In this ruling, the French Supreme Court (Cour de cassation) reiterates that, when asked whether an absorbing company should be prosecuted for criminally reprehensible acts committed by the absorbed company, the Examining Chamber of the Court of Appeal must, prior to its decision, rule on the existence of a possible fraud against the law, i.e. a merger-acquisition operation carried out with the aim of evading the law. 

In a ruling dated November 25, 2020 (Cass. crim., November 25, 2020, n°18-86.955), the French Supreme Court (Cour de cassation) declared that, in the case of a merger of one company into another, the acquiring company may be criminally convicted for acts constituting an offence committed by the acquired company prior to the transaction in two hypotheses:

• when the transaction, concluded after November 25, 2020, falls within the scope of Council Directive 78/855/EEC of October 9, 1978 on mergers of public limited liability companies, as last codified by Directive (EU) 2017/1132 of the European Parliament and of the Council of June 14, 2017. In this case, only a fine or confiscation may be imposed on the acquiring company;
• when the purpose of the transaction, whatever its date and whatever the nature of the companies involved, is to avoid criminal liability on the part of the absorbed company, and thus constitutes fraud. In such cases, any penalties incurred may be imposed.

Under these conditions, it follows that the Investigating Chamber of the Court of Appeal cannot render a decision dismissing a case based on the dissolution of the absorbed company against which it has sufficient evidence of having committed the offences referred to it.

The court is obliged to verify, either of its own motion or at the request of a party invoking it, if necessary by ordering additional information, whether the conditions for prosecuting the absorbing company are likely to be met. 

Cass. crim., April 13, 2022, n°21-80.653

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