{"id":128748,"date":"2026-02-02T12:31:21","date_gmt":"2026-02-02T12:31:21","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=128748"},"modified":"2026-02-02T12:31:21","modified_gmt":"2026-02-02T12:31:21","slug":"france-acquisition-finance","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/france-acquisition-finance\/","title":{"rendered":"France: Acquisition Finance"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-128748","comparative_guide","type-comparative_guide","status-publish","hentry","guides-acquisition-finance","jurisdictions-france"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Jeantet<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2019\/03\/jeantet.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Jeantet<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2019\/03\/jeantet.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Acquisition Finance laws and regulations applicable in France<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the trends impacting acquisition finance in your jurisdiction and what have been the effects of those trends? Please consider the impact of recent economic cycles, Covid-19, developments relating to sanctions, and any environmental, social, and governance (\u201cESG\u201d) issues.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Despite downward inflation, available credit, stable interest rates and a healthy macroeconomic environment, the rebound expected in 2025 did not live up to the expectations of private equity players. After a promising first quarter, geopolitical developments, and Liberation Day in particular, caused considerable uncertainty and a wait-and-see attitude in the market.<\/p>\n<p>Private equity fund investments fell by more than 20% in 2025 in France, to $23 billion, including major deals such as wholesaler Prosol (Grand Frais retail stores) which just ended up in the Apollo&#8217;s portfolio for around \u00a34 billion and French renewable energy pioneer Akuo acquired by Ardian for more than \u00a32 billion. However, several major minority deals are not included in the above-mentioned count (French medical diagnostics leader Sebia opening up its capital to Warburg Pincus \u2013 \u00a35 billion value \u2013, insurance broker Diot-Siaci to Ardian \u2013 \u00a34.8 billion \u2013 or animal health specialist Ceva to the M\u00e9rieux family \u2013 \u00a39 billion value).<\/p>\n<p><strong>Trend towards flexible divestment processes and buy-and-build strategies<\/strong><\/p>\n<p>In 2025, funds continued to redirect their investments towards resilient, strategic sectors such as healthcare, technology and impact industries. Despite the appetite for these assets, there was a trend towards more flexible divestment processes in terms of timing (particularly with regard to bid submission deadlines) and a smaller number of targeted candidates. Acquirers took the time to carry out in-depth due diligence, to discuss the business plan with management, to find suitable financing, and to work out more complex arrangements with the seller (earn-outs, reinvestments).<\/p>\n<p>The defence and aerospace sector emerged as a driving force for \u00a0activity and innovation in a geopolitical context that emphasises sovereignty issues.<\/p>\n<p>Funds also turned to buy-and-build strategies, which involve acquiring a core company and then carrying out a series of acquisitions of companies in the same sector. These strategies generate operational and financial synergies, notably by optimising structural costs, and enhance the value of the group as a whole, making it more attractive for future disposal.<\/p>\n<p>Last but not least, we have witnessed the rise of continuation funds, which, following the trend in the United States, have become an increasingly attractive exit option for funds wishing to maintain their support for a quality asset for a new cycle.<\/p>\n<p>Over the past three years, the scope of FDI screening in France has been significantly extended, entailing the French authorities\u2019 increased scrutiny of foreign investments.\u00a0 Recent trends in French PE transactions also include a rise in the use of warranties and indemnities (W&amp;I) insurance, sector-specific investment strategies, and the prevalence of minority investments and growth capital deals.\u00a0 Additionally, the market has seen enhanced DD focusing on ESG criteria and a rise in club deals and co-investments.General partner (GP) -led secondary transactions (where GPs decide to sell one or more portfolio companies from a fund they manage to a new investment vehicle (continuation fund) managed by the same GPs) have been increasingly considered recently, mainly due to downward valuation trends.\u00a0 This deal structure, however, remains challenging to execute mostly due to difficulties in establishing a market price (allowing a return) and in dealing with management teams and investors.<\/p>\n<p>In 2025, France experienced an increase in business failures, particularly among companies with high levels of debt. Special attention should therefore be given to the most exposed entities, such as those in leveraged finance.<\/p>\n<p><strong>ESG <\/strong><\/p>\n<p>ESG and sustainability considerations are increasingly taken into account by the lenders in the French acquisition finance market. The lenders (funds and banks) require substantial ESG reporting and state ESG ratchet applicable to margins in bank loan documentation.<\/p>\n<p>The entry into force of the Corporate Sustainability Reporting Directive (CSRD) and its European Sustainability Reporting Standards (ESRS) in 2024, as well as the publication of the first CSRD sustainability reports in 2025, increased even more the availability of reliable and comprehensive ESG data and consequently the quality of ESG reporting.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please advise of any recent legal, tax, regulatory or other developments (including any reforms) that will impact foreign or domestic lenders (both bank and non-bank lenders) in the acquisition finance market in your jurisdiction.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Ordinance n\u00b02021-1192 reforming the security law (the \u201cSecurity Law Reform\u201d) and Ordinance 2021-1193 amending Book VI of the French Commercial Code (the \u201cInsolvency Law Reform\u201d), both issued on 15 September 2021 have recently modernised French security law, improved the interaction of security law with collective proceedings law and transposed under French law the (EU) Directive 2019\/1023 of 20 June 2019, known as the \u201cRestructuring and Insolvency Directive\u201d.<\/p>\n<p>These reforms have very positively impacted the acquisition finance market and have provided greater legal protection and predictability for creditors.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please highlight any specific high level issues or concerns in your jurisdiction that should be considered in respect of structuring or documenting a typical acquisition financing.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The main issues to keep in mind under French law concerning the structuring and documentation of acquisition finance are the following:<\/p>\n<p>(i) banking monopoly rules applicable to credit transactions;<br \/>\n(ii) corporate benefit (int\u00e9r\u00eat social) rules;<br \/>\n(iii) financial assistance (assistance financi\u00e8re) rules;<br \/>\n(iv) rules relating to interest rates (anatocism and global effective rate (TEG \u2013 taux effectif global);<br \/>\n(v) rules affecting creditors\u2019 rights in the context of insolvency proceedings.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">In your jurisdiction, due to current market conditions, are there any emerging documentary features or practices or existing documentary provisions\/features which borrowers or lenders are adjusting or innovating their interpretation of, or documentary approach to?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In view of the increasing margins offered to companies wishing to secure their acquisition financing, in particular in an LBO-type transaction, and the shortfall in banks&#8217; credit commitments that these companies are facing in the current uncertain economic climate, one of the solutions that has become recurrent is the use of a Tranche C, in addition to the classic senior Tranches A and B. Unlike the \u201chybrid\u201d financing arrangements historically set up in the format of senior debt (loan) and mezzanine debt (bond), the use of this mechanism maintains a certain contractual simplicity, as Tranche C is incorporated in the initial credit agreement. In the vast majority of cases, Tranche C is underwritten as a loan by a debt fund. This Tranche C is repayable in fine, based on the unitranche model, and has a longer maturity than the two senior tranches (generally six months or one year longer than the longest maturity of the first two tranches). Subject to certain contractual adjustments, the security granted to secure the financing will also be shared.<\/p>\n<p>Another trend we can observe is the acceptance by borrowers of a certain degree of uncertainty regarding the total amount of financing made available to them through the use of unconfirmed (or incremental) credit lines. This is the case, for example, when the acquirer\/borrower wishes to obtain additional financing in order to carry out build-up transactions within a reasonable timeframe. This contractual technique provides the borrower with the assurance of being able to attempt to obtain additional financing without having to form a new banking pool or negotiate a waiver with its current lenders and enables the lenders to position themselves at the forefront when the moment comes, without any firm commitment, which is particularly valuable at a time of great uncertainty regarding refinancing rates.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Has there been a prevalence of \u201cequity bidding\u201d in acquisition financing (i.e., signing the acquisition agreement prior to securing financing) with the expectation of securing financing shortly thereafter? If in the US, would Xerox language be included in the acquisition agreement?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Sellers tend to obtain from the buyers that they provide them with commitment letters issued by the equity funds\/lenders financing the acquisition in equity\/debt, including certain funds\u2019 commitments.<\/p>\n<p>There is no equivalent to the Xerox language in the French market. However, the risk for lenders to be found liable by a court to pay damages to the seller is fairly low in the absence of direct contractual undertaking vis-\u00e0-vis the seller and, as a general rule, damages awarded by French courts are substantially smaller than in the US.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any notable trends in the use of certain financing structures (e.g., private credit vs syndicated vs high yield vs holdco vs mezzanine vs preferred, etc.) in your jurisdiction for acquisition financings?