Corporate Authorisations and Capital Markets Law in France

Corporate authorisations give approval for companies to enter into transactions (such as financings or acquisitions), and authorise people (“company representatives”) to sign the transaction documents on behalf of the company.

The new regime of delegation applicable to limited companies is now synchronised with the regime applicable to credit institutions. This allows the possibility to delegate to any persons, the power to carry out the contemplated bond issue.

The term person used in Article L. 228-40 is generally understood as individual. This construction is consistent with market practice, even if, from a French law perspective, a literal interpretation could lead to the possibility for a person within the meaning of French law to carry out the contemplated bond issue.

Such a literal construction would imply the possibility for another company, for example for a company within the same group of the issuer, to carry out a bond issue. Such a construction, although not being currently in line with market practice of corporates or banks, cannot be excluded.

In practice, this would lead to the possibility for an issuer to administratively externalise the carrying out of the bond issue and, why not, to the possibility for a specific dedicated entity to be created within a group of companies or banks to bear the administrative burden of the bond issue.

This might be interesting for companies or banks which are contractually structured as a group of companies, with the funding being separately managed.

In practice, this amendment allows members of the issuer, typically members of the funding department, to carry out bond issues. Such members do not longer have to be at the same time members of the Board of Directors as this is, to a certain extent, considered as useless for the single purpose of carrying out bond issues decided by the Board of Directors.

In addition, asking a member of the Board of Directors to carry out bond issues may lengthen the issuance process due to his potential non-availability.

It has also to be emphasised that Article L. 228-40 maintains the concept of delegation of powers only, this being in line with market practice. However, in theory, it can be considered that a delegation of signature is also possible, as new Article L. 228-40 does not prohibit it.