France: What happened in 2019 and significant events in 2020

Year in Review 2019 and Year to Come 2020 summarises some of the major developments in France last year, and a selection of key changes that we anticipate over the coming year.

Key updates to


major legal developments in 2019 and 2020

Significant events in 2019

Explore the tabs below to review the key legal developments you need to be aware of in 2019


Further transparency for ICC Arbitration: Since January 2019, the ICC intends to publish arbitral awards unless a party to the arbitration objects. Any publication would be made no later than two years after the award notification and may include anonymisation or pseudonyms if required. This transparency initiative, which follows recent moves to publish information about arbitrators sitting on ICC cases, may substantially expand the body of publicly-available arbitral awards in commercial arbitration in particular (approximately 35% of ICC awards issued in 2019). 

Arbitration-related role for the International Chamber of the Paris Court of Appeal (CICAP): As of January 2019, set-aside proceedings as to international arbitral awards rendered in Paris and appeals of recognition or enforcement orders for foreign arbitral awards fall under the jurisdiction of this recently created chamber. The CICAP otherwise has jurisdiction over appeals of court judgments in international economic and commercial disputes and in domestic disputes involving commercial contracts, transportation, competition and financial instruments. The CICAP accepts the use of English for certain aspects of the proceedings and authorises use in appeals of certain common law inspired evidentiary techniques such as the oral examination of witnesses.


Interest global rate: a single civil penalty: An Ordinance of July 2019 standardised the civil penalties applicable to error or omission of the effective global rate. Irrespective of the nature of the loan and the status of the borrower, the lender may be deprived of its right to interest in a proportion fixed by the court, having regard to the prejudice suffered by the borrower.

Relaxation of banking monopoly rules: The Pacte law relaxed two exceptions to the banking monopoly rules. Holding at least a 5% interest is no longer required for a shareholder's current account advance and the list of officers who may grant such advances is extended. The term of a loan which can be granted through intercompany lending is extended from two years to three years, and can be granted by any commercial company.

Capital markets

The Prospectus Regulation: The Prospectus Regulation became applicable in its entirety on 21 July 2019, repealing the Prospectus Directive and overhauling the pan European prospectus regime. Read more...


Merger control activity remains high in 2019: In 2019, the French Competition Authority remained particularly active in merger control with the publication of numerous opinions. The French Competition Authority also kicked off its merger control modernisation plan with the simplification of its notification process and continued to consider the best way to catch transactions falling outside the current turnover thresholds but that are likely to impact competition (e.g. killer acquisitions).


Corporate, M&A & Takeovers

Squeeze-out: The minimum ownership required to implement a squeeze-out following a takeover was lowered to 90% of the shares and voting rights of the target company (vs. 95% previously). 

“Social role” of businesses: A remarkable change in corporate law was the adoption of measures aimed at, according to the Government, “rethinking the role of businesses in society”. In addition to a general requirement for the management of any company to consider its social and environmental impact, the Pacte law allows any company to state in its by-laws what constitutes its fundamental purpose (a new concept of raison d’être). Finally, a new status of “mission-driven company” (société à mission) inspired by the US B-corp model was created.

Related-party agreements (conventions réglementées): The Pacte law requires companies listed on a regulated market to publish information on their website in respect of related-party agreements as soon as they are concluded. The content of such information was specified by a Decree published on 28 November 2019 and includes the identity of the parties, the financial terms of the agreement and information necessary to assess the interest of this agreement for the company and its shareholders, including minority shareholders. Those companies must also set up a Board procedure to regularly review related party agreements which are not subject to the Board, auditors and shareholders’ control procedures, because they are “business as usual” and at “arms’ length” agreements, and to verify that they indeed meet these requirements.

Foreign investment control: 2018 and 2019 saw both the extension of the sectors subject to foreign investment control and the strengthening of sanctions. The rules now apply to space, civil protection, R&D in some advanced technologies and data hosting. Breach of foreign investment rules is subject to fines of up to twice the amount of the investment or 10% of the turnover of the target company (with a €5 million minimum).