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The French acquisition finance market has witnessed a significant shift in 2024, with banks regaining market share from debt funds, primarily because the margins charged by debt funds combined with elevated benchmark rates have made unitranche financing considerably more expensive. Previously, the market was heavily oriented towards unitranche financing provided by domestic and international debt funds rather than traditional bank lending.<\/p>\n<p>Mezzanine financing has experienced a resurgence, playing a continuing role in financing structures. With banks returning to the market, mezzanine fills the gap between the leverage acceptable for senior debt and the overall funding requirements of transactions.<\/p>\n<p>PIK (payment-in-kind) instruments remain prevalent in deal structures, with a notable evolution in their implementation. It has become almost standard practice for these instruments to be issued by the holding company of the senior debt issuer or borrower, creating structural subordination and obviating the need for intercreditor agreements between senior and PIK lenders.<\/p>\n<p>A logical structure combining unitranche bond financing with a super senior revolving credit facility (RCF) provided by banks is becoming increasingly common in France, although French banks, particularly regional institutions, are still in the learning phase with this structure.<\/p>\n<p>The market has witnessed greater creativity in capital deployment, with financing structures becoming more diversified: hybrid financings are developing, banks are becoming more present again, and the reopening of the credit market combined with falling rates is restoring capacity for action to funds. The significant arrival of &#8220;flex&#8221; financing on the market has made structuring more sophisticated, with negotiations now focusing on performance curves rather than a fixed sale price.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Has the use of technology (e.g., e-signatures, digital platforms for syndication, document automation, AI, etc.) impacted the documentation or execution of acquisition financings?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Electronic signature has become the most commonly used process of signature in acquisition finance transactions.<\/p>\n<p>Documents can be signed electronically in accordance with the provisions of articles 1174 et seq. and articles 1366 et seq. of the French Civil Code, including when a written document is required for validity purposes, but the reliability of the process is only presumed in the case of a qualified signature within the meaning of the Regulation (EU) No 910\/2014 of the European Parliament and of the Council dated 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market (\u201ceIDAS Regulation\u201d). An advanced signature constitutes prima facie evidence in writing (commencement de prevue par \u00e9crit).<\/p>\n<p>Before the Security Law Reform, private deeds relating to guarantees or security interests entered into by consumers could not be signed electronically, but this is no longer the case.<\/p>\n<p>This impacts the documentation to the extent that electronic signature and proof agreement clauses are now incorporated in the financing agreements, in order to ensure parties\u2019 consent to electronic signature process and embedded technological risks. The parties undertake to take all appropriate measures to ensure that the electronic signature of the finance documentation is made by their duly authorised representative. They are also requested to acknowledge that electronic signature is made in full knowledge of the technology implemented and to waive any right to initiate any claim or legal action relating to the reliability of said electronic signature process or the evidence of its intention to enter into the finance documents.<\/p>\n<p>Beyond e-signatures, digital platforms and artificial intelligence are having a significant impact on the processing and execution of M&amp;A financing transactions, influencing data analysis, automated audits, and document generation. AI is used to identify targets and to generate first analysis on sectors, segments, and niches, but also to perform due diligence processes, generate initial drafts of audit reports or standardised contracts. At present, AI does not achieve however the same level of granularity and nuances as experienced lawyers and structuring, strategy or negotiating aspects of acquisition financings remain out of its scope.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the legal and regulatory requirements for banks and non-banks to be authorised to provide financing to, and to benefit from security provided by, entities established in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>According to the French banking monopoly rules, only French and EU passported credit institutions and French financing companies (soci\u00e9t\u00e9s de financement) are authorised to grant credits on a usual basis (including the purchase of non-matured receivables) in France.<\/p>\n<p>As well as for French or EU passported investment firms, (mutual) insurance or reinsurance companies or pension funds, exceptions have also been recently enacted under French law, in order to authorise (i) on the one hand, certain alternative investment vehicles and securitisation vehicles (fond professionnels sp\u00e9cialis\u00e9 \u2013 FPS \u2013, fonds professionnels de capital investissement \u2013 FPCI \u2013, soci\u00e9t\u00e9 de libre partenariat \u2013 SLP, organismes de titrisation \u2013 OT \u2013 and organismes de financement sp\u00e9cialis\u00e9s \u2013 OFS \u2013 but also alternative investment funds (AIFs) authorised to use the designation \u201cELTIF\u201d pursuant to Regulation (EU) 2015\/760 of the European Parliament and of the Council of 29 April 2015 on European long-term investment funds and their management companies) to have a lending activity in France and (ii) on the other hand, foreign entities and institutions whose corporate purpose or activities are similar to those of the above-mentioned regulated entities authorised to lend in France, to acquire non-matured receivables arising under credit transactions entered into by regulated entities, except for receivables against individuals acting for non-professional purpose.<\/p>\n<p>The Directive (EU) 2024\/927 of the European Parliament and of the Council of 13 March 2024 (AIFM II Directive) now governs the lending activities of AIFs across the European financial market and must still be transposed into French law. Amendments to the French Monetary and Financial Code are therefore to be expected in 2026.<\/p>\n<p>Various exemptions apply, such as deferred payment or advances in commercial contracts or treasury transactions (op\u00e9rations de tr\u00e9sorerie, including the granting of loans and guarantees) between companies that have direct or indirect capital links with each other that confer to one of the linked companies effective control over the others.<\/p>\n<p>Bonds issues also fall beyond the scope of the French banking monopoly.<\/p>\n<p>Violation of the French banking monopoly is a criminal offence punishable by up to three years\u2019 imprisonment and \u20ac375,000 fine for a natural person and \u20ac1,850,000 for a legal entity. In addition, civil penalties may apply but credit transactions entered into in breach of said rules would generally remain valid.<\/p>\n<p>There are no specific requirements regarding the benefit of security, except regarding the assignment of professional receivables by way of security (the so called \u201cDailly Law\u201d assignment under Articles L.313-23 to L.313-34 of the French Monetary and Financial Code) which is reserved to the regulated entities authorised to lend in France (above mentioned).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any laws or regulations which govern the advance of loan proceeds into, or the repayment of principal, interest or fees from, your jurisdiction in a foreign currency?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There are no exchange control rules currently in force in France.<\/p>\n<p>However, according to French case law, applying a principle set out under European Court of Justice case law, a lender offering a foreign currency loan to a consumer must provide clear and comprehensible information so that the borrower can make an informed decision about the risks involved. It must explain in a transparent manner how the contractual mechanism works in practice throughout its term, so that the borrower can assess the impact on repayments of a significant depreciation in the currency of the place where the property is located or where the borrower is domiciled and will receive their income.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any laws or regulations which limit the ability of foreign entities to acquire assets in your jurisdiction or for lenders to finance the acquisition of assets in your jurisdiction? Please include any restrictions on the use of proceeds.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>A special control regime governed by articles L.151-1 et seq. and R.151-1 et seq. of the French Monetary and Financial Code is applicable in France to foreign investments. Under this regime, EU investors benefit from less onerous restrictions than non-EU investors. It potentially applies to any foreign investor (i) acquiring control of a French company or (ii) acquiring all or part of a line of business of a French company. It also applies to non-EU foreign investors (i) acquiring a stake of 25% or more of the voting rights in a French company or (ii) since the COVID-19 crisis (this restriction having become permanent since an ordinance and a decree of 28 December 2023 entered into force on 1st January 2024), acquiring a stake of 10% or more of the voting rights in a French listed company.<\/p>\n<p>Such transactions will have to be authorised by the Ministry of Economy if they concern a \u201csensitive\u201d sector, including activities relating to national defence, any activity that is essential in order to safeguard the country\u2019s national interests in the fields of energy, water supply, transport services, space operations, electronic communications, public safety, public health, etc, or, in relation to the operation of businesses, infrastructures or facilities which are of \u201cvital importance\u201d to the country within the meaning of French law.<\/p>\n<p>Since the ordinance and decree of 28 December 2023 entered into force on 1st January 2024 rendering certain COVID-19 measures permanent, new sensitive sectors are concerned such as the extraction, processing and recycling of critical raw materials, which are essential for the protection of national interests.<\/p>\n<p>The Ministry of Economy can authorise the investment unconditionally or subject to the fulfilment of certain conditions in order to ensure the preservation of national interests, or he can prohibit it based on certain grounds.<\/p>\n<p>The French Treasury issued updated guidelines for the French foreign investment regime in July 2025, providing guidance on the scope of transactions captured by the French foreign investment regime and how the authorisation and prior review procedures are conducted.