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Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) must be transposed before 9 June 2018 into the legislation of the Member States.

This was the purpose of the tabling of the bill by the group of LREM (La République en Marche) deputies on 19 February 2018 aiming to introduce into the French commercial Code a new title V in book I formed of articles L 151-1 to L 153-2.

This proposed law retains a broad definition of the concept of trade secrets, which has generated a number of criticisms from journalists and whistleblowers, committed to respect for freedom of information.

In the current state of the proposal, a number of exceptions to the protection of trade secrets has been provided for. As for measures to implement its protection, the proposed law formulates a civil liability regime with specific procedural provisions.

A wide definition:

The proposed law reprises the three criteria set in article 2 of the directive:

Article L 151-1 provides that:

Is protected, as trade secret, any information presenting all the following characteristics:

It is not, in itself or in the exact configuration and assembly of its elements, generally known or easily accessible to a person acting in a sector or a field of activity usually dealing with this category of information;
It has commercial value because it is secret;
It is the object by its lawful holder of reasonable protective measures to preserve its secrecy.

It is stated in the explanatory memorandum of the proposed law, what is meant by commercial value: it is the information which constitutes for its holder an element of his scientific and technical potential, his economic or financial interests, his strategic positioning or competitiveness.

Exemptions provided for in article L 151-6 for the purpose of protecting the freedom of information:

In the first place, protection of trade secrets will yield to the general public interest or the protection of a legitimate interest recognised by Union or national law, which includes the protection of public order, public safety, public health as well as the protection of employees in their relations with their representatives.

Secondly, article L 151-6 sets out the cases of exemption allowing the protection :

Journalists :

– the exercise of the right to freedom of expression and communication in particular, respect for freedom of the press,

However, some journalists have expressed their concern on the definition of trade secrets which, by its scope, could cover any information internal to the company.

Whistleblowers:

the disclosure in good faith of misconduct, wrongdoing or unlawful activity for the purpose of protecting the general public interest, including the exercise of the whistleblowing mechanism, as defined in article 6 of law n ° 2016-1691 of 9 December 2016 relating to transparency, the fight against corruption and modernisation of the economic life.

Some have pointed out that whistleblowers, unlike journalists, will now have to prove their good faith in order to benefit from legal protection, and have some concerns because of the vagueness of this notion.

Employees:

Trade secrets are not protected when:

– Obtaining trade secrets occurred in the exercise of the right to information and consultation of employees in the company,

– disclosure of the trade secrets by the employees to their representatives intervened within the framework of the legitimate exercise of the latter of their functions, as far as this disclosure was necessary to this exercise.

This text remains silent as to whether employees, when they are not affected by the consultation procedures established by labour law, could benefit from this exception;

– what about the information gathered within the governance bodies, such as the board of directors or the executive board in the case where employees sit as directors?

As to the legal regime, the proposed law provides for a civil remedy.

As pointed out by the French Council of State in its opinion of 15 March 2018, referring to a previous opinion delivered in 2011, it appeared that the broad definition of trade secrets does not lend itself to integration into our criminal law of a new offense taking into account the principle of the strict interpretation of criminal law and respect of the constitutional principle of legality of offenses and penalties.

Thus, any breach of trade secrets may incur the civil liability of its author. The civil judge may prescribe, in particular subject to penalty, any proportionate measure likely to prevent or stop a breach of trade secrets, such as the recall of products resulting from the breach of trade secrets or their destruction. In order to fix the quantum of the damages, the judge will take into account the economic damage but also the moral damage and the profits made by the author of the breach.

Finally, the proposed law introduces specific procedural rules aimed at limiting the disclosure of documents.

This bill is currently being considered at first reading by the Senate in its regular session of 18 April 2018. It will be necessary to wait a few more weeks to know the final outline of trade secrets and the measures aiming to protect it. ensuring respect for freedom of information.

Faced with the risk of the spread of the COVID 19 virus, temporary adjustments were made by Order n°2020-321 of 25 March 2020 to the time limits and procedures for the general assemblies of a large number of structures, in particular for civil and commercial companies.
➤ Among these measures affecting SMEs closing their accounts between 30 September 2019 and 24 June 2020 are, in particular :
– the extension by three months of the deadline for the presentation of annual accounts by the management bodies to the shareholders. However, this extension does not apply to companies that have appointed an auditor when the auditor has issued his report on the annual accounts before 12 March 2020 ;
– the communication of documents to the shareholders for the general assembly approving the accounts may be carried out by electronic means;
– If the general assembly is convened in a place affected by an administrative measure restricting or prohibiting collective gatherings for health reasons on the date of the invitation or on the date of the meeting, the governing body may decide that the assembly will be held without their members or persons such as the statutory auditor or representatives of staff representative bodies attending the meeting or may use telephone or audiovisual conferencing. This type of measure shall not affect the voting rights of members, their right to information, the right to ask written questions or to request the inclusion of questions on the agenda in public limited companies, for example.
– the use of videoconferencing is facilitated to allow members to participate in general assemblies, irrespective of statutory clauses that might limit its use,
– the use of written consultation for decision-making in meetings is possible, including for meetings deciding on the annual accounts.
These measures are temporary and apply to shareholders’ meetings and meetings of collegial administrative, supervisory and management bodies held from March 12, 2020 until July 31, 2020, unless this deadline is extended to a later date set by decree and no later than November 30, 2020.
➤ Lastly, Order 2020-306 of 25 March 2020 on the extension of deadlines during the health emergency period and the adaptation of procedures during the same period introduces a mechanism for extending terms and deadlines that is likely to have a significant impact on the conduct of a certain number of company law transactions.
This concerns deadlines that expire between 12 March 2020 and the expiry of a period of one month from the end of the state of health emergency declared and, if necessary, extended.
Pursuant to Article 2 of this Order, the time limits are extended from the end of the period of health emergency for the duration that was legally stipulated, up to a maximum of two months. Thus the act or formality performed, the term of which expires during the period of health emergency, will not be considered late if it is performed within the additional two-month period.
In practice, this concerns oppositions filed by a creditor to the Commercial Court concerning a company that has undertaken since March 12, 2020, for example, a decrease of capital, a merger-absorption, a dissolution of the company caused by the fact that all the shares have come to be held by a single shareholder.
The application of this additional period will therefore add additional uncertainty for the completion of a certain number of standard corporate restructuring operations, by delaying the possibility for shareholders or managers to record the final implementation of decisions adopted before 12 March 2020.

Trade secrets confronted to freedom of information : on the proposed law

The consequences of the COVID 19 epidemic for corporate law in France

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