IM france study

8/7/2019 IM france study

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A PROJECT REPORT

ON

COUNTRY: FRANCE

IN PARTIAL FULFILLMENT OF THE SUBJECT INTERNATIONAL MARKETING INMBA PROGRAMME UNDER GUJARAT TECHNOLOGICAL UNIVERSITY.

Submitted To: Submitted By:Prof.Rajesh Asrani Viral jani(9027)

Pooja kadakiya(9030)

Mohsin junach(9029)

Deep hirani(9026)

Presha kaneriya(9031)

Suraj lakhani(9037)


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Introducing France

article aims to be a tour of France from 10,000 feet in the sky. An overview that provides

a skeleton of knowledge to guide you to the parts of the site (and of France) that are of most

interest to you.

France: large and well connected

France is one of the largest countries in Europe. It is bordered by six countries Belgium,Luxembourg and Germany to the north-east, Switzerland and Italy across the Alps to the south-

east and Spain across the Pyrenees to the south-west. The UK is across the English Channel (La

Manche). France is regarded by many people as the geographical gateway to Europe. It has

several large international airports, two of which are in the capital, Paris and many of which are

served by budget airlines. Ferry terminals are located along the north, west and Mediterranean

coasts. Visitors from the UK also have the option of taking the Channel Tunnel rail link. Once in

France, the motorway network and French rail service are known to be extremely efficient with

the high-speed, long distance TGV train service the envy of other nations.

Geographical diversity and cultural plenty

France is the worlds most popular tourist destination and it doesnt take long to work out

why. The country has an extremely diverse physical landscape and an equally diverse climate to

match. This makes it the ideal venue for a huge range of sporting and other outdoor activities.

For example, France has a huge range of golf courses. However, France also caters on a grand

scale for those who prefer a more sedate pace of life. There are numerous museums and art

galleries in France reflecting the fact that the French are fiercely and deservedly proud of their

countrys rich cultural, educational and political heritage. France has had a turbulent history

characterised by successive revolutions but at every stage it has been at the forefront of European


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development. The notion of France as a leader finds its legacy in the countrys pivotal role in the

construction of the European Union as we know it today.

The French: polite and chic

The French people and particularly the older generations - tend to be extremely

courteous and formal, a national trait that is often ungenerously dismissed as arrogance by other

nations. The French are also renowned for being chic, that is, for taking great pride in their

personal appearance and in particular, their clothes. This is symptomatic of the importance

placed on presentation in general in France. The French simply dont do scruffy. Shops, homesand public gardens are all immaculately kept and display immense attention to detail.

A food lovers paradise

France is known throughout the world for its cuisine and wine. The French love their

food. Whenever possible meals are long, sociable family occasions which sometimes span

several hours in the middle of the day. French meals usually involve three or four courses

including cheese before the dessert and are accompanied by wine and freshly baked breads. A

typical main dish might be Coq au vin (chicken in a red wine sauce), Coquilles Saint-Jacques

(sea scallops cooked in butter) or Noisettes dAgneau (sauted lamb cutlets with mushrooms).

However, French food varies enormously between regions with regional specialities and

distinctive regional variations on classic French dishes.

Distinctive regions

France is divided into 22 official regions each of which is subdivided into several

administrative departments. Many of the regions have very clearly defined and distinct regional

identities. This is in part due to the enormous geographical and climatic differences between the

regions which force the inhabitants of the various regions to lead very different ways of life.

Brittany and Normandy: a changing coastline


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Brittany, in the far north-west corner of France has one of the most distinctive regional

identities. The region has a jagged coastline of wide bays interspersed with towering granite

cliffs. The people of Brittany consider themselves as being slightly separate from the rest of

France and the regional dialect, Breton, is still fairly commonly heard. Further east along the

northern coast, Lower-Normandy and Upper-Normandy are renowned for their wide sandy

beaches which were the site of the D-Day Landings of 1944. The region is also home to Bayeux

where the famous tapestry of the same name telling the story of William the Conquerors

invasion of England is displayed. Both Normandy and Brittany are home to some beautiful,

unspoilt stretches of countryside but these regions have a varied climate with rain and cool

winds in the winter months. Nevertheless, these regions are popular with British holidaymakers

and property prices here have increased rapidly in recent years. For the best bargains head to the

Finistere department where you can still get excellent value for money.

Chateaux and waterways in the west ofFrance

Across the southern border of Brittany and Lower Normandy, you will find Pays-de la

Loire. This region is home to spectacular chteaux and lush scenery. The regions Atlantic coast

offers plenty of sandy beaches which stretch all the way down into Poitou-Charentes and

Aquitaine. All three regions have hundreds of miles of navigable waterways and enjoy a

temperate climate with warm summers and mild winters. Bordeaux is home to some beautiful

18th century architecture and the surrounding vineyards are also well worth a visit as this is one

of Frances most prolific wine-growing areas. The man-made forest of Les Lands is another asset

of Frances relatively undiscovered south-western corner.

The sunny south

As a general rule, the closer you get to the southern French coast, the hotter and the more

expensive it becomes. The south of France is generally extremely busy, particularly during the

summer months. Many Parisians have second homes in Languedoc-Roussillon and Provence-

Alpes-Cte d'Azur and spend much of August here. They are joined by tourists from Frances

neighbouring countries who come to take advantage of the sunshine and dazzling scenery. In the


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height of summer, yachts line the marinas of the Cte dAzur whilst inland, lavender fields

shimmer in the luminous sunlight that inspired such well-known artists as Van Gogh.

The Alps: the place to ski

Rhone-Alpes to the north of the Mediterranean coastal resorts is, as its name suggests,

home to the French owned part of the Alps mountain range. The French Alps are buzzing with

activity all year round and are home to some of the most popular year-round resorts in the world.

Nevertheless, the area is still most highly acclaimed for its skiing and ski chalets are highly

sought-after here. For example, the resorts of Chamonix and Courchevel attract skiers from

across the world. However, the Alps are by no means the only mountains where it is possible to

ski in France. The Pyrenees in the south-west offers some brilliant skiing and is especially

recommended for beginners. Other options include the Jura Mountains in Franche-Comte, theVosges mountains in southern Lorraine and the Massif-Central in Auvergne.

The heart ofFrance: peace and quiet

Auvergne is one of the least densely populated of Frances regions. Limousine,

Burgundy, The Central Loire Valley and Auvergne are all located in central France and do not

have any coastal or national borders. These largely agricultural regions have suffered from rural

depopulation recently. Fortunately, they are growing in popularity with foreign buyers who areattracted by the tranquil setting, slower pace of life and very reasonable property prices! The

large number of lakes in Limousine and Auvergne is also attracting fishermen to these regions.

Burgundy is a food and wine-lovers paradise. The wholesome, earthy flavors of the regional

cuisine are irresistible.

Germanic influences in the eastern regions

To the east of Burgundy lie the regions which form Frances border with Switzerland,

Germany, Luxembourg and Belgium. Franche-Comte is characterized by its landscape of woods

and rivers. This is the perfect destination for ay lover of outdoor pursuits. Alsace and Lorraine

have been fought over by France and Germany for centuries. A Germanic influence is evident in

the regional accents and dialects, the strongly flavored local cuisine and the architecture.


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However, the peaceful atmosphere of the fortified towns and rolling vineyards bears little

resemblance to that of its turbulent past. Champagne-Ardenne is a region of contrasts. Whilst the

department of Ardennes is hilly and densely packed with forests, the south of the region is full of

water meadows and undulating plains. It is here, of course that the drink champagne comes from

and where the stunning Reims cathedral is found. These regions experience cold winters and are

generally very affluent due to the access they provide to the rest of mainland Europe.

Poignant reminders north ofParis

The most northerly region of France, Nord-Pas-de-Calais is home to the Channel ports of

Dunkerque, Calais and Boulogne. It is also heavily influenced by its proximity to Belgium. The

Flemish influence is reflected in both the physical landscape windmills and canals cover flatseemingly never-ending expanses of land and the local cuisine, architecture and beer festivals.

