A bond contract is not bought, it is performed: on the day the issuer stops paying, only its clauses count, and the first question is not what they provide for but whether the issue was valid. Nullity is narrow in a société par actions (joint-stock company), where it strikes a single verification requirement; it is broad in a société à responsabilité limitée (SARL, the French private limited company), where failure to meet any one of the conditions of issue triggers it. A clause headed “guarantee” is then worth no more than the solvency of the party giving it and the assets it bites on — and, unless otherwise agreed, the garantie autonome (independent guarantee) does not follow the security that changes hands. Finally, as soon as an issue has several holders, the représentants de la masse (the bondholders' representatives) authorised by the general meeting alone have standing to defend the common interests.
Was the bond issue valid?
What conditions must a société par actions satisfy in order to issue bonds?
A société par actions which has not drawn up two duly approved balance sheets must have the issue preceded by a verification of its assets and liabilities, unless the issue is guaranteed by a company which has drawn up two, and it is that requirement which the provision penalises with nullity.
The penalty opens the provision: « A peine de nullité des contrats conclus ou des obligations émises, l'émission d'obligation par une société par actions n'ayant pas établi deux bilans régulièrement approuvés par les actionnaires doit être précédée d'une vérification de l'actif et du passif » [on pain of nullity of the contracts entered into or of the bonds issued, the issue of bonds by a société par actions which has not drawn up two balance sheets duly approved by the shareholders must be preceded by a verification of its assets and liabilities] (C. com. art. L. 228-39). Commissaires (the auditors appointed for that verification) designated by the body having authority to decide on or to authorise the issue carry it out, and their report is submitted to that body « préalablement à sa décision ou à son autorisation » [prior to its decision or its authorisation]. The provision exempts from it the issue of bonds « qui bénéficient de la garantie de sociétés ayant établi deux bilans régulièrement approuvés par les actionnaires » [which have the benefit of a guarantee from companies that have drawn up two balance sheets duly approved by the shareholders], as well as the issue of bonds secured by a pledge of debt claims on the State or on other public bodies.
The fourth paragraph prohibits the issue « aux sociétés dont le capital n'est pas intégralement libéré » [to companies whose share capital is not fully paid up], subject to two reservations relating to employees: unpaid shares reserved for them, or bonds issued in order to be allotted to them under profit-sharing. But the words « A peine de nullité » [on pain of nullity] govern the first paragraph, that of the verification: their extension to this prohibition does not follow from the provision, whose current wording has been in force since 1 January 2024.
And what about a société à responsabilité limitée?
A société à responsabilité limitée may issue registered bonds only, and on four cumulative conditions: a commissaire aux comptes (statutory auditor) appointed, the accounts for its last three financial years of twelve months duly approved, no offre au public (public offering) other than an offer to a restricted circle of investors or to qualified investors, and a decision of the meeting of the members.
A société à responsabilité limitée « ayant désigné un commissaire aux comptes et dont les comptes des trois derniers exercices de douze mois ont été régulièrement approuvés par les associés, peut émettre des obligations nominatives à condition qu'elle ne procède pas à une offre au public de ces obligations ou qu'elle procède à une offre mentionnée au 1° de l'article L. 411-2 du code monétaire et financier » [having appointed a commissaire aux comptes and whose accounts for the last three financial years of twelve months have been duly approved by the members, may issue registered bonds provided that it does not make an offre au public of those bonds or that it makes an offer referred to in 1° of article L. 411-2 of the French Monetary and Financial Code] (C. com. art. L. 223-11).
The 1° so referred to confines the offer to a restricted circle of investors acting for their own account or to qualified investors (C. mon. fin. art. L. 411-2). That is the only derogation allowed to the société à responsabilité limitée: the provision refers neither to the 2°, which covers « l'offre de titres financiers et d'instruments admis à des fins de financement participatif proposée par un prestataire de services de financement participatif » [the offer of financial securities and of instruments admitted for crowdfunding purposes made by a prestataire de services de financement participatif (crowdfunding service provider)], nor to the 3°. A société à responsabilité limitée cannot therefore place its bonds by way of an offer falling under the 2°. It is further removed from the scope of « articles L. 228-39 à L. 228-43 et L. 228-51 » [articles L. 228-39 to L. 228-43 and L. 228-51]: no option of a verification of assets and liabilities, and no delegation, for one year, of the powers needed to carry out the issue and to settle its terms (C. com. art. L. 228-40).
What is at risk where an issue is made without those conditions?
Nullity, but its subject matter differs according to the corporate form: in a société par actions, the nullity formula governs, in the provision, only the verification of assets and liabilities; in a société à responsabilité limitée, « le non-respect de l'une des conditions édictées aux alinéas précédents est sanctionné par la nullité des contrats conclus ou des obligations émises » [failure to comply with one of the conditions laid down in the preceding paragraphs is penalised by the nullity of the contracts entered into or of the bonds issued].
Each of the conditions of the first two paragraphs is therefore, on its own, a ground of nullity.
Only one decision is available: a société par actions which had not drawn up two duly approved balance sheets had issued convertible bonds without a prior verification; the court held that it was not entitled to issue them, declared the nullity and ordered the full repayment of the subscription with interest at the statutory rate (CA Aix-en-Provence, ch. 3-4, 23 May 2024, n° 20/04101). A judgment of a cour d'appel (court of appeal): the Cour de cassation (the French supreme court for civil and commercial matters) has not ruled on these conditions.
Why check the validity of the issue before claiming payment?
Because the two routes do not yield the same thing: payment leaves the holder in the rank which the contract assigned to it, whereas nullity, once established, brings down the contract itself.
Rank is a matter of stipulation: on an issue of securities representing a debt claim, « il peut être stipulé que ces valeurs mobilières ne seront remboursées qu'après désintéressement des autres créanciers » [it may be stipulated that those securities will be redeemed only after the other creditors have been paid off], and « il peut être également stipulé un ordre de priorité des paiements » [an order of priority of payments may also be stipulated] (C. com. art. L. 228-97).
The examination of validity is a documentary one: balance sheets or financial years approved, the commissaire's report delivered before the decision, the issue resolution, the registered form of the securities. What it yields is a matter for assessment case by case.
Who may invoke the nullity?
The provisions on the conditions of issue write the nullity without saying who invokes it; a single provision designates the person entitled to bring the action, for the nullity of an issue of obligations à lots (lottery bonds): « le ministère public ainsi que tout intéressé peut exercer l'action en nullité » [the public prosecutor as well as any interested person may bring the action for nullity].
An issue of obligations à lots « doit être autorisée par la loi » [must be authorised by statute], « toute émission faite en violation des dispositions du présent article est nulle » [any issue made in breach of the provisions of this article is void], and the action lies « sans préjudice de l'action en responsabilité contre les mandataires sociaux » [without prejudice to the action in liability against the company's officers] (C. mon. fin. art. L. 213-6).
As soon as a masse (the statutory body of bondholders) exists, a second question arises, and the provision expressly places part of it within the monopoly: the représentants de la masse, « dûment autorisés par l'assemblée générale des obligataires, ont seuls qualité pour engager, au nom de ceux-ci, les actions en nullité de la société ou des actes et délibérations postérieurs à sa constitution » [duly authorised by the general meeting of bondholders, alone have standing to bring, in the name of the bondholders, actions for the nullity of the company or of acts and resolutions subsequent to its incorporation] (C. com. art. L. 228-54). An issue resolution is an act subsequent to the incorporation, and the provision confers that standing to sue « au nom de » [in the name of] the bondholders.
No provision cited and no verified decision says whether the action by which a subscriber seeks the nullity of the issue and the repayment of its own subscription falls within that monopoly. The only decision available on this nullity was given in favour of a sole subscriber: a case in which there is no masse.
What other nullities threaten the issue?
Two further nullities appear in the provisions cited: that of the guarantee given by a société à responsabilité limitée to an issue of securities, and that of a general meeting of bondholders irregularly convened, which « peut être annulée » [may be annulled].
The first strikes the guarantee, not the issue: « A peine de nullité de la garantie, il est interdit à une société à responsabilité limitée de garantir une émission de valeurs mobilières, sauf si l'émission est faite par une société de développement régional ou s'il s'agit d'une émission d'obligations bénéficiant de la garantie subsidiaire de l'Etat » [on pain of nullity of the guarantee, a société à responsabilité limitée is prohibited from guaranteeing an issue of securities, unless the issue is made by a regional development company or unless it is an issue of bonds having the benefit of the subsidiary guarantee of the State] (C. com. art. L. 223-11).
The second is written in the permissive mood: « toute assemblée irrégulièrement convoquée peut être annulée » [any meeting irregularly convened may be annulled], and since 1 October 2025, « l'action en nullité obéit au régime des articles 1844-10 à 1844-17 du code civil » [the action for nullity is governed by the regime of articles 1844-10 to 1844-17 of the Civil Code] (C. com. art. L. 228-59).
Nominal value, the coupon and default interest
What does the contrat d'émission (the bond issue contract) fix, and what does the law fix?
The law fixes neither the nominal value, nor the rate, nor the term: on those three points it requires only that the securities of one and the same issue confer the same debt claim rights for the same nominal value, and it is the contrat d'émission that fixes them.
« Les obligations sont des titres négociables qui, dans une même émission, confèrent les mêmes droits de créance pour une même valeur nominale » [bonds are negotiable securities which, within one and the same issue, confer the same debt claim rights for the same nominal value] (C. mon. fin. art. L. 213-5), a definition reproduced by the French Commercial Code (C. com. art. L. 228-38). Neither floor nor ceiling of nominal value, nor term, nor rate.
Characterisation as a bond is not conditional upon a guarantee that the nominal value of the security will be repaid: the cour d'appel which had required that guarantee in order to refuse that characterisation to a structured security had added a condition which the law does not provide for (Cass. 2e civ., 23 November 2017, n° 16-22.620).
Is a coupon of 10 % a year capped by law?
No: no statutory ceiling governs the coupon of a bond issued by a legal person carrying on an industrial, commercial, craft, agricultural or non-commercial professional activity, and the status of the subscriber makes no difference to this.
Usury is measured by reference to the party that borrows: usurious means « tout prêt conventionnel consenti à un taux effectif global qui excède, au moment où il est consenti, de plus du tiers, le taux effectif moyen pratiqué au cours du trimestre précédent » [any contractual loan granted at a taux effectif global (the all-in annual rate) which exceeds, at the time it is granted, by more than one third, the average effective rate applied during the preceding quarter] (C. consom. art. L. 314-6), and the borrower, in a bond issue, is the issuing company.
Now « les dispositions des articles L. 314-6 à L. 314-8 ne sont pas applicables aux prêts accordés à une personne physique agissant pour ses besoins professionnels ou à une personne morale se livrant à une activité industrielle, commerciale, artisanale, agricole ou professionnelle non commerciale » [the provisions of articles L. 314-6 to L. 314-8 do not apply to loans granted to a natural person acting for the purposes of their profession or to a legal person carrying on an industrial, commercial, craft, agricultural or non-commercial professional activity] (C. consom. art. L. 314-9), and what survives in the French Monetary and Financial Code holds good only « pour les découverts en compte » [for overdrafts on account] (C. mon. fin. art. L. 313-5-1), which a bond issue is not. A blind spot: a legal person that is a stranger to those activities, such as a société civile patrimoniale (a French civil company holding private assets), does not appear to be covered by the exclusion.
What happens where the default rate is lower than the coupon?
No default rate is fixed by the provisions cited: it is the contract that stipulates it, and where that stipulation is characterised as an agreed penalty, the court may, even of its own motion, increase it if it is manifestly derisory.
The route opened by the provisions cited is that of the agreed penalty: « lorsque le contrat stipule que celui qui manquera de l'exécuter paiera une certaine somme à titre de dommages et intérêts, il ne peut être alloué à l'autre partie une somme plus forte ni moindre » [where the contract stipulates that the party who fails to perform it shall pay a certain sum by way of damages, no greater or lesser sum may be awarded to the other party], but « néanmoins, le juge peut, même d'office, modérer ou augmenter la pénalité ainsi convenue si elle est manifestement excessive ou dérisoire » [nevertheless, the court may, even of its own motion, reduce or increase the penalty so agreed if it is manifestly excessive or derisory] (C. civ. art. 1231-5). Characterising a default interest clause in that way is a matter for examination case by case.
The same provision reserves the mise en demeure (formal notice to pay): « sauf inexécution définitive, la pénalité n'est encourue que lorsque le débiteur est mis en demeure » [save in the case of definitive non-performance, the penalty is incurred only once the debtor has been given formal notice], and the debtor is so given notice « soit par une sommation ou un acte portant interpellation suffisante, soit, si le contrat le prévoit, par la seule exigibilité de l'obligation » [either by a demand or by an instrument containing a sufficient call upon the debtor, or, if the contract so provides, by the mere fact that the obligation falls due] (C. civ. art. 1344).
Does default interest compound?
Only if the contract has so provided or if a court decision so specifies, and on condition that the interest has fallen due and is owed for at least one full year.
The provision is contained in a single sentence each of whose terms is a condition: « Les intérêts échus, dus au moins pour une année entière, produisent intérêt si le contrat l'a prévu ou si une décision de justice le précise » [interest that has fallen due, owed for at least one full year, bears interest if the contract has so provided or if a court decision so specifies] (C. civ. art. 1343-2). Without a stipulation, compounding is not secured by the contract: it can then come only from a court decision which « le précise » [so specifies].
In the field of business lending, the commercial chamber refers back to the conditions of that provision without spelling them out (Cass. com., 11 December 2024, n° 23-15.744): it is therefore the letter of the provision, and it alone, that carries the requirement of a stipulation. No verified decision rules on compounding in a bond loan.
May the court reduce a default penalty?
Where the default interest clause is characterised as an agreed penalty, the court may reduce it, even of its own motion, if it is manifestly excessive, and any stipulation that would prohibit it from doing so is deemed not written.
The court « peut, même d'office, modérer ou augmenter la pénalité ainsi convenue si elle est manifestement excessive ou dérisoire » [may, even of its own motion, reduce or increase the penalty so agreed if it is manifestly excessive or derisory], and « toute stipulation contraire aux deux alinéas précédents est réputée non écrite » [any stipulation contrary to the two preceding paragraphs is deemed not written] (C. civ. art. 1231-5). The provision writes « peut » [may]: reduction is not secured to the debtor who invokes it.
A second route reaches the clauses that surround the rate, not the rate itself: in a contrat d'adhésion (standard-form contract), « toute clause non négociable, déterminée à l'avance par l'une des parties, qui crée un déséquilibre significatif entre les droits et obligations des parties au contrat est réputée non écrite » [any non-negotiable clause, determined in advance by one of the parties, which creates a significant imbalance between the rights and obligations of the parties to the contract is deemed not written], but the assessment of that imbalance « ne porte ni sur l'objet principal du contrat ni sur l'adéquation du prix à la prestation » [relates neither to the main subject matter of the contract nor to the adequacy of the price to the performance] (C. civ. art. 1171).
Is a contract that refers to a repealed provision still valid?
No provision cited attaches any penalty to a reference to the number of a repealed article: the applicable rule is that of the provision in force, not that of the reference copied across in the template.
