Your specialists in international projects
Edouard BERTRAND, aged 42, has been jointly managing the Litigation & Arbitration department of cabinet LAMY LEXEL in Lyon since 2001. The department is composed of 10 lawyers, including 3 partners.
Graduate of the Institut d’Etudes Politiques, holder of a DESS (post graduate diploma) in Bank and Finance Law, he began his career working for three years for a law firm in Lyon specialising in business litigation.
He was then head of the Legal department of Cabinet Deloitte & Touche in Lyon for seven years, before joining LAMY LEXEL as a partner. At the same time he has always been very active in the bodies of his profession: he was a member of the Conseil de l’Ordre and is at present the permanent representative of the head of the bar association to the Commercial Court of Lyon and the Commercial Division of the Appeals Court of Lyon.
Edouard BERTRAND was a lecturer in law of ailing companies at the University of Lyon 3 for 10 years. Specialist in company failure, he was a member of the interprofessional working party of the Commercial Court of Lyon on the reform Safeguard Act, as representative of the Bar of Lyon.
Over the years Edouard BERTRAND has acquired a solid experience in the following fields:
Litigation in business law, Bankruptcy procedures, Company Law, Economic law, Criminal Business Law, Professional liability, Bank and Finance Law, Law of enforcement measures.
To see these missions through to a successful conclusion, he horizontally seeks his partners’ in-house expertise, in particular with regard to business law, social law, tax law, contract law …
To contact him: ebertrand@lamy-lexel.com – 33 (0)4 72 74 53 00.
Business Law
From Public Issue to public offer (Order n°2009-80 of 22 January 2009, JO of 23 January 2009)
The notion of public issue, resulting from section 72 of the 1966 act, showed the French will to ensure the protection of investors called upon to save their funds and therefore create the conditions for their confidence in such or such an issuer.
At European level, the Commission undertakes to make effective the liberalisation and opening of financial markets for the development of the single market for financial services, subject to a common reference system.
The Prospectus, Transparency and MIF [1] directives are the tools of the European integration of finance markets, and establish, each in their own field, this common base that allows an important cross-border fluidity of financial services and products, without the host State being able to impose any further rules.
However, the notion of public issue, a recurrent reference in the corpus of the national texts, imposed additional obligations with regard to French issuers, but not opposable to issuers of other member States.
Thus and through the impetus given by the investment companies, the need appeared to reform public issue to bring it into compliance with the European regulations.
It was within the scope of the Transparency Directive and section 152 of the 2008-776 Act of 4 August 2008 on the modernisation of the Economy, that Order 2009-80 of 22 January 2009 was promulgated “concerning public issue and including various provisions in financial matters”.
The Order thus puts the finishing touches to this liberalisation by removing the reference to public issue, in order to substitute the notion of “public offer”, and draws all the consequences from it.
The main provisions, which will become applicable on 1st April 2009, are the following:
1. Reference to the notion of public offer
To the notion of Public Issue is substituted that of public offer, the definition of which is the direct result of the Prospectus Directive.
L 411-1 of the Monetary-Financial Code now provides:
“The public offer of financial instruments is composed of one of the following operations:
1. A communication sent in any form and in any way either to persons and presenting sufficient information on the conditions of the offer and the instruments to offer, so as to enable an investor to decide on whether to buy or subscribe for these financial instruments;
2. An investment of financial instruments by financial intermediaries.”
(…)
L411-2
« I Should not be considered as a public offer under section L411-1 an offer that exclusively concerns:
1. Persons providing the service of investment portfolio management on behalf of third parties;
2. Qualified investors or a limited circle of investors (…) »
The operations performed by public limited companies or by limited partnerships with shares that were “excluded” from the Public Issue remain “excluded” from the public offer regardless of the type of company since it is authorised to make a public offer.
Among these operations in particular are the offers that concern a limited circle of investors (less than 100 people) or qualified investors.
The Order stipulates that an SAS cannot make a public offer for financial instruments or for admission onto a regulated market of its shares, but, on the other hand expressly stipulates that the SAS is allowed to make offers to:
- a limited circle of investors,
- qualified investors.
