The Substitution Regime: Automatic Transfer by Operation of Law
Article L 145-16, alinéa 2 of the Code de commerce establishes a privileged regime for the transmission of commercial leases in certain corporate restructuring operations. In the case of a merger (fusion), a spin-off (scission), a universal transfer of corporate assets under Article 1844-5 of the Civil Code, or a partial asset contribution made under the merger regime of Article L 236-27 of the Code de commerce, the beneficiary company is substituted by operation of law for the original tenant in all rights and obligations under the lease.
Three features distinguish this regime from an ordinary lease assignment. First, the substitution is automatic: no specific formalities are required to make it effective, and the landlord cannot rely on the failure to comply with Article 1690 Civil Code formalities or on restrictive lease clauses. Second, the substitution is effective notwithstanding any contrary stipulation in the lease: even an absolute prohibition on assignment cannot prevent the substitution from taking effect. Third, the regime is of public order: it cannot be contractually excluded.
Which Corporate Operations Trigger the Substitution
Two or more companies combine, either by absorption of one into another (fusion-absorption) or by creation of a new entity (fusion par création). The absorbed or merging companies disappear. All assets and liabilities, including commercial leases, transfer automatically to the surviving or new entity.
One company splits its assets and liabilities between two or more existing or new companies. The splitting company disappears. Leases attributable to the transferred activity follow the assets to the receiving entity designated in the spin-off plan.
A company contributes part of its assets to another company and both parties elect to subject the transaction to the merger regime of Art. L 236-27 C. com. Only this type of partial contribution falls within Art. L 145-16 al. 2; contributions not placed under the merger regime are ordinary assignments.
When all shares in a company are held by a single shareholder and that company is dissolved without liquidation under Art. 1844-5 C. civ., all its assets and liabilities — including commercial leases — transfer automatically to the sole shareholder.
Operations That Do Not Trigger the Substitution Regime
The clearest case that does not trigger any lease assignment formality is a share transfer. When a buyer acquires all or part of the shares in the company that holds the lease, the tenant company itself does not change: it remains the same legal entity, with the same lease, the same obligations, and the same rights. The identity of its shareholders is irrelevant to the landlord. No notification is required, no consent needs to be sought, and no formalities apply.
A company transformation — converting a SNC to a SARL, a SARL to a SAS, or any other change of legal form — similarly does not trigger the assignment regime. The legal personality of the tenant entity continues unbroken through the transformation; only the corporate form changes. A partial asset contribution made under the ordinary law (apport partiel d'actifs de droit commun), without placing the transaction under the merger regime, is treated as an ordinary assignment subject to the standard assignment formalities and all restriction clauses in the lease.
The Landlord's Opposition Right
The automatic and mandatory nature of the substitution does not deprive the landlord of all protection. Under the corporate law provisions governing each type of restructuring (Articles L 236-15, L 236-26, L 236-30 and R 236-13 of the Code de commerce, as amended by ordonnance 2023-393 of 24 May 2023), a landlord whose premises are involved in a merger, spin-off, or qualifying partial asset contribution may exercise a creditor opposition right. The opposition must be filed within thirty days from the last of the mandatory publications in the BODACC or BALO, or from the posting of the restructuring plan on the company's website.
The opposition is not a veto: if the court finds it is not prejudicial to the creditor's interests, it will be dismissed. But a successful opposition can require the company to provide security or to repay certain obligations. The landlord's most realistic use of the opposition right is to force the successor entity to address outstanding lease obligations — arrears of rent, disputed repair obligations — before the restructuring is completed.
The fact that the substitution takes effect without formalities does not mean the successor entity can ignore its administrative obligations. The Cour de cassation has held that a company benefiting from a partial asset contribution must register (s'immatriculer) in the trade register for the leased premises if it wishes to claim the protections of the commercial lease statute — in particular, the right to renewal (Cass. 3e Civ. 7-11-2001 n° 1581). A successor that omits to register may find, at the date a renewal is sought, that it cannot establish the statutory registration condition and loses its renewal right. This is a post-transaction compliance step that transaction teams regularly overlook.
The Universal Transfer of Professional Patrimony (TUPP) — From 2022
The ordonnance of 14 February 2022 created a new vehicle for the transfer of a sole trader's entire professional patrimony as a going concern: the transfert universel du patrimoine professionnel (TUPP). Article L 145-16 al. 1 explicitly includes the beneficiary of a TUPP among those who cannot be prevented by a lease clause from receiving the lease as part of the transfer. The TUPP is published by means of a BODACC notice or legal announcement, accompanied by a descriptive inventory of the assets transferred, within one month of the transfer. The interaction between the TUPP regime and the standard assignment formalities remains the subject of doctrinal debate: whether Article 1690 Civil Code formalities are required for the lease component of a TUPP, or whether the universal nature of the transfer dispenses with them, is unresolved. The prudent approach is to notify the landlord as part of the TUPP process.
The interaction between corporate law and commercial lease law in M&A and restructuring transactions requires precise coordination. Our guides and legal contacts are here to help you manage both dimensions of the transaction.
Book a ConsultationThis article is for general information and educational purposes only. It does not constitute legal advice. Always seek qualified legal advice before any corporate restructuring affecting a commercial lease.
