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

Company Law (en cours)

The organizational unit of a group can be manifested through the pooling of human, material, and administrative resources , managed in a centralized manner. This scenario is reminiscent of the notion of an undertaking in competition law, which refers to an economic unit that may consist of several natural or legal persons and involves a unified organization of personal, material, and immaterial elements pursuing a specific economic goal in a sustainable manner .

One of the companies in the group may take charge of managing these common assets and enter into a management agreement  with the other or others, for remuneration. For such an agreement to be valid, the services rendered and the remuneration allocated must be real and effective , otherwise it risks sanctions on fiscal grounds for abnormal management, civil grounds for lack of consideration , or criminal grounds for misuse of company assets. Regarding this latter classification, the courts consider that the transfer of contracts and the provision of human and administrative resources free of charge by one company for the benefit of another do not constitute misuse of company assets, as long as they are justified by the interest of the group . Consequently, an employee of the parent company, who is not unrelated to the business and also possesses the necessary skills to be a useful interlocutor for employee representatives, may receive a delegation of powers to chair the health, safety, and working conditions committee of the subsidiary . Similarly, the conclusion by a company of a service agreement with another entity for the performance, by the manager of the former, of tasks inherent to those normally assigned to them, does not constitute abnormal commercial management, if it establishes that its competent corporate bodies intended, by paying the fees corresponding to these services, to indirectly remunerate the manager, and that this payment is not devoid of consideration for it .

Cass. crim., 6 April 2016, LawLex202200007733JBJ.

CJEU, 6 October 2021, LawLex202100005482JBJ, LD November 2021, 7, note BIANCONE; Contracts Comp. Consom. 2021, No 186, note BOSCO; Europe 2021, No 450, note IDOT; RLC 2022, No 4187, note DIOP; JCP E 2022, No 1022, note CONSTANS; LEDICO December 2021, 1, note CELAYA; Concurrences 1/2022, 85, note DEBROUX; JDE 2022, 60, note LEPIECE and VANDENNEUCKER; RDC 2022/1, 91, note PRIETO; RJ com. 2022, 103, note DECOCQ.

REYGROBELLET, Management fee agreements: where do we stand? BJS 2018, 120.

Cass. com., 12 December 2018, LawLex202200009794JBJ.

Cass. com., 5 June 2019, LawLex202200009793JBJ, considering that the services detailed in a management fee agreement that generate the payment of royalties to the benefit of a parent company must not, under penalty of invalidity for lack of consideration, duplicate those already performed by the common manager within the scope of their corporate mandate in the subsidiary.

CA Versailles, 12 March 2020, LawLex202200010909JBJ.

Cons. d'Et., 4 October 2023, LawLex202300012322JBJ, JCP E 2024, No 1100, obs. DEBOISSY and WICKER.

268. Management agreements