2. The obligation to establish a prospectus
Before making any particular exceptions, the Prospectus Directive reminded the following principle:
“Member States do not allow any offer of securities to the public within their territory with the prior publication of a prospectus”
Transposing the directive, the order amends section L 412-2 of the Monetary-Financial Code:
The persons who “carry out a public offer of financial instruments or an admission of financial instruments to the negotiation in a regulated market should beforehand publish and hold available, for the public, a document intended to inform the public, concerning the content and the terms and conditions of the operation (…) on the terms provided for by the general AMF regulations”.
Remain subject to the obligation of establishing and distributing a prospectus, the issuers making:
- a public offer;
- an admission of listed financial instruments onto a regulated market.
Operations « excluded » from the public offer, and such as defined in section L411-2 of the Monetary-Financial Code, do not give rise to the establishment of prospectuses subject to the approval of AMF.
3. Abolition of the status of “société APE” – Minimum capital
The Order abolished the notion of “company calling on public issue”. Therefore, are also repealed the rules relating to the withdrawal from this status.
On this occasion, is also abolished the minimum amount of capital specific to companies limited by shares calling on public issuance.
The capital of all these companies limited by shares should be at least 37 000 Euros. The conditions for admission to a market may set a higher amount.
4. Increases of capital
The Order amends Section L 225-136 of the commercial code and opens the way to private investment with qualified investors.
This amendment of the text may have an effect on the agenda of future general meetings.
Thus, the system of increases of capital with elimination of the preferential right of subscription is relaxed to allow:
- private investment with qualified investors or a limited circle of investors, without imposing the opening of the subscription to the public,
- and this within the limit of 20 % of the share capital per year.
In these cases, the price of the issuance remains fixed according to the same rules as for public offers.
The possibility of subdelegation with regard to increases of capital is given not only to companies, the shares of which are listed in a regulated market, but also to those of ALTERNEXT.
5. The chairman’s report on internal control and corporate governance
The report of the Chairman of the Board of Directors or supervisory board, depending on the case, concerning corporate governance and internal control is no longer required except from public limited companies and limited partnerships with shares, the shares of which are accepted in negotiations in a regulated market.
All other companies, including those of ALTERNEXT and the Free Market, are no longer concerned.
The obligation to make publicly known the information included in these reports is also limited to these companies only.
6. Declarations of managers’ operations in securities
The operation of publishing operations in securities carried out by managers is limited to the companies whose shares are accepted in negotiations in a regulated market.
Are thus concerned the managers of companies whose shares are accepted in negotiations in:
- a regulated market,
- ALTERNEXT, for the sole companies having made a public offer.
The terms and conditions for the declaration are unchanged and the threshold for triggering the obligation of 5 000 Euros is maintained.
The managers of Free Market companies are no longer concerned by this obligation.
7. Auditors
i) The prohibition made to Auditors, natural persons and to the signatory members of an Audit company to certify a company’s accounts more than six consecutive accounting periods now only concerns the companies whose shares are listed in a regulated market.
ii) The auditors are proposed for appointment by the meeting by the board of directors or supervisory board, as the case may be. Until now, in companies with a board of directors calling on public issue, insofar as they are directors, the general managers and the acting general managers did not take part in these decisions.
Henceforth, this restriction only applies to companies whose shares are listed in the regulated market.
iii) publication of the fees: The AMF project for the general regulation amended provides for the limitation of the obligation to publish auditors’ fees to the sole companies whose shares are listed in a regulated market.
8. Rules of quorum
Henceforth, only the companies whose shares are accepted in negotiations in a regulated market are prohibited from providing in their articles of association quorums at general meetings that are higher than those provided for by the law.
9. The management reports commissioned by the French « Autorité des Marchés Financiers » (AMF)
The AMF can only commission a management report concerning a company whose shares are accepted in negotiations in a regulated market.
[1] The Prospectus Directive, adopted in 2003 and effective on 1st July 2005, creates the European passport, allowing issuers who meet the conditions for establishing an information document within the State of origin, to raise funds within the European Area.
The Transparency Directive adopted in 2004 and effective on 20 January 2007, fixes the obligations with regard to periodical and continuous information to which issuers are bound, the host State not being able to impose any further obligation.
