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Dividends or Covid 19 emergency aid: large companies will have to choose  

April 03, 2020

Bruno Lemaire, Minister for the Economy and Finance, has announced that large companies wishing to take advantage of emergency aid will have to undertake not to pay out dividends. With this commitment, large French companies are being asked to participate in the nationwide effort deployed in the fight against the epidemic.

“Large companies”: which companies are affected?

Large companies means either an independent company, or a group of several related entities which have employed, during the last financial year completed, at least 5 000 employees or have a consolidated turnover greater than €1.5 billion in France.

No binding law but a moral and ethical commitment by “large companies” in support of the national effort

A large company which requests a deferral of tax and social security payments or a State guaranteed loan undertakes to:

  • not pay dividends in 2020 to its shareholders in France or abroad apart from entities which have a legal obligation to distribute a fraction during 2020);
  • not buy back shares during 2020.

For groups, this commitment covers all of the French entities and subsidiaries of the group in question, even if only some of these entities or subsidiaries benefit from liquidity support.

Keep receiving Covid-19 emergency aid VS paying out dividends: a choice to be made

The commitment by companies wishing to benefit from the special Covid-19 emergency aid depends not only on the non-payment of dividends strictly speaking (i.e. amounts to be distributed as decided by the annual shareholders’ meeting, including when the distribution is made in shares), but also any forms of distribution in cash or in shares (including, in particular, interim dividends and special dividends from reserves).

Intra-group distributions are authorized when their purpose is to financially support the French beneficiary company, “notably to meet its contractual obligations vis-à-vis its creditors”. Distributions made by foreign entities of the group to French entities of this group do not jeopardize the aid sought by the latter.

Aid granted before 27 March shall not be affected even in the case of subsequent distributions.
For distributions made before 27 March, subsequent recourse to aid remains possible.

Partial unemployment remains excluded from this measure.

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