Data Protection

Google fine: In January 2019, the CNIL imposed a penalty of €50 million on Google LLC under the RGPD for lack of transparency, unsatisfactory information and lack of valid consent for the personalisation of advertising. To date, it is the highest final sanction ordered by a data protection authority in Europe (albeit the UK data protection authority has in the meantime published its intention to impose higher fines). Previously the largest similar fine ever ordered by CNIL was for €400,000. Google has appealed to the French Council of State, but a ruling will probably only be rendered in Q1 2020.

Dispute Resolution and compliance

Recognition of business secrecy in international arbitration: Since 1 August 2018, parties to arbitration and arbitral tribunal, when proceedings are governed by French law, may rely on Article L.151-1 of the French Commercial Code to prevent the disclosure of sensitive information during the extensive document production phases which may take place in the context of such proceedings. All information that is not generally known or easily available, that has actual or potential commercial value, and that is maintained to be secret by its rightful owner will be considered sensitive. Although provisions regarding commercial confidentiality already existed prior to August 2018, under International Bar Association rules they were only binding if the parties agreed upon them, and did not provide a proper definition of business secrecy.


PACTE law impacting several aspects of employment law: The Pacte law remodelled several aspects of French employment law, and in particular (i) made bonus clawback/malus provisions enforceable for material risk takers working in credit institutions, financial companies and portfolio management companies, (ii) excluded variable compensation subject to clawback/malus from the reference salary for calculating termination payments of material risk takers, (iii) simplified the rules governing workforce thresholds for employee representation and internal regulations, and (iv) offered to foreign employees working in France since July 2018 an exemption from statutory contributions to the French basic retirement (retraite de base) and complementary retirement schemes.

Key change brought by ‘Macron’ labour law reform validated by Supreme Court: The French Supreme Court has confirmed the validity of the matrix for unfair termination damages created by the ‘Macron’ labour law reforms of September 2017. This bounds courts to allocate a pre-determined level of damages based on the length of service of the employee (e.g. a maximum of six months of damages for five years of service). It had been challenged by several lower-level courts, based on its alleged non-compliance with some international law provisions.


Revision of French IP law: The Pacte law modified the statutes of limitation related to infringement actions (and removed it for nullity actions) in both trademark and patent law. In addition, the Government issued an order implementing the Trademark Directive 2015/2436, which notably (i) amends the grounds for trademark registration or refusal (suppression of the “graphical representation” requirement, broader scope of prior rights to be invoked against a trademark application), (ii) modifies the opposition procedure before the French trademark office, (iii) changes the protection regime of certification/collective trademarks. In July, France implemented the Copyright Directive 2019/790, which creates a right for publishers of press publications in the context of online use by information society service providers.

Public Law

The law for orientation of mobility (“LOM”): LOM was adopted by the National Assembly on 19 November. It plans investment in transport infrastructure for a total amount of €13.4Md between 2018 and 2022 and €14.3Md between 2023 and 2027. It encourages growth of more environmentally-friendly transport notably through the deployment of recharging stations. For example, it clarifies the legal regime for charging station operators and increases the costs that public grid transmission/distribution operators are allowed to bear when connecting public electric/hybrid vehicle. 

Foreign investment control: 2018 and 2019 saw both the extension of the sectors subject to foreign investment control and the strengthening of sanctions. The rules now apply to space, civil protection, R&D in some advanced technologies and data hosting. Breach of foreign investment rules is subject to fines of up to twice the amount of the investment or 10% of the turnover of the target company (with a €5 million minimum).

Real Estate

Assignment of French commercial leases: Tenant’s guarantee obligation shall be limited to 3 years: French commercial leases often contain provisions pursuant to which in case of assignment of the lease, the tenant shall remain liable with its assignee for the payment of any amounts due under the lease. The Pinel Law dated 18 June 2014 limited the duration of such guarantees to three years following the assignment of the lease. The Cour de cassation ruled on 11 April 2019 that this three-year limitation is of public order. After confirming in 2018 that the tenant’s pre-emption right introduced by the Pinel Law is also of public order, the French Supreme Court is continuing to provide guidance on the interpretation of Pinel law provisions.


