Since 2 November 2014, to facilitate the purchase of a company by its employees, they must be informed in advance in case of a change of control. Introduced by the Hamon Law of 31 July 2015 and amended by the Macron Law of 6 August 2015, this obligation applies in the event of a transfer of a business or transfer of the majority shareholding of a company (i.e. a shareholding representing more than 50% of the shares or securities giving access to the capital of a LLC or a joint-stock company).

The features of this obligation are as follows:

Scope of application:

It is applied to the sales of a business, of shares of a LLC or of stocks of joint-stock companies provided that:

• the company is not required to have a works council (less than 50 employees)

• or if the company is required to have one, it employed at the end of the last financial year less than 250 people and had an annual turnover that did not exceed 50 million Euros, and/or an annual balance sheet total that did not exceed 43 million Euros.

• in LLCs, more than 50% of the company shares have to be transferred. In joint-stock companies, it is based on stocks or securities giving access to the majority of the company capital.

Exclusions:

The employees do not have to be notified beforehand in the event of a donation, a succession, a liquidation of the matrimonial property, a contribution of assets, a partial transfer of assets, a transfer to a spouse, to an ascendant or a descendant. Likewise, it does not have to be done if, within the 12 months preceding the sale, the chairman had already informed his/her employees on the possibilities of a transfer as part of his/her three-yearly obligation to inform the employees on the general business objectives relating to the shareholding of the company.

Members obligated to provide information:

The company’s legal representative shall inform the employees of the owner’s intention to sell the company and the possibility they have to make an  offer to buy the company

Information period:

The employees have to be notified beforehand:

• If the company is not required to have a works council, at least 2 months before the date of transfer of ownership of the securities, the transfer cannot occur before expiry of the 2-month period if each employee did not inform the transferor of his/her decision not to make an offer.

• If the company has a works council, at the same time the company has informed the works council at the latest.

How to inform the employees: 

The employees shall be kept informed by all means (meetings, posting on bulletin boards, letters handed over personally or certified letter with return receipt requested, etc.). In case of a certified letter with return receipt requested, the date of actual notification is the date of the first presentation of the certified letter.

Penalty:

If the company does not inform the employees beforehand, the applicable penalty is a civil fine not exceeding 2% of the amount of the sale. This fine may be pronounced only at the request of the Public Prosecutor’s Office and only if the lack of prior information led to liability actions.