All of French Company Law: ordinary law of companies and specific regime for different types of companies

Company Law (en cours)

The notion of affectio societatis is generally used to characterize the very existence of the company. The question that arises is whether the partners are acting with the intent to simulate  or if their intention to cooperate in a common enterprise is genuine . The assessment is made from the very first moments of the company's creation . Indeed, a private investor, expected to know and accept th …

Application by the courts

Article 1832 of the Civil Code, which sets out the constitutive elements of the company contract, does not explicitly refer to affectio societatis. Despite this silence, legal doctrine and case law have elevated the concept to an essential component of the company contract. However, the contours of the notion remain ambiguous, as evidenced by its numerous applications by courts.  

Interest in the concept of affectio societatis

The notion of affectio societatis is generally used to characterize the very existence of the company. The question that arises is whether the partners are acting with the intent to simulate  or if their intention to cooperate in a common enterprise is genuine . The assessment is made from the very first moments of the company's creation . Indeed, a private investor, expected to know and accept the articles of association of a company before irrevocably subscribing to an unambiguous capital increase mechanism, cannot later invoke a lack of affectio societatis at the time of signing the contract . Similarly, the absence of exchanges between the partners on the scope of the future company's purpose and the divergence of views on the potential destination of the assets to be acquired establish a lack of affectio societatis . Affectio societatis can therefore be used to establish the existence of a de facto company .

Affectio societatis is also sought in a crisis situation, when the normal functioning of the company is disrupted . However, its disappearance during the company's existence does not alone justify the dissolution of the company. It is still necessary for the crisis to be of such intensity that it causes paralysis of the company and its bodies .

Finally, the notion of affectio societatis appears in the context of the action for claiming the status of associate provided for by Article 1832-2 of the Civil Code, with case law specifying for this purpose that it is not a required condition for a spouse to claim the status of associate .

Cass. com., 25 April 2006, LawLex202200003083JBJ, indicating that the repurchase of an electrical maintenance company, dormant for many years, by a third-party company, which modifies its corporate purpose to make it a purely financial company and simultaneously enters into negotiations with a third party to sell the assets of a subsidiary of the acquired company, before ceasing all activity, reveals that the purpose of the operation was limited to seeking a substantial capital gain and, consequently, the absence of affectio societatis of its author.

Cass. req., 8 January 1872, LawLex202300014061JBJ; 28 March 1892, LawLex202300014060JBJ; Cass. 3e civ., 8 January 1975, LawLex202200003075JBJ, on bad faith and the lack of intention to cooperate in a common undertaking of a company, which, knowing the lack of affectio societatis of its associate, a civil company, obtained a lease under conditions detrimental to the latter; Cass. com., 10 February 1998, LawLex200200005103JBJ, emphasizing that the reasons for the creation of a company are not considered in assessing the real intention of the parties to associate.

Cass. 3e civ., 22 June 1976, LawLex202200003076JBJ, ruling that a limited company  (SARL) formed without affectio societatis from its original associates must be regarded as never having existed.

Cass. com., 9 June 2009, LawLex202200003079JBJ.

Cass. com., 3 March 2021, LawLex202200003082JBJ.

Cass. com., 26 June 2021, LawLex202200003085JBJ, holding that cohabitants who pool their financial resources to undertake a real estate project demonstrate, through their willingness to associate and their intention to share in profits and losses, the existence of a de facto company; Cass. 1re civ., 1 October 1996, LawLex202200003080JBJ, concerning doctors who, voluntarily, actively, and with interest and equality, collaborate within a clinic in the practice of medicine, adopt the behavior of partners and thus express a willingness to unite and a convergence of interests characteristic of the affectio societatis ; 2 October 1974, LawLex202200003084JBJ, considering that testimonies attesting that a cohabitant made contributions in cash and services, that she was the soul of the business through her various actions in favor of societal development, and that she benefited from the company's profits while remaining liable for potential losses, are sufficient to demonstrate the existence of her affectio societatis.

Cass. 1re civ., 14 December 2004, LawLex202200003077JBJ, affirming that the expression of successive withdrawal intentions by the two partners of a professional partnership and the failure of a conciliation attempt establish the disappearance of any trace of affectio societatis and justify its dissolution.

Cass. 3e civ., 25 January 2018, LawLex202200003089JBJ justifying the dissolution of an SCI on the grounds that the behavior of one of the partners, which creates confusion, opposition between partners regarding the distribution of shares as well as the representation of the joint ownership, the failure to hold general meetings, the use of written consultations contested by certain members, the lack of approval and anomalies affecting the financial statements, constitute elements that establish the disappearance of the affectio societatis and cause an irreversible impact on the functioning of the company; Cass. 1re civ., 16 October 2013, LawLex202200003087JBJ cited above; Cass. 3e civ., 16 March 2011, LawLex202200003088JBJ, considering that the disagreement between former cohabitants, partners of an SCI, which leads to the disappearance of the affectio societatis, constitutes grounds for dissolution only if it is sufficiently serious to paralyze the functioning of the company.

Cass. com., 21 September 2022, LawLex202200008786JBJ.

The affectio societatis expresses the desire of each member of a company to work together, on an equal footing, for the success of the joint undertaking . However, the lack of active participation in corporate affairs is not sufficient to establish that the affectio societatis is nonexistent. Indeed, the affectio societatis can also be expressed through acts of opposition . The lack of clarity in the definition leaves much room for interpretation and endless doctrinal debates, including on its usefulness. In fact, there are almost as many classifications of the affectio societatis as there are corporate forms. It is very pronounced in small structures, such as civil companies , and proves to be of low intensity, or even nonexistent, in capital companies, particularly listed companies. Thus, in an SAS, the absence of affectio societatis in the person of the transferor does not prevent the formation of the act of transferring their shares .

Cass. com., 3 June 1986, LawLex202200003081JBJ, excluding the existence of affectio societatis in the partner of a joint venture company who, although having “taken an interest” in the management of the business, did not effectively collaborate in its operation in a common interest and on an equal footing with the other partner and did not participate in the profits and losses in the same spirit.

Cass. com., 19 September 2006, LawLex202200003074JBJ, rejecting the disappearance of the affectio societatis of a partner in an SNC who, having expressed his willingness to participate in the corporate life by opposing the manager, demonstrated it despite a lack of active participation in the company and did not claim his share of profits.

Cass. 3e civ., 27 September 2006 LawLex202200003078JBJ, concerning the justification, for the disappearance of affectio societatis, of the right of withdrawal of a partner from an SCI with few partners and encountering issues such as the absence of documents establishing the effective distribution of dividends, necessitating the implementation of procedures such as the appointment of an ad hoc representative to resolve them; Cass. com., 10 February 2015, LawLex202200003086JBJ, for the recognition of affectio societatis to the partner of an SCI whose sole purpose was the acquisition of real estate intended for the common residence of the partners and for which she became liable, to the tax administration, for the related property taxes, although she did not release the capital within the deadlines.

Cass. com., 11 June 2013, LawLex202200003073JBJ.

Company Law (en cours)

15. Application by the courts

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Les notions juridiques connexes

15. Application by the courts

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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