Focus on the audit of the non-financial performance statement (NFPS)

1. Review of the information published pursuant to the NFPS

• Role of the statutory auditors

Article L. 823-10 of the French Commercial Code requires French companies to have the statutory auditors certifying that the company has established the NFPS. It should be noted that the statutory auditors do not check the fairness and consistency with the financial statements of the information presented in the NFPS.

• Role of the independent third-party body

In terms of the verification of information, an independent third-party body accredited by the French Committee for Accreditation (COFRAC) or an equivalent European body must be designated for all entities exceeding the thresholds of EUR 100 million total net revenue or balance sheet, and an average of 500 permanent employees employed in the financial year.

Pursuant to Articles R. 225-105-2, I and II, and A. 225-1 of the French Commercial Code, the independent third-party body must prepare a report that (i) includes a reasoned opinion on the conformity of the NFPS and on the fairness of the information provided therein, and (ii) describes the steps taken to perform the verification.

The reasoned opinion is made available to the shareholders before the general meeting.

2. Disclosure relating to the NFPS

The NFPS is presented in a dedicated section of the management report (Article L. 225-102-1 paragraph I of the French Commercial Code).

Companies may include all or part of the information in other communication media (universal registration document, annual financial report, website, etc.).

In such cases, the AMF recommends that the company ensures the consistency of non-financial information between the different media. To do so, they may use correspondence tables or cross-references to their website.

Article R. 225-105-1 of the French Commercial Code states that the NFPS should be made public on the company’s website within eight months of the close of the fiscal year and shall remain available for a period of five years.

3. Consequences of a lack of NFPS

In the absence of a NFPS in the management report, any interested party may ask the president of the court ruling in summary proceedings to direct, subject to a potential financial penalty,the company’s management body to disclose the information expected in such statement. When the request is granted, the potential financial penalty and the costs of the proceedings are borne, individually or jointly as the case may be, by the directors or members of the Management Board (Article L. 225-102-1 of the French Commercial Code).

3. Potential liability of corporate officers

• Civil liability

With respect to the obligations relating to the NFPS, the director may be held liable under Article L. 225-251, paragraph 1, of the French Commercial Code for failure to comply with the legal and regulatory provisions or for mismanagement. Failure to monitor compliance with the obligations relating to the NFPS could give rise to such civil liability if such failure has caused damage and the causal link between the two is established. 

The requirement that the fault must originate out of the scope of the functions of the Executive Officer (faute détachable) makes liability towards third parties unlikely.

• Criminal liability

Failure to publish the NFPS is not subject to criminal sanctions.

However, with regard to the content of the NFPS, liability could be incurred on the basis of information contained in the NFPS being false or misleading (Articles 465-3-2 et seq. of the French Monetary and Financial Code).

Our team remains available to discuss the content of your NFPS and improve it to align with best market practices.