Prior notification of employees in the event of the transfer of shares or a business

The employee information requirement prior to any sale of a business, company shares, stock, or securities granting access to a majority of the capital, established by the law on the social and solidarity economy and supplemented by Decree No. 2014-1254 of October 28, 2014, aims to allow employees to submit a takeover bid in the event of a proposed sale. Failing this, it was stipulated that a sale carried out in violation of these provisions could be annulled at the request of any employee, with the statute of limitations for an action for annulment being two months from an alternative starting point: the date of publication of the sale of the shareholding or the date on which all employees were informed.

A priority preliminary ruling on constitutionality concerning this requirement was raised.
The applicant initially argued that the obligation to inform employees was itself contrary to the freedom to conduct business and the right to property. In its decision of July 17, 2015, the Constitutional Council rejected this argument on the grounds that the provision pursues an objective of general interest.
The Constitutional Council nevertheless considered that, " in view of the purpose of the disclosure obligation " and " the consequences of the nullity of the transfer for the transferor and the transferee ," this action for annulment constituted a manifestly disproportionate infringement on the freedom to conduct business and declared that the fourth and fifth paragraphs of Article L. 23-10-1 and the third and fourth paragraphs of ArticleL. 23-10-7 of the Commercial Code, applicable in the event of a company transfer, were unconstitutional. The Constitutional Council specified that its decision took effect upon publication and that it applied to all cases not yet definitively decided as of that date.
The scope of this decision should be limited by the entry into force of Article 204 of the Macron Law, insofar as this article replaces the sanction of nullity of the sale with a civil fine not exceeding 2% of the sale price.
Pending the entry into force of this text, it should be noted that failure to comply with the employee information requirements applicable to the sale of shares, stocks, or securities is no longer sanctioned by nullity. However, this sanction remains applicable, as it stands, in the case of the sale of a business, insofar as this is provided for by Articles L.141-23 and L.141-28 of the Commercial Code, which were not subject to the same appeal before the Constitutional Council.
Within six months of the promulgation of the Macron Law, on a date to be set by decree, the information requirements will be amended. Employee information will cover not only the legal conditions for an employee buyout, its advantages and challenges, and the support mechanisms available to them, but also the company's general policies regarding its shareholding, particularly the context and conditions of a sale and, where applicable, the context and conditions of a substantial change in share ownership.
However, this provision will not apply if employees have already been informed of the sale within the twelve months preceding it.
The operator or business owner, when they are not the owners of the shares, will be responsible for notifying the employees of any purchase offer submitted by them.
Finally, the publication of the aforementioned decree will eliminate the penalty of nullity for non-compliance with this provision in the event of the sale of a business.