The phenomenon is in the statute itself. For the société à responsabilité limitée, the provision sets aside « articles L. 228-39 à L. 228-43 et L. 228-51 » [articles L. 228-39 to L. 228-43 and L. 228-51] (C. com. art. L. 223-11), whereas the last article of that range, L. 228-43, was repealed by ordonnance no. 2009-80 of 22 January 2009 and no longer figures among the provisions in force.
Two precautions follow from this. Name the code: the number L. 223-11 has been borne by two codes, and it is the one in the French Commercial Code, alone in force, that governs the issue of registered bonds by a société à responsabilité limitée. Date the version: the current wording of the conditions of issue for the société par actions has been in force only since 1 January 2024 (C. com. art. L. 228-39).
May bonds be subordinated?
Yes: the contrat d'émission may stipulate that the bonds will be redeemed only after the other creditors have been paid off, and it may also fix an order of priority of payments.
The power is written for the time of the issue: « il peut être stipulé que ces valeurs mobilières ne seront remboursées qu'après désintéressement des autres créanciers, à l'exclusion ou y compris des titulaires de prêts participatifs et de titres participatifs » [it may be stipulated that those securities will be redeemed only after the other creditors have been paid off, excluding or including the holders of participating loans and participating securities], and « dans ces catégories de valeurs mobilières, il peut être également stipulé un ordre de priorité des paiements » [within those classes of securities, an order of priority of payments may also be stipulated] (C. com. art. L. 228-97).
The mood of the provision is the permissive one: absent a stipulation, the contrat d'émission does not subordinate the bondholders' claim to the other creditors and organises no order of priority of payments. The holder's rank on the day of the default is therefore settled on the day of the issue, when no one yet has any interest in arguing about it.
What the contract calls a “guarantee”
What distinguishes a garantie autonome from a cautionnement (suretyship)?
The subject matter of the undertaking, and not the heading of the clause: an undertaking is a garantie autonome only if its subject matter is distinct from that of the debt of the principal debtor and if it contains a stipulation that no defence arising out of the guaranteed obligation may be raised.
The guarantor « s'oblige, en considération d'une obligation souscrite par un tiers, à verser une somme soit à première demande, soit suivant des modalités convenues » [binds himself, in consideration of an obligation entered into by a third party, to pay a sum of money either on first demand or on agreed terms] (C. civ. art. 2321). Designating the subscriber as « principale obligée » [the principal obligor] does not suffice (Cass. com., 11 March 2026, n° 24-18.780), and an undertaking whose extent depends on the principal debtor's compliance with its own covenants has the same subject matter as the principal debt (Cass. com., 13 March 2024, n° 22-15.438).
That characterisation governs the regime. The guarantor « ne peut opposer aucune exception tenant à l'obligation garantie » [may raise no defence arising out of the guaranteed obligation] and he « n'est pas tenu en cas d'abus ou de fraude manifestes du bénéficiaire ou de collusion de celui-ci avec le donneur d'ordre » [is not bound in the event of manifest abuse or fraud on the part of the beneficiary, or of collusion between the beneficiary and the party giving the instructions]. But a call is not manifestly abusive where it rests on a breach of contract that is being challenged before the court having jurisdiction and whose attribution to the guaranteed debtor is not wholly without foundation (Cass. com., 1 April 2026, n° 24-13.364).
What is a garantie à première demande (on-demand guarantee) over the units in the project company worth?
Less than its heading promises: the garantie autonome is the undertaking to « verser une somme » [pay a sum of money], and a clause bearing on the units in the project company procures a block of securities, not money. Its worth then turns on two things the clause does not state: what the assets it bites on are worth on the day it is enforced, and the form of the company that gave it.
The guarantor binds himself « à verser une somme » [to pay a sum of money] (C. civ. art. 2321): a clause promising the units in the project company does not answer that description, it belongs to security interests over property, and it procures a block of securities, not money. A cour d'appel held that the juge des référés (the judge hearing urgent interim applications) had been entitled to award the creditor the whole of the pledged shares, while ordering an expert valuation (CA Paris, pôle 1 ch. 8, 29 January 2021, n° 20/01594); the appeal on a point of law was not admitted. The value of the assets it bites on is a matter to be examined case by case.
It remains to be seen who gives that guarantee, and whether it may give it. « L'émission d'obligations, dont le remboursement est garanti par une société de capitalisation, est interdite » [the issue of bonds the redemption of which is guaranteed by a capitalisation company is prohibited] (C. com. art. L. 228-82). And « A peine de nullité de la garantie, il est interdit à une société à responsabilité limitée de garantir une émission de valeurs mobilières » [on pain of nullity of the guarantee, a société à responsabilité limitée is prohibited from guaranteeing an issue of securities], apart from an issue by a société de développement régional (a regional development company) or an issue benefiting from the subsidiary guarantee of the French State (C. com. art. L. 223-11): the guarantee given by a holding company incorporated as a société à responsabilité limitée is null.
Does the guarantee follow the bond when the instrument is transferred?
Absent agreement to the contrary, no: the garantie autonome does not follow the guaranteed obligation, so that a person who acquires a bond after the issue does not acquire the guarantee with it.
The fourth paragraph is clear: « Sauf convention contraire, cette sûreté ne suit pas l'obligation garantie » [absent agreement to the contrary, this security interest does not follow the guaranteed obligation] (C. civ. art. 2321). The Cour de cassation applied it in holding that « sauf convention contraire, la garantie autonome, qui ne suit pas l'obligation garantie, n'est pas transmise en cas de scission de la société bénéficiaire de la garantie » [absent agreement to the contrary, the garantie autonome, which does not follow the guaranteed obligation, is not transferred in the event of a demerger of the company benefiting from the guarantee] (Cass. com., 31 January 2017, n° 15-19.158).
On an instrument designed to circulate, the consequence is decisive: the bond is transferred, the guarantee does not follow it. A holder who buys a bond on the secondary market acquires the claim without the personal security that accompanied it, for so long as the agreement does not stipulate that it passes to successive holders. A contract that mentions a guarantee without stipulating that it passes to successive holders allows the default rule to operate: the guarantee does not follow the instrument.
Is a notarised ordre irrévocable de paiement (irrevocable payment instruction) a security interest?
No provision governing bond issues names it among the security interests: whatever the form of the instrument that records it, it does not place its beneficiary within the regime that those provisions reserve to security interests over property and to assignments by way of security.
The texts surveyed name only two categories: « sûretés réelles » [security interests over property] (C. com. art. L. 228-77) and, after the issue, « les sûretés réelles et cessions à titre de garantie » [security interests over property and assignments by way of security] (C. com. art. L. 228-81), all of them constituted « dans un acte spécial » [in a special instrument] (C. com. art. L. 228-79). A payment instruction, even if described as irrevocable and received by a notaire (French public officer), is an instruction addressed to a third party: it falls within neither of those two categories. Where it emanates from the issuer itself, it is no more a garantie autonome, which presupposes a guarantor binding himself « en considération d'une obligation souscrite par un tiers » [in consideration of an obligation entered into by a third party] (C. civ. art. 2321).
Execution before a notaire does not change that characterisation: an undertaking that is not a security interest does not place its beneficiary within the regimes that those provisions reserve. Its exact scope, which depends on the characterisation adopted, is dealt with in the analysis devoted to the ordre irrévocable de paiement.
What does a fiducie-sûreté (the French security trust) bring?
The provisions governing bond issues do not name it: within them it can attach only to the « cessions à titre de garantie » [assignments by way of security] covered by the provision on security interests constituted after the issue — for the account of the masse, and accepted by the représentant de la masse.
The provision that governs security interests granted after the issue covers « les sûretés réelles et cessions à titre de garantie » [security interests over property and assignments by way of security] (C. com. art. L. 228-81). A fiduciary assignment of securities, of receivables or of contracts attaches to it, on a reading of the text, and then follows its regime: constitution by the company for the account of the masse, acceptance by the representative. No other provision governing bond issues is devoted to it, and none defines it.
What it adds or takes away by comparison with a pledge — who holds the asset, the conditions for its enforcement, its fate where the issuer defaults — is therefore to be read not in the law of bond issues but in the law of the fiducie, set out in the analysis devoted to the fiducie-sûreté. For the contrat d'émission, the rule not to be missed remains that of acceptance.
For whose account are the security interests of a bond issue constituted?
For the account of the masse des obligataires, and not of each holder, as regards the security interests over property that the company constitutes: where they predate the issue or are concomitant with it, « l'acceptation résulte du seul fait des souscriptions » [acceptance results from the mere fact of the subscriptions], without any separate instrument.
« En cas d'émission d'obligations assorties de sûretés réelles, celles-ci sont constituées par la société antérieurement ou concomitamment à l'émission, pour le compte de la masse des obligataires » [where bonds are issued carrying security interests over property, those security interests are constituted by the company before the issue or concomitantly with it, for the account of the masse des obligataires], and acceptance « rétroagit à la date de l'inscription pour les sûretés soumises à inscription et à la date de leur constitution pour les autres sûretés » [takes retroactive effect as at the date of registration for security interests subject to registration and as at the date of their constitution for the other security interests] (C. com. art. L. 228-77). The two dates are not one and the same.
The special instrument may be entered into before the issue, but « Cet acte ne prend effet qu'au moment de l'émission » [this instrument takes effect only at the time of the issue] (C. com. art. L. 228-79): an issue that does not come about leaves the security interest without effect. And the requirement of prior authorisation by the corporate body disappeared with the repeal in 2017 of the provision that laid it down (C. com. art. L. 228-78, repealed): any precedent that reproduces it is out of date.
Does a security interest granted after the issue follow the same regime?
The same constitution for the account of the masse, but a different acceptance: « Elles sont acceptées par le représentant de la masse » [they are accepted by the représentant de la masse], so that, on a reading of the text, an issue with no representative in office has no one to accept a later security interest.
« Les sûretés réelles et cessions à titre de garantie constituées postérieurement à l'émission des obligations le sont par la société pour le compte de la masse des obligataires. Elles sont acceptées par le représentant de la masse » [security interests over property and assignments by way of security constituted after the issue of the bonds are constituted by the company for the account of the masse des obligataires. They are accepted by the représentant de la masse] (C. com. art. L. 228-81). Acceptance becomes an act, which presupposes someone to perform it. The text does not say what a security interest that no one has accepted is worth; but, on a reading of it, no representative appointed, no acceptance: that is the argument which makes it imperative to appoint the first représentants de la masse in the contrat d'émission, even where the law does not require it (C. com. art. L. 228-51).
Release of the security « intervient selon les modalités prévues au contrat d'émission ou, à défaut, dans les conditions déterminées par décret en Conseil d'Etat » [takes place in accordance with the terms provided for in the contrat d'émission or, failing that, on the conditions determined by decree issued after consultation of the Conseil d'Etat] (C. com. art. L. 228-80): the contract comes before the regulation. And the assemblée générale des obligataires (the general meeting of bondholders) deliberates on any proposal relating « à l'abandon total ou partiel des garanties conférées aux obligataires » [to the total or partial abandonment of the guarantees conferred on the bondholders] (C. com. art. L. 228-65).
Early redemption
May the issuer redeem before maturity without the holders' agreement?
It cannot impose it on them, save for special provisions of the contrat d'émission and apart from the case of early dissolution that the law reserves: what the law prohibits is compulsion, not the transaction.
The default rule is the maturity date: « En l'absence de dispositions spéciales du contrat d'émission, la société ne peut imposer aux obligataires le remboursement anticipé des obligations » [in the absence of special provisions of the contrat d'émission, the company may not impose the early redemption of the bonds on the bondholders] (C. com. art. L. 228-75). Two expressions govern its scope: « imposer » [impose], which leaves the agreement of each holder untouched, and « en l'absence de dispositions spéciales » [in the absence of special provisions], which makes the maturity date a protection that the contract may reverse. A negotiated buy-back therefore remains possible; what is prohibited is imposing it.
The same rule applies to securities giving access to the share capital, « Sauf stipulations spéciales du contrat d'émission et hors le cas de dissolution anticipée ne résultant pas d'une fusion ou d'une scission » [save for special stipulations of the contrat d'émission and apart from the case of early dissolution not resulting from a merger or a demerger] (C. com. art. L. 228-102).
Are there cases in which the law allows it to do so?
Only one in the texts: early dissolution not brought about by a merger or a demerger, where reciprocity is complete — the meeting of bondholders may require redemption, and the company may impose it.
« En cas de dissolution anticipée de la société, non provoquée par une fusion ou par une scission, l'assemblée générale des obligataires peut exiger le remboursement des obligations et la société peut l'imposer » [in the event of early dissolution of the company, not brought about by a merger or by a demerger, the assemblée générale des obligataires may require the redemption of the bonds and the company may impose it] (C. com. art. L. 228-76). The text names the assemblée générale des obligataires, not the holder taken in isolation: the right exists, but it is exercised through the organ.
Mergers and demergers are the converse case: the law opens up no redemption there. Where the assemblée générale des obligataires of the company absorbed or divided has not approved the transaction, the management bodies « peuvent passer outre » [may proceed regardless], and « Les obligataires conservent alors leur qualité dans la société absorbante ou dans les sociétés bénéficiaires des apports résultant de la scission » [the bondholders then retain their status in the absorbing company or in the companies receiving the assets transferred as a result of the demerger]; the meeting may only give the représentants de la masse a mandate to « former opposition à l'opération » [lodge an objection to the transaction] (C. com. art. L. 228-73).
May a bondholder require early redemption?
Acting alone, no, absent a clause in the contract; the law opens up only two routes: the meeting of bondholders may require redemption in the event of early dissolution not brought about by a merger or a demerger, and the holder may request the redemption offered where the company's organs proceed regardless of the meeting's refusal on a change in the company's objects or form, or on an issue carrying a security interest over property that does not benefit the masse.
« A défaut d'approbation par l'assemblée générale des propositions visées aux 1° et 4° du I. de l'article L. 228-65, le conseil d'administration, le directoire ou les gérants de la société débitrice peuvent passer outre, en offrant de rembourser les obligations dans le délai fixé par décret en Conseil d'Etat » [failing approval by the general meeting of the proposals referred to in 1° and 4° of I of article L. 228-65, the board of directors, the executive board or the managers of the debtor company may proceed regardless, by offering to redeem the bonds within the period set by decree issued after consultation of the Conseil d'Etat] (C. com. art. L. 228-72). The two proposals referred to are a change in the company's objects or form, and the issue of bonds carrying a security interest over property that does not benefit the bondholders making up the masse (C. com. art. L. 228-65).
This is therefore not an imposed redemption, it is the price of forcing the matter through: the provision entrusts to the decree « le délai pendant lequel le remboursement doit être demandé » [the period within which redemption must be requested], and it is the bondholder who makes the request. The law does not put a figure on that period, and allowing the one the decree sets to expire amounts to submitting to the change with nothing in return.
What is a material adverse change clause?
A purely contractual stipulation: no provision governing bond issues provides for it, no verifiable decision has applied it, and its scope depends entirely on its drafting.
It makes a significant deterioration in the issuer's position an event on which the bonds fall due early. Nothing in the texts defines it or limits it: it draws its force from the contract alone, and its effectiveness is measured by the precision of its terms.
