Regulating executive remuneration in listed companies
Measures to simplify company law
Modernising bond issues


Law 2016-1691 of December 9 2016, also known as the Sapin II Law, aims to support transparency, modernise business activity and combat corruption. It introduces measures to:

  • regulate executive pay in listed companies;
  • simplify company law; and
  • modernise bond issues.

Regulating executive remuneration in listed companies

Pay and benefit packages for executives of public limited companies (sociétés anonymes) that are listed must now be approved by the annual general meeting (Articles L 225-37-2 and L 225-82-2 of the Commercial Code). This measure gives shareholders a say over the principles and criteria used for setting and allocating the fixed, variable and exceptional components of the total remuneration and any benefits which the chair, general managers, delegated general managers or members of the management or supervisory boards may be entitled to under their terms of office. Shareholder approval must be renewed each time any of these components changes or an executive is reappointed.

Measures to simplify company law

Simplifying procedure for contributions of goodwill or going concern
In order to facilitate the conversion of unincorporated businesses into sole shareholder companies (l'entreprise unipersonnelle à responsabilité limitée (EURL) or société par actions simplifiée unipersonnelle (SASU)), the Sapin II Law has abolished the requirement to include the mandatory wording set out in Article L 141-1 of the Commercial Code in the agreement transferring a going concern to a company that is wholly owned by the transferor.

Abolishing prior authorisation requirement for certain transactions
In a société anonyme that has a management board (directoire), the supervisory board is no longer required to give prior authorisation for a total or partial disposal of a shareholding or granting of security. Only the granting of guarantees (cautions, avals et garanties) remains subject to prior authorisation under Article L 225-68 of the Commercial Code.

Exemptions from requirement to appoint auditor to evaluate contribution
The bylaws of companies that are in the form of a limited liability company by shares (société par actions simplifiée) or a limited liability company (société à responsabilité limitée) may provide that an auditor no longer needs to be appointed to issue a report if:

  • the value of any contribution in kind does not exceed €30,000 (Article D 227-3 of the Commercial Code); and
  • the total value of all of the contributions in kind that are not subject to evaluation by a contributions auditor does not exceed one half of the share capital (Article L 227-1, L 223-9 and L 223-33 of the Commercial Code).

Further, the sole shareholder of a company incorporated in the form of an EURL or SASU is also exempted from the requirement to appoint a contributions auditor if it contributes items that appeared on the company's most recent balance sheet (Article L 223-9 of the Commercial Code).

Limits on information provided to statutory auditor
The requirement to inform the statutory auditor of related party agreements in a société anonyme, which is the responsibility of the chair of the board of directors or supervisory board, is now limited to agreements that have been both authorised and concluded, thereby excluding agreements that have been authorised but not concluded (Article L 225-40 of the Commercial Code).

Simplifying foreign investments
Until now, foreign investments outside specified sensitive sectors of activity, such as defence, could be carried out without any government approvals, but an administrative filing was required when the transaction was completed. This filing requirement has now been abolished. However, foreign investments that are carried out within a sensitive sector are still subject to the Finance Ministry's prior authorisation.

Modernising bond issues

Simplifying the procedure for issuing bonds
A société anonyme can issue bonds without verifying its assets and liabilities, even if it does not have two sets of annual financial statements that have been approved by its shareholders, provided that the bond issue is guaranteed by a company that meets this requirement. To facilitate the bond issuing process, the board of directors or management board of a company incorporated in the form of a société anonyme may authorise persons other than members of the board of directors or management board, the general manager or the delegated general managers to implement the bond issue, such as the company's treasurer or director of finance (Article L 228-39 and following of the Commercial Code). In addition, the regime for issuing bonds has been simplified, as have:

  • bondholder governance procedures, for bond issues whose nominal value exceeds an amount to be set by decree; and
  • bond issues that can be subscribed only in an amount per investor and per transaction that is at least equal to an amount to be set by decree.

In these cases, if the issue does not constitute a public offering, the relevant agreements can be drafted in a language other than French (Article L 213-6-3 of the Monetary and Financial Code).

Simplifying bondholder governance
The bond documentation may provide that bondholder decisions may be made in written or electronic form, as opposed to at a general meeting of bondholders. The bondholders' representative can now be an individual or a legal entity that is a national of or domiciled in an EU member state (Article L 228-46-1 and following of the Commercial Code). The representative can also delegate its powers. The procedure for granting and managing security has also been simplified (Articles L 228-80 and L 228-81 of the Commercial Code).


Further measures to simplify company law in a number of areas are expected in forthcoming ministerial orders. These include legislation to:

  • reduce the mandatory content of management reports of commercial companies;
  • simplify requirements relating to filing reports and information at the Registry of Commerce and Companies;
  • simplify the rules on related party agreements in sole shareholder sociétés par actions simplifiées;
  • reinforce minority shareholder rights in sociétés à responsabilité limitée; and
  • simplify share transfers in sociétés par actions simplifiées.

​For further information on this topic please contact Rhidian David or Agnes Braka-Calas at Cabinet Hughes Hubbard & Reed by telephone (+33 1 44 05 80 00) or email ([email protected] or [email protected]). The Cabinet Hughes Hubbard & Reed website can be accessed at