<\/p>\n<p>In case of violation of the control of foreign investment rules, the Ministry of Economy can take the necessary interim measures in order to protect French national interests, order injunctions to the investor concerned and\/or impose a penalty of up to the highest of the following amounts: twice the amount of the irregular investment, 10% of the annual VAT-exclusive turnover of the company carrying out the protected activities, five million euros for legal entities or one million euros for natural persons.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What does the security package typically consist of in acquisition financing transactions in your jurisdiction and are there any additional security assets available to lenders?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The security interests that are typically put in place in a security package to secure the repayment of a senior debt in acquisition financing transactions in France are:<\/p>\n<p>(i) a first-ranking pledge over the target&#8217;s shares; if the target is a stock company (soci\u00e9t\u00e9 par actions) issuing financial securities registered in shareholder\u2019s account (compte d\u2019actionnaire), such as a limited liability company (soci\u00e9t\u00e9 anonyme &#8211; SA) or a simplified joint stock company (soci\u00e9t\u00e9 par actions simplifi\u00e9e &#8211; SAS), the pledge will be granted over the financial securities account in which the purchaser\u2019s shares in the target will be transferred to be pledged; if the target is another type of companies, such as limited liability company (soci\u00e9t\u00e9 \u00e0 responsabilit\u00e9 limit\u00e9e &#8211; SARL), real estate civil company (soci\u00e9t\u00e9 civile immobili\u00e8re &#8211; SCI) or partnership company (soci\u00e9t\u00e9 en nom collectif &#8211; SNC) issuing shares (parts sociales), the pledge will be granted over the shares themselves held by the purchaser;<br \/>\n(ii) a Dailly Law assignment governed by articles L.313-23 to L.313-34 of the French Monetary and Financial Code (if the borrower is the acquirer) or a first-ranking pledge over receivables granted by the purchaser covering intragroup downstream loans or advances granted to the target company to refinance its existing indebtedness or, as the case may be, to be granted to members of the group for the purpose of financing or refinancing authorised capital expenditure (capex) or external growth transactions if these transactions are also financed by the senior lenders under the setting up of capex lines or incremental facilities;<br \/>\n(iii) a Dailly Law assignment (if the borrower is the acquirer) or a delegation (d\u00e9l\u00e9gation) governed by article 1366 et seq of the French Civil Code, pertaining to any sums due under the acquisition documents and, as the case may be, the acquisition documents relating to any future authorised external growth transactions;<br \/>\n(iv) a pledge or a delegation pertaining to any insurance proceeds which may be due under the borrower insurance policies, or alternatively, the introduction of a loss-payee clause in favour of the senior creditors in the key man insurance policies;<br \/>\n(v) a pledge over the balance of the bank accounts held by the borrower;<br \/>\n(vi) as the case may be, a first-ranking pledge over the on-going business (nantissement de fonds de commerce) or shares of an eligible target in the context of external growth transactions financed by the senior lenders;<br \/>\n(vii) as the case may be, a pledge over the borrower\u2019s shares granted by the borrower\u2019s shareholder(s);<br \/>\n(viii) as the case may be, a personal and joint and several guarantee (cautionnement solidaire) of the purchaser in respect of any sums owed by the target company in its capacity as the borrower of part of the credit facilities.<\/p>\n<p>Other security interests can be provided from time to time, depending on the specifics of the transaction, such as a pledge over intellectual property (IP) rights (patents, trademarks, software or design and models), a mortgage (hypoth\u00e8que) over real property, etc.<\/p>\n<p>French law also provides for a certain number of security interests transferring the ownership of the secured assets to the beneficiary or to a trustee, offering a stronger position to the beneficiary in the context of insolvency proceedings. If they are not yet commonly used in the context of acquisition finance transactions, they tend to emerge in other financing sectors and should also be able to replace some of the above-mentioned security interests in the future. These are (i) the civil law assignment of receivables by way of security (cession de cr\u00e9ances \u00e0 titre de garantie) governed by articles 1321 et seq and 2373-1 et seq of the French Civil Code, (ii) the transfer of cash by way of security (cession de sommes d\u2019argent \u00e0 titre de garantie) equivalent to a cash collateral, both created by the Security Law, and (iii) the security-trust (fiducie-s\u00fbret\u00e9) governed by articles 2372 et seq of the French Civil Code pursuant to which the borrower will transfer selected assets, rights and securities to a trustee (fiduciaire) who will retain such assets in a special-purpose estate, as a guarantee for the repayment of the sums due under the finance documents.<\/p>\n<p>It should also be noted that, since the Security Law Reform entered into force on 1st January 2022, the lenders benefitting from a third-party security, i.e. a security provided by a grantor which is not the borrower, must, as for joint and several guarantors (cautions), provide in writing to such grantor before 31 March of each year information regarding the secured amount (calculated as at 31 December of the previous year) and the end of the secured period.<\/p>\n<p>The security interests granted by the purchaser will, to the extent permitted by law, benefit the hedging banks which have entered into the subordination agreement provided that they are also senior lenders (or affiliates of a senior lender).<\/p>\n<p>On their side, mezzanine lenders will generally require to be provided with second-ranking security interests over the same assets as the senior creditors and will enter into an intercreditor agreement with them generally determining standstill provisions giving senior lenders control over the initiation of the enforcement procedure and providing for payment priorities.<\/p>\n<p>Besides, it should be noted that Dailly Law receivables assignment can only secure the repayment of a professional loan granted to the assignor (it cannot be granted by any third party guarantor or security grantor) and the beneficiary should be either a French or passported EU credit institution, a French financing company or an alternative authorised lender (see Question ). For alternative lenders, such as debt funds, and\/or in order to secure a bond issuance, other security interests are available, such as the pledge over receivables or the civil law receivables assignment.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does the law of your jurisdiction permit (i) floating charges or any other universal security interest and (ii) security over future assets or for future obligations?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Under French law, there is no concept of floating charge. Security interests should be created over each type of asset separately (shares, receivables, bank accounts, real estate property, IP rights, etc).<\/p>\n<p>However, the pledge over on-going business enables to capture several classes of assets (forming the business) under the pledge, namely the trade name, the leasehold rights, the customer base, the goodwill, the fixed assets (furniture, tools and machinery, equipment) and the IP rights (trademarks, brands and patents).<\/p>\n<p>Furthermore, the security-trust (fiducie s\u00fbret\u00e9) is also a type of universal security interest which can include all types of assets, rights and security interests depending on the parties\u2019 agreement. It is created by way of a written contract entered into between the settlor(s) (constituant(s)), the trustee (fiduciaire) and the beneficiary(ies) (b\u00e9n\u00e9ficiaires) which must contain certain mandatory provisions and must be registered within one month of its signing date for validity purposes. The title to assets which are subject to the fiducie-s\u00fbret\u00e9 are transferred to the trustee (fiduciaire) and held by it in a special-purpose estate which remains beyond the reach of the debtor\u2019s and the trustee\u2019s creditors during the term of the trust agreement (subject to exceptions).<\/p>\n<p>Regarding security over future assets or for future obligations, they are possible provided that these assets or obligations are clearly identified or identifiable at the time the security is granted.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do security documents have to (by law) include a cap on liabilities? If so, how is this usually calculated\/agreed?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The secured obligations must be identified or at least identifiable at the time the security interest is created. Depending on the type of security interests, it can also be necessary, generally for publicity purposes, to provide a cap on liabilities (e.g. for mortgages, pledges over on-going business, movable assets, etc). This cap is usually calculated by reference to the principal amount of the secured debt to which is added a percentage of 20 to 30% of the principal amount representing the interest, default interest, fees and expenses.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the formalities for taking and perfecting security in your jurisdiction and the associated costs and timing? If these requirements are different for different asset classes, please outline the main points to note for each of these briefly.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>Formalities for taking security<\/strong><\/p>\n<p>The typical security in an acquisition financing transaction are entered into under the form of a private deed between the grantor and the beneficiaries, with no need for any notarial deed.<\/p>\n<p>For certain types of security, formal requirements apply for validity purposes.<\/p>\n<p>This is the case for the pledge over financial securities account which must be created under a pledge statement (d\u00e9claration de nantissement) signed by the pledgor and must contain certain mandatory provisions for validity purposes.<\/p>\n<p>Regarding the Dailly Law receivables assignment, it should be formalised by the execution of a form (bordereau) that must contain specific mandatory provisions for validity purposes. It is delivered to the assignee and takes effect from the date affixed on the form by the assignee. The notification of the assignment to the assigned debtor can be made at any time and will trigger the obligation for the assigned debtor to make payment directly to the assignee (unless otherwise contractually agreed).<\/p>\n<p>A trust (fiducie) must be formalised under a written trust agreement containing certain mandatory provisions and must be registered with the tax administration within one month of its signing date for validity purposes.<\/p>\n<p>In all cases, the secured assets and secured liabilities should be sufficiently identified for the security interest to be validly created.