The MIF Directive, adopted in 2004 and effective on 1st November 2007, widens the application of the European passport to investment services.
Regulations governing the mandatory application of indemnification in the event of wrongful termination by the principal of a commercial agent’s contract
Corporate Law
IP/IT
The participation of Internet actors at the sale of counterfeit products: exemption or sanction?
The globalization of exchanges had already made the protection of industrial rights more complex, but the development of networks intensifies the problem.
The litigants, followed by certain judges, thus search for means to fight against breaches of these rights, in particular against the sale of counterfeit products via the Internet.
1/ Thus, the Internet site eBay, has just been heavily sentenced by the French courts.
Indeed, on 30 June 2008 the Commercial Court of Paris pronounced three decisions sentencing eBay to approximately 40 millions Euros of damages for its participation in the sale of counterfeited products.
Christian Dior, Louis Vuitton, Malletier and Kenzo, noting that counterfeits of their models were regularly sold on the eBay site tried to engage the responsibility of eBay, who tried to take refuge behind the protection granted to hosts by the Law on Confidence on the Digital Economy (LCEN) of 21 June 2004.
Under this law, inspired by Community directives, the hosts of internet sites internets, i.e. the companies that carry on an activity of storing information or data without taking part in the activity of the sites « cannot have their criminal responsibility incurred due to information stored at the request of a recipient of these services if they were effectively not aware of the illegal activity or information or if, as soon as they became aware of it, took prompt action to withdraw this information or make access impossible.» (LCEN article 6.2)
However, the judges considered that eBay was not just a simple host due to the fact that it was not content to just store data but organises auctions, prepares the advertisements and receives a commission on the sales made.
It therefore assumes a brokerage mission.
Its responsibility can thus be incurred for putting in contact web surfers who are taking part in a transaction concerning counterfeited products.
As a broker, eBay should have adopted the necessary measures to prevent such transactions and any attack against the selective distribution networks.
The judges, depending on the arguments brought up by the Plaintiffs, retained two types of fault against eBay: the attack on the brand image and the attack on the distribution networks.
On the first point, the judges considered that eBay was supposed to be aware of the activities of the web surfers it hosts and that its negligence towards the acts of counterfeit contributed towards the deterioration of the brand image of luxury products. The massive sale of counterfeited products affects the efforts of creation and quality, essential characteristics of these luxury products.
Concerning the attack on the selective distribution networks, the judges considered that the possibility of selling the products of these trademarks through the eBay site, when the sale via the Internet is reserved for their sole approved distributors, constitutes an attack on the selective distribution networks.
More generally speaking, this decision would underline the increasing obligation of responsibility of service providers on the Internet.
However, it should be noted that this decision is very much criticised, in addition to the qualification of the facts, on the method of calculating the prejudice and the companies involved and that is the object of an appeal before the Court of Appeal of Paris.
2/ At the same time, the Google Adwords system, created by the Google research engine, is still object of discussions.
This system, through the reservation of key words, allows in a privileged way, under the heading of commercial links, the details of its site to be shown in the margin of the results of a search on the Internet.
But this system, which is paying, may have for effect to reference competitor sites before the sites reselling the trademark or even to propose in priority sites selling counterfeited products.
Can this use of the trademark by the sites referenced by constitute an act of counterfeit incurring the responsibility of Google?
Within this context, Google has thus been brought before a number of jurisdictions of the member States of the European Union. Some of them have refused to admit the responsibility of supplying commercial links on the Internet, such as the British judges.
Others have adopted a more reserved position. This is the case for the Italian judges who considered that there could not be any illegal use by Google, the use in the form of a key-word not being a usage allowing the origin of the products or services to be shown. Nevertheless, the judges retain that the advertiser can be sued for unfair competition[1].
As for other judges, they do not hesitate to incur the responsibility of Google for similar facts. Such is the case of the Belgian jurisdictions which consider that the use of the trademark by Google affects the rights of their holders and is contrary to honest usages.