This is, of course, also the site of the poppy-covered First World War battlefields, which act as

such a moving and timeless legacy to the horrors that took place here. Closer to Paris, in Picardy

(Picardie), there are numerous stately chteaux and splendid Gothic cathedrals. In this northern

part of France the climate is not unlike that in the UK and since Paris is easily accessible,

property prices come at a premium.

The King of capitals

No guide to France could possibly be complete without reference to the French capital.

Paris is arguably one of the worlds most majestic capital cities. It counts The Louvre and the

Eiffel Tower amongst its many sites, the majority of which are within walking distance of the

river Seine. Paris and the surrounding Ile-de-France region are expensive but the wealth of

architectural and cultural attractions it has to offer goes some way to justifying the high prices.

France: the perfect destination

France truly is a country with something for everyone. The geographic, climatic and

cultural diversity ensure that France remains one of the worlds top holiday destinations. With

mountain peaks, glistening lakes, fertile plains, dense forests, sandy beaches and rocky coves

counting amongst the countries many natural features, France really does have it all. Whilst the


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Alpine region is blessed with ample snow in winter to satisfy the best of skiers, sun-seekers

relish the long hot sunny summer days that are enjoyed along the Mediterranean coast. French

lifestyles vary enormously throughout France according to the physical landscape, neighboring

foreign influences and the prevailing weather conditions. From the steady pace of life in Frances

rural heart to the upbeat tempo of Paris and the glamorous southern ports there is a way of life to

suit all tastes. With food and wine that are widely acclaimed and justly celebrated, art and

architecture that are both striking and provocative and excellent sports and recreational facilities,

this is a country just waiting to be explored. If you are considering a move to France or simply

buying a holiday home here, the other great news is that there are plenty of cheap properties

available and numerous plots of land for sale on which you could build your dream French

home.

AFrench Overview

A modern and diverse country, France encompasses a wealth of landscapes and identities

influenced by an amalgamation of cultural and historical differences. As the largest Western

European country, France is a nation that takes immense pride in its history and prominent

culture. Such cultural identities play a crucial role in French business culture, where

appropriate conduct, mutual trust and understanding are the key to your organizations

success.

HISTORY

France was one of the earliest countries to progress from feudalism to the nation-state. Its

monarchs surrounded themselves with capable ministers, and French armies were among the

most innovative, disciplined, and professional of their day. During the reign of Louis XIV,

France was the dominant power in Europe. But overly ambitious projects and military campaigns

of Louis and his successors led to chronic financial problems in the 18th century. Deteriorating

economic conditions and popular resentment against the complicated system of privileges

granted the nobility and clerics were among the principal causes of the French Revolution.

Although the revolutionaries advocated republican and egalitarian principles of government,

France reverted to forms of absolute rule or constitutional monarchy four times--the Empire of

Napoleon, the Restoration of Louis XVIII, the reign of Louis-Philippe, and the Second Empire of


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Napoleon III. After the Franco-Prussian War, the Third Republic was established and lasted until

the military defeat of 1940.

World War I brought great losses of troops and material. In the 1920s, France established

an elaborate system of border defenses and alliances to offset resurgent German strength. France

was defeated early in World War II, however, and was occupied in June 1940. That July, the

country was divided into two: one section being ruled directly by the Germans, and a second

controlled by the French and which the Germans did not occupy. German and Italian forces

occupied all of France, including the "Vichy" zone, following the Allied invasion of North

Africa in November 1942. The "Vichy" government largely acquiesced to German plans, namely

in the plunder of French resources and the forceful deportations of tens of thousands of French

Jews living in France to concentration camps across Europe, and was even more completelyunder German control following the German military occupation of November 1942.

Economically, a full one-half of France's public sector revenue was appropriated by Germany.

After 4 years of occupation and strife in France, Allied forces liberated the country in 1944.

France emerged from World War II to face a series of new problems. After a short period

of provisional government initially led by Gen. Charles de Gaulle, the Fourth Republic was set

up by a new constitution and established as a parliamentary form of government controlled by a

series of coalitions. French military involvement in both Indochina and Algeria combined with

the mixed nature of the coalitions and a consequent lack of agreement caused successive cabinet

crises and changes of government.

Finally, on May 13, 1958, the government structure collapsed as a result of the

tremendous opposing pressures generated by 4 years of war with Algeria. A threatened coup led

the Parliament to call on General de Gaulle to head the government and prevent civil war.

Marking the beginning of the Fifth Republic, he became prime minister in June 1958 and was

elected president in December of that year. The Algerian conflict also spurred decades of

increased immigration from the Maghreb states, changing the composition of French society.

Seven years later, for the first time in the 20th century, the people of France went to the


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polls to elect a president by direct ballot. De Gaulle won re-election with a 55% share of the

vote, defeating Francois Mitterrand. In April 1969, President de Gaulle's government conducted

a national referendum on the creation of 21 regions with limited political powers. The

government's proposals were defeated, and de Gaulle subsequently resigned. Succeeding him as

president of France have been Gaullist Georges Pompidou (1969-74), Independent Republican

Valery Giscard d'Estaing (1974-81), Socialist Francois Mitterrand (1981-95), neo-Gaullist

Jacques Chirac (1995-2007), and center-right Nicolas Sarkozy (2007-present).

While France continues to revere its rich history and independence, French leaders have

increasingly tied the future of France to the European Union (EU). France was integral in

establishing the European Coal and Steel Community in 1951 and was among the EU's six

founding states. During his tenure, President Mitterrand stressed the importance of European

integration and advocated the ratification of the Maastricht Treaty on European economic andpolitical union, which France's electorate narrowly approved in 1992.

Since the September 11, 2001 terrorist attacks in the U.S., France has played a central

role in counterterrorism efforts. French forces participate in Operation Enduring Freedom and in

the International Security Assistance Force (ISAF) for Afghanistan. France did not, however,

join the coalition that liberated Iraq in 2003.

In October and November 2005, 3 weeks of violent unrest in France's largely immigrant

suburbs focused the country's attention on its minority communities. In the spring of 2006,

students protested widely over restrictive employment legislation. In May 2007, Nicolas Sarkozy

was elected as France's sixth president under the Fifth Republic, signaling French approval of

widespread economic and social reforms, as well as closer cooperation with the United States.

After enacting several high-profile reforms during his first year in office, President Sarkozy

scaled back his ambitious reform efforts as the worldwide economic crisis unfolded. By midway

through his 5-year term, Sarkozy faced mounting pressure to revive the economy, lower

unemployment, and reduce the governments sizable budget deficit.

On the international front, President Sarkozy has reintegrated France into the North

Atlantic Treaty Organization (NATO), confirmed Frances commitments to Afghanistan, and


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worked closely with the United States on the Iran nuclear issue. Although a 2005 French

referendum was responsible for the defeat of a treaty to establish a constitution for Europe,

France later backed the Lisbon Treaty--a main priority of Sarkozy during France's EU presidency

in the latter half of 2008. The Lisbon Treaty took effect in December 2009. France continues to

play a leading role in the EU, particularly in the development of a Common Security and

Defense Policy (CSDP). In July 2008, France was instrumental in launching the Union for the

Mediterranean (UM), a continuation of the EU Barcelona Process. France and Egypt held the

first rotating co-presidency, which serves as a forum for political and economic cooperation

between the EU and its Mediterranean neighbors.

Doing Business in France

France has always played a crucial part in both European and World events. After

experiencing two World Wars, the loss of an Empire and numerous political and social

upheavals, France has emerged as a vital component in the European Community with a

strong sense of pride and heritage. Today, the French business market boasts a variety of

international investors and is an important world supplier of agricultural and industrialproducts.

The country also demonstrates one of the highest rates of economic growth in

Europe. However, for those organisations wishing to enter the French business environment,

an understanding of the countrys culture is a vital skill for your company to possess.