<\/p>\n<p><strong>Formalities for perfecting security<\/strong><\/p>\n<p>The formalities for perfecting security may vary depending on the type of security interest concerned. In particular:<\/p>\n<p>(i) a pledge over financial securities account must be registered in the share transfer register (registre de mouvement de titres) and the shareholder\u2019s individual accounts of the issuing company. A certificate of pledge is generally requested to be issued by the financial securities account holder (being the issuing company or an authorised financial intermediary) and by the bank account holder when a special cash account onto which the cash proceeds arising from the pledged shares will be credited is also pledged (the parties may opt to exclude cash proceeds from the pledge);<br \/>\n(ii) a pledge over shares (nantissement de parts sociales) must be registered with the relevant commercial court registrar (greffe du tribunal de commerce) to be enforceable against third parties, said registration having to be renewed every five years;<br \/>\n(iii) a pledge over the balance of a bank account must be notified to the account bank for enforceability purposes, except if it is a party to the pledge agreement;<br \/>\n(iv) a pledge over on-going business must be registered with the relevant commercial court registrar (greffe du tribunal de commerce) and, if IP rights enter into its scope, with the national trademarks and patents authority (Institut national de la propri\u00e9t\u00e9 industrielle) and published in the official bulletin of industrial properties (Bulletin officiel de la propri\u00e9t\u00e9 industrielle) to be enforceable against third parties, said registration having to be renewed every ten years.<\/p>\n<p>The costs involved are nominal (save for the trust (fiducie) or the security over real property and, depending on the number of intellectual property rights and the place of their registration) and the formalities are carried out on completion or very shortly afterwards.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any limitations, restrictions or prohibitions on downstream, upstream and cross-stream guarantees in your jurisdiction? Please also provide a brief description of any potential mitigants or solutions to these limitations, restrictions or prohibitions.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In principle, French companies may give upstream and cross-stream guarantees subject to compliance with rules on corporate benefit (int\u00e9r\u00eat social) and corporate authorisation.<\/p>\n<p>The corporate benefit rules require that the guarantor must receive some \u201creal and adequate benefit\u201d. The absence of benefit renders the guarantee unenforceable and criminal sanctions may be imposed on directors for misuse of corporate assets (abus de biens sociaux). What constitutes real and adequate benefit is not defined by law, but examples include financial remuneration, the existence of cross guarantees in favour of the guarantor and interest of the guarantor in the financial success of the debtor. The established rules of thumb are that:<\/p>\n<p>(i) the companies involved must form part of a genuine group operating under a common strategy aimed at a common objective;<br \/>\n(ii) the risk assumed by the guarantor must be proportionate to the benefit; and<br \/>\n(iii) the financial support by the guarantor should not exceed its financial capabilities.<\/p>\n<p>While corporate benefit can generally be assumed where a parent company guarantees one of its direct or indirect subsidiaries, the test is much more difficult with respect to upstream or cross stream guarantees. As a result, prudent market practice is to limit upstream\/cross stream guarantees to working capital facility (when applicable) and to an amount equal to that which the guarantor and its subsidiaries receive from the loan either directly as a borrower or indirectly by downstream intercompany loans. On the basis that the guarantor does not have to pay more than it has borrowed, the second limb of the corporate benefit test should therefore be satisfied.<\/p>\n<p>The rules as to corporate benefit apply equally to security given by subsidiaries in relation to the financial obligations of its parent\/sister company.<\/p>\n<p>A guarantee by a French company must be granted for a purpose within the objects of that company and must bear a direct relation to the main activity of that company. Also, specific corporate procedures which vary depending upon the corporate form of the guarantor may have to be complied with.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any other notable costs, consents or restrictions associated with providing security for, or guaranteeing, acquisition financing in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In addition to the restrictions referred to in Question 8 (banking monopoly), Question 10 (control of foreign investments), Question 15 (corporate benefit) and Question 17 (financial assistance), it can be noted that the consultation of the works councils (comit\u00e9 social et \u00e9conomique) may be required in particular in the context of the granting of on-going business pledges (though their formal approval is not, strictly speaking, required). Such consultation must take place within a \u201creasonable period of time\u201d (i.e. can take a few days up to several weeks depending mainly on the relationship with the members of the works council), and in any case before the pledge is executed.<\/p>\n<p>In addition, depending on the corporate form of the concerned company, French law may require specific corporate authorisations: (i) in respect of regulated agreements (conventions r\u00e9glement\u00e9es) or (ii) for the purposes of the granting of guarantees (in particular in respect of limited liability companies (soci\u00e9t\u00e9s anonymes), for which it is necessary to get prior authorisation from the board of directors to issue a guarantee covering third party&#8217;s obligations.<\/p>\n<p>With respect more specifically to regulated agreements entered into by limited liability companies (soci\u00e9t\u00e9s anonymes), any agreement entered into, either directly or through an intermediary, between the company and its general manager, one of its deputy general managers, one of its directors, one of its shareholders holding a fraction of the voting rights greater than 10% or, in the case of a corporate shareholder, the company which controls it within the meaning of article L.233-3 of the French Commercial Code, must be subject to the prior consent of the board of directors.<\/p>\n<p>The same applies to agreements in which a person referred to in the previous paragraph has an indirect interest. Agreements entered into between the company and another company are also subject to prior consent if the company&#8217;s general manager, one of its deputy general managers or one of its directors is the owner, an indefinitely liable partner, a manager, a director or a member of that firm&#8217;s supervisory board or, more generally, is in any way involved in its management. However, the previous provisions are not applicable to agreements relating to usual operations (op\u00e9rations courantes) entered into under normal terms and conditions.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is it possible for a company to give financial assistance (by entering into a guarantee, providing security in respect of acquisition debt or providing any other form of financial assistance) to another company within the group for the purpose of acquiring shares in (i) itself, (ii) a sister company and\/or (iii) a parent company? If there are restrictions on  granting financial assistance, please specify the extent to which such restrictions will affect the amount that can be guaranteed and\/or secured.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Pursuant to article L.225-216 of the French Commercial Code, a French stock company (soci\u00e9t\u00e9 par actions) may not advance funds, grant loans or give security with a view to the subscription or purchase of its own shares by a third party. Any loan, security or guarantee granted in violation of the provisions of article L.225-216 is null and void.<\/p>\n<p>The financial assistance prohibition cannot be covered by a special authorisation of the board or of the shareholders of the company. In addition, directors or managers who would approve the granting of financial assistance in violation of article L.225-216 of the French Commercial Code may be held liable to a fine of up to \u20ac150,000.<\/p>\n<p>It is generally considered that the prohibition further includes (i) the financing of the acquisition of the shares of parent companies or (ii) the refinancing of the acquisition of its own shares or of the shares of parent companies by the company, as the point is here to prevent the French company from securing the financing for the acquisition of its shares whether directly or not.<\/p>\n<p>However, if certain amounts of the loans are used for the purposes of financing working capital needs of the French company or to refinance its existing debt, the latter would be authorised to give security or guarantee to secure the amounts actually received by it without conflicting with the financial assistance prohibition.<\/p>\n<p>Financial assistance does not apply to the financing or guaranteeing of the acquisition of the shares of a sister company but it would be subject to the limitation applicable under the corporate benefit principle mentioned above.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">If there are any financial assistance issues in your jurisdiction, is there a procedure available that will have the effect of making the proposed financial assistance possible (and if so, please briefly describe the procedure and how long it will take)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Under French law, there is no procedure equivalent to the &#8220;whitewash&#8221; procedure existing under English law. However, article L.225-216 of the French Commercial Code does not prohibit the service of the acquisition loan by the use of dividends or voluntary reserves (r\u00e9serves non obligatoires) paid by the French company to its parent company after the purchase of the shares (provided that there are some profits and voluntary reserves available for distribution).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">If there are financial assistance issues in your jurisdiction, is it possible to give guarantees and\/or security for debt that is not pure acquisition debt (e.g. refinancing debt) and if so it is necessary or strongly desirable that the different types of debt be clearly identifiable and\/or segregated (e.g. by tranching)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>As mentioned above, a French company could give guarantees and\/or security for refinancing debt or revolving facilities used for the purposes of financing working capital needs without conflicting with the financial assistance prohibition. However, the prohibition of financial assistance is generally considered as applying to the refinancing of the acquisition of the French company\u2019s shares or in case of quick merger between the borrower and the French target company.