Newsletter n° 29 – Business law – January 2016
Summary
LEGISLATIVE AND REGULATORY NEWS
- Public limited companies: reduction of the minimum number of shareholders – Order of September 10, 2015
- Mediation of consumer disputes – Order of August 20, 2015
- Payment times between professionals
JURISPRUDENCE
- Companies in difficulty
Rights of the debtor
Own right to seek remedies
- Contracts
Nullity
Impossibility of restitution
Penalty clause
Qualification of a conventional penalty payment as a penalty clause – Office of the judge –
Indivisibility
Nullity of the loan contract following the cancellation of the main contract
- Companies
Real estate company
Conditions of participation in decisions
Abuse of majority
Legislative and regulatory news
Limited companies: reduction of the minimum number of shareholders
The law on the simplification of business life empowered the government to take measures by means of ordinance to reduce the minimum number of shareholders in unlisted public limited companies and to adapt the rules of administration, operation and control of these companies, without calling into question the powers and rules of composition, organization and operation of their bodies.
As a result of Ordinance No. 2015-1127 of September 10, 2015, which entered into force on the 12th, the minimum number of shareholders in unlisted public limited companies is reduced to two instead of seven (art. L.225- 1 of the Commercial Code). The requirement of a minimum of seven shareholders therefore remains for listed companies only. The ordinance also draws the consequences of this new rule and modifies article L.225-247 of the Commercial Code relating to the dissolution of public limited companies when the number of shareholders has been reduced to less than seven for more than a year.
Finally, contrary to the terms of the authorization, the report to the President of the Republic specifies that the government has chosen not to modify the rules of administration, operation and control of these companies.
Mediation of consumer disputes
Ordinance No. 2015-1033 of August 20, 2015 transposes into French law Directive 2013/11/EU on the out-of-court settlement of consumer disputes. A new title, entitled "mediation of consumer disputes" is thus added to Book 1 of the Consumer Code.
Scope
This ordinance is intended to apply to all disputes between a consumer and a professional, including cross-border disputes (Art. L.156-4 of the Consumer Code). However, disputes concerning a service of general non-economic interest, health services provided by health professionals to assess, maintain or restore the patient's state of health, and public providers of higher education ( Article L.151-4 of the Consumer Code).
Obligations of professionals
Professionals must guarantee the consumer effective recourse to a free mediation system (Art. L.152-1 of the Consumer Code). It is nevertheless forbidden for the professional to impose the use of mediation prior to referral to the judge (Art. L.152-4 of the Consumer Code).
Professionals must communicate to consumers the contact details of the competent mediator(s), including when the dispute could not be settled in the context of a complaint. The professional can set up his own mediation system or use a mediator who meets certain requirements.
In the absence of information, the professional is liable to a fine of a maximum amount of 3,000 euros for a natural person and 15,000 euros for a legal person.
The procedures for implementing the mediation process were the subject of a subsequent decree and professionals had until January 1, 2016 to comply with these provisions.
Modification of payment deadlines between professionals by the Macron law
Until the entry into force of article L.441-6 of the French Commercial Code amended by the Macron law, payment terms were set at forty-five days from the end of the month or sixty days from the date issue of the invoice.
From now on, the deadline in principle is that of sixty days from the date of issue of the invoice. And it is by way of derogation that the parties may provide for a maximum period of forty-five days end of month from the date of issue of the invoice, the validity of such a period being subject to two conditions, namely that it is expressly stipulated by contract and it does not constitute a manifest abuse with regard to the creditor.
In sectors with a particularly marked seasonal nature, the parties may agree on a payment period which may not exceed the maximum period applicable in 2013. The sectors concerned are the sectors which already benefited from this regime, namely the sectors of the toys, watches and jewellery, leather, sporting goods and agricultural equipment*.
*Decree No. 2015-1484 of November 16, 2015 establishing the list of sectors mentioned in Article L. 441-6 of the Commercial Code
Case law
Own right of the debtor to exercise the remedies
Com. September 8, 2015 (n°14-14.192) F-PB:
A company and its manager, ordered to pay various sums due to the poor performance of a contract, had appealed against the judgment ten days before the company was put into compulsory liquidation. The liquidator, summoned for forced intervention by the respondents, had let it be known that he would not constitute himself on behalf of the company for lack of cash. The plaintiffs then criticize the appeal judgment for having rejected their claims directed against the company and its representative.
The Court of Cassation dismissed the appeal. According to the Court, it follows from Article L. 641-9 I of the Commercial Code that when proceedings seeking to order the debtor to pay a sum of money for a cause prior to the opening judgment of its judicial liquidation, is in progress on the date of this judgment, the debtor has, in this case, the right to exercise the means of appeal provided for by law against the decision ruling on the application for condemnation.
