Informing employees in the event of a sale of their company

Law No. 2014-856 of July 31, 2014, concerning the social and solidarity economy (the "ESS" law), establishes a right for employees to be informed prior to any sale of a business, company shares, stock, or securities granting access to a majority stake. This provision aims to enable employees to submit a takeover bid. Decree No. 2014-1254 of October 28, 2014, specifies the scope of this obligation, the definition of a sale, the procedures for informing employees, and their rights and obligations.


This decree applies to sales concluded on or after November 1, 2014. However, these provisions do not apply to sales resulting from exclusive negotiations when the negotiation agreement was signed before November 1, 2014 (Article 2 of Decree No. 2014-1254).

I. Scope of application (personnel and equipment)

Generally, the system established by the Social and Solidarity Economy (ESS) law applies to commercial companies with fewer than 250 employees. A distinction must be made between companies with fewer than 50 employees, which are not required to set up a works council (Art. L.141-23 of the French Commercial Code), and companies with fewer than 250 employees, which fall under the category of small and medium-sized enterprises (SMEs). Employees of these companies have the right to information in the event of the transmission of:

• business assets (Art. L.141-23 and L.141-28 of the Commercial Code)
• participation representing more than 50% of the shares of a limited liability company (Art. L.23-10-7 of the Commercial Code)
• securities or shares giving access to the majority of the capital of a joint-stock company (Art. L.23-10-7 of the Commercial Code)

The term "transfer" refers specifically to sales, payments in kind, gifts, transactions, trusts, exchanges, or contributions to a company. This provision does not apply in cases of inheritance, division of marital property, transfer of a business to a spouse, ascendant, or descendant, or to companies undergoing conciliation, safeguard, reorganization, or liquidation proceedings.

II. Information methods

The information must be transmitted by any means that verifies the date of receipt (Articles L.141-25, L.141-30, L.23-10-3 and L.23-10-9 of the French Commercial Code). Decree No. 2014-1254 specifies that this information may, in particular, be transmitted by email or extrajudicial document.
A. Content of the Information
The information concerns two elements: the intention to sell and the fact that employees may submit a purchase offer.
B. Recipients of the Information
In companies with fewer than fifty employees, the owner of the business or shares informs the business operator or the company's legal representative, who then informs the employees without delay. When the owner is also the operator, they inform the employees directly (Articles L.141-23 and L.23-10-1 of the French Commercial Code). This information must be transmitted no later than two months before the sale.
In companies with more than fifty employees, the owner must provide the information no later than when the works council is informed and consulted on the proposed sale (Articles L.141-28 and L.23-10-7 of the French Commercial Code). When a works council has not been established, the procedure is the same as for companies with fewer than 50 employees.

III. The rights and obligations of employees

Employees are bound by an obligation of confidentiality under the same conditions as members of the works council. However, employees may be assisted by representatives of the territorially competent regional chamber of commerce and industry or chamber of trades and crafts. The Commercial Code also stipulates that employees may be assisted by any person designated by them under conditions defined by decree. According to the practical guide from the Ministry of the Economy, employees may, in particular, be assisted by a professional consultant.
The mechanism is solely intended to allow employees to submit a takeover bid. Consequently, when they do submit a bid, the seller is free to enter into negotiations with these employees or not.

IV. The transfer

A. Minimum period
In companies with fewer than 50 employees, the sale, in other words, the transfer of ownership, cannot take place before the expiry of a period of two months from:

• of the notification of information to employees when the transferor is the operator of the business or its legal representative
• of the notification of the information to the operator or legal representative, when the transferor is not the operator

The sale may take place before the expiry of this period if the employees inform the seller of their intention not to submit an offer.
In companies with more than 50 employees, no minimum period has been set.
B. Maximum Period
In companies with fewer than 50 employees, the sale must take place within a maximum period of two years from the date on which the sale is authorized. In other companies, when the works council is consulted, this two-year period is suspended between the date the council is consulted and the date it issues its opinion, or, failing that, the expiry date of the period for issuing the opinion. If the works council fails to issue its opinion, the seller is required to inform the employees again.

V. The employee's legal recourse

In the absence of information, in the event of late notification, or when the information is incomplete, any employee may request the cancellation of the sale. Employees have two months from the publication of the notice of sale of the business to take action.