Adoption of the new European insolvency directive: Directive (EU) 2019/1023 (organising notably new preventive restructuring frameworks) was adopted on 20 June 2019. It introduces concepts previously unknown in French law, such as the “commonality of interests” as the main criterion for the constitution of classes of creditors (which at a minimum means that secured and unsecured creditors should be treated in separate classes) rather than the creditors’ capacity (e.g. lender) or the type of their claims (e.g. bonds), the cross-class cram-down (enabling the court-confirmation of the restructuring plan even if all the classes of affected parties have not approved the draft plan under specific conditions) and the best-interest of creditors test (aimed at ensuring that the dissenting creditor is treated under the restructuring plan better than under liquidation or under the next-best alternative scenario).


DAC 6: The DAC 6 directive was transposed into French law on 21 October 2019. From 1 July 2020, taxpayers and intermediaries (such as lawyers) who assist in tax-planning arrangements must disclose international tax planning arrangement “hallmarks” defined in the directive (including those whose first stage of implementation was made between 25 June 2018 and 1 July 2020) that present a strong indication of tax avoidance or abuse.

GAFA Tax: The French parliament has voted to implement a GAFA Act taxing the largest actors in the digital sector. Only some digital services provided in France by a company whose qualifying digital services generate a worldwide turnover over €750 million and a French turnover of over €25 million would fall within the scope of the tax. In substance, the tax base is composed of the revenues from sales of targeted advertising and intermediation revenues. Its rate will amount to 3%. This tax will be levied on companies as early as 2019. 
but likely to impact competition (e.g. killer acquisitions).

Significant events in 2020

Explore the tabs below to review the key legal developments you need to be aware of in 2020


Intra-EU investor protection and arbitration: The majority of EU member states agreed in October 2019 on a multilateral treaty to terminate their intra-EU bilateral investment treaties, in line with the Achmea CJEU decision of 2018. Query whether intra-EU investors, who previously could have resorted to investment arbitration in cases of breach of fair and equitable treatment, expropriation or denial of other protections by a State, will attempt to pursue similar claims in fora other than national courts on the basis of sources of law other than investment treaties. This also raises the question of whether the EU will look to create a multilateral investment court or some other dispute resolution mechanism for this purpose. For its part, the European Commission has promised to foster discussions in the coming period to improve existing dispute resolution mechanisms under EU law or to create new ones.


Security law reform: The Pacte law has empowered the government to reform the law relating to security by way of an order within two years. The aim is to simplify and reinforce the effectiveness of the law relating to security. This reform will be undertaken in co-ordination with the reform of insolvency law carried out by the implementation into French law of the Insolvency Directive.

Sustainable finance: 2020 will likely see the adoption of the ESG taxonomy regulation establishing a framework for the development of uniform criteria to identify whether a particular economic activity can be considered environmentally sustainable. It will supplement the regulation amending the EU Benchmark Regulation and the ESG Disclosure Regulation requiring financial market participants and investment advisers to make a range of disclosures relating to sustainability risks and sustainable investments, both of which are expected to be published in the EU Official Journal by the end of 2019. Read more...

Interest rate reform: The transition from LIBOR to risk-free rates is expected to continue with a shift towards the practical implementation of new risk-free rate products. ISDA is expected to publish a supplement to the 2006 ISDA Definitions and a protocol to support amendment of legacy transactions. Read more...  


Capital markets

Review of the EU Market Abuse Regulation: The European Commission will be conducting a review of the EU Market Abuse Regulation. An initial consultation by the European Securities and Markets Authority indicates that the review may cover extending the scope to Spot FX contracts, amending the definition of inside information and extending the restriction on dealings in closed periods. Read more... 