A point of comparison nevertheless exists. Events of early maturity stipulated with precision — breach of the reporting covenants, failure to pay — have been held to be clear and to call for no interpretation that would exceed the powers of the juge des référés (CA Paris, pôle 1 ch. 2, 26 February 2026, n° 25/03374). Conversely, a clause that makes early maturity depend on an assessment of whether an event is « significatif » [significant] exposes the holder to the issuer disputing that the condition is met; if that challenge is serious, the route of the provision (an interim payment on account) closes, since the juge des référés may grant it only « dans les cas où l'existence de l'obligation n'est pas sérieusement contestable » [in cases where the existence of the obligation is not seriously open to challenge] (CPC art. 873). Its implementation is a matter to be examined case by case.
How is an early redemption option that serves the holder to be drafted?
No provision opens it to the holder taken in isolation: it presupposes a clause of the contrat d'émission, and it serves the holder only if it states who triggers it, on what fact and against what sum — the law supplies none of those three points.
The provision that preserves the maturity date covers only the redemption that the company might wish to impose, and refers to the contract without saying what it must contain (C. com. art. L. 228-75). And the only case in which the law itself designates the holder of the right confers it on the assemblée générale des obligataires (C. com. art. L. 228-76): a clause that opens the option « aux porteurs » [to the holders] without saying how they decide remains difficult to implement.
Three particulars make the difference on the day of default: the triggering event, described by factors that can be objectively ascertained rather than by an assessment; the person or the organ that gives notice; and the amount due — nominal value, accrued coupon, indemnity — capable of being calculated without an expert's report. Their actual drafting is a matter to be examined case by case.
May a bond that has been bought back be put back into circulation?
No: « Les obligations rachetées par la société émettrice, ainsi que les obligations sorties au tirage et remboursées, sont annulées et ne peuvent être remises en circulation » [bonds bought back by the issuing company, together with bonds drawn by lot and redeemed, are cancelled and may not be put back into circulation].
The provision is without reservation (C. com. art. L. 228-74): a buy-back is not a reversible transaction, it definitively reduces the amount of the loan outstanding. Nor may the company use its own securities as security, since it « ne peut constituer un gage quelconque sur ses propres obligations » [may not create any pledge whatsoever over its own bonds] (C. com. art. L. 228-44).
Amortisation by drawing of lots calls for a comparable precaution. Where the company has continued to pay the income on bonds that have become redeemable following a drawing of lots, « elle ne peut répéter ces sommes lorsque ces obligations sont présentées au remboursement » [it may not recover those sums when those bonds are presented for redemption], and « Toute clause contraire est réputée non écrite » [any clause to the contrary is deemed not written] (C. com. art. L. 228-45).
The issuer's covenants
Which covenants does the contract impose on the issuer?
Covenants — a ratio, a debt ceiling, periodic reporting — have no source other than the contrat d'émission: none of the texts surveyed imposes any of them on the issuer of ordinary bonds. The law guarantees holders no more than a bedrock of information and the prohibitions it places on the company.
What the texts do show is the extent of what the contract may organise: it may be stipulated that these securities « ne seront remboursées qu'après désintéressement des autres créanciers » [will be redeemed only after the other creditors have been paid off], and that « il peut être également stipulé un ordre de priorité des paiements » [an order of priority of payments may also be stipulated] (C. com. art. L. 228-97).
That silence has an underestimated consequence: a covenant that is not written down does not exist. A written covenant to which the contract attaches no event of default does not open the way to déchéance du terme (acceleration): its breach is a matter for the general law of contract, not for the debt falling due early.
Is the breach of a ratio an event of default?
The breach of a covenant is an event of default only where the contrat d'émission makes it an event of default.
None of the texts surveyed makes a ratio exceeded, an asset disposed of or a director replaced a cause for the debt to fall due. The consequence of the breach is entirely the work of the contract: the definition of the event of default, the cure period where one is provided for, the person entitled to give notice, and the extent of what becomes due and payable.
A waiver that amends the contract is a matter neither for a single holder nor for the représentant de la masse acting alone: the assemblée générale des obligataires deliberates « sur toute proposition tendant à la modification du contrat » [on any proposal for the amendment of the contract] (C. com. art. L. 228-65).
What can a bondholder who no longer receives the accounts do?
A bondholder deprived of the accounts must go through the représentants de la masse, who derive from the law the right to be provided with the documents made available to the shareholders, on the same terms as the shareholders.
The représentants de la masse « ont le droit d'obtenir communication des documents mis à la disposition des actionnaires dans les mêmes conditions que ceux-ci » [have the right to be provided with the documents made available to the shareholders on the same terms as the shareholders] (C. com. art. L. 228-55).
That still requires a représentant to be in office. They « sont désignés dans le contrat d'émission ou par l'assemblée générale des obligataires ou, à défaut, par décision de justice, à la demande de tout intéressé » [are designated in the contrat d'émission or by the assemblée générale des obligataires or, failing that, by a court decision, on the application of any interested party] (C. com. art. L. 228-51).
Can a single holder require the company's documents to be provided?
No: the holder derives from the law no individual right of inspection and no right to be provided with the company's documents, but it retains a right of its own to be provided with documents, limited to the documents of its own meeting.
The text is blunt: « Les obligataires ne sont pas admis individuellement à exercer un contrôle sur les opérations de la société ou à demander communication des documents sociaux » [bondholders are not permitted individually to exercise any control over the company's operations or to request that the company's documents be provided to them] (C. com. art. L. 228-70). This is the exact opposite of what is believed by the holder who demands the accounts from the issuer: the right to be provided with documents belongs to the représentants de la masse, and only for the documents made available to the shareholders; as for control over the company's operations, on the holders' side it belongs to no one, the représentants being unable to « s'immiscer dans la gestion des affaires sociales » [interfere in the management of the company's affairs] (C. com. art. L. 228-55).
What remains to it is written down: « Tout obligataire a le droit d'obtenir, dans les conditions et délais déterminés par décret en Conseil d'Etat, communication du texte des résolutions qui seront proposées et des rapports qui seront présentés à l'assemblée générale » [every bondholder has the right to obtain, on the terms and within the time limits determined by a decree adopted in the Conseil d'Etat, the text of the resolutions to be proposed and of the reports to be presented to the general meeting], and « à toute époque, le même droit en ce qui concerne les procès-verbaux et les feuilles de présence des assemblées générales de la masse à laquelle il appartient » [at any time, the same right in respect of the minutes and the attendance sheets of the general meetings of the masse to which it belongs] (C. com. art. L. 228-69).
Unlisted issuer: what information should you agree to provide?
None of the texts surveyed imposes on an unlisted issuer any periodic reporting to the holders: beyond the statutory bedrock — what the shareholders receive, through the représentants de la masse — every information obligation is the one the contract creates.
The statutory bedrock is bounded on both sides. The représentants de la masse obtain what the shareholders receive, without being able to « s'immiscer dans la gestion des affaires sociales » [interfere in the management of the company's affairs]; beyond that, monthly reporting or a right of audit are not statutory rights but concessions made by the contract.
Two things are to be measured before entering into an information covenant: what will have to be produced, and what the contract provides for if it is not produced. The trade-off depends on the facts.
Can a clause that was not negotiated be set aside?
In a contrat d'adhésion, a non-negotiable clause determined in advance by one of the parties which creates a significant imbalance is deemed not written; but the assessment bears neither on the main subject matter of the contract nor on the adequacy of the price to the performance.
The text provides that « dans un contrat d'adhésion, toute clause non négociable, déterminée à l'avance par l'une des parties, qui crée un déséquilibre significatif entre les droits et obligations des parties au contrat est réputée non écrite » [in a standard-form contract, any non-negotiable clause determined in advance by one of the parties which creates a significant imbalance between the rights and obligations of the parties to the contract is deemed not written], and that « l'appréciation du déséquilibre significatif ne porte ni sur l'objet principal du contrat ni sur l'adéquation du prix à la prestation » [the assessment of the significant imbalance bears neither on the main subject matter of the contract nor on the adequacy of the price to the performance] (C. civ. art. 1171).
The review therefore leaves outside its scope « l'objet principal du contrat » [the main subject matter of the contract] and « l'adéquation du prix à la prestation » [the adequacy of the price to the performance]; it does not name the clauses that fall within it: a default clause, an information clause or a waiver-of-remedies clause is not, on a reading of the text, excluded from the review; whether a subordination clause falls within « l'objet principal du contrat » [the main subject matter of the contract] is settled by none of the texts surveyed. The counter-argument is available to both parties: a clause that has genuinely been negotiated is not a clause « non négociable, déterminée à l'avance par l'une des parties » [non-negotiable, determined in advance by one of the parties]. The definition of the contrat d'adhésion does not appear in the texts surveyed; that characterisation, like the assessment of the imbalance, is a matter for examination case by case.
Déchéance du terme (acceleration)
What is déchéance du terme in a bond issue?
Déchéance du terme does not create the holder's claim: it brings forward the date on which a claim that came into existence with the contrat d'émission itself falls due.
The date on which a contractual claim comes into existence is not to be confused with the date on which it falls due, and the claims for repayment of the nominal value and for interest under a bond issue come into existence at the date of the contrat d'émission, it being immaterial that the date on which they fall due is deferred (Cass. com., 21 February 2012, n° 11-11.693).
None of the texts surveyed defines the déchéance du terme of a bond issue or lists its causes. It is the work of the contrat d'émission, which designates the events of default, states who is to establish them and states what becomes due and payable: the nominal value still outstanding, the coupons fallen due, and default interest.
Is a mise en demeure necessary?
None of the texts surveyed makes the mise en demeure a condition of déchéance du terme: it is the contract that requires it or does not require it. And where a mise en demeure is required, the text opens two routes of which only one is conditional: dispensing with a formal demand presupposes a clause.
The text opens two routes and only one of them is conditional: « Le débiteur est mis en demeure de payer soit par une sommation ou un acte portant interpellation suffisante, soit, si le contrat le prévoit, par la seule exigibilité de l'obligation » [the debtor is given formal notice to pay either by a formal demand or by an instrument containing a sufficient summons, or, if the contract so provides, by the mere fact that the obligation has fallen due] (C. civ. art. 1344). The second presupposes the clause; the first does without it. The only text surveyed that makes the mise en demeure a condition does so for the agreed penalty: « sauf inexécution définitive » [save in the case of definitive non-performance], it « n'est encourue que lorsque le débiteur est mis en demeure » [is incurred only once the debtor has been given formal notice] (C. civ. art. 1231-5).
Déchéance du terme is not, in itself, either a mise en demeure or an action for payment (CA Bordeaux, 18 December 2023, n° 23/04451). The letter giving notice of it amounts to a mise en demeure only if it carries « interpellation suffisante » [a sufficient summons] — which is to be read in the way it is drafted — or if the contract has provided for formal notice « par la seule exigibilité de l'obligation » [by the mere fact that the obligation has fallen due].
What is a cross-default? What is a change of control?
Neither of the two is defined by any text applicable to a bond issue: each clause is worth no more than its drafting gives it.
None of the texts surveyed defines cross-default or attaches any effect to it. Its scope is to be read in the clause alone: which debts it covers, which breach, which threshold, and whether that breach must be established or may merely be alleged.
Change of control is different, because a statutory notion does exist: four cases of control, and a presumption where a person « dispose directement ou indirectement, d'une fraction des droits de vote supérieure à 40 % » [holds, directly or indirectly, a fraction of the voting rights greater than 40 %] without any other partner or shareholder holding a greater fraction (C. com. art. L. 233-3). But that text applies only « pour l'application des sections 2 et 4 du présent chapitre » [for the purposes of sections 2 and 4 of this chapter]: a clause that writes “change of control” without defining it does not borrow that notion as a matter of course.
Who benefits from a long cure period?
A long cure period benefits the issuer, because it puts off the day on which the déchéance du terme takes effect.
The period stipulated governs the point at which the déchéance takes effect. A holder who accepts a notification period, then a cure period, then a period of notice, has put off by just as much the day on which its claim becomes due and payable — and it is that day which decides what the déchéance will be worth.
That period is not to be confused with an indulgence granted after the event: a period of grace allowed in the letter of notification is an indulgence, and does not defer the date on which the debt falls due (CA Bordeaux, 18 December 2023, n° 23/04451). The first decides the day on which the déchéance takes effect; the second does not move that day.
Does a déchéance clause based on the opening of proceedings take effect?
No: a clause making the loan due and payable by the mere fact of the jugement d'ouverture (the judgment opening the proceedings) is deemed not written; the text surveyed covers only claims « non échues à la date de son prononcé » [that have not fallen due at the date on which it is delivered].
Two sentences are enough for that: « Le jugement d'ouverture ne rend pas exigibles les créances non échues à la date de son prononcé. Toute clause contraire est réputée non écrite. » [the judgment opening the proceedings does not render due and payable claims that have not fallen due at the date on which it is delivered. Any clause to the contrary is deemed not written.] (C. com. art. L. 622-29). From the holder's point of view, the consequence is clear: the clause it believes it holds gives it nothing against the jugement d'ouverture covered by that text, and the reference date is the date on which the judgment is delivered. The text says nothing, on the other hand, about claims that had already fallen due at that date.
Does a déchéance that has already taken effect remain enforceable?
The text covers only claims « non échues à la date de son prononcé » [that have not fallen due at the date on which it is delivered], so that a déchéance du terme validly taking effect before the judgment leaves a claim that has already fallen due.
A déchéance du terme notified on the basis of contractual events of default consisting neither in the opening of a procédure collective (French insolvency proceedings) nor in a failure to pay a sum of money is contrary to no rule of the law of procédures collectives: the repayment debt remains due and payable, and the enforcement of the fiducies-sûretés (the French security trusts) was authorised (CA Bordeaux, 18 December 2023, n° 23/04451). The judgment rules only on those events of default; for a déchéance founded on an unpaid instalment, the reasoning remains that of the text, which covers only claims that have not fallen due. It is a judgment of a cour d'appel: no decision of the Cour de cassation settles the déchéance du terme of a bond issue taken in isolation.
The masse des obligataires
How many holders must there be for the masse des obligataires to exist?
The grouping arises by operation of law between the holders of one and the same issue, and it gives rise to a legal person distinct from the holders; but none of the texts cited fixes a minimum number of holders, and none deals with the case of a sole holder. « Les porteurs d'obligations d'une même émission sont groupés de plein droit pour la défense de leurs intérêts communs, en une masse qui jouit de la personnalité civile » [the holders of bonds of one and the same issue are grouped, by operation of law, for the defence of their common interests, into a masse which enjoys civil legal personality] (C. com. art. L. 228-46).
Since the grouping is « de plein droit » [by operation of law], it results from no clause and its scope is that of a single issue: several successive loans form, in principle, as many masses, unless the holders « ayant des droits identiques » [having identical rights] are grouped into a single masse, which the company may do only « lorsqu'une clause de chaque contrat d'émission le prévoit » [where a clause of each bond issue contract so provides].
Who has standing to sue the defaulting issuer?
