The law no. 2019-744, dated July 19, 2019, on the simplification, clarification and modernization of company Law, known as the SOILIHI Law, came into effect and was published in the Journal Officiel on July 20, 2019.
One of the measures of this law aims to extend the scope of the simplified merger regime, which until now, was limited to mergers and acquisitions between a parent company and its subsidiary, in which the former held 100% of the capital or at least 90% of the voting rights.
Under the simplified regime, the following actions are not required:
– Approval of the transaction by the shareholders of both the acquired and the acquiring company (unless requested by one or more of the acquiring company’s shareholders representing at least 5% of the capital)
– Reports from the officers and the merger auditor (subject to certain conditions for simplified mergers involving parent companies which hold 90% of the capital of their subsidiary)
Since July 21, 2019, the following kinds of transactions are eligible for the simplified merger regime:
– Mergers between sister companies, when the same parent company holds 100% of the share capital or at least 90% of the voting rights of the acquiring and the acquired company (Articles L. 236-11 and L. 236-11-1 of the French Commercial Code, as amended).
– Demergers of a company to the benefit of several sister companies, when the demerged company and the beneficiary companies are all wholly owned subsidiaries of the same parent company (Article L. 236-2, paragraph 4 of the French Commercial Code with reference to Article L. 236-11 of the amended French Commercial Code).
– Partial contributions of assets, when the transferring company holds 100% of the capital of the company receiving the contribution and inversely, when the receiving company holds 100% of the capital of the transferring company (Article L. 236-22, paragraphs 2 and 3 of the amended Commercial Code).
Civil companies (sociétés civiles) also benefit from the reform because, as of now, in mergers between civil companies, even if the articles of association require the acquiring company’s shareholders to approve the merger, such approval shall not be considered mandatory when the acquiring company owns at least 90% of the capital of the acquired company (unless requested by one or more of the acquiring company’s shareholders representing at least 5% of the capital).
However, the text refers to the ” filing of a merger proposal ” to determine at which time the condition of 90% capital ownership must be established, whereas French law does not require such filing for civil companies. In order to effectively apply the new regime, it will be important to see how the practices of the Trade and Company Registry, case law or any new developments in legislation clarify the procedures for assessing this filing requirement when there is a 90% capital ownership.