FRANCE Law and Practice Contributed by: Karl Hepp de Sevelinges, Nicolas Martin, Cyril Deniaud and Benjamin Cohu, Jeantet
social et économique – CSE), which is granted information and consultation rights. A works council with broadened competencies shall be established in French companies having more than 50 employees and shall notably be consulted in the case of a change of control of an entity prior to any final decision being taken by the seller (ie, prior to the execution of any binding agreement relating to such operation). The works council must render its opinion within a one-month period. Such period may be extended to two months if the works coun - cil decides to appoint an expert auditor (which will assist the works council with respect to the assessment of the projects and documents provided by the company) or to three months if there are several local works councils consulted with several experts appointed. The works council is not granted a veto right, and the contemplated M&A transaction can occur even if the works council has given a negative opinion. Before entering into a binding agreement, the seller is, however, requested to take into account the works council’s comments or observations. In the case of a direct sale of a majority of the shares or of the business as a going concern ( fonds de commerce ) of a French company below certain thresholds (small or mid-sized French company), the management of such entity will also have to comply with the so- called “Hamon law” , which consists in individu - ally informing each employee of the company about the contemplated sale and of their right to make an offer. When the company has a works council with broadened competencies that must be informed
and consulted with respect to the contemplated sale, the Hamon law notification process will be carried out in parallel to the works council pro - cess and will be deemed to be completed once the works council has rendered its opinion. In such case, the Hamon law process will thus have no additional impact on the timing. This Hamon law obligation also applies when no works council with broadened competencies has been established within the French entity. In such a case, the informing of the employees must be carried out at least two months prior to the execution of any binding agreement. Indeed, employees have a two-month period (as from receipt of the notification) to submit an offer to purchase the share or business to be sold. Such period of two months may expire earlier if each employee of the French company express - ly waives their right to purchase the shares or the business as a going concern. The notification process will be handled by the seller. When notifying the contemplated sale to the employees, the seller does not need to disclose the identity of the potential bidder. The employees are subject to an obligation of discre - tion concerning the information provided under the Hamon law. There is no obligation to react to the employ - ees’ offer in any specific manner, and such right should not be seen as an employee pre-emption or priority right. 2.6 National Security Review See 2.3 Restrictions on Foreign Investments .
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