NEWS

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27-06-2018

 

"Intervention by Muriel LE FUSTEC  on contractual groupings of companies abroad with the Vendée Internationale associationThursday, June 28, 2018:

 

-    the advantages of contractual groups

-    the main clauses

-    legal, social and tax risks

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I. cc781905-5cde-3194-bb3b-136bad5cf58d_ Temporary groupings of companies (GME)

 

II. cc781905-5cde-3194-bb3b-136bad5cf58d_The main clauses to include

 

III. cc781905-5cde-3194-bb3b-136bad5cf58d_Legal, tax and social consequences

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The advantage of contractual groups over joint ventures: 

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more flexible tool

no capital investment

members retain their autonomy 

it is easier to limit the risk-taking of each member to that of their own activity 

dissolution does not require formalism 

no accounting, no societal formalities…

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There are two types of statutory groups:

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Joint grouping: each member assumes responsibility for its own service

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• Often used for specialized co-contracts

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Solidarity group: each member is responsible for all services

owed by the group to the customer

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• Often used for capacity co-contracting_cc781905-5cde-3194-bb3b-136bad5cf58d

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The notion of joint or solidarity grouping only exists in the context of French public procurement

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• It is possible to establish a contract containing these statuses for private markets, including abroad

 

 

 

It is also possible to design a tailor-made contract organizing the rights, obligations

and the responsibility of each company

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There are standard contracts published by the FFB, the FNTP and the AFNOR (standard P 03-001)

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I. cc781905-5cde-3194-bb3b-136bad5cf58d_ Temporary business groups

 

II. cc781905-5cde-3194-bb3b-136bad5cf58d_The main clauses to include

 

III. cc781905-5cde-3194-bb3b-136bad5cf58d_ Legal, fiscal and social consequences

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Main clauses to include

 

Basic rule: the project must not fit into a pre-established contractual framework, it is the contract that must   frame the project!

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You must first define what you want to do together and what you do not want to share: writing a letter of intent is useful to clarify the will of the members

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Once the nature and content of the partnership has been defined, it is necessary to analyze the legal qualification of the grouping, the possible tax, social and legal consequences (competition law, IP, etc.)

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Standard contract content 

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Determining whether members conclude contracts with clients themselves (mandate relationship)

or if a member will contract in his name and/or on his behalf (subcontracting or commissionaire relationship)

 

Determine the rules of liability between members: in the event of default by a member with regard to foreign customers, violation of the group's operating rules, etc.

 

Designate the member(s) authorized to communicate on behalf of the group: joint and several agent or not

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Determine the causes of exclusion and approval of members

 

Specify the exclusivity expected of the members with regard to the grouping

 

Specify the exclusivity granted by the group to the members

 

Determine the financial rules of the game: who bills the clients, who bears the costs of canvassing, etc.

 

Rules of confidentiality, non-poaching, loyalty, ethics

 

Provide appropriate dispute resolution clauses

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I. Temporary groupings of companies

 

II. cc781905-5cde-3194-bb3b-136bad5cf58d_The main clauses

 

III. cc781905-5cde-3194-bb3b-136bad5cf58d_Legal, tax and social consequences to anticipate

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LEGAL, TAX AND SOCIAL CSQ

 

Risk of characterizing a de facto company

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• Affirm that the members do not wish to constitute a de facto partnership

• Specify that each company is responsible for its lot 

• Properly split the payments of each company, especially if they pass through a common account

• Members' contracts with third parties should not refer to the grouping

• In case of use of the means of another member, it is necessary to make a contract with coherent remuneration

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• Failing this, responsibility of each on his personal assets of the debts of each member of the GME towards third parties in good faith, including the tax authorities!

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• Solidarity: ensure that it only benefits the contracting authority, not third parties (not the members, 3194-bb3b-136bad5cf58d_ subcontractors, suppliers, etc.)

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• That of the agent is not automatic in a joint GME, it depends on the terms of the contract

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• Beware of the theory of appearance: risk of joint condemnation if third parties are left to think that the GME is an autonomous entity 

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• Beware of misleading letterheads, site signs in the name of the group, etc.

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• Competition law: risk of illicit agreement, especially when several competitors participate

to the grouping – price harmonization, market distribution, boycott of competitors, etc.

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• Tax risk: setting up a permanent establishment abroad for members

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• Social risk: secondment of employees and change of employer, secondment abroad

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Muriel LE FUSTEC, Lawyer specializing in economic law

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