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

Company Law (en cours)

The centralized management of the group is most often manifested through the conclusion of cash management agreements intended to regulate financial flows between the different companies that comprise it and manage their liquidity and financing needs . Such agreements, initially contrary to the banking monopoly set out in Article L. 511-5 of the Monetary and Financial Code, benefit from an express …

Centralized financial management

The centralized management of the group is most often manifested through the conclusion of cash management agreements intended to regulate financial flows between the different companies that comprise it and manage their liquidity and financing needs . Such agreements, initially contrary to the banking monopoly set out in Article L. 511-5 of the Monetary and Financial Code, benefit from an express exemption when concluded between undertakings united, directly or indirectly, by capital links granting one of them effective control over the others, as per Article L. 511-7, 3°. The conditions for effective control within the meaning of Article L. 511-7, 3° are met when the common manager of two "sister" companies holds a majority stake in the capital of one and an equal stake in the capital of the other, even if this control is exercised by an individual as a sole proprietor or as a company manager .

The legal recognition of the validity of cash management agreements allows their signatories to avoid any claim of asset confusion within the framework of insolvency proceedings . Indeed, a cash management agreement does not generate abnormal financial flows when it enables the optimization of financial charges and income within a group in the form of loans or reciprocal provision of cash surpluses between each company and results in the invoicing of interest at the prevailing interbank market rate . Cash management agreements within a group are also considered to determine the available assets of a debtor and may, if necessary, delay the initiation of insolvency proceedings . The failure to implement a cash management agreement, in the event of disagreement among the parent company's partners, may even lead to the appointment of a provisional administrator when it endangers the financial situation of the subsidiaries . Conversely, outside of a cash management agreement, the upstreaming of dividends to the holding company by the acquired company in a leveraged buyout (LBO) operation may be analyzed as a management fault by the directors contributing to the insufficiency of assets of the acquired company, as long as the decision to distribute these dividends was not made considering its situation and cash flow . Similarly, the payment of fictitious dividends cannot, in the absence of any cash management agreement, be justified solely by the fact that the legal entities involved are part of the same group .

With regard to the offense of misuse of corporate assets, the validity of a cash management agreement entered into between two sister companies can be upheld when the director of the lending company and manager of the borrowing company is not a signatory and it provides for an interest service of 3% per annum . Apart from such agreements, the financial assistance provided by the de facto or de jure managers of a company to another undertaking within the same group in which they have a direct or indirect interest must be dictated by a common economic, social, or financial interest, assessed in light of a policy developed for the entire group, and must neither lack consideration or disrupt the balance between the respective commitments of the various companies involved, nor exceed the financial capabilities of the one bearing the burden .

In labor law, the invoicing of management fees by a parent company, the granting of financial support through loan guarantees, and the waiving of debts do not necessarily constitute wrongful interference in the economic and social management of its subsidiary, which would justify the classification as a co-employer .

BIENVENU, Cash pooling agreements in corporate groups, LexisNexis, 2012.

Cass. com., 10 December 2003, LawLex202200007123JBJ.

CA Riom, 14 September 2021, LawLex202200009746JBJ.

Cass. com., 16 December 2014, LawLex202100002095JBJ.

Versailles, 2 April 2002, LawLex202200009470JBJ. - A contrario, See Paris, 7 September 2021, LawLex202100005672JBJ, holding that in the absence of a cash management agreement and the presentation of regular accounts by the subsidiary, recurring payments to a holding company characterize abnormal financial flows.

Paris, 15 December 2011, LawLex202200007793JBJ; Toulouse, 6 April 2022, LawLex202200006457JBJ, holding that within a group of companies, claims held by one company against other companies in the group may constitute available assets provided that the debtor companies are able to settle their intercompany debts. - Cf. Cass. com., 17 May 2011, LawLex202100005968JBJ, indicating that current account advances made by the parent company of the debtor solely to abnormally delay the date of cessation of payments cannot constitute an available asset.

CA Aix-en-Provence, 22 May 2014, LawLex202100005526JBJ.

Cass. com., 9 September 2020, LawLex202200007229JBJ.

T. com. Paris, 16th ch., 23 September 2022, LawLex202300003710JBJ, RJDA 2023, No 261.

Cass. crim., 28 September 2016, LawLex202200005006JBJ

Cass. crim., 4 February 1985, LawLex202200009861JBJ; 20 March 2007, LawLex202200007734JBJ, holding that the manager who has his company pay, without consideration, invoices of other companies in which he has an interest, some of which correspond to fictitious services, and who personally collects sums owed to one of them, notably to have a "nest egg," outside of any accounting, is guilty of misuse of company assets; 24 June 1991, LawLex202200007234JBJ, ruling that cash transfers made exclusively in the interest of the parent company to pay for the acquisition of its subsidiary by the latter's treasury, as long as they are not part of a group policy, constitute misuse of company assets.

Company Law (en cours)

267. Centralized financial management

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Les notions juridiques connexes

267. Centralized financial management

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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au contenu exclusif Livv – juristes d’entreprise