Sale and acquisition of industrial activities - Environmental issues

Under company law, the transfer or acquisition of industrial activities can be carried out in a variety of legal ways, the main ones being as follows:

• acquisition of shares in the company operating the business concerned;

• acquisition of land and movable assets ;

• the acquisition of the business or the contribution of the business as part of a partial asset contribution.

The choice of one or other of these methods depends on a number of factors (financial and tax in particular), as well as on the objective underlying the acquisition, i.e. whether or not to continue operating the industrial business.

A wide range of parameters therefore come into play in determining the risks and responsibilities weighing on each of the parties (seller or buyer), as well as the possibilities for contractually adjusting them. Mergers and acquisitions law, which is strongly influenced by Anglo-Saxon practice in the case of the largest transactions or those involving foreign players, generally provides for a period of due diligence prior to the completion of the acquisition. During this period, the buyer's advisors will examine the seller's declarations in various fields (financial, accounting, tax, employment, legal, etc.), in order to verify them and detect any risks, which will enable the buyer to make a better-informed acquisition decision, reduce the price or amend contractual clauses, particularly those relating to the seller's guarantee of liabilities.

In this context, the practice of environmental audits, which emerged in the United States in the 1970s, has become so widespread as to be an essential part of any acquisition of land or industrial sites.

This practice has also developed in Europe and France, as awareness has grown that environmental risks and liabilities can have very heavy financial consequences (site remediation can cost several tens of millions of euros), leading to administrative liability (e.g. non-compliance with regulations on classified facilities), civil liability (recourse from neighbors) or criminal liability (e.g. water pollution).

It should be noted that there is no legal obligation to carry out an environmental audit in connection with a sale or acquisition. Indeed, there are few obligations in this area under environmental law. Article L. 514-20 of the Environmental Code, for example, imposes an information obligation on the seller of industrial land in certain cases. However, this obligation only applies to the sale of land, not company shares. It has been ruled that this article does not apply to the sale of land on which a classified facility is currently...