Political Condition in France:

Nicolas Sarkozy assumed office on May 16, 2007 as France's sixth president under the

Fifth Republic, the last day of Jacques Chirac's official term. In the April 22, 2007 first round of

presidential elections, Sarkozy, the leader of the center-right Union for a Popular Movement

(UMP) party, placed first; Socialist candidate Segolene Royal placed second; centrist Francois

Bayrou placed third; and extremist Jean-Marie Le Pen placed fourth out of a field of 12

candidates. Sarkozy prevailed in the May 6, 2007 second round, defeating Royal by a 53.06% to

46.94% margin. Royal's loss marked the third straight defeat for the Socialist candidate in

presidential elections.


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In electing Nicolas Sarkozy, French voters endorsed the wide-ranging program of

reforms--including market-oriented social and economic reforms--that were the focal point of his

campaign, implicitly giving him the green light to try and implement these reforms quickly, and

allowing a way forward for overcoming France's 2005 rejection of the EU constitutional treaty.

By embracing a figure long tagged as "pro-American," French voters also expressed their desire

to renew trust in the U.S.-France relationship. During the campaign Sarkozy often ended his

stump speeches--evoking Martin Luther King--by calling for a "French dream" of social equality,

social mobility, and equal opportunity, and his first speech as President-elect assured his

"American friends" that they could rely on France's friendship.

After his inauguration, President Sarkozy focused his first months in office on improving

the performance of France's economy through liberalization of labor markets, higher education,and taxes. Sarkozy named Francois Fillon Prime Minister. Jean-Louis Borloo became the

second-highest ranking figure in the government, presiding over an expanded Ministry of

Environment, renamed the Ministry of Ecology and Sustainable Planning.

Legislative elections held on June 10 and 17, 2007 gave the UMP a large parliamentary

majority. The UMP reinforced its ascendance over the Socialists by winning the June 7, 2009

European Parliament election with 27.88% of the vote, an increase of more than 11 percentage

points over 2004. The Socialists finished a distant second, in a virtual tie with Europe Ecology,

the French Green party. In the March 2010 regional elections, the Socialist Party won a majority

of seats in 21 of the 22 regions of mainland France, marking a definitive resurgence for the main

opposition party.

During his first year and a half in office, Sarkozy eliminated income taxes on overtime

hours, lengthened the contribution period for retirees to receive full pensions, and established a

"minimum service" requirement on strike days, among other reforms. He also completed a major

revision of the French constitution, which gave Parliament more oversight responsibility,

particularly with respect to approval of long-term French military deployments abroad. French

and EU analysts stress that longer-term reform measures must focus on reducing the future

burden of ballooning public pension and health care budgets, as well as reducing labor-related


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taxes. Against a backdrop of gloomy economic news starting in late 2008, Sarkozy appears to

have placed his reform agenda on a temporary hiatus. In light of the financial crisis, the Sarkozy

government has been active in pursuing austerity measures in order to reduce government

deficits. Despite low public approval ratings, however, President Sarkozy is governing at a time

when the main opposition, the Socialist Party (PS), is in the minority in both houses of

Parliament.

There are two main categories of legal structures available to businesses in France:

incorporated ones have a legal personality and have a limited duration of 99 years (which is

renewable), and unincorporated ones, which include businesses which have not accomplished

registration formalities, but which the law recognizes because they act as if they were

incorporated and carry on a commercial or economic activity. The information below will onlydeal with the most commonly used of these two types of business structures, i.e.: corporations.

To incorporate a company, certain documents must be filed with the clerk of the

Commercial Court of the place of the companys registered office and the company must be

listed in the relevant corporate register. In addition, a notice of incorporation must be published

in legal bulletins. It should be noted that, if certain conditions of formation are not compliedwith, this can result, in the worst case scenario, in the nullity of the corporation. However,

French law usually provides for a period of time during which the company may comply with the

requirements not fulfilled. This is all the more welcome incorporation in France is more

complicated and time consuming than in typical Common Law jurisdictions.

Classically, one can distinguish between limited liability companies and unlimited

liability companies. Limited liability companies are those where shareholders liability is limited

to their capital contributions. They include SA, SAS, SARL, and EURL. On the contrary,

shareholders of unlimited liability companies are jointly and severally liable for the companys

debts. In other words, their financial exposure is not only limited to their capital contributions,

but can extend to their personal assets as well. This type of company includes the SNC. Two


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types of companies (SCS and SCA) are shuffling these two categories, resulting in an hybrid

company form including two types of shareholders: some whose liability is limited to their

capital contributions, and others whose liability is unlimited.

There are a number of obstacles which a shareholder or an officer of a non EU country will

need to overcome. For instance, a non EU citizen intending to be the Chairman of a corporation

must obtain an administrative authorization in the place in which he will be exercising its

activity. This requirement does not apply to European Union citizens nor to those of a country of

the European Economic Area (EEA) and of a country that is a member of the OCDE (i.e.,

Australia, Canada, Korea, the United States, Japan, Mexico, New Zealand and Turkey).

y Socit Anonyme (SA)The SA is one of the two most common types of corporations in France. For all practical

purposes it may be compared to a corporation in the United States of America.

General Structure

The stated capital of a SA is divided into shares. As a matter of principle, theshareholders liability for the debts and obligations of the SA is limited to their capital

contributions. A SA must have at least seven shareholders, and the law sets no maximum. A

shareholder may be either a legal entity or an individual, a French national or a foreign national.

If the SA trades publicly, the capital must be at least 225,000 . If the SA is not listed on

a stock exchange, the stated capital must be at least 37,000 . Only the latter form of SA will be

discussed below as listed corporations would require significant specific developments and they

are generally not used as an initial investment vehicle.

The shareholders contributions may be made in cash or in kind, such as tangible assets

or intellectual property, but not by way of services and know-how (apports en industrie). An

expert appraiser (Commissaire aux apports) must be appointed by the Commercial Court to

assess the value of the shareholders contributions in kind. Contributions in kind must be


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effected immediately. At least half of the contribution in cash must be paid in immediately, and

the rest must be paid for within five years from the date of the incorporation.

Management Structure

There are two types of management structures possible in a SA, either with a general

manager (Directeur gnral) and a Board of Directors (Conseil dadministration), or a

Directorate (Directoire) and a Supervisory Council (Conseil de surveillance).

In the most traditional and frequent situation, the corporation is managed by a Board of

Directors which appoints the general manager, a natural person. In the dual structure, the

management consists of a Directorate, made up of physical persons who may or may not be

shareholders and who are in charge of the management of the company and a Supervisory

Council made up of either natural persons or legal entities, that must be shareholders and whose

role is essentially to appoint the members of the Directorate and to review their decisions.

Traditional Management Structure

The Board of Directors

Members of the Board of Directors are elected at the General Meeting of shareholders.

There must be between three directors andeighteen directors. However, up to twenty-four

members are allowed in the event the company merges with another one. A director may be

either a natural person or a legal entity. If it is a legal entity, it must appoint a permanent

representative to attend the meetings. The mandate of the directors appointed upon incorporationmay not exceed 3 years, while the mandate of those named subsequently by the General Meeting

of shareholders may not exceed 6 years. A salaried employee may be appointed to the Board, but

a Director may not become a salaried employee.


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Members of the Board must each hold a minimum number of shares (at least one) set in

the articles of incorporation. It should be noted that articles of incorporation are far from being

standardized, although statutory law imposes a number of provisions which must appear

therein.

Termination or revocation of the Board may be exercized at any moment by the

shareholders without cause, within certain limits. Vexatious or injurious revocation may entitle

the revoked party to damages.

The Board determines the course of action of the corporation and oversees its activities. It

convenes the General Meeting of shareholders; adopts the annual and consolidated accounts;drafts the management report; names and revokes the Chairman of the Board, the general

manager and any deputy general manager; and approves the guarantees given on behalf of the

company.

Members of the Board may be held individually or jointly and severally liable to the

corporation or to third parties because of a breach of the articles of incorporation or of laws and

regulations applicable to SAs as well as for grave mismanagement. Criminal liability is incurred

for violations of law committed in the administration and management of the corporation.

The Chairman and the General Manager

The Chairman (Prsident du Conseil dadministration) is elected and may be revoked by

the Board. His compensation is also decided by the Board. In no way does he represent the

company in dealings with third parties. He represents the Board, organizes and supervises its

work, produces a report on internal control and ensures that the corporate bodies function

porperly. Like directors, he may be held personally liable.