Noting the divergence of the jurisdictions of the member States on the responsibility of Google as to the working of the Adwords system, the Cour de Cassation asked two interlocutory questions to the Court of Justice of the European Communities (CJEC):
- can the reference service provider be directly accused of an act of counterfeit by offering his services to advertisers reproducing or imitating a trademark?
- does a reference service provider have the exemption status of the host?
The decision to be taken by the CJEC will have the merit of creating a unique and stable solution within the European Union.
In comparing both the eBay decision previously mentioned and the decisions concerning search engines such as Google, it would seem that a desire to make Internet service providers more responsible has been shown.
It still remains to be seen whether the CJEC and the Court of Appeal of Paris will give it the legal substance for its materialisation or will put a brake on it.
To be followed with great interest….
[1] Mila, 15 October 2007, Key 21 vs Mulitiutility and Google Italy
Litigation
The reduced rate of VAT is definitively extended to new services
The Council has adopted a new directive allowing Member States, permanently but optionally, to apply reduced VAT rates to local services using a high level of labour but which do not lead to any unfair competition between European service providers.
However, the reduced rate to be applied should represent at least 5 % of the value of the service provided or goods supplied.
The following services are concerned:
- Small repairs (shoe repair, bicycle…)
- Cleaning of private accommodation
- Home care
- Hairdressers
- Renovation of private accommodation
- Catering
- Sale of books regardless of the media
This directive came into effect on 1st June 2009. France has applied the reduced rate of 5.5 % to catering since 1st July 2009.
The national judge national should automatically examine the excessive character of a clause included in a contract concluded between a consumer and a professional.
Within the scope of a dispute concerning the execution of a telephone rental contract, a Hungarian jurisdiction questioned the Court of Justice on the interpretation of the directive 93/13/CEE concerning the excessive clauses in the contracts concluded with the consumers
The question was to know whether the national judge should take a decision, automatically if needs be, on the excessive character of a clause granting jurisdiction included in the general terms of the litigious contract within the scope of the examination of its competence.
Insofar as the national judge to whom the case was referred should ensure the useful effect of the protection required by the directive, his role should not be limited, according to the Court, to the simple possibility of pronouncing a decision on the excessive nature of a contractual clause, but includes the obligation to examine it automatically, including when he questions his own territorial competence. When he considers such a clause is excessive, he should not apply it unless the consumer is opposed to it.
The French judge should take into account the obligation made to him, beyond the simple possibility acknowledged by article L. 141-4 of the Consumer laws, to automatically bring up an excessive clause contained in a contract binding a professional to the consumer.
The question arises as to whether such a solution should be extended to other types of protection in the contractual relations encompassed by the community directives.
Employment Law
Economic redundancy: Redeployment area
Under section 1233-4 of the Labour Laws, an employer who intends to make employees redundant for economic reasons must offer them all the posts available and corresponding to their socio-professional group or abroad if the legislation applicable locally does not prevent the employment of foreign workers.
In a decision dated 24 June 2008, the Cour de Cassation had considered that the employer was not complying with his redeployment obligation by basing his decision on the assumed willingness of the employees to limit his research (Cass. Soc. 24 June 2008 n° 06-45.870 FB-PB).
In this case, employees working in Lyon had refused to be transferred to Paris. Later, the employer did not offer them jobs available abroad, considering that they had demonstrated their desire not to leave the area of Lyon.
More recently, the Cour de Cassation, while confirming that an employer cannot base his decision on the presumed willingness of an employee, considered that he could on the other hand take into consideration the wishes expressed by that employee.
In this case, an employee threatened with redundancy had refused a first offer of redeployment explaining that, for family reasons, she did not wish to be far from home. In accordance with her wishes, the employer then limited his search to the area defined by the employee and since no jobs were available in relation with the skills, pronounced her redundancy.
The employee challenged the decision considering the employer’s lack of loyalty and claiming that he had not offered her all of the jobs available and equivalent to the job she was holding.
Wrongly, according to the Cour de Cassation which confirmed the decision of the Appeals Court.
