Foreign investment in France: European Commission proposal
French law places no restrictions on foreign individuals or legal persons holding shares in a French trading…
Delcade est la rencontre d’avocats issus de grands cabinets internationaux, désireux de fonder un cabinet d’excellence. Pour y parvenir, nous appliquons des règles simples et pourtant souvent oubliées :
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Attachés aux règles déontologiques, les avocats de Delcade véhiculent des valeurs humaines décisives pour une relation de confiance. Fondateurs d’une société d’avocats d’affaires, nous sommes avant tout des entrepreneurs qui conseillons des entrepreneurs. En cela, nous comprenons et partageons les problématiques de nos clients. L’ouverture internationale est une volonté commune et motrice de notre société. La passion du voyage et de la découverte d’autres cultures et systèmes juridiques a conduit la plupart d’entre nous à La double implantation Paris – Bordeaux de notre structure permet de répondre géographiquement à tout besoin dans le Nord ou le Sud de la France. Chacun des bureaux est facilement accessible et
Valeurs humaines et déontologie
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Entreprenariat
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Capacité internationale
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Couverture France entière
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BACKGROUND AND DEAL ISSUES
An asian group wanted to obtain a stake in a French SMEs. The group wanted a step by step acqusition : initially a joint venture, with a later option to take control of the JV.
OUR INVOLVMENT
Both of Delcade’s office (Paris and Bordeaux) studied the feasibility of the transation with the client in two main steps. Our lawyers firstly asessed the feasibility of the purchase, more particularly, during a legal audit which established the rights and assets of the company, especially regarding patented goods. Once this was established, Delcade negotiated the price with the sellers as well as any warranties relating to the activities of the company and the purchase options for our client to acquire a majority of shares at the end of the test phase. It was also necessary to negotiate a right of withdrawal for the client, in the event of a failure of partnership.
Despite the complex nature of the case, the transaction was completed in less than 6 months. Benoit Lafourcade led a bilingual team that was available and responsive during the transaction and made many site visits to assess the intricacies of the transaction and conduct the required due diligence.
Company Law:
Benoit Lafourcade
Cynthia Lefeuvre
International liaison:
Roobesh Ramanjooloo
Tax:
Fabrice Delouis
BACKGROUND AND DEAL ISSUES
A difficult business context as many internal conflicts where occuring at the time. Leases were contracted but not always brought to term. They belonged to a franchise but were essential to the company.
OUR INVOLVMENT
Our ability to cross intervention was decisive. In addition, the presence of a tax lawyer helped optimize the purchase. The client had us involved from the first contact with the seller, which greatly facilitated the negotiation of documentation, pricing and completion of the transaction.
New leases contracts were signed (renegotiated with the lenders, including supermarket groups). The franchise agreement was validated and the conflicts were dealt with by the Employment Tribunal. Delcade brought in an expert in psycho-social risks and conflicts in the work place to defuse social tension and renew the dialogue between employees and the buyer.
Company Law:
Benoit Lafourcade
Tax:
Fabrice Delouis
Employment law:
Cynthia Lefeuvre assisted by a specialised lawyer
BACKGROUND AND DEAL ISSUES
Buying a business subject to finance by the seller. The buyer is a successful restaurateur who wished to settle in Paris, he did not speak French.
OUR INVOLVMENT
The operation required the signature of a promise of sale, subject to fulfilment of conditions precedent for the buyer. The funds were raised and the operation was made possible. Delcade acted in English for the benefit of the buyer.
Company Law:
Benoit Lafourcade
Tax:
Fabrice Delouis
BACKGROUND AND DEAL ISSUES
A transfer of control to a foreign buyer. The sale was made in two stages, with a staggered share price payment. The intermediate phase required an accurate and comprehensive drafting, to secure the payment for the seller. In addition, the sale by a holding necessitated to take into account the quality of the seller (company) and the destination of the sale price.
OUR INVOLVMENT
Our corporate law and tax lawyers facilitated a comprehensive and coherent approach.