<\/p>\n<p>The shares of the French target company may be pledged without breaching the prohibition.<\/p>\n<p>It is strongly recommended to split the acquisition debt and the refinancing debt in several tranches or facilities in order to avoid any confusion that may lead to the application of the financial assistance prohibition to the funds made available indistinctly.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does your jurisdiction recognise the concept of a security trustee or security agent for the purposes of holding security, enforcing the rights of the lenders and applying the proceeds of enforcement? If not, is there any other way in which the lenders can claim and share security without each lender individually enforcing its rights (e.g. the concept of parallel debt)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>It exists two different regimes alternatively applicable to the security agent in France:<\/p>\n<p>(i) either the regime of the general mandate under article 1984 of the French Civil Code under which the security agent is appointed as mandataire (i.e. agent acting in the name and on behalf of the secured parties) for the purpose of taking, managing and enforcing security;<\/p>\n<p>(ii) or the security agent regime introduced in the French Civil Code in 2007 and reformed in 2017, which has been specifically created to import and adapt under French law the concept of security trustee; under this regime governed by articles 2488-6 et seq. of the French Civil Code, the security agent acts in its own name and for the benefit of the secured parties, i.e. it holds and manages the security\/guarantees created in its favour for the benefit of the secured parties (as a trustee). The security\/guarantees are segregated from the security agent\u2019s assets (as a trustee).<\/p>\n<p>Whereas the security agent regime is better suited to syndicated loans, certain domestic banks, notably in midcap transactions, are still reluctant to use it, due to the accounting and organisational constraints as well as prudential treatment uncertainties and additional liability incurred.<\/p>\n<p>However, the use of the general mandate regime may raise certain issues, e.g.:<\/p>\n<p>(i) for the purposes of enforcing the security (and more generally for entering into any legal proceedings) and filing any claim in any bankruptcy proceedings, the security agent may need to benefit from a special mandate delivered by each of the secured parties at the time when the contemplated action is initiated;<\/p>\n<p>(ii) the perfection of the security may require that the names of all creditors (and not only the name of the security agent) appear on the relevant registries or security documents themselves.<\/p>\n<p>On the contrary, in large-cap and cross border transactions, the security agent regime is more commonly used.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does your jurisdiction have significant restrictions on the role of a security agent (e.g. if the security agent in respect of local security or assets is a foreign entity)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>French courts recognised in 2011 that (i) a foreign trust can be used for holding security interests in France and file a claim in French bankruptcy proceedings and (ii) the parallel debt mechanism is also compliant with French international public policy if there is no risk of double counting of the secured debt.<\/p>\n<p>However, in order to avoid conflict of law issues in case of enforcement or in the context of the opening of bankruptcy proceedings against the French debtor, when security interests governed by French law are created in favour of the lenders, it is sometimes incorporated in the facility agreement governed by a law other than French law, a specific clause providing for the appointment by the finance parties of a security agent governed (i) either by the provisions of articles 2488-6 et seq. of the French Civil Code (the \u201cFrench Security Agent Regime\u201d) which organise the isolation of the security interests managed by the security agent in its own account and for the benefit of the finance parties in a patrimonial estate separated from the one of the security agent (ii) or by the provisions of article 1984 of the French Civil Code which govern the general mandate regime.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please provide the main differences and considerations between bank loan financing and high yield bond\/note financing for acquisition purposes in your jurisdiction, and how do they affect the structuring and documentation of the transaction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>LBO financing can be provided by a bank (or a pool of banks), debt investors (term loans C, mezzanine, junior, unitranche) or a mix of financing providers made up of banks and investors.<br \/>\nSenior bank loans can comprise several tranches, including bullet and amortising term facilities aiming at financing the acquisition price and associated costs and the refinancing of the existing debt (including of the target company), a revolving credit facility and a committed or uncommitted credit facility aiming at financing future capital expenditures and\/or build-up transactions.<\/p>\n<p>This financing will generally be formalised by the execution of a credit agreement based on the standards provided by the Loan Market Association (LMA) entered into between the arranger(s), the agent, the security agent, the lenders, the borrower and, as the case may be, the sponsor(s) or guarantor(s). The finance parties will benefit from security (see Question 11 above) materialised under security documents (except the delegation pertaining to the insurance key manager \u2013 or the loss payee clause \u2013 which is generally entered into within a period varying from 3 to 6 months after completion of the transaction). A subordination\/intercreditor agreement will organise the subordination of certain payments and more globally the relationships between the senior lenders, as the case may be, the hedging banks, the shareholders of the borrower and the borrower.<\/p>\n<p>Mezzanine financing can be put in place in LBO transactions to increase leverage. It is usually provided by investment funds and structured as a private bullet bond issuance, having a five to eight-year maturity, remunerated by a mix of cash and payment-in-kind (PIK) interest and potentially by an equity kicker.<\/p>\n<p>Instead of a bank loan and a mezzanine financing, it has become common on the mid-cap market to see unitranche financing, having the same characteristics as the mezzanine financing and easier to manage for the sponsors.<\/p>\n<p>The documentation relating to the bonds issuance in the context of mezzanine or unitranche comprises a subscription agreement entered into between the subscriber(s), the representative of the bondholders masse and the issuer. The bonds are governed by terms and conditions generally attached to the subscription agreement as a schedule.<\/p>\n<p>Due to the type of financing and their dual culture and appetence to support the business, debt funds will generally require the appointment of an observer (censeur) in the supervisory board of the issuer.<\/p>\n<p>The main clauses of a subscription agreement are very closed to the provisions of a credit agreement. One can nevertheless note that, the French law requirement to provide an indication of the overall effective rate (TEG \u2013 taux effectif global) applicable to a loan does not apply to a bond issue. In a credit agreement, failure to provide the TEG or providing an erroneous TEG may be sanctioned by the reduction of the contractual interest by the judge to be determined by notably taking into account the actual prejudice caused to the borrower.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Describe the loan transfer mechanisms that exist in your jurisdiction and how the benefit of the associated security package can be transferred.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>If the loan has already been fully drawn down by the borrower, the transfer could take the form of a simple assignment of receivables (cession de cr\u00e9ances) which only needs to be formalised in writing and notified to the borrower if it is not a party thereto. Collateral security is automatically transferred with the assigned receivables when they are ancillary (accessoires) to said receivables. This would not be the case of an autonomous guarantee which would only be transferred if it is expressly provided therein. In the case of a French law personal joint and several guarantee (cautionnement), if it is called by the assignee following the assignment of receivables, the guarantor (caution) could take this opportunity to withdraw from its commitment by paying the purchase price of the receivable to the assignee (droit de retrait litigieux). For enforceability (opposabilit\u00e9) purposes however, it may be necessary to record the new creditor with public registers or to amend the security documentation to quote the new beneficiary.<\/p>\n<p>Whether the loan has already been fully drawn down by the borrower or not, other transfer mechanisms are available to the lenders such as the assignment of contract (cession de contrat) or the novation (i.e. the extinguishment of an obligation by the replacement of a new one). In both situations, the consent of the borrower is needed but it can be given in advance in the loan agreement.<\/p>\n<p>The assignment of contract when it occurs should give rise to a written agreement and the new agreement should be notified to the borrower if it is not a party thereto. If security interests have been provided by third party guarantors, and if the former lender is released from its obligations under the assigned contract, then the existing security provided by third party guarantors disappear and should therefore be reiterated in favour of the new lender.<\/p>\n<p>The novation cannot be automatic; it should be clearly stated in the deed of novation. The borrower can give its consent in advance to the selection of the new creditor by the former creditor. In accordance with the provisions of article 1334 of the French Civil Code, the security rights do not survive the novation except if they are expressly reserved to secure the new obligation, with the consent of the third-party guarantors if applicable.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the rules governing the priority of competing security interests in your jurisdiction? What methods of subordination are used in your jurisdiction and can the priority be contractually varied? Will contractual subordination provisions survive the insolvency of a borrower incorporated in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The legal regime applicable to priority of competing security interests and of survival of contractual subordination provisions in the context of insolvency proceedings has recently been clarified by the Security Law Reform and the Insolvency Law Reform.<\/p>\n<p><strong>Priority of competing security interests<\/strong><\/p>\n<p>It has been clarified by the Security Law Reform that, despite the existence of a right of retention legally organised, successive ranking pledges could be created over receivables, bank accounts and financial securities accounts.