Nullity of the contract – Impossibility of restitution
3rd Civil. July 8, 2015 (n°14-11.582) FS-PB:
A municipality had granted the real estate civil society (SCI) a real estate leasing contract. Relying on a failure to pay rent, the municipality obtained by interim order, the finding of the resolution of the contract to the damages of the SCI and the condemnation of the latter to pay it a provision to be worth on the rents due and a monthly occupancy allowance until the premises are vacated. The SCI then sued the municipality for nullity of the leasing contract and reimbursement of the rent paid, on the grounds of the absence of authorization issued to the mayor by the municipal council to conclude such a contract.
Finally, the municipality requested the payment of an occupancy allowance for the period prior to the cancellation. The Court of Appeal rejected the municipality's request for the payment of an occupancy allowance for the period prior to the cancellation of the municipality insofar as, due to the restitution of the building, the municipality no did not experience any depletion.
The Court of Cassation quashed the appeal judgment and specified that in the event that a null contract has been executed, the parties must be returned to the state in which they were before this execution and that, when this restoration takes place proves impossible, the party who has benefited from a service that it cannot restore, such as the enjoyment of a leased property, must pay an occupancy allowance.
Contractual obligation and penalty clause
2nd Civil. September 3, 2015 (n°14-20.431) F-PB:
The sellers of a building, have, by authentic deed, subscribed the obligation, to remove a planter established on the public domain, under daily penalty. An enforcement judge nevertheless declared inadmissible the purchaser's request for the liquidation of the contractual penalty.
The latter having ordered, under the notarial title, a seizure-sale and two seizures-attributions, to obtain payment of the agreed sum, the sellers seized an execution judge, who rejected their request for cancellation of the order seizure-sale, release of the two seizure-attributions and cancellation of the penalty.
In order to cancel the seizure order and order the release of the two attachments, the trial judges held that no penalty payment could give rise to a measure of forced execution before its liquidation, that this penalty be pronounced by a judge or that it is agreed between the parties in an act to ensure the execution of an obligation to do.
The Court of Cassation first recalls that the judge must give or restore their exact qualification to the facts and acts in dispute without stopping at the name that the parties would have proposed. Consequently, it was up to the Court of Appeal to qualify and assess the disputed clause, which in this case amounted to a penalty clause.
Indivisibility
1st Civil.
September 10, 2015 (n°14-13.658) FS-PBI: 1st Civ. September 10, 2015 (n°14-17.772) FS-PBI:
The two judgments presented here relate to similar facts. In each of the cases, a bank challenges before the Court of Cassation the decision of the Court of Appeal pronouncing the nullity of a contract for the sale and installation of a wind turbine as well as the nullity of the loan contract granted in order to fund this acquisition.
The Court of Cassation dismissed both appeals. The Court, in support of its first judgment, held that the Court of Appeal had noted that the credit offer was assigned to the main contract and had been informed by the seller, and that the lender had returned the borrowed funds in the hands of the latter, which characterized the existence of conventional indivisibility between the sale and loan contracts within the meaning of Article 1218 of the Civil Code. In the second judgment, the Court considers that the trial judges highlighted the indivisibility of the disputed contracts by stating, on the one hand, that the credit agreement was ancillary to the contract of sale to which it was subordinated, and on the other hand, that the borrower had attested to the performance of the main contract in order to obtain the release of the funds by the lender, who had made them available to the seller. Consequently, the resolution of the main contract entailed the annihilation of the ancillary contract.
Conditions of participation in decisions in a real estate civil society
3rd Civil. July 8, 2015 (n°13-27.248) FS-PB:
The Court of Cassation recalls that under the terms of article 1844 of the civil code, only the partners have the right to participate in the collective decisions of the company. Thus, the Court confirms the appeal judgment pronouncing the nullity of a general meeting in which the heirs of a deceased partner took part and during which they participated in the appointment of the manager when they could not claim neither approval nor the status of associate.
Abuse of majority
3rd Civil. July 8, 2015 (No. 13-14.348) FS-PB:
The minority shareholder of an SCI sued the majority shareholder to have several decisions taken by the general meeting declared null and void. Indeed, this SCI, initially set up to acquire and operate a building, had sold two-thirds of its shares to a company. Then, following this new distribution of shares, a capital increase had been voted and fully subscribed by the majority shareholder, the corporate purpose had been modified and all of the results of two financial years had been allocated to reserves.
The Court of Appeal having concluded that the statutory rules of reinforced majority required for the modification of the statutes had been disregarded, it sanctioned these irregularities by nullity.
The decision of the judges on the merits is confirmed by the Court of Cassation on the grounds that the principle of unanimity, unless otherwise stipulated, to modify the statutes, laid down by article 1836 of the civil code, falls under the mandatory provisions of the title referred to in the article 1844-10 of the same code.
