This broad question involves several further questions. First, the type of product or service could involve regulatory or quality issues (e.g. technical products or food or medical products). Secondly, the type of customer needs to be identified: is it a public-sector agency? – are the sales subject to calls for tenders? Are they consumers? – in which case French consumer protection rules will come into play. Or it is a business-to-business transaction?

The form of sales network will also have a bearing on the legal issues: sales through physical outlets or over the internet. The general terms and conditions of sale will need to be adapted to each type of sales medium and category of customer.

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The main corporate obligation which is recurrent is to prepare and approve the annual accounts by the shareholders. However, there will also be regular VAT (Value-Added Tax) filings, annual tax returns.

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Takeovers fall broadly into two categories: a purchase of the goodwill and assets or the purchase of shares in the company.

The purchase of the goodwill and assets in principle does not involve the taking over of liabilities from the vendor with the exception of employment contracts and perhaps the commercial lease. Because the change of owner means that creditors of the vendor need to be protected, French law has a specific procedure and rules for the sale of goodwill and a going concern. Contracts with third parties are not in principle transferred.

The purchase of shares entails a full transfer of assets and liabilities and contracts with the company would in principle remain in place. The target company would continue in operation. Because the purchaser would be taking over the liabilities of the company, it is recommended that due diligence, prior to completion, should be more wide-ranging.

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In terms of a long-term presence, it is first necessary to distinguish between a branch and a subsidiary.

A branch would be an extension of the foreign company in France: the branch would be the same legal person as the foreign company. The liabilities of the branch would be coterminous with the liabilities of the foreign company.

A subsidiary would be a separate company from the foreign parent. It would be a means of hiving off liability if a limited liability company is chosen.

In France, there are three main types of limited liability company:

• The SA – société anonyme which is generally fitted for more complex corporate structures, including listed companies
• The SAS – société par actions simplifiée which is generally seen as the most flexible corporate vehicle. The SAS is the simplest vehicle for 100% controlled subsidiaries
• The SARL – société à responsabilité limitée which is a more closed company and traditionally used for smaller business with a close relationship between shareholders.

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A company can be set up in France by undertaking the following broad steps: choice of the company name; selecting business premises or at least the address of the registered office; depositing share capital with a bank or notary; opening a bank account; drafting the company articles of association or by-laws; appointment of the legal representatives and auditors (if the latter are required); filing with the Company and Commercial Register. On completion of the formalities, a company certificate (K-Bis) will be delivered and the company will have legal personality.

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A hidden defect or a vice caché is something which renders a product or good unfit purpose. The purchaser benefits from statutory protection provided that the purchaser was not in a position to become aware of the defect at the time of the purchase. French law makes a distinction between

specialist and non-specialist purchasers in regard to the product in question. If the court finds that there is a hidden defect, the contract of sale can be rescinded or the price reduced.

In the case of a sale at the home of consumer, the consumer has a period of seven days in which to withdraw from the sale.

A supplier can set up a website for online sales without it constituting a breach of exclusive distribution rights in the physical outlets. At the same time, the supplier cannot prohibit the outlets from setting up their own websites; the supplier can impose certain quality standards however.

Care should be taken that sales on the Internet do not infringe distribution networks or the ownership of trademarks.

Electronic documents can be produced as evidence before the French courts. The French Civil Code requires that the sender should be clearly identifiable and that the integral nature of the document should be guaranteed.