Two locks, and not one: the actions which defend the common interests of the bondholders belong only to the représentants de la masse, and only to the extent that the assemblée générale des obligataires has authorised them to bring them. « Les représentants de la masse, dûment autorisés par l'assemblée générale des obligataires, ont seuls qualité pour engager, au nom de ceux-ci, les actions en nullité de la société ou des actes et délibérations postérieurs à sa constitution, ainsi que toutes autres actions en justice ayant pour objet la défense des intérêts communs des obligataires » [the représentants de la masse, duly authorised by the assemblée générale des obligataires, alone have standing to bring, in the name of the bondholders, actions for nullity of the company or of the acts and resolutions subsequent to its incorporation, as well as any other legal proceedings whose object is the defence of the common interests of the bondholders] (C. com. art. L. 228-54): an unauthorised representative is therefore no better placed than an isolated holder.
There must, first of all, be a representative in existence: they « sont désignés dans le contrat d'émission ou par l'assemblée générale des obligataires ou, à défaut, par décision de justice, à la demande de tout intéressé » [are appointed in the bond issue contract or by the assemblée générale des obligataires or, failing that, by a court decision, on the application of any interested party]. And although « lorsque les obligations sont offertes au public, les premiers représentants de la masse sont désignés dans le contrat d'émission » [where the bonds are offered to the public, the first représentants de la masse are appointed in the bond issue contract], « cette désignation n'est pas obligatoire pour les offres au public mentionnées aux 1° et 2° de l'article L. 411-2 du code monétaire et financier et à l'article L. 411-2-1 du même code » [that appointment is not mandatory for the public offerings referred to in 1° and 2° of article L. 411-2 of the French Monetary and Financial Code and in article L. 411-2-1 of the same code] (C. com. art. L. 228-51): a great many unlisted documentation packages appoint none. The authorisation may be given in general meeting or at the conclusion of a written consultation, including an electronic one, where the contrat d'émission so provides (C. com. art. L. 228-46-1; Cass. com., 6 May 2026, n° 25-12.493).
The monopoly does not stop at actions of common interest: the same text places within the exclusive standing of the representatives « les actions en nullité de la société ou des actes et délibérations postérieurs à sa constitution » [actions for nullity of the company or of the acts and resolutions subsequent to its incorporation], and the resolution deciding upon the issue is one of them. No verified decision says whether a holder may apply alone for nullity of the issue in order to obtain repayment of its subscription; the only decision available on that nullity is a judgment of a court of appeal given in favour of a subscriber, in a case in which the question of the masse was not at issue (CA Aix-en-Provence, ch. 3-4, 23 May 2024, n° 20/04101).
What does a party who sues without that standing risk?
An action falling within the monopoly — the action which defends the common interests of the bondholders — and brought by an isolated holder or by an unauthorised representative « doit être déclarée d'office irrecevable » [must be declared inadmissible by the court of its own motion]: it is a bar to the claim which the judge raises of his own motion, not a nullity — it does not destroy the act, it shuts the door, and the issuer has nothing to plead in order to have the benefit of it.
The rule has a counterpart which the issuer, for its part, forgets: « Les actions en justice dirigées contre l'ensemble des obligataires d'une même masse ne peuvent être intentées que contre le représentant de cette masse. » [legal proceedings directed against the whole body of the bondholders of one and the same masse may be brought only against the représentant of that masse.] And the inadmissibility is not without remedy where the claimant is indeed a représentant de la masse: the want of authority may be cured up to the day on which the judge gives his ruling (Cass. com., 6 May 2026, n° 25-12.493), no text requiring that the authorisation be sought before the action is brought (CA Paris, pôle 1 ch. 2, 3 July 2025, n° 24/15661).
Can an isolated holder sue alone for sums unpaid to it?
The texts leave room for a personal action for payment of a holder's own instalments, since the monopoly covers only the actions « ayant pour objet la défense des intérêts communs des obligataires » [whose object is the defence of the common interests of the bondholders]; but no verified decision has upheld such an action, and two judgments have recharacterised as an action of common interest what a holder presented as a personal one.
Two texts which almost no account of the subject brings together show that the legislature contemplated an act performed by a holder acting alone. The first extends to the others the effects of an act interrupting the limitation period: « Tout acte qui interrompt la prescription des intérêts à l'égard de l'un des porteurs d'obligations émises en France par toute collectivité privée ou publique, société commerciale ou civile, française ou étrangère, profite aux autres obligataires du même emprunt » [any act which interrupts the limitation period for the interest as regards one of the holders of bonds issued in France by any private or public body, or any commercial or civil company, French or foreign, benefits the other bondholders of the same loan] (C. mon. fin. art. L. 213-6-1). The second extends to the others the effects of the judgment the holder obtains: « la décision judiciaire définitive rendue en faveur de l'un des porteurs d'obligations émises en France par toute collectivité privée ou publique, ou par toute société commerciale ou civile, française ou étrangère, et concernant les droits communs des obligataires, peut acquérir force exécutoire au profit de tout obligataire qui n'a pas figuré dans l'instance par une ordonnance du président du tribunal judiciaire » [a final judicial decision given in favour of one of the holders of bonds issued in France by any private or public body, or by any commercial or civil company, French or foreign, and concerning the common rights of the bondholders, may acquire enforceable effect for the benefit of any bondholder who was not a party to the proceedings, by an order of the president of the tribunal judiciaire, the French civil court of general jurisdiction] (C. mon. fin. art. L. 213-6-2). Both of these texts cover any bond issued in France, by a public body as much as by a company: in them the legislature contemplated the holder who acts alone. But the second covers a decision « concernant les droits communs des obligataires » [concerning the common rights of the bondholders], that is to say the very subject matter which the monopoly reserves to the representatives: the texts therefore leave in place a tension which no verified decision resolves. The argument remains a textual one: it is a reading of the monopoly a contrario, not a solution decided by a court, and it holds good only for what the monopoly does not cover.
The case law, for its part, points the other way. A holder « ne saurait, en invoquant les règles relatives à la gestion d'affaires, s'affranchir des dispositions impératives de l'article L. 228-54 du code de commerce » [cannot, by invoking the rules on the management of another's affairs, free itself from the mandatory provisions of article L. 228-54 of the French Commercial Code] (Cass. com., 7 April 2010, n° 09-11.196). A claim for compensation for the loss arising from the failure to adjust convertible bonds, brought by a holder on its own account, « était de nature à intéresser l'ensemble des obligataires placés dans la même situation » [was of such a nature as to concern the whole body of bondholders placed in the same situation], only the représentants de la masse being admissible to sue (Cass. com., 10 December 2013, n° 12-24.198). And the monopoly extends to an investigative measure intended to prepare an action in liability for fault committed in the preparation of the information document for the issue, the subscriber's individual action being inadmissible, it mattering little that each holder's loss is a distinct one (Cass. com., 9 October 2024, n° 23-10.645). The dividing line is therefore a narrow one, and its two sides do not have the same source: claiming one's own coupon or one's own principal that has fallen due escapes the monopoly on the letter of the text, without any verified decision having so held; a claim for compensation for a loss which arises from the contrat d'émission and strikes every holder in the same way is, for its part, confiscated by the masse, and that is what those judgments hold. None of these three decisions upholds the individual action; two recharacterise it as an action of common interest.
What can a minority of holders do when the masse is paralysed?
One thirtieth of the securities of a masse is enough to request that the meeting be convened and to have draft resolutions placed on its agenda; where no meeting is convened within the period laid down by regulation, those who made the request may instruct one of their number to apply to the court for the appointment of an agent who will convene the meeting; and in case of urgency, the representatives may be appointed by the judge on the application of any interested party.
The threshold is written down: « Un ou plusieurs obligataires, réunissant au moins le trentième des titres d'une masse, peuvent adresser à la société et au représentant de la masse une demande tendant à la convocation de l'assemblée » [one or more bondholders, together holding at least one thirtieth of the securities of a masse, may send the company and the représentant de la masse a request for the meeting to be convened] and, if that request remains without effect within the period fixed by a décret en Conseil d'État, which the texts cited do not reproduce, « les auteurs de la demande peuvent charger l'un d'entre eux de poursuivre en justice la désignation d'un mandataire qui convoquera l'assemblée » [those who made the request may instruct one of their number to apply to the court for the appointment of an agent who will convene the meeting] (C. com. art. L. 228-58). The same threshold opens up the power to « requérir l'inscription à l'ordre du jour de projets de résolution » [require draft resolutions to be placed on the agenda] (C. com. art. L. 228-60). And where no representative is in office, a door opens which presupposes no threshold: « En cas d'urgence, les représentants de la masse peuvent être désignés par décision de justice à la demande de tout intéressé » [in case of urgency, the représentants de la masse may be appointed by a court decision on the application of any interested party] (C. com. art. L. 228-50). The judge « peut » [may] appoint: urgency is a matter for assessment case by case.
How does the masse take its decisions?
In general meeting, where it rules by a majority of two thirds of the votes cast, or at the conclusion of a written consultation where the contrat d'émission so provides and on the terms which it lays down. « Les décisions de la masse des obligataires sont prises en assemblée générale » [the decisions of the masse des obligataires are taken in general meeting], but « ces décisions peuvent également être prises à l'issue d'une consultation écrite, y compris par voie électronique, si le contrat d'émission le prévoit et selon les modalités de délai et de forme définies par celui-ci » [those decisions may also be taken at the conclusion of a written consultation, including by electronic means, if the contrat d'émission so provides and on the terms as to time and form which it lays down] (C. com. art. L. 228-46-1).
The meeting « délibère sur toutes mesures ayant pour objet d'assurer la défense des intérêts communs des obligataires ainsi que sur toute proposition tendant à la modification du contrat » [deliberates upon all measures whose object is to secure the defence of the common interests of the bondholders, as well as upon any proposal for the amendment of the contract] and « statue à la majorité des deux tiers des voix exprimées par les porteurs présents ou représentés » [rules by a majority of two thirds of the votes cast by the holders present or represented], which « ne comprennent pas celles attachées aux obligations pour lesquelles l'obligataire n'a pas pris part au vote, s'est abstenu ou a voté blanc ou nul » [do not include those attached to the bonds in respect of which the bondholder did not take part in the vote, abstained or cast a blank or spoilt vote] (C. com. art. L. 228-65). The quorum is that of the second paragraph of article L. 225-98 of the same code, which the texts cited do not reproduce.
Two voting rules count on the day of the default: « les porteurs d'obligations amorties et non remboursées par suite de la défaillance de la société débitrice ou à raison d'un litige portant sur les conditions de remboursement, peuvent participer à l'assemblée » [the holders of bonds drawn for redemption and not repaid as a result of the default of the debtor company or by reason of a dispute as to the terms of repayment may take part in the meeting], and « la société qui détient au moins 10 % du capital de la société débitrice ne peut voter à l'assemblée avec les obligations qu'elle détient » [a company which holds at least 10% of the share capital of the debtor company may not vote at the meeting with the bonds it holds] (C. com. art. L. 228-61).
When the contract disapplies the masse
Can the contract disapply the regime of the masse?
Yes, but on three conditions: a regulatory threshold reached, whether through the nominal value of the security or through the minimum amount of acquisition per investor; a contract which itself organises the representation of the holders and the rules of quorum and of majority; and bonds which do not give access to share capital securities to be issued. The disapplication may then be total or partial. The contrat d'émission « peut prévoir que tout ou partie des dispositions législatives et réglementaires relatives à la masse des obligataires, aux représentants de la masse et aux assemblées générales d'obligataires ne leur sont pas applicables » [may provide that all or part of the legislative and regulatory provisions relating to the masse des obligataires, to the représentants de la masse and to general meetings of bondholders are not applicable to them] (C. mon. fin. art. L. 213-6-3).
The words « tout ou partie » [all or part] open the way to an à la carte construction: the regime may be withdrawn as a whole, or only for the general meeting. But the power is available only « sous réserve des dispositions du III » [subject to the provisions of III], and the text attaches to it an immediate sequel, drafted in the indicative: « Dans cette hypothèse, le contrat d'émission des obligations organise la représentation des obligataires et prévoit les règles de quorum et de majorité applicables à leurs décisions. » [in that case, the contract for the issue of the bonds shall organise the representation of the bondholders and shall lay down the rules of quorum and of majority applicable to their decisions.] That is not a recommendation of good practice. The text does not say, on the other hand, what a failure to meet that condition entails — neither nullity of the issue, nor unenforceability of the disapplication, nor an automatic return to the statutory regime: the consequence would be a matter for argument case by case.
What is the threshold, and where is it written down?
One hundred thousand euros, and the source is not some indeterminate “decree”: « le montant mentionné au premier et au deuxième alinéa du I de l'article L. 213-6-3 est fixé à 100 000 euros » [the amount referred to in the first and in the second paragraph of I of article L. 213-6-3 is set at 100,000 euros] (C. mon. fin. art. R. 213-16-1, created by décret no. 2017-1165 of 12 July 2017).
That amount governs two alternative limbs, and it is the second which is used most often. The first turns on the value of the security: bonds « dont la valeur nominale à l'émission est au moins égale » [whose nominal value on issue is at least equal] to that amount. The second turns on the entry ticket: the same power is available « lorsque les obligations émises ne peuvent être acquises que pour un montant par investisseur et par opération au moins égal » [where the bonds issued may be acquired only for an amount per investor and per transaction at least equal] to that same amount (C. mon. fin. art. L. 213-6-3). An unlisted company may therefore keep a customary nominal value, provided that the contract prohibits any acquisition of less than 100,000 euros per investor and per transaction: this is a clause of the contract, not a characteristic of the security, and it is drafted as a prohibition on acquiring.
What must the contract then provide for, as a matter of obligation?
The representation of the bondholders, the rules of quorum and the rules of majority: they are conditions of the disapplication, and the incompatibilities laid down by the French Commercial Code continue to apply to the representative appointed.
III shuts the door on the accommodating representative: « Lorsque le contrat d'émission prévoit la nomination d'un ou plusieurs représentants des obligataires ou du mandataire mentionné au IV, les dispositions des articles L. 228-49, L. 228-62 et L. 228-63 du code de commerce sont applicables. » [where the contrat d'émission provides for the appointment of one or more representatives of the bondholders, or of the agent referred to in IV, the provisions of articles L. 228-49, L. 228-62 and L. 228-63 of the French Commercial Code are applicable.] (C. mon. fin. art. L. 213-6-3). The first of those articles excludes from the office « la société débitrice » [the debtor company], « les sociétés possédant au moins le dixième du capital de la société débitrice ou dont celle-ci possède au moins le dixième du capital » [companies owning at least one tenth of the share capital of the debtor company, or of whose share capital the debtor company owns at least one tenth] and « les sociétés garantes de tout ou partie des engagements de la société débitrice » [companies guaranteeing all or part of the debtor company's undertakings] (C. com. art. L. 228-49). The other two are not reproduced in the texts cited.
One stipulation remains optional and yet changes a great deal: the contract « peut prévoir que les obligataires désignent un mandataire chargé de les représenter lorsque l'émetteur fait l'objet d'une des procédures du livre VI du code de commerce ou des procédures similaires de droit étranger » [may provide that the bondholders appoint an agent charged with representing them where the issuer is the subject of one of the procedures of Book VI of the French Commercial Code, or of similar procedures under foreign law], and « ce mandataire procède à la déclaration des créances obligataires » [that agent carries out the lodging of the bondholders' claims]. Without it, the holders of an issue which has disapplied the masse have, faced with proceedings that have been opened, nothing but the representative the contract has organised, and no agent charged with lodging their claims collectively: each then lodges its claim as any creditor does, itself or « par tout préposé ou mandataire de son choix » [through any employee or agent of its choosing] (C. com. art. L. 622-24). The issuer further receives from the text the power to amend the contrat d'émission « sans le consentement des obligataires afin de corriger une erreur matérielle » [without the consent of the bondholders in order to correct a clerical error] (C. mon. fin. art. L. 213-6-3).
