France: A Major Easing of the Obligation to Inform Employees of Their Rights to Bid on Business Transfers

Introduced by the French Act of 31 July 2014 on the Social and Solidarity Economy, the Hamon Law requires companies with a maximum turnover of EUR 50 million per year or a maximum balance sheet amount of EUR 43 million, to inform each of their employees of their right to submit a take-over offer when they intend to sell their companies.

More specifically, the law applies to the sale of a business (fonds de commerce), or of any participation representing more than 50% of shares, stocks, or securities giving access to the capital of a company. Employees do not, however, benefit from a preferential acquisition right, and the seller remains free to select the purchaser of its choice, including where one or more employees submit a competing offer.

Compliance with the Hamon Law has long represented an additional procedural step in French M&A transactions since the law applied to entities with less than 250 employees—which represent the majority of French entities.

In addition, the process implied to notify the employees:

• At least two months before the signing of the binding agreement for companies with less than 50 employees (unless all employees of the company provide written waivers to their individual right to make an offer); or
• At latest, at the same time as the first meeting of the CSE on the proposed transaction for companies with at least 50 employees.

Although the legislator’s objective was to encourage employee-led buyouts, the effectiveness of the regime has frequently been questioned. This is why the French Act No. 2026-403 of 26 May 2026 substantially amended the Hamon Law regime.

Narrowing the Scope of the Employee Information Obligation

Before the reform, the employee information obligation applied to companies employing less than 250 employees. Therefore, a large number of small and medium-sized companies were required to individually inform their employees of their right to bid before the transaction could be completed.

As from 27 July 2026, the Hamon Law will only apply to:

• Companies employing less than 50 employees; and
• Companies employing between 50 and 250 employees that do not have a CSE.

The main practical consequence of the reform is therefore that companies employing between 50 and 250 employees and having a CSE will no longer be required to individually inform employees of their right to bid.

Simplifications for Companies Remaining Within the Scope of the Hamon Law

The companies remaining within the scope of the Hamon Law benefit from several significant simplifications introduced by the reform:

• First, the minimum information period of the employees has been reduced from two months to one month. As under the previous regime, the transaction may proceed before expiry of that period if all employees expressly waive their right to submit an offer.
• Second, the maximum civil fine that may be imposed for failure to comply with the employee information requirements has been reduced from 2% to 0.5% of the sale price.

Points of Caution

• The exemption for companies employing between 50 and 250 employees is contingent upon the existence of a duly constituted CSE. Where a company has crossed the 50-employee threshold but has not yet established a CSE, or where the CSE has not been renewed following the expiry of its members' term of office, the exemption will not apply.
• Companies employing at least 50 employees are still obliged to inform and consult their CSE on the targeted sale, with such information/consultation process taking between one and two months.