FRANCE Law and Practice Contributed by: Arnaud Fromion, Frédéric Guilloux and Pierre-Benoît Pabot du Châtelard, Clifford Chance
the secured asset privately) are generally pro - hibited. Usually, the method that is chosen to enforce security in France is the private foreclosure referred to in paragraph (iii) above, which is typically considered as the swiftest process as it allows the parties to agree, under the terms of their security agreement, the terms of the enforcement (in this respect, the time delay to transfer the shares and the name of the valuation expert can be pre-agreed by the parties in the pledge agreement). Enforcement of security in France is not subject, in principle, to any mandatory cost, other than the legal costs referred to below. However, cer - tain experts are likely to be mandated for this kind of transaction (valuators, lawyers), so it is hard to predict precisely, in practice, the enforce - ment cost in an enforcement scenario, which very much varies from one matter to another, on the basis of the parties that are involved. Please note, however that where enforcement is con - Since 1 August 2012, the transfer of shares in an SA and an SAS has been subject to a 0.1% registration duty. However, in the case of listed shares, the duty is due only if the transfer is made by way of a written deed (even if this deed is executed abroad. In the case of shares in a non-listed SA, whose assets consist principally of immoveable property, the transfer attracts a 5% registration duty. sensual, the costs are minimised. Enforcement Costs for Shares Enforcement Costs for Land and Buildings The principal costs triggered by the sale by way of auction of a mortgaged real estate depend on the characteristics of the real estate and the size of the operation (ie, costs to draft/obtain vari -
ous required documents, fees, legal advertising costs, and Land Registry’s fees). Specific advice should be sought. Enforcement Costs for Intellectual Property When enforcing security, the beneficiary must pay a nominal fee and when doing so, a registra - tion duty of 5% may in certain cases be payable. These costs apply if intellectual property rights are pledged as part of the business or indepen - dently through a specific pledge instrument. Enforcement Costs for Businesses When enforcing and selling the business, the beneficiary of the security must pay 5% of its value as a registration fee. 6.6 Practical Considerations/Limitations on Enforcement In a market the size of France’s, enforcing secu - rity under any circumstance may result in bad press and certain private debt providers have historically seen their reputation negatively affected by taking enforcement measures. 6.7 Claims Against Secured Lenders Post-Enforcement Generally speaking, enforcement over shares would simply put the creditor in a shareholder’s seat and not result in a transfer directly to it of obligations that lie with the company of which it has become a shareholder as a result of enforce - ment. Environmental remediation obligations would arise as a result of direct ownership of real estate – which is not relevant to the French acquisition financing market.
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