Which issues can never have the benefit of it?
Those whose bonds give access to share capital securities to be issued: convertible bonds and bonds with share subscription warrants fall outside the mechanism in its entirety, even though they are the most frequent instruments of an unlisted fundraising.
The exclusion covers the article, and not one or another of its provisions: « Les dispositions du présent article ne sont pas applicables aux obligations donnant accès à des titres de capital à émettre, ni aux titres émis par l'Etat. » [the provisions of this article are not applicable to bonds giving access to share capital securities to be issued, nor to securities issued by the State.] (C. mon. fin. art. L. 213-6-3). An issue of convertible bonds therefore cannot disapply the regime of the masse on that basis. The power to issue those securities is not affected by it — « les sociétés par actions peuvent émettre des valeurs mobilières donnant accès au capital ou donnant droit à l'attribution de titres de créance » [joint-stock companies may issue securities giving access to the share capital or carrying a right to the allotment of debt securities] (C. com. art. L. 228-91): it is their collective regime which remains that of the French Commercial Code, masse, meeting and representatives included. Since the exclusion bears on share capital securities « à émettre » [to be issued], the fate of a bond exchangeable for existing securities is settled neither by that text nor by any verifiable decision, and is a matter for examination case by case.
Should it be confused with the loans which the law itself removes from the masse?
No, and the reading is reversed: the statutory disapplication covers only three exhaustive categories of loan, and for those three categories a clause to the contrary in the contrat d'émission serves to reintroduce the regime of the masse, not to dispense other issuers from it.
The text is built the other way round from that of the French Monetary and Financial Code: « Sauf clause contraire du contrat d'émission » [save for a clause to the contrary in the bond issue contract], the provisions it lists « ne sont pas applicables aux sociétés dont les emprunts sont soumis à un régime légal spécial, ni aux emprunts garantis par l'Etat, les départements, les communes ou les établissements publics ni aux emprunts émis à l'étranger par des sociétés françaises » [are not applicable to companies whose loans are subject to a special statutory regime, nor to loans guaranteed by the State, the départements, the communes or public establishments, nor to loans issued abroad by French companies] (C. com. art. L. 228-90). An unlisted company which issues in France, without a public guarantee and without a special statutory regime, falls into none of the three: that article opens up nothing for it, and the only route to disapplication offered to it is that of the threshold.
What difference does this make for the holder?
What the contract has disapplied is replaced only by what the contract organises: apart from the transactions which the text itself governs, no default body fills the silence of the documentation, and what becomes of a disapplication whose counterpart is missing is settled by none of the texts cited.
The statutory regime provides, to whoever does not disapply it, a grouping endowed with civil legal personality, a meeting, representatives and a standing to sue defined by law. The disapplication mechanism provides nothing equivalent: apart from the representation, the quorum and the majority which the contract « organise » [organises] and « prévoit » [lays down], no default body is designated. A single case of absence is dealt with: « En l'absence de masse et d'un représentant » [in the absence of a masse and of a representative], where the issuer takes part in a merger, a demerger, a reduction of capital not prompted by losses, or a transfer of the registered office of a European company to another Member State, « les obligataires bénéficient des mêmes droits que les créanciers non obligataires » [the bondholders have the same rights as creditors who are not bondholders] (C. mon. fin. art. L. 213-6-3). Outside those situations, the silence of the contract is filled by none of the texts cited.
Two questions therefore govern the reading of such documentation: who represents the holders, by name, and by what decision is that person replaced if he resigns or disappears? By what majority, on what quorum, may an amendment of the contract — the postponement of a maturity date, the abandonment of a security interest, a change in the rate — be imposed on a holder who has refused it? The text does not answer them: it refers the answer to the contract.
May the contract be drafted in English?
Yes, but only for the issues which satisfy one of the two limbs of the threshold: the power is granted only « dans les cas prévus aux deux alinéas précédents » [in the cases provided for in the two preceding paragraphs], and not to every bond issue.
The text is as precise as to its field of application as it is as to the documents covered: « Dans les cas prévus aux deux alinéas précédents, le contrat d'émission ainsi que tout autre document contractuel afférent à l'émission des obligations, à leur service financier ou à leur couverture peuvent être rédigés dans une langue, autre que le français, usuelle en matière financière. » [in the cases provided for in the two preceding paragraphs, the contrat d'émission and any other contractual document relating to the issue of the bonds, to their financial servicing or to their hedging may be drafted in a language, other than French, that is customary in financial matters.] (C. mon. fin. art. L. 213-6-3). The language permitted therefore depends on the threshold being crossed, through the nominal value or through the minimum ticket, and the drafting in a foreign language of documentation which does not cross it finds no support in the texts cited. The exclusion of bonds giving access to share capital securities to be issued reaches this power too, since it disapplies the article in its entirety.
Bond crowdfunding
Under what status does a platform offer bonds?
That of prestataire de services de financement participatif, authorised by the Autorité des marchés financiers (the French financial markets authority); the conseiller en investissements participatifs (the crowdfunding investment adviser) disappeared from the code on 24 December 2021.
Defined by reference to Regulation (EU) no. 2020/1503 of 7 October 2020, these prestataires are « agréés, dans les conditions fixées par ce règlement, par l'Autorité des marchés financiers » [authorised, on the terms laid down by that regulation, by the Autorité des marchés financiers], the binding opinion of the Autorité de contrôle prudentiel et de résolution (the French prudential supervision and resolution authority) being required only for the « facilitation de l'octroi de prêts » [facilitation of the granting of loans] (C. mon. fin. art. L. 547-1).
The offer put out is an offre au public permitted by way of derogation, namely the one « proposée par un prestataire de services de financement participatif au sens du règlement (UE) 2020/1503 » [offered by a crowdfunding service provider within the meaning of Regulation (EU) 2020/1503], but only « pour autant qu'elle n'excède pas le seuil fixé à l'article 1er, paragraphe 2, point c, dudit règlement » [provided that it does not exceed the threshold set in article 1, paragraph 2, point c, of that regulation] (C. mon. fin. art. L. 411-2, 2°); that threshold is set by the European regulation, not by the code.
Why does the crowdfunding investor not conduct the proceedings?
Because there are several holders: it is that plurality, and not any clause of the platform, which constitutes the masse by operation of law and reserves to the représentants authorised by the assemblée générale des obligataires the actions that defend the common interests of the holders.
« Les porteurs d'obligations d'une même émission sont groupés de plein droit pour la défense de leurs intérêts communs, en une masse qui jouit de la personnalité civile » [the holders of bonds of a single issue are grouped by operation of law, for the defence of their common interests, into a masse having civil legal personality] (C. com. art. L. 228-46).
The représentants, « dûment autorisés par l'assemblée générale des obligataires » [duly authorised by the general meeting of bondholders], have « seuls qualité pour engager, au nom de ceux-ci » [sole standing to bring, in the bondholders' name] the « actions en justice ayant pour objet la défense des intérêts communs des obligataires » [legal actions whose object is the defence of the common interests of the bondholders]; an action brought in disregard of that rule « doit être déclarée d'office irrecevable » [must be declared inadmissible by the court of its own motion] (C. com. art. L. 228-54).
Can it nevertheless bring an action for its own unpaid sum?
The texts leave room for a personal action for payment of its own coupon or of its own principal once due, the monopoly bearing only on the defence of the common interests; but no verified decision has recognised that action, and complaining of the way in which the issue was presented, or seeking compensation for a loss arising from the contrat d'émission and common to all the holders, is taken over by the masse.
The monopoly covers only actions whose object is « la défense des intérêts communs des obligataires » [the defence of the common interests of the bondholders] (C. com. art. L. 228-54): an instalment owed to a particular holder does not have that object. This is a reading of the text: no verified decision has recognised that personal action.
Two judgments have, conversely, narrowed the individual action. The monopoly extends to an investigative measure preparing an action in liability for fault committed in the preparation of the information document for the issue, the subscriber's action being inadmissible, regardless of the fact that the loss of each holder is distinct (Cass. com., 9 October 2024, n° 23-10.645). And compensation sought in a personal capacity, for failure to adjust convertible bonds, was held to be such as to concern all the bondholders placed in the same situation, only the représentants having standing (Cass. com., 10 December 2013, n° 12-24.198).
What happens if the platform ceases to operate?
Representation does not disappear with it: new représentants may be appointed by the assemblée générale des obligataires or, if the contrat d'émission so provides, by a written consultation of the holders, and failing that their appointment is sought from the court.
The decisions of the masse « peuvent également être prises à l'issue d'une consultation écrite, y compris par voie électronique, si le contrat d'émission le prévoit » [may also be taken following a written consultation, including by electronic means, if the bond issue contract so provides] (C. com. art. L. 228-46-1). The new représentants, once vested, have standing to act in place of the resigning représentant that has gone into liquidation judiciaire (compulsory liquidation) (CA Paris, pôle 1 ch. 2, 26 February 2026, n° 25/03374).
Where no one is in office, the représentants « peuvent être désignés par décision de justice à la demande de tout intéressé » [may be appointed by court decision on the application of any interested party] in a case of urgency (C. com. art. L. 228-50), and the same route is open where no appointment has been made by the contrat d'émission or by the assemblée générale des obligataires (C. com. art. L. 228-51).
And « à défaut de déclaration par les représentants de la masse, une décision de justice désigne à la demande du mandataire judiciaire, un mandataire chargé d'assurer la représentation de la masse » [failing the lodging of a claim by the representatives of the masse, a court decision appoints, on the application of the mandataire judiciaire, an agent charged with ensuring the representation of the masse] (C. com. art. L. 228-85).
In a private placement with a single investor, who acts?
None of the texts cited settles the case: the masse groups « les porteurs d'obligations d'une même émission » [the holders of bonds of a single issue] for « la défense de leurs intérêts communs » [the defence of their common interests], and a sole subscriber has no common interest with anyone; this is a reading of the text, which no verified decision confirms.
The text groups « les porteurs d'obligations d'une même émission » [the holders of bonds of one and the same issue] (C. com. art. L. 228-46) and reserves standing to the représentants acting « au nom de ceux-ci » [in their name] (C. com. art. L. 228-54): a sole subscriber has no common interest to defend.
The question arises afresh as soon as another holder enters the issue, by subscription or by transfer: the grouping then operates by operation of law, and the actions that defend the common interests cease to be individual.
What should be checked before subscribing?
Who represents the holders, the appointment not always being mandatory, and what the security guarantees: a bond may offer no guarantee of capital at all.
The appointment of the first représentants in the contrat d'émission « n'est pas obligatoire pour les offres au public mentionnées aux 1° et 2° de l'article L. 411-2 du code monétaire et financier » [is not mandatory for the public offerings mentioned in 1° and 2° of article L. 411-2 of the French Monetary and Financial Code] (C. com. art. L. 228-51), which covers a platform's offer. Characterisation as a bond is not conditional on a guarantee of repayment of the nominal value (Cass. 2e civ., 23 November 2017, n° 16-22.620).
No decision of the Cour de cassation settles the civil liability of a crowdfunding platform. The judgment of 24 September 2025 does not examine it: on the civil claims, it requires a direct link between a specific breach and the loss, and holds that the financial loss is not necessarily equal to the sums lost, given the contingent nature of the investment (Cass. crim., 24 September 2025, n° 24-84.249).
When the bonds are convertible
What is a convertible bond, and who may issue one?
A security giving access to the share capital, available to sociétés par actions (joint-stock companies), and which remains a debt security until it is converted.
« Les sociétés par actions peuvent émettre des valeurs mobilières donnant accès au capital » [joint-stock companies may issue securities giving access to the share capital] (C. com. art. L. 228-91). The mechanics of the issue are dealt with on the page on bond issues.
Until they are converted, they are debt securities and not shares; they are not taken into account in assessing the conditions as to the holding of the share capital (Cass. com., 18 September 2024, n° 22-23.054).
Can shares be converted into bonds?
No: conversion operates in one direction only, and a clause purporting to reverse it is deemed not written.
« Les titres de capital ne peuvent être convertis ou transformés en valeurs mobilières représentatives d'un droit de créance. Toute clause contraire est réputée non écrite » [equity securities may not be converted or transformed into securities representing a debt claim. Any clause to the contrary is deemed not written] (C. com. art. L. 228-91). Only the clause falls, the contract surviving.
An investor that has come into the share capital cannot therefore secure itself an exit as a creditor by transforming its shares.
Can conversion cause control of the company to be lost?
It can lead to that, since it creates new shares and shifts the voting rights; none of the texts cited caps the dilution.
In the sense which the law gives to control for the purposes of certain of its provisions, control belongs to whoever holds « une fraction du capital lui conférant la majorité des droits de vote » [a portion of the share capital conferring on it the majority of the voting rights], and it is presumed in whoever has « d'une fraction des droits de vote supérieure à 40 % » [a portion of the voting rights greater than 40 %] without any other shareholder holding more (C. com. art. L. 233-3); a change of control clause may adopt a different definition.
Before they are converted, convertible bonds are not taken into account in assessing the conditions as to the holding of the share capital (Cass. com., 18 September 2024, n° 22-23.054); the voting rights shift only upon conversion. No verified decision settles the question of abuse of the right of conversion: the protection is that which the contrat d'émission organises.
Can the issuer impose a buy-back of the rights?
No, save for a special stipulation in the contrat d'émission, and apart from the case of an early dissolution not resulting from a merger or a demerger.
« Sauf stipulations spéciales du contrat d'émission et hors le cas de dissolution anticipée ne résultant pas d'une fusion ou d'une scission, la société ne peut imposer aux titulaires de valeurs mobilières donnant accès à son capital le rachat ou le remboursement de leurs droits » [save for special stipulations in the bond issue contract and apart from the case of an early dissolution not resulting from a merger or a demerger, the company may not impose on the holders of securities giving access to its share capital the buy-back or the redemption of their rights] (C. com. art. L. 228-102).
The principle holds for ordinary bonds as well: « en l'absence de dispositions spéciales du contrat d'émission, la société ne peut imposer aux obligataires le remboursement anticipé des obligations » [in the absence of special provisions in the bond issue contract, the company may not impose early redemption of the bonds on the bondholders] (C. com. art. L. 228-75). Where there is an early dissolution not brought about by a merger or by a demerger, « l'assemblée générale des obligataires peut exiger le remboursement des obligations et la société peut l'imposer » [the general meeting of bondholders may require redemption of the bonds and the company may impose it] (C. com. art. L. 228-76).
What becomes of the conversion ratio where there is a transaction affecting the share capital?
It is governed by the contrat d'émission; the law locks down certain transactions, and the case law distinguishes authorisation by the holders from their mere consultation.
