Acquisitions: France reverses its case law on the transfer of liability from the acquired company to the acquiring company

03-12-20 | News

The highest body of the judicial order in France, the “Cour de cassation”, has ruled that the acquiring company can be prosecuted and convicted for acts committed by the acquired company before the completion of the merger or acquisition operation.

On November 25, 2020, the “Cour de cassation” issued a judgment which marks an important reversal of case law concerning the issue of the transfer of liability of a legal person in the event of a merger or acquisition of one company by another. Therefore, the acquisition of a company can no longer be adjudged as the death of a legal person in the eyes of the law.

What are the repercussions?

From now on, the acquisition of a company could bear legal responsibilities for the acquired company. The acquiring company will be able to inherit all existing defense mechanisms of the absorbed company. And what can be more powerful than information? 

Nowadays, more than ever, mergers and acquisitions will require access to data and documents from disparate applications. The acquiring company will want to guarantee compliance by ensuring:

• A complete access to the legacy data, documents and reports produced by the acquired company and its subsidiaries.
• The data extracted must be complete, consistent and reliable to comply with future tax and audit obligations. The information has to be a compliant tax archive

TJC solutions make it possible to archive, decommission or perform a complex data extract from SAP systems both during and after the mergers or acquisitions have taken place. If you need any support in preparing your SAP system for a similar situation, TJC Group can assist you. Please get in touch with any queries, or to discuss any other issues related to SAP system decommissioning in the event of mergers or acquisitions. Contact us.

Stay informed about the latest topics related to Data Management! Subscribe to our newsletter