Business transfers: employee information requirements eased as of this summer
Since the Law of 31 July 2014 on the Social and Solidarity Economy (Law No. 2014-856, known as the “Hamon Law”), the sale of a business or of a majority stake in companies that do not exceed the SME thresholds has been subject to a specific requirement to provide all employees with prior information (Articles L. 23-10-1 et seq. of the French Commercial Code).
This mechanism, which was intended to facilitate the takeover of businesses by their employees, has been criticised from the outset by most M&A practitioners due to the formalities and time constraints it imposes on transactions, not to mention its effectiveness, which remains to be demonstrated…
These concerns have now been partly addressed, as the Law of 26 May 2026 simplifying economic life (Law No. 2026-403) introduced several relaxations, applicable to all sales completed after 27 July 2026.
In summary:
In companies with fewer than 50 employees:
▪️ the scope of the mechanism remains unchanged, but the minimum period between informing employees and completing the sale is reduced from two months to one month;
▪️ the civil fine incurred for failure to comply with the information requirement is reduced from 2% to 0.5% of the sale price.
In companies with at least 50 employees and a Social and Economic Committee (CSE) exercising the broadest statutory powers: direct and individual notifications to employees are abolished altogether, leaving only the CSE information and consultation procedure.
In companies with at least 50 employees without a CSE exercising the broadest statutory powers (i.e. where no CSE has been established):
▪️ the rules applicable to companies with fewer than 50 employees now apply (and consequently employees must be informed directly and individually, subject to the new one-month period);
▪️ it should be noted that the reference to SMEs has been removed from the legislation. As a result, where no CSE has been established, companies with 250 employees or more may potentially become subject to the mechanism (under the rules applicable to companies with fewer than 50 employees), whereas the previous wording limited its application in all circumstances to companies with fewer than 250 employees.
The existing exemptions remain unchanged (sale to a spouse, ascendant or descendant; sale in the context of conciliation, safeguard, accelerated safeguard, judicial reorganisation or judicial liquidation proceedings; or where the required information has already been provided within the previous 12 months pursuant to Article 18 of the Social and Solidarity Economy Law No. 2014-856 of 31 July 2014).
A summer development that should be taken into account without delay in ongoing M&A transactions!
Article written by Fabio Pires