Boost of antitrust enforcement and finalisation of the modernisation of the merger control procedure: In 2020, the French Competition Authority may finalise key investigations including the review of purchasing alliances in the retail sector and the vertical investigation in the optical sector. It may also boost its enforcement in the digital sector after having gained experience in this sector over the past years. The French Competition Authority is also expected to finalise its merger control modernisation plan with revised merger control guidelines and a possible ex-post regime to tackle so-called killer acquisitions.

Corporate, M&A & Takeovers

New rules for the calculation of the majority in shareholders’ general meetings: According to the Loi de simplification, de clarification et d’actualisation du droit des sociétés, the majority in ordinary and extraordinary general meetings in French sociétés anonymes must now be calculated based on the number of votes cast by shareholders present or represented and not on the basis of the number of votes they hold. This new method for calculating the majority will have the effect of “neutralising” abstentions, whereas they were before de facto counted as a “no” vote. These new rules will apply to public and private companies alike, as from the general meeting held to approve the first financial statements following the promulgation of the law (i.e. the AGM held in 2020 for companies closing on 31 December).

Revised say on pay rules: The French Government enacted revised say on pay rules through an order and a decree dated 27 November 2019. Whilst the overall architecture of the French say on pay regime remains unchanged, the reform brings significant changes to the existing rules. The new rules will apply to annual shareholders’ meetings held after January 1. Read more...

Reform of takeover regulations: Further to the lowering of the squeeze-out threshold, the French market authority has launched a public consultation on a series of proposed changes in takeover regulations. Essentially the proposals aim to strengthen the protection of minority shareholders as well as better guaranteeing the independence of experts and the transparency of their mission. The changes may in certain cases result in a longer takeover process. The reform is expected to be enacted late in 2019 or early 2020.

Pay ratio disclosure: CEO pay ratios disclosure rules adopted in 2019 will apply in 2020 for the first time for most of the companies listed on a regulated market (those whose financial year ends on 31 December). Corporate governance reports must now contain a comparison between the compensation of corporate officers (chairman of the board of directors, CEO and deputy CEO) and the average and median compensation within the company.

Foreign investment control: further extensions: 2020 may see further extensions to the scope of foreign investment control. The Minister for the economy, Bruno Le Maire, announced plans to make the rules applicable to food products and the media, and rules could apply when crossing a 25% threshold in shares or voting rights (compared to 33.33% today), capturing more transactions.

Data Protection

New guidelines and recommendations on cookies: As part of its action plan on advertising targeting, the CNIL has adopted new guidelines on cookies and other tracers, notably stating that the mere continuation of browsing on a site can no longer be considered as a valid expression of consent to the deposit of cookies on a user’s terminal. However, the practical methods of collecting valid consent are still to be clarified. As such these guidelines will be supplemented, at the beginning of 2020, by a recommendation on the practical procedures for obtaining consent that will be developed in discussion with operators. How these guidelines and this expected recommendation align with the ePrivacy Regulation which is at a later stage of drafting (and seems to adopt a relatively more flexible approach) remains to be seen.

Dispute Resolution and compliance

The Gauvain report: Submitted to the French Government in June 2019, the Gauvain report sets out pragmatic legislative proposals to protect French companies in the context of extraterritorial judicial proceedings and investigations. Two key proposals, which could be passed into law in 2020, are (a) extending legal privilege to the work of in-house lawyers by allowing them to register with the Bar and; (b) strengthening the French Blocking Statute by (i) creating a binding ex-ante obligation to report any document/information request from a foreign court or authority to the SISSE (the French Strategic Information and Economic Security Service) which would be entrusted with supporting French companies in their dealings with such courts and authorities, and (ii) increasing the financial sanctions in case of violation of the French Blocking Statute (from €18,000 to €2M for natural persons, and up to €10M for legal entities).


New patent rules to be adopted: In the context of the Pacte law, which substantially modified the landscape of French patent law, orders implementing new patent rules are yet to be issued, notably to (i) create an opposition procedure before the French patent office, (ii) introduce the assessment of the inventive step in the examination procedure following a French patent application, and (iii) strengthen the utility certificates with increased protection and the option to turn them into patent applications.