The general manager (Directeur gnral) is appointed by the Board which determines his

compensation. He exercises the broadest powers in the company, and represents it in dealings

with third parties. He may bind the company even if his action is beyond the corporate purpose


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(objet social), unless the third party knew or should have known, given the circumstances, that

the action was not within corporate purpose. He maybe be liable for the same reasons as the one

of the directors.

The general manager may be assisted by up to five deputy general managers. The deputy

general manager(s) do not have to be shareholders or directors of the company. Their powers are

determined by the Board of Directors in agreement with the general manager. With regard to

third parties, the deputy general manager(s) has the same powers as the general manager.

The general manager and the deputy general manager(s) may be revoked at any time by

the Board of Directors. However, they may seek damages if their revocation is without justcause.

The Board of Directors may appoint the same individual to the positions of Chairman and

General Manager, which is often the case in practice. Otherwise, the Chairman represents the

Board and the general manager represents the company with regard to third parties and the latter

is vested with the broadest powers in the corporation.

Dual Management Structure

Alternatively, the management of the corporation may be entrusted to a Directorate subject to a

Supervisory Council.

The Directorate is made up of two to five members, either French or foreign individuals.

In an SA with a capital below 150,000 , only one member of the Directorate may be appointed.

Unlike members of the Board of Directors or the Supervisory Council, they do not need to be

shareholders. Members of the Directorate are appointed by the Supervisory Council to serve fora term of three to six years, as set forth in the articles of incorporation, and may be revoked by

the General Meeting of Shareholders or by the Supervisory Council if the articles of

incorporation so provide. Unlike members of the Board of Directors or the Supervisory Council,

the members of the Directorate can only be revoked for cause.


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The Directorate has the broadest powers and binds the company in dealings with third

parties, subject to the powers granted to the General Meeting of shareholders and to the

Supervisory Council. The company is bound even if the action is beyond the corporate purpose

unless the third party knew or should have known so, given the circumstances.

The Directorate is headed by a Chairman or a general manager who is appointed by the

Supervisory Council and who is authorized to represent the company in transactions with third

parties.

The Supervisory Council reviews actions taken by the Directorate. It authorizes, inter

alia, all issuances of securities and guarantees, appoints the members of the Directorate,

determines their compensations, and approves sales of the companys real estate.

Members of the Supervisory Council are elected at the General Meeting of shareholders

and may be revoked in the same conditions as the members of the Board of Directors. The

Supervisory Council is composed of at least three and at the most eighteen members that may be

French or foreign nationals, legal entities or natural persons. Council members may be held

liable individually for their acts, but they are not liable for management acts and they are not

jointly and severally liable for those committed by the Directorate or the Supervisory Council as

a whole. The members of the Supervisory Council may not serve on the Directorate.

Shareholders Rights

Shareholders have a range of rights, such as voting rights and the right to payment of

dividends. The right to vote must be proportional to the number of shares held. Shareholders may

also place questions on the meeting agenda, subject to certain limitations and certain information

must be provided to them.

The shareholders of an SA are required to meet in an Ordinary General Meeting within

six months of the end of each fiscal year in order to approve the companys annual accounts. At

a General Meeting, there must be a quorum of one-quarter and a majority of one-half of the

shareholders in order to, inter alia, appoint and revoke members of the Board, approve the


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companys accounts and decide the distribution of benefits, appoint the statutory auditors, and

more generally, to take any decision which does not modify the articles of incorporation.

To amend the articles of incorporation (such as to the increase or decrease of the stated

capital, to change of the corporate name, or to transform the corporate structure), there must be a

quorum of one-third and a majority of two-thirds of the shareholders, gathered in the

Extraordinary General Meeting. In no way may the liability of the shareholders be changed from

limited to unlimited, even through a change of the corporate structure.

The transfer of shares between existing shareholders is unrestricted; however, the articles

of incorporation may limit the transfer of shares to third parties (right of first refusal, prior boardof directors approval, etc.).

Statutory Auditor

A statutory auditor (commissaire aux comptes) and a deputy statutory auditor

(Commissaire aux comptes supplant) must be appointed by the shareholders for a renewable

term of six years. The statutory auditor is independent from the corporation, even though he is

compensated for his services. He must be impartial in the exercise of his duties.

The auditor is required to issue various financial reports to the shareholders, including an

annual report on the companys financial accounts and an annual report disclosing certain

regulated transactions (conventions rglementes).

The statutory auditor may be held liable to the company or third parties in cases of

inadequate performance

y Socit par Actions Simplifies (SAS)The SAS is a type of corporate structure that was created in 1994 and improved in 1999 to

give more flexibility to the founders in setting the basic rules of the company. This type of

company is increasingly used, especially by small and mid-size businesses. The attractiveness of


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the SAS, in comparison to the SA, has even recently increased due to new requirements imposed

on SAs. Nowadays, SAS are clearly favored by foreign groups which are setting up subsidiaries

in France.

General Structure

In principle, there must be at least two shareholders in an SAS, that may be any

individuals or legal entities, French or foreign. An individual or a corporate entity may be a

shareholder of several SAS. However, the two-shareholder minimum requirement may be set

aside with some specific rule applying.

The minimum stated capital is 37,000 . Shareholders contributions may be made under

the same conditions as in the SA (see above, 1.1). One specificity of SASs, however, is that they

may not be listed on the French stock exchange.

General Management

A SAS provides much more freedom than a SA regarding the internal organization of

powers. The only corporate body required is the Prsident who can be either a corporation or anatural person. There is no obligation for the Prsident to be a shareholder. If the Prsident is a

corporation, it is represented either by the legal representative of that corporation, or by a person

that the legal representative appoints. The Prsident may be a salaried employee of the SAS. The

employment agreement may be entered into after his status as Prsident is secured, which is not

allowed in the SA.

The Prsident is appointed by the shareholders and revoked as set forth in the articles of

incorporation. He represents the corporation when dealing with third parties. His authority to actin the name of the corporation may be broadly defined within the limitation of the commercial

purpose. However, with regard to third parties, he binds the company even if his actions are

beyond the corporate purpose unless a third party knew or should have known so, given the

circumstances.


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The articles of incorporation may provide for the appointment of one or several general

managers, who may be entrusted with the same authority as that of the Chairman regarding third

parties. There may also be a Board of Directors or any other body whose members appointment,

revocation, and authority are to be set forth in the articles of incorporation.

Officers of the SAS (the Prsident and, if applicable, general managers) are civilly and

criminally liable like directors of SAs. When a corporation is itself appointed Prsident or

manager of an SAS, the representatives of the said corporation are held to the same rules and

incur the same civil and criminal liabilities as they would be had they been individually Prsident

or manager.

Shareholders Rights and Powers

Shareholders of a SAS are given considerable freedom in making decisions. The articles

of incorporation determine the conditions in which decisions are taken by the shareholders (e.g.:

in a General Meeting, by videoconferencing, by correspondence, by facsimile, or by written

consent signed by the shareholder). The articles of incorporation also stipulate the information

to be given to the shareholders in view of the meetings.

Shareholders have the usual rights, such as voting rights and the right to payment of

dividends. One of the specificities of the SAS, however, is that proportional voting is not

mandatory. Certain shareholders may have more votes than others, based upon various criteria,

such as the number of shares they hold of course, but also their seniority or status. The articles of

incorporation may also provide that each shareholder may dispose of his number of votes in any

way he pleases. For example, if six resolutions are proposed in the General Meeting of

shareholders and the shareholder has 600 votes, he may use, for example, 450 for one resolution,

100 for another, etc if the articles of incorporation provide so.

The following decisions must be taken by the General Meeting of shareholders of the

SAS: approval of accounts; appointment of the statutory auditor; modification of the stated

capital; review and approval of agreements between the company and its officers or

shareholders; merger, division, and transformation of the SAS into another corporate structure.

Quorum and majority are set forth by the articles of incorporation. Unless otherwise provided by


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the latter, decisions which do not modify the articles of incorporation and those for which

unanimity is not required are decided by a majority of votes.

