FRANCE Law and Practice Contributed by: Jean-Christophe Devouge and Kaïs Boussadia, Aurès
tus may be granted to companies choosing to adopt – in addition to a raison d’être – strong commitments towards environmental, ethical and/or social concerns. These commitments are submitted to the general meeting of share - holders and included in the by-laws. Compliance with these commitments is assessed regularly by a mission committee, comprising at least one employee and usually representatives of other stakeholders. Failure to comply with the mission or the commitments not only entails the with - drawal of the status, but could also lead to liabil - ity claims against the directors and the company. Extra-Financial Reporting and CSRD Directive French listed companies and other large com - panies are subject to extra-financial reporting obligations in the form of a non-financial perfor - mance declaration (DPEF). These requirements will be drastically extended starting in 2024 with the entry into force of the Corporate Sustainabil - ity Reporting Directive (CSRD) of 14 December 2022, transposed within French law by the Ordi - nance dated 6 December 2023. CSRD provides for the substitution of a new extended reporting on sustainability, in order to include informa - tion on environmental, social and governance issues. The reporting requirements will by based on a double materiality principle: sustainability matters that affect the company as well as the impacts of the company on sustainability mat - ters. Information contained in this new sustainability report (to be included in the annual management report) will be certified by authorised auditors or independent third-party organisations. In addi - tion, shareholders holding at least 5% of the capital or voting rights may request the appoint - ment of another auditor or independent third-
party organisation to draft a separate report on part of, or all sustainability information. Following the adoption of the “Stop the Clock” Directive in April 2025, the timetable for the application of the CSRD has been adjusted. Large listed companies with more than 500 employees, already subject to the CSRD, must report on the 2025 financial year, with reports published in 2026. Other large companies and parent companies of large groups, not covered by the first wave, will be required to report on the 2027 financial year, with publication in 2028. Listed small and medium-sized enterprises, excluding micro-enterprises, will be required to report on the 2028 financial year, with pub - lication in 2029. In order to guide companies, the ESMA, the European Commission, and the Haute Autorité de l’Audit have respectively pub - lished recommendations, Q&A and guidelines. 3. Management of the Company 3.1 Bodies or Functions Involved in Governance and Management There are three main functions involved in the governance and management of French com - panies: • deliberative functions; • supervisory functions; and Deliberative functions are always delegated to the shareholders of the company. Depending on the corporate form, shareholders’ decisions are mandatorily adopted in general meetings (eg, SA) or may result, if the company’s by-laws allow it, from their unanimous consent expressed in a written act (eg, SAS, SARL). • management functions. Deliberative Functions
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