At the client’s request, the lawyers attended both the negotiation of the sale and the drafting of the documentation.
The choice was made to write a Due Diligence for the seller that did not replace the Acquisition Due Diligence conducted on behalf of potential buyers. This had several advantages:
⦁ Accelerated the sale process by providing the vendor the information requested by all potential buyers, ⦁ Reduced costs of the Acquisition Due Diligence for the potential buyers, ⦁ Avoided the management of seller to respond multiple times to some issues already covered in the seller’s due diligence
⦁ Allowed the seller to have information validated by external consultants.
The operation was completed in less than four months, negotiations undertaken bilingually, French and English.
Company Law:
Benoit Lafourcade
Agathe Descamps
Tax:
Fabrice Delouis
BACKGROUND AND DEAL ISSUES
The client wanted to retire. He wanted to optimise his departure, by either selling the goodwill of the business or shares of his company.
OUR INVOLVMENT
Our firm prepared a comparative study to advise the best option for the client.
Delcade negotiated the sale and purchase agreement and ensured the transfer of commercial agency contracts to the buyer.
Company Law:
Benoit Lafourcade
Cynthia Lefeuvre
Tax:
Fabrice Delouis
BACKGROUND AND DEAL ISSUES
The company had a small turnover, and a low value despite strong potential. The founders had difficulty borrowing but promising technology made finding an investor (subscription of shares by an investor) and capital funding possible. Another challenge was that the founders wanted to avoid excessive dilution of their shareholding stake and losing the majority decision.
OUR INVOLVMENT
Delcade advised a statutory grooming of the SAS to rebalance the rights of the founding shareholders. These also received special securities (including warrants) entitling them to subscribe for shares at a discounted price, compared to a future value. With a valuation of the company and its intangible assets, and the output of the initial minority, the company was valued enough to prevent excessive dilution of the founding shareholders. In addition, they benefited of securities that, if effective, allowed them to increase their participation in the company. Finally, specific rights and benefits were secured that conferred the founders’ safety against the new investors. A shareholders agreement was also negotiated. The investor subscribed to capital and convertible bonds, which ultimately helped avoid an excessive dilution of the founding shareholders.
Company Law:
Benoit Lafourcade
Agathe Descamps
Tax:
Fabrice Delouis
BACKGROUND AND DEAL ISSUES
An investor wanted to create an investment vehicle designed to make investments in subsidiaries in the wine sector. Delcade had to plan an investment scheme allowing an easy investment in subsidiaries (reduced formalities leverage facility for the investment vehicle), without taking immediate participation but conditional upon the occurrence of certain events such as investment participation.
OUR INVOLVMENT
Delcade lawyers have developed a scheme based mainly on the issue of warrants to subscribe for shares which gave the holder the right to: subscribe at a nominal value (without premium), a variable
number of shares as determinable through a predetermined formula and if certain events occurred, such as a new issue of shares by the target company, new shares. The investor was preset between a minimum and a maximum number of shares, depending on the final value of the shares of the company. The investor therefore, benefited from a simple scheme to reward its stategy to accompany its investments.
Company Law:
Benoit Lafourcade
Cynthia Lefeuvre
Tax:
Fabrice Delouis
BACKGROUND AND DEAL ISSUES
A client company found itself excluded from an innovative company with a statutory exclusion mechanism. The reason for the exclusion was challenged.
OUR INVOLVMENT
We analysed the content of the articles of association and this highlighted an inconsistency reason used to exclude the partner. In addition, the right procedure had not been followed (the clause was illegal under recent developments in case law).
The suspension of the exclusion was required for interim relief before the Commercial Court. We achieved the annullment of the exclusion.
Litigation:
Benoit Lafourcade
Cynthia Lefeuvre
BACKGROUND AND DEAL ISSUES
Damages not covered under warranty amounting to to several million euros for the buyer.
OUR INVOLVMENT
The warranty was obtained through a formal notice sent by Delcade. Misrepresentation by the seller was proven as he hid some major risks when selling. The client obtained a reasonable compensation.