Certain types of statutory clauses must be decided or modified unanimously, e.g.: the

possibility of exclusion of a shareholder, the change of nationality of the company or the

regulation of the transfer of shares, etc.

The articles of incorporation may subject to an agreement the transfer of shares to a

third party, or even to an existing shareholder or to a parent. Corporate authority to give such

agreement may lie in the Chairman, or more frequently, in the shareholders or in part of the

shareholders. The articles of incorporation may also prohibit any transfer of shares for a periodof time up to ten years and they may provide that such prohibition only applies to certain

shareholders or to sales to certain third parties (a competitor, for example).

Statutory Auditor

The same rules as for the SA apply to statutory auditors of SAS (see above, 1.4).

Socit par Actions Simplifies Unipersonnelle (SASU)

Rules applicable to the SAS apply to the SASU, a special type of SAS which may have a

single shareholder, either a corporation, including another SASU, or an individual.

The minimum stated capital is still 37,000 , of which at least half must be paid upon the

date of subscription. Like a SAS, a SASU may not be listed on a stock exchange.

The sole shareholder may appoint himself as Prsident of the company or appoint

somebody else who may be a corporation or a natural person. The sole shareholder has the same

powers as the collectivity of the shareholders in the SAS (approval of annual accounts,

appointment of the statutory auditor, increase or decrease in the stated capital).

y Socit Responsabilit Limite (SARL)


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The SARL is the most widely utilized form of corporation in France, mainly because, like

the SAS, it has many advantages for small companies, such as low stated capital requirements

and simple rules and regulations by which the shareholders must abide. There is a special type of

SARL with one shareholder only (see 3.6 below). To some extent, it resembles a close

corporation in the U.S. or a private limited company in the UK.

General Structure

A SARL must have at least two and no more that one hundred shareholders. They may be

French or foreign citizens, natural persons or legal entities. A SARL may not be listed on a stock

exchange.

The stated capital of a SARL may be as low as 1 and shareholders contributions maybe made in cash or in kind, such as tangible assets or intellectual property . As for the SA, an

expert appraiser (Commissaire aux apports) must be appointed to issue a report regarding the

value of said contributions. At least one-fifth of the monetary contributions must be paid on the

date of the shares subscription, the rest being paid off within five years of the date of

incorporation. Contributions in the form of services or know-how (apports en industrie) are

possible but any shares issued therefore are subject to special rules, and they are not taken into

account to determine the stated capital of the company.

General Management

A SARL differs from a SA, inter alia, since it is ran by one or several managers (grants),

the number of which being set forth in the articles of incorporation. They may be third parties,

shareholders, or salaried employees if they do not own the majority of shares, but they must be

natural persons (no corporate management). A manager may be a French or foreign national. He

or she is initially appointed by the articles of incorporation and, subsequently, by one or more

shareholders holding more than one-half of the shares. His or her compensation is set likewise. A

Manager may be revoked by the partners of the SARL or by a court decision for just cause. He is

entitled to damages in the event of a revocation without just cause. Unless a shorter term is

specified in the articles of incorporation, a manager is appointed for life in the company.


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The manager has the widest-ranging powers to deal with third parties on behalf of the

corporation. Moreover, like in a SA or SAS, the corporation is bound even by actions that are

outside the corporate purpose unless the third party knew or should have known so, given the

circumstances. The articles of incorporation may limit the authority of the manager with respect

to shareholders. In the absence of a limitation of power, the manager may engage the SARL in

any activity in the interest of the corporation.

A manager may be held civilly and criminally liable for breach of the articles of

incorporation or of laws and regulations applicable to the SARL, and for mismanagement.

Salaried employees, shareholders and even third parties may sue the manager in case of personal

injury. The shareholders have also standing to sue the manager where injury is caused to the

corporation. Criminal liability is incurred for infractions committed in the incorporation,administration, or management of the company.

Shareholders Rights

The way the shareholders of a SARL take their decisions is close to the one in a SA, except

that the articles of incorporation may allow their consultation by correspondence or the adoption

of decisions by unanimous written consent of the partners, which is not possible in a SA.

Voting depends on categories of decisions taken in a SARL:

Ordinary decisions such as approval of accounts, appointment and revocation of the

manager, and other decisions which do not imply a modification of the articles of

incorporation: upon the first vote, a majority of the stated capital is required, if a majority

is not obtained, a decision is made by a majority of shareholders who participated in the

vote, regardless of the number of shareholders having participated in the vote but a higher

majority may be required by the articles of incorporation;


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Extraordinary decisions including modification of articles of incorporation, increase or

decrease in the stated capital, merger, dissolution, etc : decisions must be approved by

holders of shares representing at least 50 % of the stated capital;

Unanimous decisions are required for a change of the place of the incorporation,

transformation into an SAS, SNC, SCS or SCA, etc.

Shares are freely transferable between the shareholders, but approval of a majority of the

shareholders holding at least half of the shares is required in case of transfer to a third party

(unless the articles of incorporation require a larger majority). The articles of incorporation may

provide that a transfer to a spouse, a parent, or a child may be the subject to an agreement. Thearticles of incorporation may also subject the transfer of shares of a shareholder upon death to

approval. In order to transfer shares, a written agreement must be entered into and the transaction

is subject to a registration tax of 4.8 % of transfer price. This tax is, however, subject to a tax

relief equal to the ratio between 23,000 Euros and the total number of shares in the corporation.

Statutory Auditor

A statutory auditor is only necessary if 2 of the 3 following thresholds are met: (i) totalassets of 1,550,000 ; (ii) sales (net of taxes) of 3,100,000 ; or (iii) an average number of

employees exceeding 50. The appointment of a statutory auditor may also be requested from the

commercial court by shareholders representing at least one-tenth of the stated capital of the

SARL.

If a statutory auditor is appointed, the same rules as those applicable in the case of a SA

apply with respect to the performance of his duties.

Entreprise Unipersonnelle Responsabilit Limite (EURL)

An EURL is a SARL with one partner only, which situation may result from a decision

made at its creation or from the acquisition of all the shares by one shareholder.


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The basic regime of the EURL is the same as that of the SARL, with a few differences.

The sole shareholder may be a corporation or a natural person, but not another EURL.

The sole shareholder may be the manager or may appoint a third party as manager.

The rules relating to the notice of General Meetings of shareholders are not

applicable, but the decisions of the sole shareholder must be recorded in the corporate minute

book of the company.

y Socit en Nom Collectif (SNC)The SNC is the oldest type of corporation in France, dating back to 1673. It may be

compared to a UK or a U.S. General Partnership. Such a type of corporate structure suitsparticularly well enterprises with only a very limited number of partners. Many investors faced

with the choice between a SNC and a SARL prefer the latter form. It should however be

emphasized that SNCs are much more flexible than SARLs with respect to the rules governing

corporate life. The required unanimous consent of all the shareholders for to the transfer of ones

shares is often the key factor for choosing such type of company.

A SNC is different from the other types of corporate structures described above in that

the shareholders are jointly and severally liable for all debts and obligations incurred while theyare shareholders. The creditors of the SNC may attach the personal assets of a shareholder should

there not be enough assets in the SNC to pay off the debt.

General Structure

There is a two-shareholder minimum requirement, but no maximum. The shareholders

may be either French or foreign citizens, corporations or natural persons, but all will be deemed

to be business persons, which entails special liabilities.

There is no minimum stated capital required. The stated capital must be divided into

shares. The shareholders contribution may be made in cash or in kind, such as tangible assets or

intellectual property. There is no timing requirement for the payment of shares. The partners


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decide quite liberally whether the payments for the shares must be immediate or may occur by

installments, according to the needs of the corporation.

General Management

All shareholders are deemed managers if the articles of incorporation do not provide

otherwise. The shareholders may appoint one or more managers, individuals or legal persons,

French or foreign nationals. The term of a manager is for the duration of the company, unless

otherwise provided for by the articles of incorporation. If all the shareholders are managers, therevocation of one of them must be decided unanimously. The revocation of a manager-

shareholder who is appointed in the articles of incorporation must be unanimously approved by

the shareholders; for other managers, the decision must be approved by the majority of votes as

set forth by the articles of incorporation. The revocation may also be requested in justice. In all

cases, the revocation must be for cause. Absence of cause may give rise to a claim for damages.