<\/p>\n<p>Subject to contractual priority arrangements, the ranking of a security interest will depend on the date on which the security is perfected. If it has to be published or registered on a public or corporate registry (pledges over shares, IP rights or moveable assets without dispossession, mortgages, etc), the beneficiary whose security has been published first will have priority; if it has to be notified to be enforceable against the concerned debtor (pledges over receivables, bank accounts, etc), the beneficiary whose security has been notified first to the concerned debtor will have priority.<\/p>\n<p>However, the rank of security interests can also be contractually organised between the secured creditors, as it is usually the case in LBO or other complex financing transactions involving different classes of creditors, e.g. senior lenders, second lien lenders, mezzanine lenders, hedging banks and shareholders.<\/p>\n<p><strong>Methods of subordination<\/strong><\/p>\n<p>The most commonly used methods of subordination are (i) the structural subordination consisting in splitting the senior\/mezzanine\/junior debts between capital structures at several levels with separate covenants and security interests or (ii) the contractual subordination organised under an intercreditor agreement setting out more generally the payment waterfall, the rank of the security interests and the enforcement restrictions.<\/p>\n<p>A contractual subordination is generally organised under an intercreditor agreement establishing the ranking of security interests granted in the transaction and providing for the allocation of payments among the beneficiaries of such security interests in case of enforcement. The intercreditor agreement is also frequently used to extend the security interest to additional secured parties on a pari passu basis with the prior ranking security.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a concept of \u201cequitable subordination\u201d in your jurisdiction whereby loans provided by a shareholder (as a creditor) to a company incorporated in your jurisdiction are subordinated by law upon insolvency of that company in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>French law does not provide for equitable subordination rights, except for the so called \u201cparticipative loan\u201d which is a special type of shareholder\u2019s loan subordinated by law and treated as equity from an accounting standpoint.<\/p>\n<p>However, a shareholder may potentially incur liability by imposing to its subsidiary the repayment of a shareholder\u2019s loan in the context of financial difficulties.<\/p>\n<p>Furthermore, in the context of the preparation of a traditional plan, it is also very common for other creditors to require shareholders to agree to freeze their current accounts for a certain period of time, generally corresponding to the length of the plan (e.g., 10 years). The law does not provide for any mechanism to force the shareholders to do so (except if uniform payment deadlines apply to all creditors). However, this may sometimes be a condition for the viability of the plan and therefore for its adoption by the court.<\/p>\n<p>The obligation to replenish equity capital, provided for under article L. 626-3, paragraph 2 of the French Commercial Code, may also encourage shareholders to agree to a write-off of the company&#8217;s current account debt. In this regard, however, there is a more attractive measure under insolvency law, which is the conversion of debt into equity (article L. 626-3, paragraph 4), which allows the debt owed in respect of a capital increase subscribed to by a shareholder to be offset against the debt it has declared.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does your jurisdiction generally (i) recognise and enforce clauses regarding choice of a foreign law as the governing law of the contract, the submission to a foreign jurisdiction and a waiver of immunity and (ii) enforce foreign judgments?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>Choice of a foreign law<\/strong><\/p>\n<p>French private international law recognises as a general rule the choice of a foreign law to govern an international civil or commercial contract, except if the foreign law has been chosen to elude the application of mandatory provisions of the laws of any other jurisdiction having a close connection with the relevant transaction (in which case, French courts may choose to apply the laws of such jurisdiction irrespective of the choice of another law by the parties) and do not contravene international French public policy rules (<em>ordre public international fran\u00e7ais<\/em>) or French overriding mandatory provisions (<em>lois de police<\/em>).<\/p>\n<p>It is however highly recommended, in order to avoid any conflict of laws between the foreign law as <em>lex contractus<\/em> and French law as l<em>ex rei sitae<\/em> to have security interests granted over assets located in France governed by French law.<\/p>\n<p><strong>Submission to a foreign jurisdiction <\/strong><\/p>\n<p>The choice of a foreign court as the competent jurisdiction to rule a dispute in connection with the contract would generally be recognised by French courts pursuant to and subject to French private international law, provided that, in particular, it does not contradict any special or exclusive jurisdiction.<\/p>\n<p>It should however be noted that a jurisdiction clause which would provide for the submission of any dispute between the parties to a given court, while also allowing one party only to file a claim before any other competent local or foreign court (the so-called asymmetric jurisdiction clause), has given rise to fluctuant case law, both at the European and French levels.<\/p>\n<p>The preliminary ruling of the European Court (Case C\u2011537\/23, 27 February 2025), followed by the French Supreme Court (\u201c<em>Cour de cassation<\/em>\u201d) (Lastre case, 17 September 2025, No 22-12.965), upheld the validity of an asymmetric jurisdiction clause if it complies with the following conditions: (i) it designates courts of one or several states which are either EU members states or parties to the Lugano Convention; (ii) it describes objective and precise factors enabling the court before which legal proceedings are initiated to ascertain whether it has jurisdiction; (iii) it is not contrary to special or exclusive jurisdiction provisions of EC Regulation No 1215\/2012 dated 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels I Recast Regulation) or the Lugano Convention dated 30 October 2007 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. In this case, the Supreme Court considered that the jurisdiction clause referring to competent courts designated by the jurisdiction rules of Brussels I Recast Regulation or the Lugano Convention is valid.<\/p>\n<p><strong>Waiver of immunity <\/strong><\/p>\n<p>A waiver of immunity from jurisdiction (judgment by its own courts only) or from enforcement (unseizability of its assets) by a foreign state could be held as valid by a French judge if, according to case law, it is certain, express and unequivocal, and regarding the seizure of assets allocated to diplomatic missions, the waiver should be express and special (i.e., identify the assets in respect of which it is granted) in accordance with article L.111-1-3 of the French Civil Enforcement Proceedings Code. Furthermore, enforcement proceedings may only be implemented on property belonging to a foreign state with the prior authorisation of a judge.<\/p>\n<p><strong>Enforcement of foreign judgements <\/strong><\/p>\n<p>The procedure for the enforcement of a judgment of a non-French court in the French courts is determined by reference to the applicable reciprocal enforcement arrangements or conventions in place between France and the relevant state.<\/p>\n<p>In particular, a final judgment obtained in the courts of an EU member state could be enforceable by the French courts without re-examination or re-litigation of the matters adjudicated subject to and in accordance with the EC Regulation N\u00b0 1215\/2012 dated 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast Brussels I Recast Regulation). Recognition or enforcement may be refused in limited circumstances, such as when the judgment is manifestly contrary to public policy, when the defendant was not properly served or in case of conflict with an existing judgment between the same parties. It is not verified that the court of origin had jurisdiction.<\/p>\n<p>Where no such reciprocal enforcement arrangements exist, a final judgment could be enforceable by the French courts without re-examination or re-litigation of the matters adjudicated, through an action for exequatur brought before the competent French court provided that the court is satisfied that the requirements established by case law for the enforcement of foreign judgments in France are met. In this procedure, French courts verify that the foreign court had jurisdiction, that the judgment complies with international public policy, both pertaining to the merits and procedure of the case, and that it is free from fraud. Once these conditions are met, the judgment becomes enforceable in France.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the requirements, procedures, methods and restrictions relating to the enforcement of collateral by secured lenders in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Security interests can only be enforced if the debtor has failed to comply with a payment obligation of secured liabilities having become due and payable. Therefore, if a creditor wishes to enforce its security interest following a financial covenant breach, it will have to first accelerate the debt and obtain an actual payment default under the credit agreement.<\/p>\n<p>Enforcement will in each case be subject to the following conditions: (i) the underlying secured obligations must exist and be due and payable; and (ii) the creditor must serve a formal notice (mise en demeure) on the pledgor (and, as the case may be, the debtor of the pledged receivable), informing the latter of its intention to enforce the security interest (in certain cases, and depending on the applicable regime, the notice will need to contain specific details, failing which it is invalid).<\/p>\n<p>Then there are generally two options available to a creditor for the enforcement of the security interest, in particular when it is a pledge. It can request the competent court to either (i) order the sale of the pledged assets by way of public auction (vente forc\u00e9e), the creditor being in that case paid out of the proceeds of sale (and, as the case may be, in competition as to ranking with other creditors benefiting from a right or security over the shares) or (ii) allow the judicial attribution (attribution judiciaire) of the pledged shares to the creditor (which has the advantage of avoiding any competition with other secured creditors).<\/p>\n<p>If it is expressly provided in the pledge agreement, the creditor may also, as a third option, be entitled to enforce the pledge by contractual foreclosure (pacte commissoire) of the secured assets, in which case there will be no need to obtain a court order in order to enforce the pledge. However, in both the judicial attribution and contractual foreclosure options, the value of the secured assets must be appraised by an independent expert.