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

Company Law (en cours)

The manager of an SARL acts on behalf of the company. As such, they have a number of powers.

1) Relations with shareholders
First, in its relationship with the associates, Article L. 223-18 of the Commercial Code provides that the powers of the manager are determined by the statutes and that, in the absence of provisions, the manager may perform all acts of management in the interest of the compa …

Scope of powers.

The manager of an SARL acts on behalf of the company. As such, they have a number of powers.

First, in its relationship with the associates, Article L. 223-18 of the Commercial Code provides that the powers of the manager are determined by the statutes and that, in the absence of provisions, the manager may perform all acts of management in the interest of the company, in accordance with Article L. 221-4.

The power attributed to the manager is not without limits. Indeed, they must refrain from encroaching on the prerogatives of the body of partners. In fact, a transaction involving a modification of the statutory purpose of an SARL, for which the law expressly assigns competence to the partners, falls outside the manager's powers . Conversely, the manager of an SARL can independently conclude a transfer of business assets, as long as such an act does not inherently fall within the powers legally reserved for the partners, if it does not necessitate a modification of the articles of association .

In its dealings with third parties, the manager of the SARL is vested with the broadest powers to act in all circumstances on behalf of the company, subject to those powers expressly attributed by law to the partners . Indeed, the promise to sell the company's business assets made by the manager of an SARL without authorization from the general meeting is unenforceable against the company since such an operation involves an amendment to the articles of association for which the law expressly grants authority to the partners . However, the inconsistency of an act with the corporate interest does not constitute grounds for nullity, as long as it is in accordance with the corporate purpose . A fortiori, the guarantee granted by an SARL, as long as it is not prohibited by the corporate purpose, does not incur nullity solely because it does not present an interest for the company as long as it is not contrary to the corporate interest . Acts carried out by the manager bind the SARL with respect to third parties, unless it is established that the latter knew or could not have been unaware, given the circumstances, that they exceeded the corporate purpose, with the mere publication of the articles of association not being sufficient to constitute such proof . This is the case when the banker himself made the partners' authorization a condition for the validity of a guarantee and it was granted by the manager alone .

If the manager can grant a third party a special power of attorney to represent the SARL , the company is not bound by an act that has not been signed by its manager, in the absence of circumstances that could have legitimately led the co-contractor to believe in the reality of the signatory's powers to bind it and in the absence of ongoing business relations between the parties .

To guard against potential misuse, the partners may include limitation of liability clauses stipulating that actions exceeding the manager's powers are unenforceable against the company. Generally contained in the statutes , these clauses cannot, in principle, be invoked by third parties , nor can they be enforced against them , even if they are aware of them . Consequently, the fact that a lease-purchase agreement was entered into solely by the manager of an SARL, without the co-manager's co-signature and the general meeting's approval as required by the statutes, is unenforceable against the lessor, so the company, guaranteed by the manager, must pay the rent .

Whether in his dealings with partners or third parties, the manager must perform his duties in compliance with the duty of loyalty and fidelity, under penalty of having his liability engaged in the context of a derivative action, known as ut singuli, brought by one of the partners . These obligations specifically prohibit him from negotiating, as the manager of another company, a contract in the same field of activity as that of the SARL . However, the manager who, during his term, engages, personally or through another company, in an activity competing with that of the company he manages does not breach his duty of loyalty and does not incur liability towards it under Article L. 223-22 of the Commercial Code if he has received unanimous authorization from the partners . A co-manager of an SARL may also accept a position within a competing company without committing a disloyal act in the exercise of his corporate mandate . At the end of his mandate, the fact that certain clients wished to follow the former co-manager of an SARL who created his own company, in a field where there is a strong intuitus personae, does not in itself constitute an act of unfair competition . Similarly, the manager who has resigned from an SARL may engage in an activity competing with it but must refrain from acts of unfair competition such as poaching employees or diverting clientele . However, one who creates a competing company and begins its operation before the expiration of the notice period imposed by a statutory clause breaches his obligation of loyalty and fidelity towards the company .