If the manager is a shareholder, he must be registered as a business person. The

managers compensation is either set in the articles of incorporation, or decided by theshareholders.

In their dealings with third parties, the managers bind the corporation within the limits of

the corporate purpose, which means that, unlike in the SA, SAS, or SARL, the company is not

bound by actions which exceed the corporate purpose. Regarding the shareholders, the authority

is determined by the articles of incorporation. In the silence of the articles of incorporation, the

managers can bind the corporation by any action taken in the corporations interest.

Managers may be held civilly liable for breach of law or of the articles of incorporation

as well as for mismanagement. Managers may be held criminally liable for breaches of general

criminal law (breach of trust, fraud, etc.) and for certain breaches of company law

(mismanagement of corporate funds, etc.).


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Shareholders Rights

The shareholders supervise the management, in addition to their other traditional rights,

such as voting rights and the right to payment of dividends.

A formal meeting of shareholders is required for the approval of annual accounts and

when requested by one of the shareholders. In all other cases, the articles of incorporation may

provide for a consultation by correspondence or the adoption of decisions by unanimous written

consent of the shareholders.

The shareholders may take decisions such as the approval of accounts, appointment of the

statutory auditor, modification of the stated capital, approval of certain agreements, merger, and

division. Quorum and majority rules are set forth in the articles of incorporation.

Certain decisions must be approved unanimously, e.g.: revocation of a manager if all

shareholders are managers or if the shareholder is appointed manager in the articles of

incorporation; the approval of a transfer of shares; the transformation into an SAS; the

continuation of the company despite the bankruptcy of a partner.

The shares of SNCs are not freely transferable. A shareholder in an SNC may only

transfer his shares with the prior approval of all others. Absent such approval, the transfer ofshares may not be completed. However, if the articles of incorporation allow the continuation of

the corporation after a shareholders death, the shares are transferred to the surviving

shareholder, or to the deceaseds heirs, or to a designated third party.

Statutory Auditor

A statutory auditor is only necessary in a SNC when 2 of 3 triggers applicable to the

SARLs are surpassed (see above, 3.4). Also, such appointment may be requested in Court by anyshareholder.

If a statutory auditor is appointed, the same rules as for a SA apply.


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y Socit en Commandite Simple (SCS)SCSs are unusual. Like the SCAs (see below) they most closely resemble limited

partnerships.

General Structure

There must be at least 2 shareholders, with rules similar to those applicable to a general

partner (associ commandit) and a limited partner (associ commanditaire). There is no set

maximum of shareholders. The general partners are jointly and severally liable for debts of the

company and also act as managers (grants), if the articles of incorporation do not provide

otherwise. The limited partners invest in the SNC and their liability is limited to their

contribution as long as they are not involved in the management of the company. The

shareholders may be French or foreign individuals or entities.

There is no minimum stated capital requirement. The contributions of shareholders may

be made in cash, in kind, such as tangible assets or intellectual property, and by way of servicesand know-how (apart en industries). However, limited partners may not contribute know-how.

Contributions are paid in as required by the articles of incorporation.

General Management

All general partners are managers except as otherwise provided in the articles of

incorporation. The manager(s) may be individuals or entities chosen among the shareholders.

The rules concerning appointment, termination of the authority of a manager of an SCS are thesame as those applicable to that of a SNC.

The limited partners have no management authority in the corporation and may not bind

the corporation with regard to third parties.


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Shareholders Rights andP

owers

A meeting of the partners of an SCS is required:

(i) To approve the annual accounts, and

(ii) Upon request of a general partner or of a of the limited partners.

In all other cases, the decisions may be taken by correspondence as in the SNC (see above, 4.3).

Regarding ordinary decisions, the majority is set forth in the articles of incorporation.Extraordinary decisions (i.e., the modification of the articles of incorporation) must be approved

by all the general partners and a majority of the limited partners. Changing the companys

nationality and/or its transformation into an SAS requires a decision of all shareholders.

As a general rule, interests cannot be transferred without the unanimous consent of all

shareholders. However, the articles of incorporation may authorize transfers of the interests of

limited partners between shareholders and may allow transfers of all interests to third parties

with the unanimous consent of all general partners and consent of a majority of limited

partners.

Statutory Auditor

The rules are the same as those applicable to SNCs.

y Socit en Commandite par Actions (SCA)The SCA, dating from 1807, was a model for the limited partnership. However, the SCA,

like the SCS, has fallen into disuse mainly because of the wide preference for SAs and SARLs.

SCAs are still used, notably, by family-owned businesses as they allow to keep control of the

corporate affairs even when the family members become minority shareholders.


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General Structure

A SCA is governed by the rules applicable to SCSs and SAs, with certain limitations and

specificities. Like a SCS, a SCA comprises one or more general partners (associs

commandits) who generally act as managers. The limited partners (associs commanditaires)

hold shares, which give them rights in the company, but they may not manage it. There must be

at least three limited partners and one general partner. The general partners are jointly and

severally liable for the debts of the company. The limited partners are liable for the corporate

debts up to the amount of their contribution to the capital.

Like in the SA, the minimum stated capital requirement for a SCA is 37,000 if the

company is not listed, and 225,000 if the it trades publicly. The stated capital is divided into

freely negotiable shares.

The contributions of shareholders may be made in cash, in kind, such as tangible assets or

intellectual property, or by way of services and know-how (apports en industrie) for the general

partners only, but shares may not be issued in exchange of such contributions. An expertappraiser (Commissaire aux comptes) must be appointed in court to assess the value the

contributions in kind. He must issue a report on the value of each contribution in kind, like in a

SA. Contributions in kind must materialize or be paid for immediately, at least half of the

contributions in cash must be paid immediately, and the balance must be paid within five years

from the date of registration of the corporation.

Management

A SCA is headed by one or more managers, individuals or legal entities, appointed by the

articles of incorporation or subsequently at a General Meeting of shareholders with the approval

of all general partners. Managers are generally chosen among the general partners, but they

need not be affiliated with the SCA. A limited partner may not be the manager of a SCA. As in


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the case of a SNC, a manager may be a French or foreign individual or an entity. He may be

revoked under the conditions stated in the articles of incorporation or, in the silence of the

articles of incorporation, by the Commercial Court upon request of a shareholder or of the

corporation for cause only.

The manager exercises the broadest powers in the company, and represents the company

in dealings with third parties. With regard to shareholders, the articles of incorporation may limit

the managers powers but these limitations cannot be relied upon vis--vis third parties. With

respect to third parties, he binds the company even if his actions are beyond the corporate

purpose unless the third party knew or should have known so, given the circumstances. Like the

Board of Directors in a SA, the manager convenes the General Meeting of Shareholders, sets the

annual accounts, etc. He is liable like the directors in a SA.

The supervisory council includes at least three limited partners who are

appointed by the articles of incorporation or by the limited partners and who supervise the

management of the company.

Shareholders Rights

With the exception of the appointment of members of the Supervisory Council, all

actions taken by the shareholders of a SCA require two levels of approval : that of the limited

partners at the General Meeting of Shareholders, and that of the general partners at a formal

meeting or by written consent. Decisions of general partners may be taken in the same manner

as in a SNC. Unless otherwise stated in the articles of incorporation, decisions can only be taken

by a unanimous vote of the general partners. The only exception to this rule relates to the

transformation of the company into an SA or a SARL. Meetings of limited partners are subject

to the same rules as those applicable in an SA.

Financially, a general partner is treated like in a SNC. Regarding the management of

the company, the general partner plays an active role : except as otherwise provided in the

articles of incorporation, his approval is necessary for the designation of managers; he can

oppose the compensation granted to the manager or managers at the General Meeting of

shareholders if it was not set in the articles of incorporation; he approves the corporate accounts


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and resulting taxation; and he holds veto rights to any modification of the articles of

incorporation.

