COVID-19: Paul Hastings Paris Teams Are Mobilized
By Paul Hastings Professional
Public measures announced in recent days dealing with the COVID-19 pandemic have major impacts on all areas of law. In these exceptional circumstances and due to a fluctuating environment, Paul Hastings Paris teams are mobilized to support you in the management of your matters, including their transnational aspects.
Impacts on Contractual Relationships
The current situation has significant consequences for a large number of contractual relationships. In particular, questions arise as to whether a party may, in these circumstances, suspend its contractual duties or terminate the contract on the basis of force majeure or request its renegotiation on the basis of hardship (i.e., imprévision) introduced in French Civil Code as of October 1, 2016.
However, it should be noted that hardship, which allows one party to require the renegotiation of a contract in the event of unpredictable circumstances, does not apply to transfers of shares as of October 1, 2018.
An accurate review of any relevant contracts will have to be carried out in order to determine the cases where a party will be able to rely on force majeure or on the provisions relating to hardship, depending on whether those contracts (i) provide for a definition of force majeure or not and/or (ii) provide any waiver to hardship of the parties—keeping in mind that the execution date of the contract will truly matter.
Impacts on Judicial Proceedings
As of March 16, 2020, French jurisdictions are closed. The only exceptions relate to the handling of litigation qualified as essential, which mainly correspond to certain sensitive criminal cases and cases of absolute priority.
With regard to the Paris Commercial Court, and except for outstanding proceedings such as hourly summary proceedings (i.e., référés d’heure à heure), oral arguments and procedural hearings will be postponed and should not be held before June 2020 at the earliest. As for the Paris Court of Appeal, most non-criminal cases that were due to be heard will be deferred, at the earliest, to the end of September 2020.
Imminent Orders on the adaptation of limitation and procedural deadlines are also announced by the French Chancellery in order to take the impact of the situation into account.
Impacts on Tax
Several measures have been announced by French public authorities, including on tax deferrals and the suspension of ongoing tax audits. However, it should be noted that, at this stage, the terms of those measures have not yet been specified.
As far as we are concerned, the French Government has not yet taken a position at this stage either on an eventual deferment of the date for the declaration of tax results for 2019, initially scheduled on May 2nd of this year, or an eventual staggering of down payments and tax payments for the rest of the year 2020.
Impacts on Employment
Various announcements have been made by French public authorities in order to ensure the safety and the health of employees, with measures in favor of telecommuting and the reorganization of job positions, as well as measures to limit the financial impact of that crisis over employees and employers by facilitating the implementation of partial activity (i.e., short-time working) and by improving the financial coverage of that measure by public authorities.
Impacts on Corporate Law
Procedures for Holding General Meetings
French Government is currently working on an emergency bill aiming at authorizing the Government to adjust, by issuing a Ministerial Order, the procedures for the deliberation of general meetings and boards of directors as well as supervisory bodies of companies.
With regard to current containment measures, the purpose is to allow, on an exceptional basis, remote participation and the holding of general meetings behind closed doors.
Communication to the Financial Markets
The current crisis takes place within the announcement of 2019 results and 2020 targets for most issuers. On February 28, 2020, the AMF (i.e., Autorité des Marchés Financiers) published a report on the disclosure rules applicable in the context of the Coronavirus epidemic asking issuers to reassess the impact of the current situation on their business and their prospects and to describe their economic exposure to that crisis in terms of risk factors.
Impacts on Financing
Bpifrance has announced its support, in the form of a guarantee, for banks from which companies will apply for credit lines.
Bpifrance has also undertaken to provide liquidity in the form of (i) unguaranteed loans, (ii) mobilization of invoices and (iii) suspension of payment of due dates on loans granted by Bpifrance.
Banking institutions, for their part, have decided on various emergency measures, including the implementation of an accelerated credit appraisal procedure for stretched cash flow situations within five days, as well as the deferment of corporate loan repayment up to six months and the staggering of payment of due sums over several years (up to six years).
Impacts on Competition Law
Companies remain subject to strict compliance with antitrust rules. The utmost vigilance is required, particularly in the event of contact with competitors.
Several competition authorities around the world (including the European Commission) have already indicated that they will not be able to guarantee the usual time limits applicable to mergers and are asking companies to postpone the filing of “non-urgent” transactions.
With respect to State-aids, the European Commission announced on March 20, 2020, that it is relaxing the current framework, up until December 2020. Many direct subsidies/loans/guarantees from Member States are concerned.