<\/p>\n<p>The expert will have to determine the value of the secured asset at the time of the foreclosure and, in the event that such value would be higher than the amount of the secured liabilities remaining outstanding, the difference (soulte) will have to be paid by the beneficiary to the pledgor or, said difference may also be deposited onto a special account until all the secured liabilities have been effectively repaid or when there are other secured creditors remaining unpaid.<\/p>\n<p>As regards share pledges, the enforcement may, in some occasions, require the approval of the other shareholders, if any, of the company whose shares have been pledged. Therefore, it is generally important to determine whether the granting of the pledge had been approved by the other shareholders of the company in advance, in order to avoid any delay and\/or challenge at the time of enforcement.<\/p>\n<p>Furthermore, in companies having a works council (conseil social et \u00e9conomique), there can be no change of control unless the works council has been consulted and has provided an opinion. There is therefore a theoretical risk that enforcement could be challenged by the works council. Finally, regulatory consents may be applicable, i.e. from the French Markets Authority (Autorit\u00e9 des March\u00e9s Financiers) in case of thresholds overstepping, or from the Ministry of Economy in case of a foreign investment in a sensitive business activity.<\/p>\n<p>The contractual foreclosure (pacte commissoire) in accordance with the provisions of article 2348 of the French Civil Code should be expressly provided in the security agreement and is not available for some security interests or in some specific circumstances (e.g. for pledges over on-going business or to secure the repayment of a consumer credit).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the insolvency or other rescue\/reorganisation procedures in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The various procedures available under French law for distressed and insolvent companies are the following:<\/p>\n<ul>\n<li><strong>Mandat <em>ad hoc<\/em><\/strong>: these voluntary proceedings are confidential out of court proceedings pursuant to which the commercial court appoints a restructuring practitioner to assist a solvent debtor in its negotiation with its stakeholders under the aegis of the court;<\/li>\n<li><strong>Conciliation<\/strong>: these voluntary proceedings are confidential out of court proceedings pursuant to which the commercial court appoints a restructuring practitioner to assist a debtor that is solvent or has been insolvent for no more than 45 days in its negotiation with its creditors under the aegis of the court;<\/li>\n<li><strong>Safeguard (<em>sauvegarde<\/em>)<\/strong>: these proceedings are judicial pre-insolvency proceedings available to solvent debtors facing difficulties that they cannot overcome and which can only lead to a \u201ccontinuation\u201d plan.<\/li>\n<li><strong>Accelerated safeguard (<em>sauvegarde acc\u00e9l\u00e9r\u00e9e<\/em>)<\/strong>: these proceedings are available as a closing stage following conciliation proceedings to all debtors (without size thresholds) who prepared a draft safeguard plan that is likely to be approved by classes of affected parties.<\/li>\n<li><strong>Judicial reorganisation (<em>redressement judiciaire<\/em>)<\/strong>: these proceedings are insolvency proceedings available to insolvent debtors which can lead to a reorganisation plan which can include a transfer of the whole business or to the liquidation of the company.<\/li>\n<li><strong>Judicial liquidation (<em>liquidation judiciaire<\/em>)<\/strong>: these proceedings are insolvency proceedings available to insolvent debtors where their reorganisation is manifestly impossible and the activity is necessarily terminated while the assets may be transferred.<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does entry into any insolvency or other process in your jurisdiction prevent or delay secured lenders from accelerating their loans or enforcing their security in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>Effects on Acceleration <\/strong><\/p>\n<p>Creditors are prohibited from accelerating a loan or terminating an ongoing contract on the sole basis of the opening (or of any filing for that purpose) of pre-insolvency and insolvency proceedings (other than judicial liquidation). Any contractual provision to the contrary, or more generally increasing the debtor&#8217;s obligations (or reducing its rights) by that sole same reason, is null and void.<\/p>\n<p>In the context of judicial liquidation proceedings, all claims will become immediately payable upon the opening of the proceedings or, if the court expressly continues business activities on a temporary basis to ensure the preparation of a sale plan, upon the court&#8217;s approval of the sale plan or the cessation of the temporary continuation of the business.<\/p>\n<p><strong>Effects on enforcing security <\/strong><\/p>\n<p>While a <em>mandat ad hoc<\/em> is pending, no stay of payments and enforcement actions applies save for a rescheduling of debt for a maximum of 2 years that may be ordered by the court on a case-by-case under article 1343-5 of the French Code civil if creditors attempt to enforce their rights.<\/p>\n<p>During the conciliation proceedings, the court has the ability to decide an individual stay of enforcements or rescheduling of claims (until the end of the conciliation, i.e. during maximum 5 months) if creditors do not grant a standstill request.<\/p>\n<p>The opening of insolvency proceedings triggers an automatic and general stay of all payment and enforcement actions, with limited exceptions (notably the set-off right of related debts (<em>cr\u00e9ances connexes<\/em>) or the financial obligations arising out of certain financial contracts (notably derivatives) and the recovery of pre-petition claims during the observation period (<em>p\u00e9riode d\u2019observation) <\/em>including (i) claims secured by a security conferring a retention right, (ii) claims assigned by way of a Dailly Law assignment and (iii) claims secured by a trust (<em>fiducie<\/em>)).<\/p>\n<p>Furthermore, once these proceedings are commenced, the scope of existing security interest can no longer increase (e.g., dividends accruing after such commencement are no longer captured by share pledges and can be freely used by the debtor), with limited exceptions (notably the Dailly Law assignments of claims arising post-commencement pursuant to a framework agreement entered into before the opening of proceedings).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">In what order are creditors paid on an insolvency in your jurisdiction and are there any creditors that will take priority to secured creditors?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>During the pre-insolvency proceedings all parties must comply with contractual provisions, including those creating contractual priorities amongst creditors, unless otherwise agreed by all parties.<\/p>\n<p>In the context of insolvency proceedings (except judicial liquidation), the set-up of classes of affected parties must at least (i) distinguish between classes of secured \/ unsecured creditors and (ii) comply with the subordination \/intercreditor agreement entered into prior to the opening judgment and notified to the administrator. The court may allow the plan to divert from the ranking of creditors if this is deemed necessary and does not excessively prejudice the rights of affected parties.<\/p>\n<p>In the event of safeguard or rehabilitation proceedings, the \u201cdistributable assets\u201d are determined after payment of creditors which are exempt from the proceedings (such as claims payable immediately to the beneficiary of a retention right or from property-based security interests, but also post-petition claims that are paid when due). There are many exceptions and legal privileges provided for in insolvency law, but the general outlines are the following:<\/p>\n<p>(i) employees\u2019 super-privileged claims (wages due for 60 days prior to the opening of proceedings), including if already paid by the French wage guarantee insurer (AGS), which is then subrogated in the rights of employees<br \/>\n(ii) proceedings fees (e.g., court and legal fees relating to the liquidation proceedings)<br \/>\n(iii) claims benefiting from the \u201dNew Money\u201d conciliation privilege<br \/>\n(iv) claims benefiting from the \u201dPost Money\u201d safeguard or reorganisation<br \/>\n(v) employees\u2019 wages due after the opening of proceedings (where not paid by the AGS)<br \/>\n(vi) in relation to disposal proceeds of real estate, claims that have been granted security interests over debtor\u2019s real estate<br \/>\n(vii) new credits and claims arising out of the continuation of executory contracts after the opening of proceedings<br \/>\n(viii) claims benefiting from the public Treasury privilege (e.g., income, taxes, VAT, inheritance tax, etc.)<br \/>\n(ix) claims benefiting from other privileges<br \/>\n(x) unsecured claims<br \/>\n(xi) in the event of judicial liquidation, all claims shall be subject to the same priority rules, except for pre-petition claims secured by a mortgage (hypoth\u00e8que) which shall have priority over post-petition claims benefiting from the statutory &#8220;Post Money&#8221; privilege. Security with a retention right grants the beneficiary an exclusive right over the proceeds of the isolated sale of the affected assets. Similar exceptions shall apply to Dailly assignments and trusts (fiducies).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any hardening periods or transactions voidable upon insolvency in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Certain transactions entered into during the hardening period (p\u00e9riode suspecte) can be subject to clawback provisions. The hardening period starts from the date when the company is deemed to have become insolvent and may be set by the bankruptcy court as far as 18 months prior to the date on which that company.<\/p>\n<p>If the insolvency proceedings are preceded by a conciliation workout agreement, the insolvency date cannot be backdated to a date before the court order approving the workout agreement.<\/p>\n<p>Notably, security interests granted by a French company during the hardening period:<\/p>\n<p>(i) are automatically void (that is, the court must declare these transactions void on petition by the administrator, the liquidator, or the Public Prosecutor) if they have been granted to secure a previously incurred debt (except security interests granted as replacement of an existing security interest of an equivalent nature and scope, or Dailly Law assignments of receivables implemented in execution of a framework agreement entered into before the hardening period); and<\/p>\n<p>(ii) are subject to optional voidance (that is, subject to the court&#8217;s discretionary decision on petition by the administrator, the liquidator, or the Public Prosecutor) if the secured creditor had knowledge of the insolvency of the debtor at the time it was granted.