Legal reforms simplify business asset transfers in France

Over the past decade, France has reformed its legal framework for transferring business assets, moving away from strict formalism toward a system emphasizing the diligence of the parties involved and the role of the deed drafter.

Removal of mandatory mentions in transfer deeds

The law No. 2019-744 of 19 July 2019, known as the Soilihi law, abolished the requirement for specific mentions in transfer deeds, such as the identity of the previous seller and the financial details of the business. This change aimed to reduce legal uncertainty and streamline the transfer process.

Protection of buyers through civil law

The protection of buyers now relies on the common law of obligations, renewed by the ordinance of 10 February 2016. Article 1112-1 of the Civil Code establishes a general duty of pre-contractual information, which applies to the transfer of business assets. This duty requires parties to inform each other of information that is critical for their consent.

Legal consequences of concealment

In cases of intentional concealment of critical information, the Court of Cassation has ruled that this constitutes dol (fraud), which can lead to the annulment of the transfer. However, the burden of proof differs between claims of dol and general errors, with dol requiring proof of intent.

Transparency and trade secrets

The seller is required to disclose enough information to fulfill their pre-contractual duty of information, but they must also protect trade secrets. The law No. 2018-670 of 30 July 2018 provides legal protection for trade secrets, which are defined by specific criteria in the Commercial Code.

Commercial preemption rights

The commercial preemption right, codified in the Urban Planning Code, allows local municipalities to claim the right to purchase certain businesses. The seller must notify the municipality before any transfer, and failure to do so can lead to the nullity of the sale.

Legal guarantees and registration

The ordinance No. 2021-1192 of 15 September 2021 introduced changes to the legal guarantees for commercial businesses. The seller's privilege and pledge are now registered in a commercial court registry, and the registration period is critical for the transfer process.

SVE law and labor obligations

The SVE law of 26 May 2026 modified the contractual regime of commercial leases and introduced changes to the obligations regarding employee information. The law also tightened the deadlines for informing employees about the transfer, reducing the financial risk for the buyer.

Tax and registration considerations

The transfer of commercial businesses involves various tax considerations, including depreciation deductions and registration fees. The 2022 and 2026 finance laws introduced temporary exemptions and deductions, while the registration fees depend on the price of the transfer and the applicable tax brackets.

Legal and practical challenges in transfers

The removal of mandatory mentions has shifted the responsibility of ensuring the accuracy of the transfer to the deed drafter. This includes the need to document the transferred perimeter, ensure the completeness of the data room, and address the legal implications of intangible assets like artificial intelligence tools and data.

Future outlook for business transfers

The legal framework for business transfers in France continues to evolve, emphasizing the role of the deed drafter in ensuring the accuracy and completeness of the transfer. The ongoing development of legal protections for trade secrets and other intangible assets highlights the need for careful planning and legal diligence in the transfer process.