Litigation:
Benoit Lafourcade
BACKGROUND AND DEAL ISSUES
No fee agreement signed, but actual work of the architect reported.
OUR INVOLVMENT
Delcade acted against the debtor, for damages exceeding 50,000 euros. We submitted accurate and justified arguments sustained by many pieces of evidence.
High Court and the Court of Appeal confirmed that the fees were due, despite the absence of fee agreement. Damages were obtained.
Litigation:
Benoit Lafourcade
BACKGROUND AND DEAL ISSUES
The client company was being blackmailed by a minority shareholder in a foreign subsidiary which imposed an unfair right of withdrawal for the majority shareholders.
OUR INVOLVMENT
Using its international network, Delcade undertook a through due diligence of all available documents (statutes, covenants, etc..) in connection therewith. The right of withdrawal invoked proved valid, but the calculation of the exit securities was disputed. An understanding of the applicable local law and contractual documents reduced the purchase price requested. Moreover, the minority shareholder was in default of under various statutory and contractual obligations. A negotiation to resolve the conflict and bring out the minority shareholder in reasonable conditions was achieved.
Litigation:
Benoit Lafourcade
Cynthia Lefeuvre
BACKGROUND AND DEAL ISSUES
The client, a U.S. company, was not present in Europe.
OUR INVOLVMENT
Delcade participated in the negotiations with a potential franchisor in France and drafted the franchise agreement.
Company Law:
Benoit Lafourcade
Tax:
Fabrice Delouis
BACKGROUND AND DEAL ISSUES
The client, a U.S. company had a subsidiary in France. It wanted to outsource its legal issues.
OUR INVOLVMENT
Delcade offered a subscription to his client. As a genuine legal advisor, Delcade provides legal support in corporate law (legal monitoring of general meetings), contract law, tax law and employment law.
Company Law:
Benoit Lafourcade
Cynthia Lefeuvre
Agathe Descamps
Roobesh Ramanjooloo
Tax:
Fabrice Delouis
BACKGROUND AND DEAL ISSUES
The target group, consisting of the target and numerous foreign subsidiaries, was a competitor group larger than the purchaser, but in financial difficulty.
Subject to financial recovery of the target group after acquisition, this was a major transaction opportunity for our client. The client had to finance the operation by a reconciliation of investment funds.
The transaction had to be done quickly, and take into account the international dimension and the cultural differences of the target group.
OUR INVOLVMENT
The firm organised its international team. The Paris and Bordeaux offices dealt with all aspects of fundraising and negotiation with sellers. The firm has partners specialising in advising on mergers and acquisitions (validation of the business plan) and local counsel in each of these jurisdiction through its network of international partners.
Despite the technical nature of the transaction, the acquision completed very quickly thanks to the involvement of a very helpful and responsive bilingual team and site visits by Benoît Lafourcade, associate coordinator for judging the context operation and conducting the due diligence required.
Company Law:
Benoit Lafourcade
Cynthia Lefeuvre
Agathe Descamps
International Coordination:
Roobesh Ramanjooloo
Tax:
Fabrice Delouis
BACKGROUND AND DEAL ISSUES
The group had numerous subsidiaries in France and abroad and wanted to refinance its debt LBO. It was decided to merge the two holding companies of the group.
The banking syndicate group wanted a detailed analysis of the tax consequences associated with the refinancing and the review of the tax conditions of the simplified merger.
In association with our various partners involved in the legal process, the operation was carried out quickly and successfully.
OUR INVOLVMENT
Our tax team analysed all of the legal and tax documentation available, delivered its findings as a “Memorandum of structure” though satisfying the prerequisites for funding.
Tax:
Fabrice Delouis
BACKGROUND AND DEAL ISSUES
The Group had droped significant claims of some of its foreign subsidiaries. The tax authorities considered that these waivers were false acts of management. The amount of write-offs was reinstated to the taxable income in France and subject to corporation and withholding tax.
