Updated on 27 March 2020
The emergency law n° 2020-290 of 23 March 2020 (article 4), published in the Official Journal on 24 March 2020, has declared a state of health emergency for 2 months from the date of the publication of the law, which can be ended by a decree. In the current state, this state of emergency is established from 24 March to 24 May 2020.
In applying the aforementioned emergency law, the government has legislated by certain orders on the following points, in relation to corporate law:
1. Approval of accounts (order n° 2020-318 of 25 March 2020)
- The period to present accounts by the Management Board (Directoire) is extended by 3 months (i.e. for those closing on 31 December 2019, until 30 June 2020).
These measures are applicable to companies closing their accounts between 31 December 2019 and 24 June 2020 (except early termination of the state of health emergency). However, those companies having a statutory auditor are excluded, when said auditor has sent his report before 12 March 2020.
- The period to prepare accounts by a liquidator for companies in liquidation is extended by 2 months (i.e. for those closing on 31 December 2019, until 31 May 2020).
These measures are applicable to companies closing their accounts between 31 December 2019 and 24 June 2020 (except early termination of the state of health emergency).
- The legal and statutory periods for approval of accounts and calling General Meetings for this approval, are extended by 3 months (i.e. for those closing 31 December 2019 and with a notice period of 15 days, an extension of notice until 15 September 2020 and an extension to hold the General Meeting until 30 September 2020).
These measures are applicable to companies closing their accounts between 30 September 2019 and 24 June 2020 (except early termination of the state of health emergency). However, those companies having a statutory auditor are excluded, when said auditor has sent his report before 12 March 2020.
- The period to prepare projected management documents is extended by 2 months.
These measures are applicable to companies closing their accounts or their term between 30 November 2019 and 24 June 2020 (except early termination of the state of health emergency).
2. Meetings of corporate bodies (order n° 2020-321 of 25 March 2020)
The exceptional measures below are applicable, notably, to civil and commercial companies, to economic interest groups (GIE), cooperatives, mutual funds and to associations and foundations. They apply to meetings of corporate bodies of the above-mentioned entities held from 12 March 2020 and until 31 July 2020 (except for extension by a decree, and at the latest until 20 November 2020).
- When a General Meeting is called in a place affected, at the date of the notice or of the meeting, by an administrative measure limiting or prohibiting gatherings for health reasons, the author of the convocation or the legal representative acting by delegation can decide to hold the Meeting without anyone physically being neither present, nor assisting by video/conference call. In this case, members participate and vote according to the means set out in their governing texts (for example using the form for voting at distance or by proxy).
- In order to facilitate member participation at these types of General Meetings held “behind closed doors”, the use of video or telephone conferencing is open to all entities (whatever the reason for the meeting). This includes entities for which this type of participation is not legally or statutorily prescribed and without any clause in the articles of association being able to oppose it.
- Additionally, the use of written consultation of General Meetings is relaxed in entities for which this mode of participation was already set out in law, since such a consultation is now possible even if the articles of association are silent on this or if they expressly exclude this possibility. Note that, as the law does not provide for written consultation in SA, this form of company is still excluded from these new provisions.
- If one of these aforementioned powers (meetings held without members present or using video/telephone conference) is used whilst all or part of the notice formalities have been completed before the order came into force, the participants are informed by any means 3 working days before the meeting.
- Requirements to communicate documents can be done by electronic means.
Board of Directors (Conseils d’Administration), Management Boards (Directoire) and Supervisory Boards (Conseils de Surveillance)
The use of video/telephone conferencing, as well as written consultation are authorised for all meetings of these bodies, whatever the reason, even if the articles of association are silent or if they expressly exclude them.
3. Expired periods (order n° 2020-306 of 25 March 2020)
The exceptional measures below are applicable to all periods expiring between 12 March and the expiration of the period of 1 month from the date of the end of the state of health emergency. In the current state, all periods expiring between 12 March and 24 June 2020 are included.
Any act, help, formality, registration, declaration, notification or publication, which would have needed to be completed during this period “will be considered to having been made at the time that it was effected in a period which does not exceed, from the end of this period, the legal period given to act, within the limit of 2 months”.
Therefore, the order allows any act or formality for which the term has passed during the period mentioned, to be considered as not late. It is on the condition that it is completed in the additional period given.
This text lacks clarity. Should we understand that all periods, which expire during the aforementioned time, are pushed back in their entirety, to take effect from the end of this period and within the limit of 2 months? Alternatively, is it that these periods are simply suspended only for the time left, and will resume from the end of this period and within the limit of 2 months?
The wording brings us to think that the legislator prefers the first possibility. Additionally, according to this interpretation, the period of opposition for creditors for TUP (Transmission Universelle de Patrimoine or dissolution without liquidation), mergers, partial contributions of assets and liabilities or reduction of capital which have started before the 12 March 2020 and which should, in principle, expire in March or April are stopped. They will restart to run from the beginning (either for their initial duration of 30 or 20 days), from 24 June 2020.
In relation to TUP in which the creditors’ period are currently underway, in practice this means that their implementation is delayed. Indeed, Article 1844-5 of the Civil Code expressly stipulates “the transfer of assets and liabilities is not completed and there is no dissolution of the legal entity until the end of the period of opposition”. Ultimately, a question remains about the date of the legal completion of the TUP. In assuming that no creditor finally makes an opposition in the additional given period (in the current state 24 July 2020), will the TUP be automatically completed on 25 July 2020? Alternatively, will we consider that it is from the end of the initial period of opposition? This additional period has the objective of protecting creditors, which cannot currently make a material opposition. A legal completion of the TUP at the initial effective date in the absence of opposition does not seem to be against this protective objective and would allow groups ultimately to follow their initial calendar for these operations. This question is justified, taking into account the terms “will be considered”, which are used in the order. We will wait for the position of the National Counsel of Clerks of the Corporate Tribunal (Conseil National des Greffiers des tribunaux de commerce) on this point.
Additionally, in the current state and except for in an early termination of the state of health emergency, these measures risk having an important impact on reorganisations where the completion is expected before the 30 June 2020, whilst they render ineffective all publications in preparation to make a creditors’ opposition period within the month of June.
All of these measures evidently will have a very important impact on current reorganisations and those expected to take place in the first half of 2020.