From the date of the issue, the company « ne peut modifier sa forme ou son objet » [may not change its form or its objects] without being authorised to do so by the contrat d'émission or on the terms which the law provides; nor may it alter the rules for the allocation of its profits or « amortir son capital » [redeem its share capital], unless authorised in the same manner « et sous réserve de prendre les dispositions nécessaires au maintien des droits des titulaires des valeurs mobilières donnant accès au capital » [and subject to taking the steps necessary to preserve the rights of the holders of securities giving access to the share capital] (C. com. art. L. 228-98).
Where there is a reduction of capital « motivée par des pertes et réalisée par la diminution du montant nominal ou du nombre des titres composant le capital » [prompted by losses and carried out by reducing the nominal value or the number of the securities making up the share capital], the rights of the holders « sont réduits en conséquence, comme s'ils les avaient exercés avant la date à laquelle la réduction de capital est devenue définitive » [are reduced accordingly, as though they had exercised them before the date on which the reduction of capital became final] (C. com. art. L. 228-98).
The boundary between authorisation and consultation has grown finer: in 2012, the meeting of holders had to be called upon to rule in advance on decisions affecting the conditions of allotment (Cass. com., 10 July 2012, n° 11-22.898), whereas the holders of convertible bonds must authorise amendments to the contrat d'émission, decisions affecting the conditions of subscription or of allotment fixed at the time of the issue being subject only to their consultation (Cass. com., 22 November 2023, n° 22-16.362).
Why can a convertible not disapply the masse?
Because the option of disapplying the regime of the masse is expressly denied to bonds giving access to equity securities to be issued.
The contrat d'émission may disapply the provisions « relatives à la masse des obligataires, aux représentants de la masse et aux assemblées générales d'obligataires » [relating to the masse des obligataires, to the representatives of the masse and to the general meetings of bondholders] where the nominal value, or the amount required « par investisseur et par opération » [per investor and per transaction], reaches the amount set by decree (C. mon. fin. art. L. 213-6-3, I), « fixé à 100 000 euros » [set at 100,000 euros] (C. mon. fin. art. R. 213-16-1) — it then falling to the contract to organise the representation of the bondholders and to fix the rules as to quorum and majority.
But « les dispositions du présent article ne sont pas applicables aux obligations donnant accès à des titres de capital à émettre » [the provisions of this article do not apply to bonds giving access to equity securities to be issued] (C. mon. fin. art. L. 213-6-3, VI): a convertible does give such access, and the nominal value or the ticket may reach 100,000 euros without the disapplication becoming available.
Governing law, jurisdiction, confidentiality
Before which court does the bondholder bring its action?
The texts cited do not organise the division of jurisdiction between the tribunal de commerce (commercial court) and the tribunal judiciaire (the French civil court of general jurisdiction); they do, on the other hand, make available, before the president of either one, a référé (urgent interim proceedings) for payment of a provision.
Where « l'existence de l'obligation n'est pas sérieusement contestable » [the existence of the obligation is not seriously open to challenge], the president of the tribunal de commerce « peut accorder une provision au créancier » [may grant an interim payment on account to the creditor] (CPC art. 873); the president of the tribunal judiciaire holds the same power (CPC art. 835).
Both may also, « même en présence d'une contestation sérieuse, prescrire en référé les mesures conservatoires ou de remise en état qui s'imposent, soit pour prévenir un dommage imminent, soit pour faire cesser un trouble manifestement illicite » [even where there is a serious challenge, order in référé the protective or restorative measures that are called for, either to prevent imminent harm or to put an end to a manifestly unlawful interference]. Who brings the action is a different question from before whom: as soon as there are several holders, the représentants de la masse, « dûment autorisés par l'assemblée générale des obligataires » [duly authorised by the general meeting of bondholders], have « seuls qualité » [sole standing] to defend the common interests (C. com. art. L. 228-54).
Is a jurisdiction clause inserted in the issue documentation enforceable?
In the case of a jurisdiction clause inserted in a prospectus for a bond issue, the Court of Justice has held the requirement of written form to be satisfied only where the contract signed at the time of the issue records acceptance of the clause or refers expressly to the prospectus.
Transposed to the documentation of an unlisted issue, the requirement calls for a check that the instrument signed refers to the clause or to the documentation that contains it; what a clause to which the signed instrument does not refer is worth is not settled by the sources cited.
Where it is relied on against a third party that acquired the securities from a financial intermediary, it presupposes three cumulative conditions: its validity as between the issuer and the intermediary, the third party's succession to the rights and obligations attached to the securities under national law, and the possibility for that third party to acquaint itself with the prospectus (CJEU, 20 April 2016, case C-366/13).
In what language may the contract be drawn up?
The texts cited allow the contrat d'émission to be drawn up in a language other than French, customary in financial matters, only where the nominal value on issue or the minimum amount per investor and per transaction is at least equal to 100,000 euros, and never for bonds giving access to equity securities to be issued, to which the whole article is inapplicable.
Where the nominal value on issue, or the amount required « par investisseur et par opération » [per investor and per transaction], reaches the amount set by decree, « le contrat d'émission ainsi que tout autre document contractuel afférent à l'émission des obligations, à leur service financier ou à leur couverture peuvent être rédigés dans une langue, autre que le français, usuelle en matière financière » [the bond issue contract and any other contractual document relating to the issue of the bonds, to their financial servicing or to their hedging may be drawn up in a language other than French that is customary in financial matters] (C. mon. fin. art. L. 213-6-3, I), that amount being « fixé à 100 000 euros » [set at 100,000 euros] (C. mon. fin. art. R. 213-16-1).
The option turns on the threshold, not on the parties' choice, and it is closed to bonds giving access to equity securities to be issued (C. mon. fin. art. L. 213-6-3, VI). In crowdfunding, the fiche d'informations clés sur l'investissement (the key investment information sheet) « est rédigée en français » [is drawn up in French], another language customary in financial matters being admitted only within the limits set by the general regulations of the Autorité des marchés financiers (C. mon. fin. art. L. 547-2).
Does a confidentiality clause prevent the contract from being produced in court?
Neither any text cited nor any verified decision settles the production in court of a contrat d'émission that describes itself as confidential: the clause binds the parties as between themselves, and its effect before the court cannot be deduced from those sources.
What the clause does, on a reading of the sources cited, amounts to a duty of discretion among those who signed it. What it would be wrong to ascribe to those sources is that such a clause would stand in the way of producing the contract in support of a claim for payment.
The only route which the texts cited open against the clause itself is that of the contrat d'adhésion: « toute clause non négociable, déterminée à l'avance par l'une des parties, qui crée un déséquilibre significatif entre les droits et obligations des parties au contrat est réputée non écrite » [any non-negotiable clause, determined in advance by one of the parties, which creates a significant imbalance between the rights and obligations of the parties to the contract is deemed not written] (C. civ. art. 1171). It still has to be established that there was adhesion, an absence of negotiation and an imbalance, which is assessed case by case.
What is the time limit for bringing an action, and can one holder make the others benefit from it?
The texts cited put no figure on any time limit specific to a bond loan; they lay down that an act interrupting the limitation period for interest as against a single holder benefits all the bondholders of the same loan issued in France.
« Tout acte qui interrompt la prescription des intérêts à l'égard de l'un des porteurs d'obligations émises en France par toute collectivité privée ou publique, société commerciale ou civile, française ou étrangère, profite aux autres obligataires du même emprunt » [any act which interrupts the limitation period for interest as against one of the holders of bonds issued in France by any private or public body, or any commercial or civil company, whether French or foreign, benefits the other bondholders of the same loan] (C. mon. fin. art. L. 213-6-1). The text addresses the limitation of interest, and an interrupting act performed as against a single holder is enough to interrupt it for all.
The same relay exists at the judgment stage: a final court decision given in favour of one of the holders « et concernant les droits communs des obligataires, peut acquérir force exécutoire au profit de tout obligataire qui n'a pas figuré dans l'instance par une ordonnance du président du tribunal judiciaire » [and concerning the common rights of the bondholders may be made enforceable for the benefit of any bondholder that was not a party to the proceedings, by an order of the president of the tribunal judiciaire] of the place where the case was brought at first instance (C. mon. fin. art. L. 213-6-2).
When the issuer stops paying
What is the first step to take?
Serve the issuer with a mise en demeure, by an instrument whose date and content are established: failing a clause that dispenses with it, the passing of the due date is not enough, and, save where the non-performance is final, the penalty for late payment is not incurred. The debtor « est mis en demeure de payer soit par une sommation ou un acte portant interpellation suffisante, soit, si le contrat le prévoit, par la seule exigibilité de l'obligation » [is put on notice to pay either by a summons or by an instrument conveying a sufficient demand or, if the contract so provides, by the mere fact that the obligation has fallen due] (C. civ. art. 1344): dispensing with the summons presupposes an express stipulation. The consequence for the computation is immediate, since « Sauf inexécution définitive, la pénalité n'est encourue que lorsque le débiteur est mis en demeure » [save where the non-performance is final, the penalty is incurred only once the debtor has been put on formal notice] (C. civ. art. 1231-5). The instrument further settles, item by item, what is being claimed, and dates the starting point of everything that the mise en demeure conditions.
Can a swift decision be obtained?
A swift route does exist, the référé-provision, the urgent interim application for a provision, but it is no more than a power the judge may exercise, and it presupposes a condition which the contract and the documents dictate: that the existence of the obligation should not be seriously open to challenge. « Dans les cas où l'existence de l'obligation n'est pas sérieusement contestable, ils peuvent accorder une provision au créancier » [in cases where the existence of the obligation is not seriously open to challenge, they may grant a provision to the creditor] (CPC art. 835), and the president of the tribunal de commerce holds the same power (CPC art. 873). The bondholder's claim arises early but is not due and payable for all that: the claims for repayment of the nominal value and for interest arise at the date of the contrat d'émission, the coming into existence of a contractual claim not being the same thing as the date on which it falls due (Cass. com., 21 February 2012, n° 11-11.693). It is therefore the due date or the déchéance du terme, and not the contract alone, that the holder produces before the juge des référés. Unless the claims are the subject of proceedings on the merits, an order made in référé which has become final enters, moreover, into the issuer's liabilities that are due and payable (Cass. com., 25 March 2026, n° 25-10.686).
What can the issuer raise in answer?
Before the juge des référés, the issuer's defence consists first in giving rise to a serious challenge, and two decisions show where it fails and where it succeeds; there remain the plea of inadmissibility drawn from the claimant's want of standing to sue, which is raised of the court's own motion (C. com. art. L. 228-54), and the judicial moderation of the penalty. It fails where the clauses are clear: events of early maturity stipulated in the contrat d'émission — breach of the information undertakings, failure to pay — were held to be clear and to call for no interpretation exceeding the powers of the juge des référés, a provision of 410,000 euros being upheld (CA Paris, pôle 1 ch. 2, 26 February 2026, n° 25/03374). It also fails as regards a principal amount which the issuer was not disputing (CA Paris, pôle 1 ch. 2, 3 July 2025, n° 24/15661). It succeeds, by contrast, as regards the surplus claimed without supporting documents, which was rejected in that same 2026 decision: hence the holder's preparation, producing the contract and the terms and conditions that it incorporates and justifying separately each item claimed beyond the principal. One reservation remains: the judge « peut, même d'office, modérer ou augmenter la pénalité » [may, even of its own motion, reduce or increase the penalty] where it is manifestly excessive or derisory (C. civ. art. 1231-5).
The issuer has nothing left: is there still someone to pursue?
The liability of the professionals who were involved around the issue may be pursued, and the civil liability insurer of the person liable sued directly, but nothing is secured in advance: the fault, the causal link and the loss must be established, and the complaint that bears on the presentation of the issue belongs to the représentants de la masse alone. « Le tiers lésé dispose d'un droit d'action directe à l'encontre de l'assureur garantissant la responsabilité civile de la personne responsable » [the injured third party has a direct right of action against the insurer covering the civil liability of the person liable] (C. assur. art. L. 124-3). The texts governing the issue themselves point to possible grounds without prejudging anything: the commissaires who verify the assets and liabilities draw up their report « sous leur responsabilité » [under their own responsibility] (C. com. art. L. 228-39), and the action for nullity of an issue of obligations à lots is brought « Sans préjudice de l'action en responsabilité contre les mandataires sociaux » [without prejudice to the action in liability against the company's officers] (C. mon. fin. art. L. 213-6).
Two limits apply. The quantum: a direct link is needed between a specific breach and the loss, and the financial loss is not necessarily equal to the sums invested and lost, having regard to the uncertainty inherent in the investment (Cass. crim., 24 September 2025, n° 24-84.249). Then standing to sue: the complaint drawn from the way in which the issue was presented is appropriated by the masse, the subscriber's individual action being inadmissible in that respect (Cass. com., 9 October 2024, n° 23-10.645).
And what if proceedings are opened against the issuer?
From the holder's point of view, the lodging of the bondholders' claim is collective: the représentants de la masse do it for all of them, and failing that an agent appointed by the court; none of the texts surveyed gives the holder a right to lodge it himself. « Les représentants de la masse déclarent au passif du redressement ou de la liquidation judiciaires de la société, pour tous les obligataires de cette masse, le montant en principal des obligations restant en circulation augmenté pour mémoire des coupons d'intérêts échus et non payés » [the représentants de la masse lodge, in the liabilities of the company's judicial reorganisation or judicial liquidation, on behalf of all the bondholders of that masse, the principal amount of the bonds remaining outstanding, increased, for the record, by the coupons of interest fallen due and unpaid] (C. com. art. L. 228-84). « A défaut de déclaration par les représentants de la masse, une décision de justice désigne à la demande du mandataire judiciaire, un mandataire chargé d'assurer la représentation de la masse » [failing a lodging by the représentants de la masse, a court decision appoints, at the request of the creditors' representative, an agent entrusted with ensuring the representation of the masse] and with lodging its claim (C. com. art. L. 228-85).
In what order should one act?
Mise en demeure first; déchéance du terme next, if the contract opens a ground for it other than the opening of proceedings and if the capital not yet fallen due is to become due and payable; référé-provision last, for the sums fallen due whose existence is not seriously open to challenge. No text imposes that order: it follows from the fact that each step manufactures the proof of the next, and from the fact that standing to sue must be verified before the first of them. The déchéance du terme is neither a mise en demeure nor an action for payment, and the period of grace granted in the letter notifying it was analysed as an indulgence, without any postponement of the date on which the debt falls due (CA Bordeaux, 18 December 2023, n° 23/04451). Standing to sue remains: the authorisation that the assemblée générale des obligataires gives to the représentant de la masse may be issued following a written consultation, including an electronic one, if the contrat d'émission so provides, and the representative's want of authority may be cured up to the day on which the judge rules (Cass. com., 6 May 2026, n° 25-12.493).
The clauses in one table
A contrat d'émission is read twice: on the day of subscription, when everything appears to have been negotiated, and on the day of default, when the only things that count are the clauses to which the law allows effect. The table in this section sets side by side the fourteen clauses that decide repayment, what the contract ordinarily says about them, what they are worth on the day of default and the document or the stipulation to obtain before signing. Each cell of law refers to the article that founds it.