OUR INVOLVMENT
We have advised the company throughout the duration of this fiscal control and contested the proposed adjustments by establishing a through case. We obtained a very significant reduction of the proposed adjustments.
Tax:
Fabrice Delouis
BACKGROUND AND DEAL ISSUES
The Group was organised in a conventional manner with a holding company owning all operating subsidiaries. The manager was an employee of the holding company who reinvoiced all management fees to its affiliates. The tax authorities had recovered the taxable income of subsidiaries considering that no actual service was rendered as such to them.
OUR INVOLVMENT
We helped the holding company in the preparation of a thorough file in response to the proposed amendment, and defended this issue with the help of our client during many discussions with the tax authorities. We were able to obtain a very significant part of the adjustments.
Tax:
Fabrice Delouis
BACKGROUND AND DEAL ISSUES
The Wine Group was made up of different companies holding land assets, operations, vinification and trading. This group was developed within the family for two generations and we were consulted to prepare the transfer to the third generation.
Several questions arose, in particular: (i) how to minimize the tax impact of the transfer, (ii) how to avoid members of the family who did not want to subscribe to capital and (iii) how to secure the Group’s governance after transfer among the family members.
OUR INVOLVMENT
Our mission was initially to understand the issues and family roles. We then implemented a redemption process of certain investments held by members who wanted out. Finally, we developed a mode of governance based on a shareholders agreement and preferrential shares with voting rights and dividends differentiated according to the involvement of each member of the family.
Tax:
Fabrice Delouis
Company Law:
Benoit Lafourcade
BACKGROUND AND DEAL ISSUES
Temporary joint venture between an American company and a French company to respond to a call for tenders.
The group was formed from the preliminary stage of the transaction, in response to an international call for tenders, by obviously hoping to get the market and therefore the prospect of running the whole project. However, this set-up sometimes occurs after the submission of the bid by a bidder, while it is being negotiated with the contracting authority (in this case, the offer generally specifies that is valid only under the condition that a group can be realised between X, Y, Z, with or without a common entity, to perform the contract), or after the conclusion of the contract, the succesful company undertakes to bring the necessary skills and abilities necessary to perform. The latter solution presented a disadvantage for members of the consortium because they have had no part in negotiating the terms of the contract.
OUR INVOLVMENT
Delcade advised the appropriate cooperation agreement – Two main forms of cooperation were analysed. On the one hand, a commercial cooperation agreement with the creation of a common unit (a company or group of economic interest). On the other hand, a business group agreement, which allows each to participate as such in the contract.
The contract option was chosen. Delcade drafted the constitution and organised its application. A classic contract, around which were drafted subsequent contracts. The founding document of the group included certain essential clauses, common in any contract of cooperation, such as determining the obligations of each party, confidentiality and non-competition, but also an exit clause to resolve the situation born of a deadlock between the joint contractors and a multi-party arbitration clause between group members.
Tax:
Fabrice Delouis
BACKGROUND AND DEAL ISSUES
Develop a sales force at a reasonable cost, by establishing of an independent external network
OUR INVOLVMENT
Delcade has compared the different possible forms of sale to external parties.
Tax:
Fabrice Delouis
BACKGROUND AND DEAL ISSUES
A French subsidiary had to sell software licenses for its parent company and ensure their maintainance. The license had to remain exclusively between the parent company and the end client. We had to cement the legal relations between the subsidiary and clients, as well as the intra-group relationships (management agreements between the parent company and the subsidiaries, conditions of sale of licenses to use the software, mutual technical support).
OUR INVOLVMENT
Delcade assessed with the president of the subsidiary the exact reality of relations between the parties (client of the firm, its parent company and their clients). Based on the findings, it was possible to precisely determine the contributions of each and to draft bespoke contracts. Intra-group tax flows were validated with the expertise and support of the “price transfer” team of the firm.
Tax (price transfer):
Fabrice Delouis
BACKGROUND AND DEAL ISSUES
The association was governed by the 1901 law applying, inter alia, the provisions of the Code of Construction and Housing (art. L. 313-33).
