The purpose of the law of 6 August 2021, which entered into force on 16 August 2021, is to rectify a material error in the penal provision of article 1500-7, item 2° of the amended law of 10 August 1915 concerning commercial companies (1915 Law), which occurred during the legislative process leading to the adoption of the law of 10 August 2016 modernizing the 1915 Law (2016 Law).

The reference to “parts sociales” in item 2 of article 1500-7 gave rise to discussion as to whether or not private limited liability companies were prohibited from making loans or advances from corporate funds, to give securities for the acquisition of company shares or to take a pledge on their own shares although parliamentary documents regarding the 2016 Law indicated that financial assistance provisions shall not apply to private limited liability companies.

Further to the entry into force of the law of 6 August 2021 and the deletion of “parts sociales” in item 2 of article 1500-7, it is now clear that such prohibition does not apply to managers of private limited liability companies. However, the managers still have to consider, inter alia, that such operations are in the best corporate interests of their companies.

For any further questions, feel free to contact our corporate team.