One point of reading governs all the rest: where a cell states that the texts are silent, this means that the articles surveyed do not settle the point, and this amounts neither to authorisation nor to prohibition. The survey that serves as the basis covers the French Commercial Code, the French Monetary and Financial Code, the French Consumer Code, the French Civil Code, the French Code of Civil Procedure and the French Insurance Code; what it does not contain is not for that reason permitted, and a clause those texts do not reach will be decided on other grounds or on the facts.
Three rows gain from being read together, because they produce the same accident: the garantie autonome which, unless otherwise agreed, does not follow the security that is transferred, the security interest promised after the issue which no representative has accepted, and the disapplication of the masse stipulated in an issue that could not benefit from it. In all three cases, the contract announces a protection that the text does not allow it to produce, and the subscriber notices this only on the day it claims it.
| Clause | What the contract says about it | What it is worth on the day of default | What to obtain before signing |
|---|---|---|---|
| Conditions of the issue | Recites the capacity to issue and the decision of the body that resolved on the issue | In a société par actions, the verification of the assets and liabilities is required « A peine de nullité des contrats conclus ou des obligations émises » [on pain of nullity of the contracts entered into or of the bonds issued] where two balance sheets have not been duly approved (C. com. art. L. 228-39), apart from issues guaranteed by a company that has drawn up two duly approved balance sheets and those secured on public debt securities (same article); in a société à responsabilité limitée, « Le non-respect de l'une des conditions édictées aux alinéas précédents est sanctionné par la nullité des contrats conclus ou des obligations émises » [failure to comply with any one of the conditions laid down in the preceding paragraphs is penalised by the nullity of the contracts entered into or of the bonds issued] (C. com. art. L. 223-11) | In a société par actions, the two approved balance sheets or the commissaires' report, the full payment-up of the share capital (C. com. art. L. 228-39) and the decision of the body having authority to resolve on or to authorise the issue (C. com. art. L. 228-40); in a SARL, the appointment of a commissaire aux comptes, the approval of the accounts for the last three financial years of twelve months, the registered form of the securities, the absence of any offre au public other than the one mentioned in 1° of C. mon. fin. art. L. 411-2, and the decision of the meeting of the members, each of those conditions being penalised by nullity (C. com. art. L. 223-11) |
| Nominal value and coupon | Fixes the nominal value, the rate and the coupon dates | No usury rate caps the coupon of a commercial company: the texts on usury « ne sont pas applicables aux prêts accordés à une personne physique agissant pour ses besoins professionnels ou à une personne morale se livrant à une activité industrielle, commerciale, artisanale, agricole ou professionnelle non commerciale » [do not apply to loans granted to a natural person acting for the purposes of their business or to a legal person carrying on an industrial, commercial, craft, agricultural or non-commercial professional activity] (C. consom. art. L. 314-9), and the cap reinstated for those borrowers applies only « Pour les découverts en compte » [to overdrafts on account] (C. mon. fin. art. L. 313-5-1); what remains open to challenge, in a contrat d'adhésion and for a clause that is not negotiable, is the clause and not the price, the assessment of significant imbalance bearing « ni sur l'objet principal du contrat ni sur l'adéquation du prix à la prestation » [neither on the main subject matter of the contract nor on the adequacy of the price to the performance] (C. civ. art. 1171) | The nominal value, the basis and the dates of calculation written into the contract, and the minimum ticket per investor and per transaction if the disapplication of the masse is sought |
| Default interest | An increased rate or a flat-rate penalty for each day of delay | Characterised as an agreed penalty clause, it is incurred, « Sauf inexécution définitive » [save where the non-performance is final], only upon a mise en demeure, and the judge « peut, même d'office, modérer ou augmenter la pénalité ainsi convenue si elle est manifestement excessive ou dérisoire » [may, even of its own motion, reduce or increase the penalty so agreed if it is manifestly excessive or derisory], any stipulation to the contrary being deemed not written (C. civ. art. 1231-5) | The written distinction between moratory interest and penalty, and the dispensation from a summons, the debtor being put on formal notice « si le contrat le prévoit, par la seule exigibilité de l'obligation » [if the contract so provides, by the mere fact that the obligation has fallen due] (C. civ. art. 1344) |
| Capitalisation of interest | Most often silent | « Les intérêts échus, dus au moins pour une année entière, produisent intérêt si le contrat l'a prévu ou si une décision de justice le précise » [interest fallen due, owed for at least one full year, itself bears interest if the contract has so provided or if a court decision so specifies] (C. civ. art. 1343-2): without a clause, capitalisation can be obtained only from a court decision that specifies it, and only for interest owed for one full year | An express anatocisme (compounding of interest) clause, covering the interest fallen due and owed for one full year |
| Garantie autonome | Entitled “garantie à première demande”, sometimes given by a company within the group | The undertaking is autonomous only if its subject matter is not the debt of the principal debtor and if it contains a stipulation that defences may not be raised, the mere designation of the subscriber as « principale obligée » [principal obligor] not being sufficient (Cass. com., 11 March 2026, n° 24-18.780); and « Sauf convention contraire, cette sûreté ne suit pas l'obligation garantie » [unless otherwise agreed, this security does not follow the guaranteed obligation] (C. civ. art. 2321) | The clause excluding the raising of defences, the clause providing for transmission with the security, and the guarantor's accounts. As to the call itself: it is not manifestly abusive where it rests on a contractual breach contested before the court having jurisdiction and whose attribution to the guaranteed debtor is not wholly without foundation (Cass. com., 1 April 2026, n° 24-13.364) |
| Notarised ordre irrévocable de paiement | An instruction to pay received by a notaire, presented as a security | The texts surveyed are silent: they do not characterise it and do not settle its effects, and that silence amounts neither to authorisation nor to prohibition. A garantie autonome presupposes a guarantor who « s'oblige, en considération d'une obligation souscrite par un tiers, à verser une somme soit à première demande, soit suivant des modalités convenues » [undertakes, in consideration of an obligation assumed by a third party, to pay a sum either on first demand or in accordance with agreed terms] (C. civ. art. 2321): an instruction given by the issuer over its own funds is not the undertaking of a third party, and none of the texts surveyed attaches any security interest to the notarial form. Its exact scope is dealt with in the analysis devoted to the ordre irrévocable de paiement | Have it stated what asset it bites on, at what rank and under what regime; failing that, a named and registered security interest |
| Fiducie-sûreté | Assets transferred into a fiduciary estate for the benefit of the holders | None of the texts surveyed settles the fiducie itself, and that silence amounts neither to authorisation nor to prohibition. What is settled is that the « sûretés réelles et cessions à titre de garantie » [security interests in rem and assignments by way of security] created after the issue are created by the company on behalf of the masse (C. com. art. L. 228-81); the enforcement of fiducies-sûretés was authorised after a déchéance du terme notified on grounds of events of default consisting neither in the opening of a procédure collective nor in a failure to pay a sum of money (CA Bordeaux, 18 December 2023, n° 23/04451) | The special instrument, the inventory and the valuation of the assets transferred, and the designation of the masse as beneficiary |
| Security interest created after the issue | A security interest promised, “to be created” within a given period | « Elles sont acceptées par le représentant de la masse » [they are accepted by the représentant de la masse] (C. com. art. L. 228-81): no representative in office, no acceptance. For security interests created before or at the same time as the issue, by contrast, « L'acceptation résulte du seul fait des souscriptions » [acceptance results from the subscriptions alone], with retroactive effect to the date of registration for the security interests that are subject to it, and to the date of creation for the others (C. com. art. L. 228-77), and the special instrument entered into before the issue « ne prend effet qu'au moment de l'émission » [takes effect only at the time of the issue] (C. com. art. L. 228-79) | A représentant de la masse designated and in office, and a timetable for creation coupled with an event of default |
| Early redemption | A right reserved to the issuer, sometimes coupled with a premium | « En l'absence de dispositions spéciales du contrat d'émission, la société ne peut imposer aux obligataires le remboursement anticipé des obligations » [in the absence of special provisions in the contrat d'émission, the company may not impose early redemption of the bonds on the bondholders] (C. com. art. L. 228-75): the clause is therefore what lifts the prohibition. In the event of an early dissolution not brought about by a merger or a demerger, the assemblée générale des obligataires « peut exiger le remboursement des obligations et la société peut l'imposer » [may require the redemption of the bonds and the company may impose it] (C. com. art. L. 228-76) | The reciprocity of the right, the calculation of the premium, and the cases in which the holder may require it; bonds bought back « sont annulées et ne peuvent être remises en circulation » [are cancelled and may not be put back into circulation] (C. com. art. L. 228-74) |
| Covenants and information | Financial ratios and periodic reporting owed to each holder | The clause is worth what the contract provides if it is not performed: the texts surveyed give it nothing more, and refuse the isolated holder any statutory right — « Les obligataires ne sont pas admis individuellement à exercer un contrôle sur les opérations de la société ou à demander communication des documents sociaux » [bondholders are not permitted individually to exercise control over the company's operations or to request disclosure of the corporate documents] (C. com. art. L. 228-70); it is the représentants de la masse who « ont le droit d'obtenir communication des documents mis à la disposition des actionnaires dans les mêmes conditions que ceux-ci » [have the right to obtain disclosure of the documents made available to the shareholders on the same terms as the shareholders] (C. com. art. L. 228-55) | A named recipient for the information and a contractual right of disclosure enforceable by the representative; a non-negotiable clause creating a significant imbalance in a contrat d'adhésion is deemed not written (C. civ. art. 1171) |
| Déchéance du terme | A list of events of default rendering the loan immediately due and payable, the opening of insolvency proceedings at the head of it | « Le jugement d'ouverture ne rend pas exigibles les créances non échues à la date de son prononcé. Toute clause contraire est réputée non écrite » [the judgment opening the proceedings does not render due and payable the claims that have not fallen due at the date on which it is delivered. Any clause to the contrary is deemed not written] (C. com. art. L. 622-29). A déchéance acquired before that, on another ground, remains effective: notified on the basis of contractual events of default consisting neither in the opening of a procédure collective nor in a failure to pay a sum of money, it was held to produce its effect (CA Bordeaux, 18 December 2023, n° 23/04451) | Events of default distinct from the opening of proceedings, a short cure period, and the dispensation from a summons |
| Representation of the holders | Designates, or does not designate, the représentants de la masse | The representatives « dûment autorisés par l'assemblée générale des obligataires, ont seuls qualité » [duly authorised by the assemblée générale des obligataires, alone have standing] for the actions whose purpose is the defence of the common interests, and any action brought contrary to that text « doit être déclarée d'office irrecevable » [must be declared inadmissible of the court's own motion] (C. com. art. L. 228-54); the authorisation may be issued following a written consultation if the contrat d'émission so provides (C. com. art. L. 228-46-1), and a want of authority may be cured up to the day on which the judge rules (Cass. com., 6 May 2026, n° 25-12.493) | Representatives designated in the contract, the written-consultation clause, and the route open to holders together representing « au moins le trentième des titres d'une masse » [at least one thirtieth of the securities of a masse] in order to request the convening of the meeting (C. com. art. L. 228-58) |
| Disapplication of the masse | Stipulates that the provisions relating to the masse do not apply | The option presupposes a nominal value on issue at least equal to the amount fixed by decree, or bonds that may « être acquises que pour un montant par investisseur et par opération » [be acquired only for an amount per investor and per transaction] at least equal to that amount, and it requires that the contract « organise la représentation des obligataires et prévoit les règles de quorum et de majorité applicables à leurs décisions » [organise the representation of the bondholders and provide for the quorum and majority rules applicable to their decisions] (C. mon. fin. art. L. 213-6-3); that amount « est fixé à 100 000 euros » [is fixed at 100,000 euros] (C. mon. fin. art. R. 213-16-1). The regime does not apply « aux obligations donnant accès à des titres de capital à émettre » [to bonds giving access to equity securities to be issued] | The verification of the threshold on one of the two limbs, the representation clause with quorum and majority, and the agent entrusted with lodging the bondholders' claims |
| Jurisdiction | Designates a court, sometimes in the issue documentation alone | For a jurisdiction clause inserted in a bond issue prospectus, the requirement of writing is satisfied only if the contract signed on the issue in the primary market mentions the acceptance of the clause or contains an express reference to the prospectus (CJEU, 20 April 2016, case C-366/13) | The express acceptance of the clause in the instrument signed, and the language of the contract; the swift route remains the provision that the juge des référés « peut accorder » [may grant] « Dans les cas où l'existence de l'obligation n'est pas sérieusement contestable » [in cases where the existence of the obligation is not seriously open to challenge] (CPC art. 835 and 873) |
The right-hand column is not a list of wishes. Each of its boxes designates a document or a stipulation whose absence is paid for, depending on the case, in nullity, in unenforceability, in inadmissibility or in the loss of a right, and not in a bad bargain: the commissaires' report, the decision of the competent body, the special security instrument, the designation of a représentant de la masse, the written-consultation clause, the clause excluding the raising of defences, the contractual computation of default interest and the anatocisme clause are all obtained at no cost before signature; afterwards, a meeting, a judge or the issuer's agreement is needed. What is at stake there is not the yield announced but two questions that the day of default poses together: who will have standing to sue, and over what assets.
Common mistakes
“The contract was executed before a notaire, so it is solid”
Execution before a notaire makes good none of the conditions to which the law subjects an issue, and it constitutes in itself no security interest. The verification of the assets and liabilities is required « A peine de nullité des contrats conclus ou des obligations émises » [on pain of nullity of the contracts entered into or of the bonds issued] of a société par actions which has not drawn up two duly approved balance sheets (C. com. art. L. 228-39): the penalty bears on the issue, not on the form of the instrument. A cour d'appel has inferred from this that an issuer was not entitled to issue and has ordered the full repayment of the subscription, notwithstanding the subscriber's acceptance of the terms (CA Aix-en-Provence, ch. 3-4, 23 May 2024, n° 20/04101).
“There is a garantie à première demande, so I shall be paid”
The label does not determine the characterisation: an undertaking amounts to a garantie autonome only if it does not have as its object the debt of the principal debtor and if it contains a stipulation that defences may not be raised against the beneficiary. The garantie autonome is « l'engagement par lequel le garant s'oblige, en considération d'une obligation souscrite par un tiers, à verser une somme soit à première demande, soit suivant des modalités convenues » [the undertaking by which the guarantor binds itself, in consideration of an obligation entered into by a third party, to pay a sum either on first demand or on agreed terms] (C. civ. art. 2321), and the mere designation of the subscriber as the « principale obligée » [principal obligor] does not suffice (Cass. com., 11 March 2026, n° 24-18.780). A second trap: « Sauf convention contraire, cette sûreté ne suit pas l'obligation garantie » [unless otherwise agreed, this security interest does not follow the obligation guaranteed] (same article), so that the transferee of the bond may find itself without it.
“A bond means guaranteed capital”
It does not: the characterisation of an instrument as a bond is not subject to a guarantee that the nominal value of the security will be repaid. By requiring such a guarantee in order to deny that characterisation to a structured security, a cour d'appel added a condition which the law does not lay down (Cass. 2e civ., 23 November 2017, n° 16-22.620). The text promises nothing more than a right of claim: bonds are « des titres négociables qui, dans une même émission, confèrent les mêmes droits de créance pour une même valeur nominale » [negotiable securities which, within one and the same issue, confer the same rights of claim for the same nominal value] (C. mon. fin. art. L. 213-5).