Another company, simple joint stock company, ensured the promotion and development of the association’s activities on the operational, financial and technical level.
As part of the implementation of the new governance group as envisaged by the partners, we considered a grouping of activities within the association whose mission was expanded.
OUR INVOLVMENT
The advice included legal and tax assistance including:
- Pre-Audit and analysis of operations: due diligence of parties;
- Analysis relating to the taxation of all transactions in order to optimise tax for all participants;
- Writing legal and tax synthesis that included proposed actions and recommendations;
- Tax structuring of transaction, draw up of a provisional timetable;
- Completion of transaction: legal drafting, support for all legal and administrative formalities.
Delcade’s advice was divided into three phases:
Phase 1: Acts and preliminary operations
Phase 2: Structuring the transaction
Phase 3: Assistance on legal and tax issues
Legal:
Benoit Lafourcade
Tax:
Fabrice Delouis
BACKGROUND AND DEAL ISSUES
Foreign association registered in France, Delcade provided legal support for the association.
OUR INVOLVMENT
Delcade provided assistance in English by taking into account legal and tax characteristics of the structure, and implementing the recommendations. Advice was provided particularly in the context of a tax audit that enabled the validation of the recommendations and policies of the tax group.
Legal:
Benoit Lafourcade
Tax:
Fabrice Delouis
Fabrice Delouis
Partner
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Benoit Lafourcade See profile Sophie Coignat See profile Pierre Papelard See profile Delphine Benabou See profile Frédérique Sallée See profile Caroline Zimbris-Golleau See profile Edouard Fraignieau See profile Edgard Nguyen See profile Cynthia Lefeuvre See profile Stéphanie Doutremepuich See profile Aurélie Boury See profile Mathilde Loulmet See profile Percy Louis See profile French law places no restrictions on foreign individuals or legal persons holding shares in a French trading… For most foreign investors, operations in France are often a source of insecurity when it comes to… Delcade, in the list of recommended business lawyers in France by the British Embassy since 2007: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/516978/Lawyers_List_France_041316.pdf In the Steria case (CJEU, C-386/14), the CJEU ruled that “article 49 TFEU must be interpreted as precluding rules… On November 13, the highest administrative French court, Conseil d’Etat, ruled that the holding period abatement only… The “de Ruyter” case handled by the CJEU on February 26th, 2015 and by the “Conseil d’Etat”on… By Antoine Roux, Delcade Foreign investments in France are growing again. Microsoft wants to invest EUR 70… On August 6th 2015, the Law on Growth and Economic Activity (so-called “Macron Law”) was finally enacted… The CJEU decision de Ruyter dated February 26th, 2015 applied by the “Conseil d’Etat” July 27th, 2015,… French 3% additional contribution on distribution of profits: the European Commission opens infringement procedure against France Companies… The Parent-Subsidiary regime A tax option that sets up a tax exemption of 95% on dividend received… Definition : Double Tax Treaty (DTT) between France and another state (120+ in France) Taxes concerned by… adresse PARIS : BORDEAUX : LONDRES : latest tweet
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Foreign investment in France: European Commission proposal
French employment law update – Foreign Companies: Few Traps You Should Be Aware Of
Delcade – recommended lawyers
Taxation on dividends : Amendment to the regime after the Steria case
Individual taxation and capital gains deriving from the transfer of securities
Real estate capital gain: Social contributions are no longer payable
Foreign investments in France: Microsoft example
Macron Law’s Key Measures
Claim on French social contributions: consequences of « de Ruyter » case
Foreign companies collecting French-source dividends: you may get a tax refund!
Holding : an Attractive Tax Regime
Double Tax Treaty (DTT)
Contact
28 Cours Albert 1er, 75008 Paris
+ 331 75 43 18 56
Fax : + 331 78 76 75 44
78 Cours de Verdun 33000 BORDEAUX
+335 56 45 27 90
11 Buckingham Palace Road LONDON SW1W 0SR
(no correspondence)
+44 (0) 7481 159 835