On September 29, 2026, France’s Criminal Chamber of the Cour de Cassation ruled that corporate mergers cannot be classified as fraud simply because they occur after a criminal investigation begins, requiring courts to establish a precise set of indices demonstrating fraudulent intent.
The Bottom Line
- The Cour de Cassation ruled that a merger cannot be branded as procedural evasion without a detailed matrix of suspicious indices.
- The decision directly impacts pre-2020 corporate restructurings where prosecutors attempt to establish criminal continuity.
- Lower courts must now meticulously document economic context, temporal triggers, and corporate ties rather than relying on chronological coincidence.
The November 2018 Merger and the Fatal Workplace Accident
The legal challenge originated from a workplace fatality on a construction site. A company had provided a crane to a third party to lift material pallets. During the operation, falling boards killed one worker and severely injured two others. Following the incident, authorities placed the company under formal investigation for involuntary homicide and workplace injuries.
While that judicial inquiry was active, the company underwent a fusion-absorption operation on November 26, 2018. This transaction occurred prior to a major 2020 jurisprudence shift that officially allowed prosecutors to pursue an absorbing company for offenses committed by an absorbed entity prior to the merger, provided an economic and functional continuity existed.
The Bordeaux Court Ruling and the Allegation of Procedural Evasion
Prosecutors subsequently targeted the absorbing entity and several former employees, securing convictions in the correctional tribunal. On May 28, 2024, the Court of Appeal of Bordeaux upheld those convictions. According to the appellate judges, the 2018 merger had no operational purpose other than shielding the absorbed firm from active prosecution and terminating public action.
Challenging this finding, the defense brought the case to the Cour de Cassation. The appellants argued that the appellate court had inferred fraudulent evasion solely from the timeline of the corporate restructuring while an investigation was pending, omitting any factual inquiry into the actual mechanics or evidence of fraud.
The Criminal Chamber Restricts Procedural Fraud Characterization
Publishing its decision in the official Bulletin, the Criminal Chamber partially quashed the appellate ruling. The high court reaffirmed that abuse of law remains the sole legal pathway to transfer criminal liability for mergers executed before the landmark 2020 jurisprudence shift.
However, the court censured the Bordeaux judges for failing to outline a precise matrix of indices—such as the structural links between the entities, the exact timing of the deal, or the surrounding economic context—necessary to prove intent. Without a rigorous factual framework, labeling a standard corporate merger as a procedural escape vehicle fails to meet the threshold of legal certainty.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