“The issuer may redeem me early whenever it wishes”
Only if the contrat d'émission so provides, or in the single case the law reserves, early dissolution: outside those two situations the issuer cannot impose it. « En l'absence de dispositions spéciales du contrat d'émission, la société ne peut imposer aux obligataires le remboursement anticipé des obligations » [in the absence of special provisions in the bond issue contract, the company cannot impose early redemption of the bonds on the bondholders] (C. com. art. L. 228-75): the clause is what lifts the prohibition. Where there is an early dissolution not brought about by a merger or a demerger, the assemblée générale des obligataires « peut exiger le remboursement des obligations et la société peut l'imposer » [may require the bonds to be redeemed and the company may impose redemption] (C. com. art. L. 228-76).
“I can never bring proceedings myself”
The misconception remains a misconception, but its correction is a narrow one: the texts leave room for a personal action for payment of one's own coupon or of one's own principal that has fallen due, the case law has never upheld such an action, and twice it has recharacterised as an action in the common interest what a holder presented as personal. The monopoly is mandatory (Cass. com., 7 April 2010, n° 09-11.196) and covers only actions « ayant pour objet la défense des intérêts communs des obligataires » [whose object is the defence of the common interests of the bondholders], any action to the contrary having to be « déclarée d'office irrecevable » [declared inadmissible by the court of its own motion] (C. com. art. L. 228-54). Two texts moreover assume that a holder has been able to act alone, since they extend to the others what that holder obtains: the act which interrupts the limitation period for interest as against one of them « profite aux autres obligataires du même emprunt » [benefits the other bondholders of the same loan] issued in France (C. mon. fin. art. L. 213-6-1), and the final decision given on the common rights of the bondholders « peut acquérir force exécutoire » [may be made enforceable], by order of the president of the tribunal judiciaire, for the benefit of a holder « qui n'a pas figuré dans l'instance » [who was not a party to the proceedings] (C. mon. fin. art. L. 213-6-2).
In the opposite direction, twice. An individual action by a subscriber in liability for a fault committed in the preparation of the information document is inadmissible, it being immaterial that the loss suffered by each holder is distinct (Cass. com., 9 October 2024, n° 23-10.645); and a claim for compensation for the failure to adjust convertible bonds, presented as a personal claim, was held to be « de nature à intéresser l'ensemble des obligataires placés dans la même situation » [of a nature to concern all the bondholders placed in the same situation] (Cass. com., 10 December 2013, n° 12-24.198). The dividing line: claiming an unpaid sum that is one's own alone, or making good a loss which arises from the contrat d'émission and strikes every holder.
“The déchéance du terme clause will operate when the proceedings are opened”
Such a clause is deemed not written; what remains effective is an acceleration already achieved before, on another ground. « Le jugement d'ouverture ne rend pas exigibles les créances non échues à la date de son prononcé. Toute clause contraire est réputée non écrite » [the judgment opening the proceedings does not render due and payable claims which have not fallen due at the date on which it is delivered. Any clause to the contrary is deemed not written] (C. com. art. L. 622-29). The penalty has a precise name: the clause falls, the contract survives. By contrast, an acceleration notified on the ground of events of default consisting neither in the opening of a procédure collective nor in a failure to pay a sum of money has been held to take effect, the debt remaining due and payable (CA Bordeaux, 18 December 2023, n° 23/04451).
“The contract says it is confidential, so I cannot produce it”
None of the texts surveyed prohibits producing the contrat d'émission in court, and none attaches that effect to a confidentiality clause: the scope of such a clause depends on the way it is drafted and calls for an examination case by case. What the texts do offer is a purchase against the clause that was not negotiated: « Dans un contrat d'adhésion, toute clause non négociable, déterminée à l'avance par l'une des parties, qui crée un déséquilibre significatif entre les droits et obligations des parties au contrat est réputée non écrite » [in a standard-form contract, any non-negotiable clause, determined in advance by one of the parties, which creates a significant imbalance between the rights and obligations of the parties to the contract is deemed not written] (C. civ. art. 1171), yet it remains necessary to establish adherence to standard terms, the absence of negotiation and the imbalance, which is assessed case by case.
FAQ
What is a bond contract, and what is it worth on the day of default?
On the day of default it is worth no more than what its clauses say, because the law settles almost nothing of it: it requires only that the securities of one and the same issue confer « les mêmes droits de créance pour une même valeur nominale » [the same rights of claim for the same nominal value] (C. mon. fin. art. L. 213-5). No minimum nominal value, no rate, no term, no list of events of default. The contrat d'émission also fixes the ranking, since it may be stipulated that these securities « ne seront remboursées qu'après désintéressement des autres créanciers » [will be redeemed only after the other creditors have been paid off], and it may fix an order of priority of payments (C. com. art. L. 228-97).
The claim itself is of long standing: the claims for repayment of the nominal value and for interest arise on the date of the contrat d'émission, the coming into existence of a contractual claim not being the same thing as the date on which it falls due (Cass. com., 21 February 2012, n° 11-11.693). But the security does not promise the capital: the characterisation of an instrument as a bond is not subject to a guarantee that the nominal value will be repaid (Cass. 2e civ., 23 November 2017, n° 16-22.620).
What conditions must a company satisfy in order to issue bonds?
They depend on the corporate form. A société par actions which has not drawn up two balance sheets duly approved by the shareholders must have the issue preceded by a verification of the assets and liabilities, carried out by commissaires designated by the body having authority to decide upon or to authorise the issue, who deliver their report before the decision is taken, and that « A peine de nullité des contrats conclus ou des obligations émises » [on pain of nullity of the contracts entered into or of the bonds issued] (C. com. art. L. 228-39). The same text prohibits an issue « aux sociétés dont le capital n'est pas intégralement libéré » [by companies whose share capital is not fully paid up], subject to two reservations relating to employee shareholding.
A société à responsabilité limitée must satisfy four cumulative conditions: a commissaire aux comptes appointed, the accounts for the last three twelve-month financial years duly approved by the members, the absence of any offre au public other than the one referred to in 1° of the text on offers authorised by way of exception (C. mon. fin. art. L. 411-2), and a decision of the meeting of members; the bonds are then in registered form (C. com. art. L. 223-11).
Can an irregular issue be annulled, and with what consequences?
Yes, the penalty being written into the very texts which lay down the conditions; its subject matter differs according to the corporate form. In a société par actions it strikes only the absence of a verification of the assets and liabilities (C. com. art. L. 228-39). In a société à responsabilité limitée, « le non-respect de l'une des conditions édictées aux alinéas précédents est sanctionné par la nullité des contrats conclus ou des obligations émises » [failure to comply with any one of the conditions laid down in the preceding paragraphs is penalised by the nullity of the contracts entered into or of the bonds issued] (C. com. art. L. 223-11): each condition is enough on its own.
There is only one decision: an issuer without two approved balance sheets had issued convertible bonds without any verification; the court held that it was not entitled to issue, declared the nullity and ordered the full repayment of the subscription with interest at the statutory rate (CA Aix-en-Provence, ch. 3-4, 23 May 2024, n° 20/04101). It is a decision of a cour d'appel: the Cour de cassation has not ruled. These texts do not state who may invoke the nullity; only one does so, for obligations à lots (C. mon. fin. art. L. 213-6).
Is a coupon of 10 % a year capped by law?
No, where the issuer is a commercial company, and the capacity of the subscriber makes no difference to this. Usury is measured against the party which borrows, and in a bond issue the borrower is the issuing company: usurious means « tout prêt conventionnel consenti à un taux effectif global qui excède, au moment où il est consenti, de plus du tiers, le taux effectif moyen pratiqué au cours du trimestre précédent » [any contractual loan granted at an all-in annual rate which exceeds, at the time it is granted, by more than one third, the average effective rate applied during the preceding quarter] (C. consom. art. L. 314-6).
Now those provisions « ne sont pas applicables aux prêts accordés à une personne physique agissant pour ses besoins professionnels ou à une personne morale se livrant à une activité industrielle, commerciale, artisanale, agricole ou professionnelle non commerciale » [do not apply to loans granted to a natural person acting for the purposes of their business or to a legal person carrying on an industrial, commercial, craft, agricultural or non-commercial professional activity] (C. consom. art. L. 314-9), and what survives elsewhere holds good only for overdrafts on account (C. mon. fin. art. L. 313-5-1), which a bond issue is not. A legal person that is a stranger to those activities, such as a société civile patrimoniale (a French non-trading company holding private assets), does not appear to be covered by the exclusion.
What is a garantie à première demande given over the units in the project company worth?
Its worth lies in two things which its label never states: how much the assets it bites on are worth, and the capacity of the party which gave it. The guarantor « s'oblige, en considération d'une obligation souscrite par un tiers, à verser une somme soit à première demande, soit suivant des modalités convenues » [binds itself, in consideration of an obligation entered into by a third party, to pay a sum either on first demand or on agreed terms] (C. civ. art. 2321), and an undertaking is independent only if it does not have as its object the debt of the principal debtor and if it contains a stipulation that defences may not be raised against the beneficiary (Cass. com., 11 March 2026, n° 24-18.780).
A clause which promises units does not pay a sum: it provides a block of securities, whose value is assessed case by case. A cour d'appel has been able to award the creditor the whole of the pledged shares, while ordering a valuation expert's report (CA Paris, pôle 1 ch. 8, 29 January 2021, n° 20/01594); the appeal to the Cour de cassation was not admitted. And a guarantee given by a holding company incorporated as a société à responsabilité limitée is null (C. com. art. L. 223-11).
May the issuer redeem early whenever it wishes?
It cannot impose redemption, save where there are special provisions in the contrat d'émission: « En l'absence de dispositions spéciales du contrat d'émission, la société ne peut imposer aux obligataires le remboursement anticipé des obligations » [in the absence of special provisions in the bond issue contract, the company cannot impose early redemption of the bonds on the bondholders] (C. com. art. L. 228-75). What the law prohibits is compulsion, not the transaction: a negotiated buy-back to which the holder consents remains possible, and the bonds bought back « sont annulées et ne peuvent être remises en circulation » [are cancelled and may not be put back into circulation] (C. com. art. L. 228-74).
A single statutory case reverses the rule: « En cas de dissolution anticipée de la société, non provoquée par une fusion ou par une scission, l'assemblée générale des obligataires peut exiger le remboursement des obligations et la société peut l'imposer » [in the event of an early dissolution of the company not brought about by a merger or by a demerger, the general meeting of bondholders may require the bonds to be redeemed and the company may impose redemption] (C. com. art. L. 228-76): the right there belongs to the assemblée générale des obligataires, not to the holder taken in isolation. For securities giving access to the share capital, the same reservation for special stipulations in the contrat d'émission applies (C. com. art. L. 228-102).
Who has standing to sue the defaulting issuer?
As soon as there is more than one of them, it is no longer each of the holders, where the common interests are concerned. Their grouping into a masse des obligataires operates « de plein droit » [by operation of law] (C. com. art. L. 228-46), and the représentants de la masse, « dûment autorisés par l'assemblée générale des obligataires, ont seuls qualité » [duly authorised by the general meeting of bondholders, alone have standing] for actions « ayant pour objet la défense des intérêts communs des obligataires » [whose object is the defence of the common interests of the bondholders], any action to the contrary having to be « déclarée d'office irrecevable » [declared inadmissible by the court of its own motion] (C. com. art. L. 228-54).
A representative in office is required (C. com. art. L. 228-51), together with an authorisation, which may be regularised up to the day on which the judge rules (Cass. com., 6 May 2026, n° 25-12.493). The monopoly being confined by its own terms to the common interests, claiming one's own coupon or one's own principal that has fallen due does not fall within its letter; no decision has held such a claim admissible, and two judgments have recharacterised as an action in the common interest what a holder presented as personal (Cass. com., 10 December 2013, n° 12-24.198; Cass. com., 9 October 2024, n° 23-10.645).
In bond crowdfunding, may I bring proceedings myself?
That depends on the object of the claim. Plurality is enough for the masse to be constituted by operation of law (C. com. art. L. 228-46), and the monopoly of the authorised representatives covers actions « ayant pour objet la défense des intérêts communs des obligataires » [whose object is the defence of the common interests of the bondholders] (C. com. art. L. 228-54). It extends to an investigative measure preparing an action in liability for a fault committed in the preparation of the information document, the subscriber's action being inadmissible, it being immaterial that the loss suffered by each holder is distinct (Cass. com., 9 October 2024, n° 23-10.645).
Compensation claimed in a personal capacity for the failure to adjust convertible bonds was likewise held to be of a nature to concern all the bondholders placed in the same situation (Cass. com., 10 December 2013, n° 12-24.198). Claiming one's own unpaid instalments escapes the letter of the monopoly, but that is a reading of the text, which no verified decision has upheld. Hence the first check: who represents the holders, the appointment not being mandatory for an offer made through a platform (C. com. art. L. 228-51).
What should be done when the first coupon goes unpaid?
Serve a mise en demeure on the issuer: « Le débiteur est mis en demeure de payer soit par une sommation ou un acte portant interpellation suffisante, soit, si le contrat le prévoit, par la seule exigibilité de l'obligation » [the debtor is given formal notice to pay either by a summons or by an instrument containing a sufficient demand, or, where the contract so provides, by the mere fact that the obligation has fallen due] (C. civ. art. 1344). Without a clause dispensing with it, the passing of the due date is not enough, and « Sauf inexécution définitive, la pénalité n'est encourue que lorsque le débiteur est mis en demeure » [save in the case of definitive non-performance, the penalty is incurred only once the debtor has been given formal notice] (C. civ. art. 1231-5).
Next comes notification of the déchéance du terme, which takes the place neither of a mise en demeure nor of an action for payment (CA Bordeaux, 18 December 2023, n° 23/04451). Then the swift route: a provision may be granted « dans les cas où l'existence de l'obligation n'est pas sérieusement contestable » [in cases where the existence of the obligation is not seriously open to challenge] (CPC art. 835 and 873), which requires each head of claim beyond the principal to be separately justified (CA Paris, pôle 1 ch. 2, 26 February 2026, n° 25/03374). Who carries out those steps depends on standing to sue (C. com. art. L. 228-54).
Does a déchéance du terme clause triggered by the opening of insolvency proceedings take effect?
No: the text deprives it of effect by deeming it not written. « Le jugement d'ouverture ne rend pas exigibles les créances non échues à la date de son prononcé. Toute clause contraire est réputée non écrite. » [the judgment opening the proceedings does not render due and payable claims which have not fallen due at the date on which it is delivered. Any clause to the contrary is deemed not written.] (C. com. art. L. 622-29). The clause falls, the contract survives without it, and the reference date is that on which the judgment is delivered. The text says nothing, by contrast, of claims already fallen due at that date, since it covers only claims « non échues » [that have not fallen due].
What remains effective is an acceleration already achieved before, on another ground. A déchéance du terme notified on the basis of contractual events of default consisting neither in the opening of a procédure collective nor in a failure to pay a sum of money has been held to take effect, the debt of repayment remaining due and payable (CA Bordeaux, 18 December 2023, n° 23/04451). It is a decision of a cour d'appel: no decision of the Cour de cassation determines the déchéance du terme of a bond loan taken in isolation.