Statutory Auditor

The same rules as for SAs apply.

y Succursale (branch)The pros and cons of choosing a French branch office over an incorporated subsidiary

should be weighed carefully before a decision is made, including legal liabilities, tax

consequences and formalities to be complied with.

General Structure

A simple branch, the succursale is not separated from the foreign entity, it is part of it for

any legal or tax purpose. Filing and publicity for a branch are similar to those required in setting

up a SA or a SARL. In addition, a certified translation of the foreign corporations articles of

incorporation must be filed with the Commercial Court.

Management

A manager is designated to operate the branch. His/her authority is determined by the

corporation, subject to the same requirements as French company managers.

Doing Business in France

France has always played a crucial part in both European and World events. Afterexperiencing two World Wars, the loss of an Empire and numerous political and social

upheavals, France has emerged as a vital component in the European Community with a

strong sense of pride and heritage. Today, the French business market boasts a variety of

international investors and is an important world supplier of agricultural and industrialproducts.

The country also demonstrates one of the highest rates of economic growth in


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Europe. However, for those organisations wishing to enter the French business environment,

an understanding of the countrys culture is a vital skill for your company to possess.

Working practices in France

Arriving for business appointments 10-15 minutes after the scheduled time is not

uncommon, but you should always aim to arrive at the stated time. If you cannot,

you will be expected to call them to let them know.

Generally speaking in French business culture, deadlines are open to negotiation but

this is fast changing as French businesses incorporate more Anglo-Saxon business

practices and stricter attitudes to time.

Business organisations in France are highly organised and well structured. Rules and

administrative practices tend to be favoured over flexibility, particularly in the public

sector.

Structure and hierarchy in French companies

There exists a strong, vertical hierarchy in French business culture which respects the

Cartesian way of thinking. Working with all levels of the business organisation will

ensure your success.

In French business culture, the highest individual in authority still tends to be the

only one who can make the final decision.

Working relationships in France

The French have an inherent sense of privacy exhibited in their definite distinction

between business and personal life. Dont expect to be invited out in the evenings

after work as most people will go home to their families.


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Relationships are an important part of French business culture, and you will often

spend a few minutes getting to know your colleagues before discussing business.

Business practices

In French business culture it is customary to only use first names when invited to do

so. Sometimes the French will introduce themselves by saying their surname first,

followed by their Christian name.

Lunch is one of the best places to forge business relationships in France, but business

lunches are not as common as they used to be. If invited to one, it is always polite to

accept.

A business meeting should begin and end with a brisk handshake accompanied by an

appropriate greeting and the exchanging of business cards.

Despite the formality of French business culture, it is not uncommon practice to stray

from the agenda during meetings. Initial meetings are often dedicated to information

sharing and discussion, rather than reaching final decisions.

Business Etiquette (Dos and Donts)

y DO maintain an air of formality and reserve during all business practices and at alllevels within the business, using titles wherever possible.

y DO make direct but moderate eye contact with your French business colleagues.

y DO try to learn a few basic French phrases and use them whenever possible. Yourefforts will not go unnoticed.


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y DONT discuss your family or other personal matters during negotiations.

y DONT be put off by frequent differences in opinion and rigorous debate duringbusiness negotiations. The French will appreciate your ability to defend your

position.

y DONT rush or display signs of impatience with your French counterparts. TheFrench take their time before arriving at a decision.

Economic Condition in France

With a GDP of $2.66 trillion, France is the worlds fifth-largest economy. It has

substantial agricultural resources, a large industrial base, and a highly skilled work force. A

dynamic services sector accounts for an increasingly large share of economic activity and is

responsible for nearly all job creation in recent years. Real GDP fell by 2.5% in 2009. While

growth picked up in the course of 2009, with 1.2% growth in the third quarter and 2.0% in the

fourth quarter, it slowed down through the first quarter of 2010 (0.1%). The European

Commission, Organization for Economic Cooperation and Development (OECD), and

International Monetary Fund (IMF) have forecast GDP growth between 1.3% and 1.7% by theend of 2010; they estimated slightly higher growth for 2011, between 1.5% and 2.1%.

Government economic policy aims to promote investment and domestic growth in a

stable fiscal and monetary environment. Creating jobs and reducing the high unemployment rate

has been a top priority. The unemployment rate in metropolitan France increased to 9.5% in the

first quarter of 2010, up from 9.2% in the third quarter of 2009. France joined 10 other European

Union countries in adopting the euro as its currency in January 1999. Since then, monetary

policy has been set by the European Central Bank in Frankfurt. On January 1, 2002, France,

along with the other countries of the euro zone, dropped its national currency in favor of euro

bills and coins.

Despite significant reform and privatization over the past 15 years, the government


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continues to control a large share of economic activity: Government spending, at 55.6% of GDP

in 2009, is among the highest in the G-7. The government continues to own shares in

corporations in a range of sectors, including banking, energy production and distribution,

automobiles, transportation, and telecommunications.

In 2008, in a move to advance France's competitiveness, the National Assembly passed

four bills introduced by the French government to modernize the economy and improve the labor

market. In October 2007, under President Nicolas Sarkozy's impetus, overtime work beyond the

35-hour work week was exempted from income taxes and payroll taxes, a move to encourage

work and to increase work time. In July 2009, meanwhile, the French Parliament approved a

controversial bill allowing more businesses to stay open on Sundays. Membership in France's

labor unions accounts for approximately 5% of the private sector work force and is concentratedin the manufacturing, transportation, and heavy industry sectors. Most unions are affiliated with

one of the competing national federations, the largest and most powerful of which are the

communist-dominated General Labor Confederation (CGT), the Workers' Force (FO), and the

French Democratic Confederation of Labor (CFDT).

France has been very successful in developing dynamic telecommunications, aerospace,

and weapons sectors. With virtually no domestic oil production, France has relied heavily on the

development of nuclear power, which now accounts for about 80% of the country's electricity

production.

Trade

France is the second-largest trading nation in Western Europe (after Germany). France

ran a $61.2 billion trade deficit in goods (Customs basis) in 2009. Total trade in goods for 2009

amounted to $1.006 trillion, over 53% of GDP, 61% of which was with the other EU-27

countries. In 2009, U.S.-France trade in goods and services totaled $154 billion. U.S. industrialchemicals, aircraft and engines, electronic components, telecommunications, computer software,

computers and peripherals, analytical and scientific instrumentation, medical instruments and

supplies, and broadcasting equipment are particularly attractive to French importers. Total

French trade of goods and services was $1.276 trillion in 2009.


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Principal French exports to the United States are aircraft and engines, beverages,

electrical equipment, chemicals, cosmetics, and luxury products. France is the eighth-largest

trading partner of the United States.

Agriculture

France is the European Union's leading agricultural exporter, accounting for about 17%

of all agricultural land within the EU-27. The share of agriculture value-added in GDP has

shown a steady decline since the early 1980s, representing less than 1.2% of France's GDP in

2009. Agricultural production not including subsidies fell 8.5% from the preceding year to 60.6

billion ($80 billion) in 2009. Northern France is characterized by large grain farms. Dairy, pork,

poultry, and apple production is concentrated in the western region. Beef production is located in

central France, while the production of corn, fruits, vegetables, and wine ranges from central tosouthern France. France is expanding its forestry and fishery industries. France remains

extremely cautious about the cultivation of genetically modified (GM) plants at the domestic and

EU levels. France is a proponent of the European preference principle and is attentive to

protecting its interests in further agricultural trade liberalization at the EU and World Trade

Organization (WTO) levels.

France is the world's second-largest agricultural producer, after the United States. The

destination of 70% of its exports is other EU member states. Wine and beverages, wheat, meat,

and dairy products are the principal exports. The United States, the sixth-largest exporter to

France in recent data, faces stiff competition from domestic production, other EU member states,

and third countries. U.S. agricultural exports to France--totaling $1.28 billion in 2008--consisted

primarily of tree nuts, planting seeds, hides and skins, tobacco, red meats, seafood, hardwood

lumber, and grapefruits. French agricultural exports to the United States amounted to $2.3 billion

in 2008, half of it being wine and spirits.

