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Transfer of control of a production company subject to mandatory prior notification

Decree no. 2022-256 of February 25, 2022 and decree no. 2022-344 of March 10, 2022

The French Intellectual Property Code provides that the producer of an audiovisual work must seek ongoing exploitation. This obligation applies only to producers, accordingly if a producer transfers a catalog of audiovisual works, the transferee will not be bound by the obligation of exploitation.

To remedy this situation and ensure public’s access to cinematographic and audiovisual works, a new control mechanism by the Minister of Culture of the transfer of catalogs of audiovisual works has been introduced. From now on, six months before a transfer, or any other operation of equivalent effect, to a person not subject to the obligation to seek ongoing exploitation, the transferring producer must make a declaration to the Minister of Culture.

After three months from the notification, the minister may decide to submit the operation to the Commission for the protection of access to works if he considers that the human, technical, material and financial means at the disposal of the beneficiary of the operation aren’t satisfactory to ensure the respect of the obligation of ongoing exploitation.

At the end of an adversarial investigation procedure, within a period which cannot be longer than three months from the date of submission, the Commission may impose a certain number of obligations on the beneficiary of the operation in order to ensure the ongoing exploitation of the transferred works. The operation is suspended throughout this procedure.

The selling producer who does not comply with the mandatory notification might incur a financial penalty of up to 10% of the value of the works involved in the transaction.

This mechanism was recently detailed and completed by the publication of two decrees of February and March 2022.

Within those provisions, one measure catches the eye: Article 11 of Decree no. 2022-256 of February 25, 2022 which adopts a very broad conception of the notion of an operation with equivalent effect to a transfer.

Indeed, it extends the scope of the prior declaration mechanism by assimilating the transfer of control of a company to the transfer of a catalog of audiovisual works. Thus, from now on, when an operation pertaining to the control of a production company is being considered (for example sale of a business, transfer of assets, partial contribution of assets or merge), the producer will have to send to the Minister of Culture, six months before the planned date for the completion of the operation, documentation detailing the considered operation on the part related to cinematographic or audiovisual works.

As it stands, these measures only apply to catalogs of audiovisual works and do not concern other work catalogs that are also subject to an obligation of exploitation, such as publishing catalogs.

Eric LAUVAUX et Lucile TRANCHARD FRAYSSINHES