ length” agreements, and to verify that they indeed meet these requirements.

Foreign investment control: 2018 and 2019 saw both the extension of the sectors subject to foreign investment control and the strengthening of sanctions. The rules now apply to space, civil protection, R&D in some advanced technologies and data hosting. Breach of foreign investment rules is subject to fines of up to twice the amount of the investment or 10% of the turnover of the target company (with a €5 million minimum).

Google fine: In January 2019, the CNIL imposed a penalty of €50 million on Google LLC under the RGPD for lack of transparency, unsatisfactory information and lack of valid consent for the personalisation of advertising. To date, it is the highest final sanction ordered by a data protection authority in Europe (albeit the UK data protection authority has in the meantime published its intention to impose higher fines). Previously the largest similar fine ever ordered by CNIL was for €400,000. Google has appealed to the French Council of State, but a ruling will probably only be rendered in Q1 2020.

Recognition of business secrecy in international arbitration: Since 1 August 2018, parties to arbitration and arbitral tribunal, when proceedings are governed by French law, may rely on Article L.151-1 of the French Commercial Code to prevent the disclosure of sensitive information during the extensive document production phases which may take place in the context of such proceedings. All information that is not generally known or easily available, that has actual or potential commercial value, and that is maintained to be secret by its rightful owner will be considered sensitive. Although provisions regarding commercial confidentiality already existed prior to August 2018, under International Bar Association rules they were only binding if the parties agreed upon them, and did not provide a proper definition of business secrecy.

PACTE law impacting several aspects of employment law: The Pacte law remodelled several aspects of French employment law, and in particular (i) made bonus clawback/malus provisions enforceable for material risk takers working in credit institutions, financial companies and portfolio management companies, (ii) excluded variable compensation subject to clawback/malus from the reference salary for calculating termination payments of material risk takers, (iii) simplified the rules governing workforce thresholds for employee representation and internal regulations, and (iv) offered to foreign employees working in France since July 2018 an exemption from statutory contributions to the French basic retirement (retraite de base) and complementary retirement schemes.

Key change brought by ‘Macron’ labour law reform validated by Supreme Court: The French Supreme Court has confirmed the validity of the matrix for unfair termination damages created by the ‘Macron’ labour law reforms of September 2017. This bounds courts to allocate a pre-determined level of damages based on the length of service of the employee (e.g. a maximum of six months of damages for five years of service). It had been challenged by several lower-level courts, based on its alleged non-compliance with some international law provisions.

Revision of French IP law: The Pacte law modified the statutes of limitation related to infringement actions (and removed it for nullity actions) in both trademark and patent law. In addition, the Government issued an order implementing the Trademark Directive 2015/2436, which notably (i) amends the grounds for trademark registration or refusal (suppression of the “graphical representation” requirement, broader scope of prior rights to be invoked against a trademark application), (ii) modifies the opposition procedure before the French trademark office, (iii) changes the protection regime of certification/collective trademarks. In July, France implemented the Copyright Directive 2019/790, which creates a right for publishers of press publications in the context of online use by information society service providers.

The law for orientation of mobility (“LOM”): LOM was adopted by the National Assembly on 19 November. It plans investment in transport infrastructure for a total amount of €13.4Md between 2018 and 2022 and €14.3Md between 2023 and 2027. It encourages growth of more environmentally-friendly transport notably through the deployment of recharging stations. For example, it clarifies the legal regime for charging station operators and increases the costs that public grid transmission/distribution operators are allowed to bear when connecting public electric/hybrid vehicle. 

Foreign investment control: 2018 and 2019 saw both the extension of the sectors subject to foreign investment control and the strengthening of sanctions. The rules now apply to space, civil protection, R&D in some advanced technologies and data hosting. Breach of foreign investment rules is subject to fines of up to twice the amount of the investment or 10% of the turnover of the target company (with a €5 million minimum).

Assignment of French commercial leases: Tenant’s guarantee obligation shall be limited to 3 years: French commercial leases often contain provisions pursuant to which in case of assignment of the lease, the tenant shall remain liable with its assignee for the payment of any amounts due under the lease. The Pinel Law dated 18 June 2014 limited the duration of such guarantees to three years following the assignment of the lease. The Cour de cassation ruled on 11 April 2019 that this three-year limitation is of public order. After confirming in 2018 that the tenant’s pre-emption right introduced by the Pinel Law is also of public order, the French Supreme Court is continuing to provide guidance on the interpretation of Pinel law provisions.

Adoption of the new European insolvency directive: Directive (EU) 2019/1023 (organising notably new preventive restructuring frameworks) was adopted on 20 June 2019. It introduces concepts previously unknown in French law, such as the “commonality of interests” as the main criterion for the constitution of classes of creditors (which at a minimum means that secured and unsecured creditors should be treated in separate classes) rather than the creditors’ capacity (e.g. lender) or the type of their claims (e.g. bonds), the cross-class cram-down (enabling the court-confirmation of the restructuring plan even if all the classes of affected parties have not approved the draft plan under specific conditions) and the best-interest of creditors test (aimed at ensuring that the dissenting creditor is treated under the restructuring plan better than under liquidation or under the next-best alternative scenario).

DAC 6: The DAC 6 directive was transposed into French law on 21 October 2019. From 1 July 2020, taxpayers and intermediaries (such as lawyers) who assist in tax-planning arrangements must disclose international tax planning arrangement “hallmarks” defined in the directive (including those whose first stage of implementation was made between 25 June 2018 and 1 July 2020) that present a strong indication of tax avoidance or abuse.

GAFA Tax: The French parliament has voted to implement a GAFA Act taxing the largest actors in the digital sector. Only some digital services provided in France by a company whose qualifying digital services generate a worldwide turnover over €750 million and a French turnover of over €25 million would fall within the scope of the tax. In substance, the tax base is composed of the revenues from sales of targeted advertising and intermediation revenues. Its rate will amount to 3%. This tax will be levied on companies as early as 2019. 
but likely to impact competition (e.g. killer acquisitions).