The Pacte Law of 2019 introduced the concept of a mission-driven company (Article 176 of the law). It goes beyond adopting a purpose, as the company's bylaws must not only specify a purpose but also one or more social and environmental objectives that the company undertakes to pursue as part of its business activity. How should this status, voluntarily assigned to the company, be legally structured? What legal implications arise from it?

The main advantages of becoming a mission-driven company are:

  • Giving ethical meaning to the company's activities;
  • Uniting teams around a common project;
  • Enhancing the company’s brand image and visibility;
  • Collaborating with stakeholders in the mission area the company has set;
  • Improving economic performance;
  • Protection against hostile takeovers;
  • Strengthening the employer brand.

Note: Obtaining the status of a mission-driven company currently does not provide any fiscal, financial, or social advantages.

 

How to Become a Mission-driven Company?

Any commercial company registered in the RCS (French Trade and Companies Register) can become a mission-driven company. By extension, this also applies to mutuals and cooperatives. It is not necessary to change the legal form; it is a quality, not a new legal status.

To become a mission-driven company, three key elements must be included in the bylaws:

  • A purpose;
  • One or more associated social and environmental objectives that the company undertakes to pursue as part of its activity;
  • The mechanisms for monitoring the execution of the mission, through the establishment of governance that safeguards the mission: this involves setting up a "mission committee" or a "mission referent" (for companies with fewer than 50 employees).

In practice, the mission is akin to an extended corporate purpose, and it must be sufficiently clear and engaging. To minimize costs and avoid frequent rewrites of the bylaws, it is advisable not to go into the details of the actions to be taken to achieve the mission.

Once the mission is defined, the company must make commitments to implement the mission: setting statutory objectives, establishing a timeline, assigning responsibilities, etc.

Finally, the company must declare its status as a mission-driven company to the Commercial Court Registry for publication in the Register of Commerce and Companies. Mutuals and cooperatives are exempt from declaring this to the registry.

 

What Monitoring and Control Mechanisms Should Be Put in Place?

A specific governance structure must be established, with the primary task of ensuring coherence between the company’s purpose and its practices.

This governance consists of forming:

  • A mission committee; or
  • A mission referent for companies with fewer than 50 employees.

The Mission Committee

The mission committee is exclusively responsible for monitoring the mission. It is separate from the corporate bodies and does not have legal personality.

The company’s bylaws must specify the composition of the committee (noting that it must include at least one employee), set the criteria for determining its members, and establish the method for designating those members.

It may be composed of individuals external to the company.

The members of the mission committee must conduct any checks they deem appropriate and may request any necessary documents to monitor the execution of the mission. At the end of their monitoring, the mission committee presents an annual report, which is included in the management report submitted to the assembly responsible for approving the company’s annual accounts.

In small companies as defined by Article L. 123-16 of the Commercial Code, which are exempt from the obligation to prepare a management report, the mission committee's report is directly handed to the shareholders.

The Mission Referent

In companies with fewer than 50 permanent employees, it is possible to replace the mission committee with a mission referent. This substitution must be provided for in the bylaws, which determine the method for appointing the referent. It may be an employee of the company, provided their employment contract corresponds to an actual position, or any individual external to the company.

The mission referent has the same duties and investigative powers as the mission committee and can, therefore, carry out any checks they deem appropriate and demand the communication of any document they consider necessary to fulfill their mission.

External Independent Third-Party Control (OTI)

Additionally, external control has been implemented by the legislator. The verification of whether the set objectives are being achieved is conducted by an independent third-party organization.

This third-party organization, designated by the body in charge of the company’s management, unless the bylaws provide otherwise, must be accredited by the French Accreditation Committee (COFRAC) or any other accreditation body that is a signatory to the multilateral recognition agreement established by the European Coordination of Accreditation Bodies.

To carry out its mission, the independent third party has access to all documents held by the company and necessary for forming its opinion. It can conduct any on-site verification it deems useful within the company.

The first verification by the independent third party occurs within 18 months after the declaration of the “mission-driven company” status in the register of commerce and companies. This period is extended to 24 months for companies with fewer than 50 permanent employees. Once the first verification is done, a similar review must occur at least every 2 years, or every 3 years for companies employing fewer than 50 permanent employees.

The verification results in an opinion, which is attached to the management report submitted to the shareholders during the assembly approving the company’s annual accounts. The opinion is published on the company’s website and remains publicly accessible for at least 5 years.

 

What Are the Consequences of Failing to Comply with Monitoring or Control Obligations?

Can the status of "Mission-driven company" be revoked?

If the mission committee or, where applicable, the mission referent presents a negative report to the annual assembly responsible for approving the accounts, this does not, however, trigger legal proceedings aimed at stripping the company of its right to publicly claim its “mission-driven company” status.

On the other hand, if the independent third party determines in its report that the company is not meeting one or more of the objectives it has set, this may lead to a request from any interested party to revoke the company’s right to claim the “mission-driven company” status.

“Interested Party” Definition

The concept of “interested party” is broad. It may include a shareholder, an employee, a competitor of the company, etc.

Thus, any “interested party” or the Public Prosecutor may refer the matter to the president of the Commercial Court where the company’s headquarters is located. The court will rule in summary proceedings to order, if necessary, under penalty, the company’s legal representative to remove the mention of “mission-driven company” from all acts, documents, or electronic materials issued by the company. The company, however, retains the “mission-driven company” status “internally,” unless it decides to rewrite its bylaws.

Possibility of Regaining the Right to Claim the “Mission-Driven Company” Status

The company may regain its right to claim the “mission-driven company” status if the following cumulative conditions are met:

  • The mission committee or referent and the independent third party continue to perform their respective tasks;
  • The company respects the social and environmental objectives set forth in its bylaws; and
  • The president of the commercial court, upon request from the company, lifts the prohibition on publicly claiming its mission-driven company status in summary proceedings.
     

RSM’s legal teams can assist you in critically reviewing the coherence of your purpose and statutory objectives with your corporate purpose, as well as in modifying your bylaws and following the related formalities.

Author

Amandine Duquesne
Amandine Duquesne
Associée - RSE & Finance durable
Elisabeth de Carvalho
Juriste en droit des affaires et des sociétés

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