French Government Approves Corporate Law Reform and Normative Inflation Trends

During the Council of Ministers held on July 21, 2023, the French government approved a significant corporate law reform and discussed the results of normative inflation statistics.

Corporate Law Reform: The Minister of Justice presented a crucial project of law for the ratification of the ordinance No. 2023-393 dated May 24, 2023. This ordinance aimed at reforming the regulations concerning corporate mergers, divisions, partial asset contributions, and cross-border operations of commercial companies. The project of law proposes the ratification of this ordinance, which was enacted in response to Article 13 of Law No. 2023-171 dated March 9, 2023, aiming at adapting French law to meet European Union requirements in various domains such as the economy, health, labor, transport, and agriculture. The ordinance transposed the directive (EU) 2019/2121 of November 27, 2019, which simplified and modernized cross-border transformations, mergers, and divisions. It also took effect in conjunction with the decree No. 2023-430 dated June 2, 2023, and the entire framework became operational on July 1, 2023. The proposed law for ratification includes adjustments to the ordinance, clarifying the application of double voting rights for partial asset contributions and specifying the applicable regime for divisions involving only limited liability companies. Furthermore, it addresses minor editorial imperfections.

Normative Inflation Trends: The Prime Minister presented a communication on the results of normative inflation statistics. The “normative inflation statistics,” which have been available since 2002 on the Légifrance website, monitor the quantitative evolution of normative production in France.

The results for 2022, recently published, indicate several notable developments:

  1. A reduction in the number of laws promulgated (excluding laws ratifying international agreements or treaties) was observed in 2022. There were 43 laws enacted in 2022, compared to 67 in 2021. Notably, three of the laws in 2022 were focused on managing the COVID-related health crisis, while there were seven such laws in 2021. The decrease in the number of laws follows ten years during which the number of laws enacted was equal to or higher than 45, except for the year 2017, which had 36 laws.
  2. Consequently, the number of measures of application called for by laws also decreased, with 423 in 2022 compared to 748 in 2021 and 559 in 2020. It is noteworthy that the application rate of laws at the end of the XVth legislature (2017-2022) was 89%.
  3. The origin of laws has shown an evolution, with 63% of the 1042 laws published in the last 20 years originating from the government, and 37% from parliamentary proposals. However, in 2022, there was an inversion in the distribution, with 42% of laws originating from the government and 58% from parliamentary proposals. This confirms a trend already observed in 2021.
  4. The trend of an increase in the number of articles between the submission of a bill to Parliament and its promulgation continues, with the number often more than doubling. The rate of progression was 162% in 2022, while it was 78% in 2002.
  5. The number of published ordinances, which had increased significantly during the COVID-related health crisis, was halved in 2022 (45, including two related to health) compared to 2021 (91, including ten related to health).
  6. The volume of regulatory decrees (excluding nomination decrees) published in 2022 (1786 decrees) decreased by 3% compared to 2021 (1843 decrees). The number of decrees taken annually was over 2000 in the early 2000s.
  7. The number of regulatory orders also decreased by 7.6%, from 8747 in 2021 to 8077 in 2022.
  8. The number of circulars made available on Légifrance continued its decline since 2019, with 569 circulars in 2019, 151 in 2020, 123 in 2021, and 104 in 2022. The decrease amounted to 92% since 2018.
  9. The volume of the Official Journal of the French Republic decreased by 14% between 2021 (83,570 PDF pages) and 2022 (71,293 PDF pages).

The overall trends suggest a welcome slowdown in the normative inflation rate, which can be attributed to both conjunctural factors and the mechanisms of text production regulation implemented since 2017.

The government also emphasized its commitment to the accessibility of law and continued efforts for codifying the current legislation. Notably, in 2022, the legislative part of the code on taxes on goods and services, the legislative part of the general code of the civil service, and the penitentiary code came into effect, increasing the proportion of codified legislative law from 55% to 63% over the past 20 years.

Individual Measures: During the Council of Ministers, several key individual measures were adopted:

  1. The Minister of Interior and Overseas Territories proposed appointments for temporary territorial missions:
    • Mr. Philippe LAYCURAS, sub-prefect of Brive-la-Gaillarde, was appointed as delegated prefect.
    • Mr. François PROISY, sub-prefect of Castres, was appointed as delegated prefect.
    • Mr. Pierre CASTOLDI, sub-prefect of Béziers, was appointed as delegated prefect.
    • Ms. Virginie DARPHEUILLE-GAZON, State administrator, was appointed as a member of the Higher Council for Territorial Support and Evaluation, effective from September 1, 2023.
  2. The Minister of Europe and Foreign Affairs proposed the appointment of Ms. Fatène BENHABYLES-FOETH as ambassador, permanent representative of France to the Organization for Security and Co-operation in Europe in Vienna, effective from September 1, 2023.
  3. The Minister of Justice proposed appointments to various positions:
    • Mr. Francis LAMY was appointed as president of the social section of the Council of State, effective from August 12, 2023.
    • Ms. Pascale ROUSSELLE was appointed as Councilor of State in ordinary service, effective from September 1, 2023, to exercise the functions of president of the administrative court of appeal of Nancy.
  4. The Minister of Armed Forces proposed appointments for top positions:
    • Mr. Nicolas VAUJOUR was appointed as Chief of Staff of the Navy and elevated to the rank of Admiral, effective from September 1, 2023.
    • Mr. Pierre VANDIER was appointed as Major General of the Armed Forces, effective from September 1, 2023.
  5. The Minister of Energy Transition proposed the appointment of Ms. Sophie MOURLON as Director-General of Energy and Climate.

The individual measures reflect the government’s efforts to appoint skilled personnel to key positions in various domains.

The Council of Ministers concluded with a sense of optimism, given the positive trends in normative inflation and the enactment of crucial corporate law reforms, which are expected to have a significant impact on France’s legal and economic landscape.