Industry

Leading industrial sectors in France are telecommunications (including communication

satellites), aerospace and defense, ship building (naval and specialist ships), pharmaceuticals,

construction and civil engineering, chemicals, and automobile production.


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Research and development spending is also high in France at 2.26% of GDP, the fourth highest

in the OECD.

Energy

France is the world-leading country in nuclear energy, home of global energy giants

Areva, EDF and GDF Suez: nuclear power now accounts for about 78% of the country's

electricity production, up from only 8% in 1973, 24% in 1980, and 75% in 1990. Nuclear waste

is stored on site at reprocessing facilities. Due to its heavy investment in nuclear power. France is

the smallest emitter of carbon dioxide among the seven most industrialized countries in the

world.

In 2006 of electricity in France amounted to 548.8 TWh, of which:

y 428.7 TWh (78.1%) were produced by nuclear power generationy 60.9 TWh (11.1%) were produced by hydroelectric power generationy 52.4 TWh (9.5%) were produced by fossil fuel power generationy 21.6 TWh (3.9%) by coal powery 20.9 TWh (1.1%) by natural gas powery

9.9 TWh (1.8%) by other fossil fuel generation (fuel oil and gases by-products of industry

such as blast furnace gases)

y 6.9 TWh (1.3%) were produced by other types of power generation (essentially waste-to-energy and wind turbines))

y The electricity produced by wind turbines increased from 0.596 TWh in 2004, to 0.963TWh in 2005, and 2.15 TWh in 2006, but this still accounts only for 0.4% of the total

production of electricity.

In November 2004, EDF (which stands for Electricit de France), the world's largest utility

company and France's largest electricity provider, was floated with huge success on the French

stock market. Notwistanding, the French State still keep 70% of the capital.


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Tourism

France is, by far, the world's top tourist destination with more than 81.9 million foreign

tourists in 2007, way ahead of Spain (58.5 million in 2006) and the United States (51.1 million in

2006). This 81.9 million figure excludes people staying less than 24 hours in France, such asnorthern Europeans crossing France on their way to Spain or Italy during the summer.

France features cities of high cultural interest (Paris being the foremost), beaches and seaside

resorts, ski resorts, and rural regions that many enjoy for their beauty and tranquillity (green

tourism). France also attracts many religious pilgrims to Lourdes, a town in the Hautes-Pyrnes

dpartement, that hosts a few million visitors a year.

Weapons industry

France is the fourth largest weapons supplier in the world. The French arms industry's

main customer, for whom they mainly build warships, guns, nuclear weapons and equipment, is

the French Government. Furthermore, record high defense expenditure (currently at 35 billion),

which was considerably increased under the government of Prime Minister Jean-Pierre Raffarin,

have contributed to the success of the French arms industries. In addition, external demand plays

a big part in the growth of this sector: for example, France exports great quantities of weaponry

to the United Arab Emirates, Brazil, Greece, India, Pakistan, Taiwan, Singapore and many

others.

Legal Condition in France:

The constitution of the Fifth Republic was approved by public referendum on September

28, 1958. It greatly strengthened the powers of the executive in relation to those of Parliament.

Under this constitution, presidents were elected directly for a 7-year term. Beginning in 2002, the

presidential term of office was reduced to 5 years, and a constitutional reform passed on July 21,

2008 limits presidents to two consecutive terms in office. The next presidential and legislative

elections are scheduled for 2012.


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The main components of France's executive branch are the president, the prime minister

and government, and the permanent bureaucracies of the many ministries. The president names

the prime minister, presides over the cabinet, commands the armed forces, and concludes

treaties. The president can submit questions to a national referendum and can dissolve the

National Assembly. In certain emergency situations, with the approval of Parliament, the

president may assume dictatorial powers and rule by decree. Led by a prime minister, who is the

head of government, the cabinet is composed of a varying number of ministers, ministers-

delegate, and secretaries of state. Traditionally, presidents under the Fifth Republic tended to

leave day-to-day policy-making to the prime minister and government, and the 5-year term of

office was expected to make presidents more accountable for the results of domestic policies.

Nicolas Sarkozy has been a hands-on manager and policymaker.

Parliament meets for one 9-month session each year. Under special circumstances the

president can call an additional session. Under the constitution, the legislative branch has few

checks on executive power; nevertheless, the National Assembly can still cause a government to

fall if an absolute majority of the total Assembly membership votes to censure. The Parliament is

bicameral, with a National Assembly and a Senate. The National Assembly is the principal

legislative body. Its deputies are directly elected to 5-year terms, and all seats are voted on in

each election. Senators are chosen by an electoral college and, under new rules passed in 2003 to

shorten the term, serve for 6 years, with one-half of the Senate being renewed every 3 years. (As

a transitional measure in 2004, 62 Senators were elected to 9-year terms, while 61 were elected

to 6-year terms; subsequently, all terms will be 6 years.) The Senate's legislative powers are

limited; the National Assembly has the last word in the event of a disagreement between the two

houses. The government has a strong influence in shaping the agenda of Parliament, although the

constitutional reform passed in July 2008 granted new authority to the Parliament to set its own

agenda. The government also can declare a bill to be a question of confidence, thereby linking its

continued existence to the passage of the legislative text; unless a motion of censure is

introduced and voted, the text is considered adopted without a vote. The constitutional reform

passed in July 2008 limited the process to the vote of the national budget, the financing of the

social security, and to one bill per session of the Parliament. As of September 2009, impact


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assessment is mandatory for all draft laws going to the Council of State and the Parliament.

A distinctive feature of the French judicial system is that the Constitutional Council

protects basic rights when they might be potentially violated by new laws, and the Council of

State protects basic rights when they might be violated by actions of the state. The Constitutional

Council examines legislation and decides whether it conforms to the constitution. Unlike the

U.S. Supreme Court, it considers only legislation that is referred to it by Parliament, the prime

minister, or the president. Moreover, it considers legislation before it is promulgated. The

Council of State has a separate function from the Constitutional Council and provides recourse to

individual citizens who have claims against the administration. The Ordinary Courts--including

specialized bodies such as the police court, the criminal court, the correctional tribunal, the

commercial court, and the industrial court--settle disputes that arise between citizens, as well asdisputes that arise between citizens and corporations. The Court of Appeals reviews cases judged

by the Ordinary Courts.

Traditionally, decision-making in France has been highly centralized, with each of

France's departments headed by a prefect appointed by the central government. In 1982, the

national government passed legislation to decentralize authority by giving a wide range of

administrative and fiscal powers to local elected officials. In March 1986, regional councils were

directly elected for the first time, and the process of decentralization continues, albeit at a slow

pace.

In academic terms, French law can be divided into two main categories: private or

judicial law and public law.

Judicial law includes, in particular:

y civil lawy criminal law

Public law includes, in particular:

y administrative law


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y constitutional law

Civil Law

The term civil law in its general sense refers to private law, e.g., corporate law and thelaw of contracts, and should be distinguished from the French legal system as a whole, also

known as civil law. The body of statutes and laws governing civil law and procedure are set out

in the Civil Code of France. Article 5 of the Civil Code specifically prohibits the practice of case

law, while Article 4 provides for the punishment of judges who refuse to give sentence if there is

insufficient legal material on the idea that it is a refusal of justice.

Basic civil litigation concerning private individuals is dealt with by a local court, known

as a Tribunal d'Instance, or by a regional or departmental court known as a Tribunal de GrandeInstance (TGI), depending on the importance of the case. Commercial and business law is

administered through institutions known as Tribunaux de commerce. These are known as "first

degree courts".

Appeals are heard in a Cour d'Appel or Court of Appeal, a "second degree court". In

France, there is a fundamental right of appeal in all cases. In exceptional circumstances,

judgements of the Appeal Court can be contested at the highest level, the Cour de Cassation, the

French Supreme Court in matters of private law.

Everyday offences and petty criminal matters are generally dealt with either by a Juge de

proximit (a local magistrate) or a Trib

IM france study

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