Growing digitalization of collective decision-making with the French Attractiveness Act

published on 13 December 2024 | reading time approx. 5 minutes

Law no. 2024-537 of 13 June 2024, designed to boost business financing and the attractiveness of France, known as the Loi Attractivité, is intended to extend the use of digital resources for the benefit of collective corporate decision-making.

Some of the law's measures, which take up many of the proposals made in a March 2022 report by the HCJP ^[1], apply to all companies except for the French société par actions simplifiée, “SAS”, since the articles of association of this type of company already allow for the free organization of a written consultation of shareholders.

The development will deal with the new features concerning companies falling within the scope of the Loi Attractivité, depending on their form.

Public limited company („SA“)

Extending the scope of telecommunications for boards

The law of 15 May 2001 ^[2] introduced the use of telecommunications for decision-making by the board of directors of a French société anonyme, „SA“. This was subject to the board's internal regulations having authorized it. Moreover, this procedure was only possible for decisions that did not concern the closing of the accounts or the preparation of the management report.

The Loi Attractivité authorizes the use of telecommunications for all decisions of the Board decision-making. In all cases that follow, these means must transmit at least the voice of the participants and meet technical specifications enabling continuous and simultaneous retransmission of deliberations. They must enable shareholders to be identified. Only express opposition in the articles of association or by-laws may prevent participation in board meetings by telecommunication ^[3].In the case of supervisory boards, the bylaws or internal regulations may, however, restrict the use of these means to a limited number of decisions ^[4].

Opening the field of written consultation for councils

Initially, the law of 19 July 2015 ^[5]

had introduced the possibility for the articles of association to authorize the electronic consultation channel for decisions by the board of directors. This only concerned a limited number of decisions.

The Loi Attractivité takes up proposal number 4 formulated by the HCJP working group ^[6].All deliberations of the board of directors may be subject to written consultation by electronic means subject to (i) this possibility being provided for in the bylaws and (ii) an opposition right for the benefit of the members of the board must also be provided ^[7]. The scope of electronic consultation has not been fully extended to the dualistic French “SA” (comprising a management board and a supervisory board). Documents are still sent to board members in paper format ^[8].

Dematerialized meetings

The French Law on New Economic Regulations (NRE) of 15 May 2001 ^[9] enabled companies' articles of association to provide for shareholders to attend meetings by telecommunications. The holding of a dematerialized general assembly of a “SA” required authorization in the articles of association. To oppose the holding of a dematerialized meeting, a shareholder had to prove that he or she held at least 5 per cent of the company's capital.

The Loi Attractivité modifies the statutory obligation. Except where the meeting is held entirely dematerialized, authorization to use a telecommunications device for a partially dematerialized meeting no longer must be included in the articles of association ^[10].

The threshold required for shareholders to object to a fully dematerialized Extraordinary General Meeting of an unlisted company has also been raised. Shareholders will now have to prove that they hold at least 25 per cent of the company's capital to exercise their right to object ^[11]. As a result, opposition is less accessible.

Limited liability company („SARL“)

There are three procedures for consulting a French société à responsabilité limitée “SARL” associates: a shareholders' meeting, a written consultation, and a deed recording the consent of all associates. The Loi Attractivité intends to make these methods more flexible.

Procedures for approving financial statements and holding shareholders' meetings by electronic means

Under the Loi Attractivité, the companies’ articles of association may now provide for annual approval of the financial statements by means of a written consultation or a deed recording the consent of all associates ^[12].

Until now, approval of the accounts could only be taken by a physical meeting of the shareholders. It should be noted that the use of a means of telecommunication for dematerialized approval of the annual financial statements is not applicable.

A second development now allows articles of association to provide for postal voting by means of a shareholder form for shareholders' meetings ^[13]. “SARLs” will need to amend their articles of association to benefit from this change.

Written electronic consultation and unanimous consent of all associates

Regarding written consultations and the unanimous consent of associates in a deed , the articles of association may now allow associates to be consulted and to return their response electronically ^[15]. However, an amendment to the articles of association will be required.

Other companies („SC/SNC/SCA“)

Under the Loi Attractivité, written consultation by electronic means is now possible in a French société civile, “SC” and in a French société en nom collectif, “SNC”, if it is provided for in the articles of association ^[16]. However, for the approval of annual financial statements, “SCs” may use written consultation by electronic means, whereas “SNCs” do not.

Regarding the French société en commandite par actions, “SCA”, the new paragraph 5 of article L. 226-4 of the French Commercial Code now allows the articles of association to decide whether the supervisory board will take its decisions by written consultation, including electronic consultation ^[17].

By perpetuating the measures put in place during the health crisis, the Loi Attractivité aims to overcome the legal and regulatory rigidities governing the meeting and organization of corporate decision-making bodies. Access to digitized deliberations by boards of directors and supervisory boards, as well as collective decisions by associates and shareholders, has been standardized. In addition, the law addresses financing issues by introducing multiple-voting shares in listed companies, as well as mechanisms to simplify capital increases ^[18].

[1] Source: HCJP, “Report on adapting corporate governance by leveraging health crisis experience”, 30 March 2022, A. Couret and A. Outinn-Adam (chairmen)

[2] Source: Law no. 2001-420 of 15 May 2001, on new economic regulations

[3] Source: Commercial Code, art. L. 225-37, al. 3, version in force since 14 September 2024, amended by LOI n°2024-537 of 13 June 2024 - art. 18

[4] Source: Commercial Code, art. L. 225-82 al. 3, Version in force since 14 September 2024, amended by LOI n°2024-537 of 13 June 2024 - art. 18

[5] Source:Loi n° 2019-744 du 19 juillet 2019 de simplification, de clarification et d'actualisation du droit des sociétés

[6] Source: HHCJP, “Report on adapting corporate governance by building on the experience of health crises”, March 30, 2022, A. Couret and A. Outinn-Adam (chairmen), proposition 4, p. 19

[7] Source: Commercial Code, art. L. 225-37, al. 3, version in force since 14 September 2024, amended by LOI n°2024-537 of 13 June 2024 - art. 18

[8] Source: Commercial Code, art. L. 225-82, al. 3, version in force since 14 September 2024, amended by LOI n°2024-537 of 13 June 2024 - art. 18

[9] Source: Law no. 2001-420 of 15 May 2001, on new economic regulations

[10] Source: Commercial Code, art. L. 225-103-1 al. 1, version in force since 14 September 2024, amended by LOI n°2024-537 of 13 June 2024 - art. 18

[11] Source: Commercial Code, art. L. 225-103-1 al. 4, version in force since 14 September 2024, amended by LOI n°2024-537 of 13 June 2024 - art. 18

[12] Source: Commercial Code, art. L. 223-27, al. 1, version in force since 14 September 2024, amended by LOI n°2024-537 of 13 June 2024 - art. 18

[13] Source: Ibid 14

[14] Source: Ibid 14

[15] Source: Ibid 14

[16] Source: Code civil, art. 1853 - Commercial Code, art. L. 221-6, versions in force since 14 September 2024, modified by LOI n°2024-537 of 13 June 2024 - art. 18

[17] Source: Commercial Code, art. L. 226-4, al. 5, version in force since 14 September 2024, amended by LOI n°2024-537 of 13 June 2024 - art. 18

[18] Source: A. Lecourt, "Attractiveness, modernization, simplification... and a few oversights: the Attractiveness law”, RTD com. 2024, p. 675