When the SARL has more than one manager, it is referred to as joint management. The articles of association may allocate responsibilities among them or provide for a management committee that will decide, if necessary, by majority or unanimously. In the absence of specific provisions in the articles, Article L. 223-18 provides that each manager acts separately. An objection raised by one manager to the actions of another manager is ineffective against third parties unless it is established that they were aware of it. Jurisprudence specifies that each co-manager separately holds the broadest powers to act on behalf of the company in all circumstances with respect to third parties, so that a co-manager cannot file a third-party opposition to a judgment that ruled on an extension of the company's collective proceedings, which he was entitled to appeal solely in that capacity . Similarly, in the presence of a statutory clause silent on the functioning of the corporate bodies, each co-manager of the SARL may convene the meeting without the others being able to oppose it .

Cass. com., 12 January 1988, LawLex202200002940JBJ.

Cass. com., 31 January 2012, LawLex202200006151JBJ.

Cass. com., 28 November 2006, LawLex202200006033JBJ, considering that any limitation of the powers of managers of an SARL in their relations with the associates can only validly result from the articles of association, which can only be amended by an extraordinary general meeting deciding by a three-quarters majority and not by an ordinary general meeting, on pain of nullity of the decisions.

Cass. com., 13 November 2013, LawLex202200006046JBJ, emphasizing that third parties cannot rely on the articles of association of an SARL to challenge the manager's authority to represent it in court.

Cass. com., 9 January 2019, LawLex202300004575JBJ, considering that the statutory clauses limiting the powers of the manager of an SARL are unenforceable against third parties, so that a lease concluded beyond the manager's powers remains valid; 14 February 2018, LawLex202100001679JBJ.

Cass. com., 2 June 1992, LawLex202200006034JBJ.

Cass. com., 3 December 2002, LawLex202300004569JBJ.

Cass. com., 9 November 2022, LawLex202200010035JBJ, RJDA 2023, No 78

JCP G 2022, No 1290, obs. DONDERO; JCP E 2023, No 1085, No 4, obs. VALIERGUE, noting that the manager of an SARL who has breached their duty of loyalty can be sued by a partner provided that, due to the conflict of interest alleged between the SARL and its legal representative, the latter is duly represented by an ad hoc agent.

Cass. com., 15 November 2011, LawLex201200001990JBJ, D. 2012, 134, obs. FAVARIO; Contrats Conc. Consom. 2012, No 41, obs. MALAURIE-VIGNAL; Concurrences 2012-1, 135, obs. MESA; D. 2011, 2865, obs. LIENHARD; D. 2012, 2760, obs. PICOD; RTD com. 2012, 134 and 137, obs. CONSTANTIN.

Cass. com., 18 March 2020, LawLex202300004423JBJ.

Cass. com., 8 February 2017, LawLex201700000317JBJ.

Cass. com., 2 December 2020, LawLex202000003508JBJ, RJDA 2021, No 615; 7 July 2021, LawLex202100004630JBJ.

Commercial Code, Art. L. 223-18, para. 4. - See, for an application, Cass. com., 24 June 2020, LawLex202200006437JBJ.

Cass. com., 17 March 2015, LawLex201500000362JBJ.

Cass. com., 12 February 2002, LawLex200200000553JBJ, RJDA, 2002, No 708; D., 2003, summary, 1033, note PICOD.

Cass. com., 25 June 1996, LawLex202300004564JBJ.

Cass. com., 6 June 1972, LawLex202200009392JBJ.

Cass. com., 18 October 1994, LawLex202200006150JBJ.

Cass. com., 16 October 2019, LawLex202300004188JBJ; 14 February 2018, LawLex202100001679JBJ; 12 May 2015, LawLex202200007375JBJ.

Cass. com., 17 December 2003, LawLex202300004572JBJ.

Cass. com., 8 March 2017, LawLex202300004571JBJ, annulling the guarantee, even if it was in accordance with the corporate purpose and if the SARL was united by a community of interests with the guaranteed company.

Cass. 2e civ., 22 October 1997, LawLex202300004568JBJ.

Cass. com., 27 June 2000, LawLex202300004570JBJ.

Company Law (en cours)

447. Scope of powers.

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

447. Scope of powers.

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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