<\/p>\n<p>Third party security can be affected by those voidance provisions when the grantor is subject to insolvency proceedings, but not when they concern the principal debtor.<\/p>\n<p>Also, the payment of debts not due at the time of payment or the payment of debts made in a manner which is not commonly used in the ordinary course of business are also automatically void if made during the hardening period.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any other notable risks or concerns for secured lenders in enforcing their rights under a loan or collateral agreement (whether in an insolvency or restructuring context or otherwise)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>According to the provisions of article L.650-1 of the French Commercial Code, guarantees, security interests and any other credit support whatsoever granted by a party to its creditors may be under certain circumstances reduced or even declared null and void, if found disproportionate with the amounts they are securing.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please detail any taxes, duties, charges or related considerations which are relevant for lenders making loans to (or taking security and guarantees from) entities in your jurisdiction in the context of acquisition finance, including if any withholding tax is applicable on payments (interest and fees) to lenders and at what rate.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No withholding tax applies on interest payment made to non-residents except if they are located in a non-co-operative within the meaning of Article 238-0 A of the French Tax Code (NCCT), in which case interest payments onto an account opened with a financial institution situated in an NCCT would give rise to a 75% withholding tax (subject to the existence of a double tax treaty providing for a reduction of such withholding tax).<\/p>\n<p>The latest list of the Non-Cooperative State or Territory (NCST) as published in the EU official journal of 17 October 2025 includes the following countries: US Samoa, Anguilla, Fidji, Guam, Palaos, Panama, Federation of Russia, Samoa, Trinit\u00e9-et-Tobago, US Virgin Islands, Vanuatu. Safe Harbour rules may apply to avoid the potential application of the 75% withholding tax by demonstrating that the main purpose and effect of the transactions in respect of which the interest is paid is not to allow the location of such interest in an NCCT.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any other tax issues that foreign lenders should be aware of when lending into your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>French entities controlled by entities located outside France are taxable in France on profits transferred directly or indirectly to the entity located abroad through an increase or decrease in the purchase or sales prices or by any other means. If the rate interest paid by a French entity is higher than interest applied by companies operating in the same business (i.e. they do not respect the arm\u2019s length principle) it may generate some transfer pricing issues.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the regulatory framework by which an acquisition of a public company in your jurisdiction is effected?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The acquisition of a public company through a tender offer (offre publique) is governed by the General Regulation (R\u00e8glement g\u00e9n\u00e9ral) of the Financial Markets Authority (Autorit\u00e9 des march\u00e9s Financiers \u2013 AMF) and, to a lesser extent, by the French Monetary and Financial Code. Euronext rules also contain certain rules relating to tender offers.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the key milestones in the timetable (e.g. announcement, posting of documentation, meetings, court hearings, effective dates, provision of consideration, withdrawal conditions)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The first step is generally the acquisition of a controlling stake through a block trade, in which case a mandatory tender offer has to be filed with the AMF (under the \u201csimplified\u201d procedure if the stake represents more than 50% of the share capital and voting rights, which means in particular that the offer period will last for 10 trading days only).<\/p>\n<p>But the first step of the acquisition may simply be the filing of a voluntary tender offer, under the \u201cnormal\u201d procedure, which means that the offer period will last for 25 trading days. In such a case, it is recommended for the bidder to obtain irrevocable undertakings to tender from major shareholders of the target.<\/p>\n<p>The potential transaction has to be disclosed once a binding agreement (tender offer agreement or investment agreement) has been entered into or, even sooner, at the time exclusivity is granted to the bidder with the signing of a put option (which allows the start of the consultation process of the works council of the target). The announcement contains the price of the future tender offer, it being specified that the price of the acquisition of the controlling block constitutes a floor price.<\/p>\n<p>When the block trade has actually been completed (or when all conditions precedent provided for in the binding agreement have been met, as the case may be), a sponsoring bank (banque pr\u00e9sentatrice) files, on behalf of the bidder, the draft offer document with the AMF (this document is immediately made public). At this moment in time, the offer becomes irrevocable, which means that the bidder is committed to acquire the target shares, subject only to the conditions provided for in the tender offer (see Question 38 below).<\/p>\n<p>Then the target has to file with the AMF a draft offer document in response once (i) the works council of the target has rendered its opinion (maximum period of one month) and (ii) the independent expert (if any) has issued its fairness opinion (minimum period of 20 trading days as from its appointment by the target). These opinions, together with the reasoned opinion of the target board of directors, are contained in the draft offer document in response (which is immediately made public).<\/p>\n<p>Once the AMF has received the two draft offer documents, it takes in theory between 5 and 10 trading days to obtain the clearance of the offer from the AMF.<\/p>\n<p>The offer can then open, once technical documents containing certain legal, financial and accounting information on the bidder and on the target are published, together with the final versions of the offer documents.<\/p>\n<p>In a \u201cnormal\u201d procedure, the duration of the offer period may be extended in case of counter-offers (which can be filed with the AMF until the fifth trading day preceding the end of the offer period). The filing of a counter-offer is also an event which allows the bidder to withdraw its offer. The other cases of withdrawal being (i) a regulatory clearance not being obtained, (ii) a minimum acceptance threshold not being met or (iii) major changes in the substance of the target due to measures taken by the target.<\/p>\n<p>The results of the tender offer are made public by the AMF within 9 trading days from the end of the offer period and the settlement delivery is made 2 trading days later. Under the \u201cnormal\u201d procedure, if the tender offer is successful (i.e. if the minimum acceptance threshold is met), the offer period is reopened for an additional 10 trading days\u2019 period.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the technical minimum acceptance condition required by the regulatory framework? Is there a squeeze out procedure for minority hold outs?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The legal mandatory cancellation threshold (seuil de caducit\u00e9) under which any tender offer under the \u201cnormal\u201d procedure becomes void is 50% of the share capital or voting rights. But bidders sometimes add a voluntary minimum acceptance threshold (seuil de renonciation), which in practice cannot be higher than 2\/3 of the share capital or voting rights.<\/p>\n<p>The bidder is entitled to implement a squeeze-out procedure (retrait obligatoire) to force the minority shareholders to sell their target shares if the target shares not tendered to the offer do not represent more than 10% of the share capital and voting rights of the target at the end of the offer.<\/p>\n<p>The AMF generally refuses that the voluntary minimum acceptance threshold corresponds to the squeeze-out threshold.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">At what level of acceptance can the bidder (i) pass special resolutions, (ii) de-list the target, (iii) effect any squeeze out, and (iv) cause target to grant upstream guarantees and security in respect of the acquisition financing?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Special resolutions, including amendments to the target&#8217;s by-laws, are adopted at a 2\/3 majority of the votes expressed during shareholders meetings.<\/p>\n<p>The standard route to delist a target is to file a tender offer followed by a squeeze-out after reaching the 90% threshold.<\/p>\n<p>Target companies are prevented from offering any form of assistance, such as granting guarantees or security, for the acquisition of its own shares, in compliance with the financial assistance prohibition (see Question 17 above).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a requirement for a cash confirmation and how is this provided, by who, and when?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The role of the sponsoring bank is to guarantee the performance by the bidder of its obligations in connection with the tender offer (in particular its undertaking to acquire all the target shares tendered to the offer at the offer price). In order to be in a position to give such confirmation to the AMF in the filing letter (lettre de d\u00e9p\u00f4t), the sponsoring bank requires the bidder (or its financing bank, as the case may be) to provide a cash collateral for the corresponding amount on the trading day preceding the filing of the offer.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What conditions to completion are permitted?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In addition to the mandatory or voluntary minimum acceptance thresholds (see Question 37), the bidder is also authorized to make the success of the tender offer conditional upon obtaining antitrust clearances. In the case of an exchange tender offer (i.e. when the consideration for the shares tendered is not cash but securities to be issued by the bidder), it is possible to make the tender offer conditional upon the approval of the issuance of the new securities by the bidder\u2019s shareholders meeting.<\/p>\n<p>In no event can the tender offer be conditional upon obtaining the necessary financing, which accordingly has to be put in place before the filing of the offer.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">13393<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/128748","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=128748"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}