Public law

Privatisation of Aéroports de Paris (ADP):  2020 will be key for the future of ADP, the operator of the main French airports. The Pacte law authorised the sale by the State of its majority stake (50.6%) in ADP to the private sector. The privatisation process has been suspended due to a “shared initiative referendum” procedure intended to make the privatisation of ADP impossible. If this procedure obtains support from more than 4.7 million voters before 12 March 2020, Parliament will have to vote again on the privatisation process within six months, failing which a referendum will be organised. As of 4 December 2019, 1 000 500 persons have supported the shared initiative referendum procedure.

Foreign investment control: further extensions: 2020 may see further extensions to the scope of foreign investment control. The Minister for the economy, Bruno Le Maire, announced plans to make the rules applicable to food products and the media, and rules could apply when crossing a 25% threshold in shares or voting rights (compared to 33.33% today), capturing more transactions.

Real Estate

Energy savings plan in tertiary industry buildings: mandatory reporting obligations and ambitious targets to be reached by 2030, 2040 and 2050: The French Government has adopted implementation provisions of the energy saving targets set by the Elan Law dated 23 November 2018 (“Elan Law”) through Decree No. 2019-771 dated 23 July 2019, which came into force on 1 October 2019.
Energy consumption of tertiary use buildings (i.e. offices, retail, logistics premises, etc.) with a floor surface area of at least 1,000 sqm and existing as at 24 November 2018 shall (i) be reduced by 40% by 2030, 50% by 2040 and 60% by 2050 as compared to 2010 energy consumptions, or (ii) reach specific quantified targets to be specified by a further government order. Annual energy consumption will have to be reported by the owners and/or tenants of such buildings through a dedicated online platform. Administrative fines will be incurred should the targets fail to be reached or the owners/tenants fail to comply with their reporting obligations.


Implementation into French law of the new insolvency Directive: The main deadline for the transposition of Directive (EU) 2019/1023 is 17 July 2021. In that respect, the Pacte law enables the French Government to transpose this directive under French law by way of ordinance. Depending on how it is transposed into French law, it may significantly affect French insolvency law, especially regarding the approval process of restructuring plans.


Transposition of ATAD 2: The draft for the 2019 Finance Bill, currently being discussed before Parliament, transposes articles 9 to 9 ter of the Anti-Tax Avoidance Directive (ATAD) as modified by the ATAD 2 Directive, relative to the tax treatment of hybrid situations. The purpose of ATAD 2, based on Action 2 of BEPS, is to provide a framework to tackle hybrid mismatches. In practice, the proposed mechanism would result in an additional set of rules reducing the ability to deduct financial charges in hybrid situations. 

Reduction of CIT rates: The decrease in corporate income tax rates should slow down. French CIT for companies with a turnover of over €250 million will be levied at a maximum rate of 31% for fiscal years opened from 1 January 2020 to 31 December 2020 (reduced to 27.5% and 25% respectively for fiscal years opened from 1 January 2021 to 31 December 2021, and for fiscal years opened from 1 January 2022 onwards). 

New French-Luxembourg Tax Treaty: The new double tax treaty entered into between France and Luxembourg on 20 March 2018 will enter into force on 1 January 2020.

2019 has seen significant changes in law at EU level, which will impact your business in the years to come. By watching this video, you can get a sneak peek into:

  • the sustainable finance package, which seeks to integrate environmental, social and governance considerations into the investment process;
  • the banking package, which brings changes to prudential regulation and the resolution of banks;
  • the investment firms review package, which marks a major reform for capital and liquidity rules for investment firms;
  • the clean energy package, which aims to create an integrated energy market;
  • the screening of FDI regulation, which sets minimum standards for national FDI screening.

Key contacts for France

Please contact your usual Linklaters contact if you would like to discuss any of these matters further.

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