Thus, the Appeals Court, which had not based its decision on the presumed willingness of the employee, was able to deduce that the employer had not failed to meet its redeployment obligation by noting that, on one hand, within the scope of the execution of his redeployment obligation, the employer had offered the employee a job and that she had refused by referring to her wish, for family reasons, not to exercise of her profession away from home and, on the other hand, that the employer had sought a job within this geographical area justified the absence of any job available in relation with the employee’s qualifications. (Cour de Cassation, chambre sociale - 13 November 2008, Boncristiano vs Société Créditpar n° 06-46.227).
Economic redundancy: Area of the PSE (Plan de sauvegarde de l’emploi) (job-saving plan)
Under section 1233-61 of the Labour Laws, in companies with fifty or more employees, when the redundancy project concerns ten or more employees within a same period of 30 days, the employer establishes and implements a job-saving plan to avoid redundancy or limit its number.
In a recent case, the Appeals Court had cancelled the redundancy of 28 employees of a French branch of a company whose registered office was in Rome due to the lack of implementation of a job-savings plan.
The Appeals Court had retained that should be taken into account for establishing this plan, the global nature of the company and the whole community of employees, whether in France or abroad, and not just the employees assigned to the activities performed in France, insofar as the Paris branch of the company could not be distinguished from the Italian company whose registered office was abroad since it did not have any autonomous legal personality and was not a subsidiary company set up in France.
The Cour de Cassation, in this decision of 23 September 2008, stipulates that when the redundancy procedure is undertaken by a foreign employer, for the sole personnel working for a branch exercising its activity in France, its is the workforce corresponding with the personnel depending on this French establishment that should be retained for determining whether a job-saving plan should be established. (Cour de Cassation, chambre sociale - 23 September 2008, n°07-42.862).
The difference should therefore be established between the area of the redeployment obligation, which includes all the jobs available situated in France and abroad and that of the obligation made to employer to draw up a job-saving plan, which is limited to the sole establishments situated in France and concerned by the staff cutbacks.
Secondment to a foreign subsidiary
Under section L.1231-5 of the Labour Laws, when an employer taken on by a parent company has been placed at the disposal of a foreign subsidiary and a contract of employment has been concluded with that subsidiary, the parent company guarantees his/her repatriation in the event of dismissal by the subsidiary and finds him/her another job in keeping with the importance of his/her previous functions within the company.
In this case, an employee of a French country was seconded to a subsidiary in Argentina. Two years later, the subsidiary transferred its goodwill to a third party company. Under the laws of Argentina, the staff of the subsidiary was transferred to the transferee company.
In spite of this, the employee requested his repatriation to the previous French parent company. Yet he signed a new contract with the Argentine transferee with a retroactive effect.
Under these circumstances, the French parent company refused to repatriate him and did not offer him another job.
The employee instituted proceedings before the industrial tribunal against the French parent company for the wrongful termination of his work contract and the payment of compensation for breach of contract.
The Appeal Court dismissed the employee’s claims due to the transfer of his work contract, under the laws of Argentina, to the company having taken over the subsidiary.
The decision of the Appeals Court is censored by the Cour de Cassation which, in a decision dated 13 November 2008, judged that the transfer by the Argentine subsidiary of its goodwill to a third party company ipso facto terminates the work contract binding the employee to the Argentine subsidiary and deduced that it was up to the parent company to take the initiative of repatriating the employee and offering him a redeployment (Cour de Cassation, chambre sociale - 13 November 2008, n°06-42.583).
Tax Law
Fiscal integration: the French system judged incompatible with Community Law (CJCE, 27 Nov. 2008, Société Papillon, C-418/07)
The European Court of Justice, to which the issue was referred for preliminary ruling by the Council of State (10 July 2007, Société Papillon, n° 284785), judged that the French system of fiscal integration is incompatible with Community Law in that it prohibits a resident parent company to include in the group a resident sub-subsidiary held by a non-resident subsidiary.
Small and medium-sized companies: Possibility of deducting deficits sustained abroad (Finance Act for 2009, n°2008-1425, 17 Dec. 2008 ; Code Général des Impôts, new article 209 C)
This new system allows Small and medium-sized companies to deduct from their income from the accounting periods open from 1st January 2009, under certain conditions, the deficits sustained by their branches or subsidiaries:
- held directly and continuously at at least 95 %
- established in a State within the European Union or within a State having concluded a fiscal convention with France containing an administrative assistance clause in matters of exchanging information and the struggle against tax dodging and evasion.
