Hamon Law Broadly Aims

Despite its shared namesake with the Filipino word for ham, France’s Hamon law feels more like eggs benedict without the bacon and with rotten eggs for that matter.

Before you accuse me of being a cold-hearted capitalist that is against the proletariat, let me state right up front that I am wary of the Loi Hamon exactly because I believe it runs counter to the interests of the very employees the law was conceived to protect.

While the main thrust of the law is to bolster the non-profit sector, the Hamon law broadly aims to restore power to employees.

Specifically, company directors planning to sell their firms to a third party are required to inform their employees as such two months in advance.

My favorite is the compliance with stock market regulations: French public companies must now disclose potentially sensitive and confidential M&A discussions with their entire workforce, janitors and all.

The good intentions of the Hamon legislation are clear: give employees of a target company a chance to mount a counter offer to a potential big bad outside acquirer feared to take control and restructure to the detriment of existing employees.

Unlike the U.S., China, or perhaps even Japan, the worlds top three economies; France is not a sufficiently large market for a company to restrict itself to its home turf.

Inevitably over time, companies that are inwardly focused on France alone will cede ground to global competitors.

A French company’s very survival – and the jobs of its workforce – may depend on its joining of forces with a foreign company.

Teaming up may trigger the Hamon law, which would then throw up an arbitrary two-month roadblock to such combinations.

Or perhaps in anticipation to avoid such a fate, a French company may consider relocating to a jurisdiction where the Loi Hamon cannot apply.

One such solution involves encapsulating the company inside a new holding company shell, which has none or few direct employees.

Although I’m not endorsing any solution that arguably violates the spirit of the law Hamon, I have to admire the creativity.

(Credits to MARK BIVENS)

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