The system is not reserved for new establishments from 1er January 2009.
These deficits are then posted to the taxable income when these establishments make profits or at the latest at the end of the five accounting periods following their application.
The cash incentive granted to small and medium-sized companies within the scope of this system is subject to the community regulation concerning de minimis aids, pursuant to the CE regulation n°1998/2006 of the commission of 15 December 2006.
International tax evasion: increased powers granted to the tax authorities (Amending Finance Act for 2008, n°2008-1443, 30 December 2008)
So as to increase the powers granted to the tax authorities to fight tax evasions, in particular concerning the evasion achieved through States or territories considered as non cooperative, the amending finance act provides for an extension of the period of adjustment by the authorities and increases the fines applicable in the event of non declaration of certain accounts or contracts held abroad.
Period for adjustment in the event of non-compliance with certain declarative obligations (LPF, art. L169)
The three-year prescription in matters of income tax and corporate tax is raised to ten years when certain declarative obligations concerning a non-cooperative State or territory have not been complied with. By « non cooperative » one should understand a State or territory that has not entered into an agreement with France for administrative assistance for the purpose of fighting tax dodging and evasion and giving access to banking information.
The declarative obligations concerned are as follows:
- obligation to declare the financial entities established in a country with a privileged tax system in which the individual tax-payer holds at least a 10 % share (CGI art. 123 bis and ann.II art 50 septies)
- obligation to declare the entities with a privileged tax system in which the legal entity tax payer holds an interest of more than 50 % (5 % in the event of splitting the shares) (CGI, art. 209 B et ann. II art. 102 Z à 102 ZB) ;
- obligation for natural persons, associations and companies not having a commercial form, to declare the references of accounts open, used or closed by it abroad (CGI, art. 1649 A) ;
- obligation for natural persons to declare life insurance polices taken out with organisations established abroad (CGI, art. 1649 AA).
Penalties for non declaration of certain accounts (CGI, art. 1736, IV)
The non declaration, by natural persons, associations and companies not having a commercial form, of accounts open, used or closed abroad is now liable to a fine of:
- 1 500 € (previously 750 €) per bank account not declared
- 10 000 € in the event that the account is held in a State or territory that has not entered into an agreement with France for administrative assistance for the purpose of fighting tax dodging and evasion and giving access to banking information.
Community framework for de minimis aids: temporary rise of the ceiling (Plan de relance 11/12 Dec. 2008, Com. CE 17 Dec. 2008)
The Member States of the European Union voted a European Reflationary Plan last 11 and 12 December 2008. This plan effectively plans, to counter the crisis, to raise the de minimis threshold to 500 000 € for certain firms.
Thus, in an exceptional and provisional manner (for the period covering 01/01/2008 to 31/12/2010), the Member States of the EU are entitled to grant direct aids, without notification, to the same firm for a maximum amount of 500 000 €, compared with 200 000 € for the present threshold.
At the end of this period, this arrangement will come to an end, by principle, but a discussion on a possible extension is already planned.
News of bilateral tax conventions
Franco-American Convention
A new rider signed on 13 January, the effective date of which is subject to its ratification by the two States in particular provides for the abolition of the withholding at source applicable to royalties and, under certain conditions, to intragroup dividends (Communiqué of 13-1-2009 n° 012).
Franco-Swiss Convention
The rider signed on 12 January and whose effective date is subject to its ratification by the two States provides for the alteration of certain provisions of the convention and to extend the clause on the exchange of information to those necessary for the application of internal law in cases involving holdings and in those of tax evasion constituting an offence punishable by a term of imprisonment (Communiqué of 13-1-2009 n° 014).
Franco-Danish Convention
The Franco-Danish convention of 8 February 1957 aiming at avoiding double taxation in matters of income tax and wealth is denounced. It is no longer applicable since 1st January 2009 (Decree 2009-46 of 13-1-2009).
Droit International
Regulations governing the mandatory application of indemnification in the event of wrongful termination by the principal of a commercial agent’s contract.
