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

Company Law (en cours)

The term “ordinary general meeting” can account for two different situations. It is indeed necessary to distinguish between the ordinary general meeting convened annually, commonly referred to as the “annual meeting,” and the ordinary general meeting that can be convened extraordinarily. The difference between these two meetings lies in the frequency of their convening as well as their respective  …

Competence and functioning

The term “ordinary general meeting” can account for two different situations. It is indeed necessary to distinguish between the ordinary general meeting convened annually, commonly referred to as the “annual meeting,” and the ordinary general meeting that can be convened extraordinarily. The difference between these two meetings lies in the frequency of their convening as well as their respective responsibilities. In fact, the annual meeting, which, in accordance with Article L. 225-100 of the Commercial Code, meets at least once a year, within six months of the end of the fiscal year, has the primary responsibility of reviewing the annual accounts, while an ordinary meeting can be convened extraordinarily to decide on any decisions within the scope of the former, as long as the decision in question exceeds the management powers granted to the governing bodies.

Article L. 225-98 establishes a division of responsibilities between the different meetings: the ordinary general meeting makes all decisions other than those referred to in Articles L. 225-96 and L. 225-97, meaning decisions for which the extraordinary general meeting is responsible. The ordinary general meeting is thus competent to rule on all changes that do not result in an amendment to the statutes. It also follows from Article L. 225-100 that the ordinary general meeting is solely competent to review and approve or reject the accounts for the past fiscal year, which gives it genuine oversight power over the management of the governing bodies . If it considers that the latter have failed in their duties, it can draw the consequences and proceed with their dismissal. It is also the ordinary general meeting that co-opts and appoints directors  and members of the supervisory board, decides on their remuneration, and, if necessary, their dismissal . It also appoints the statutory auditor. Furthermore, the ordinary meeting holds the power to approve so-called "regulated" agreements.

In reality, the powers of the ordinary general meeting are not only limited by the attributions of the extraordinary general meeting. They are also constrained by the prerogatives of the company's governing bodies, which it must refrain from encroaching upon.

The ordinary general meeting is convened based on an agenda previously established  by the person calling the meeting and communicated to the shareholders . However, Article R. 225-71 of the Commercial Code states that shareholders representing at least 5% of the share capital may request the inclusion of items or draft resolutions on the meeting's agenda. Article R. 225-66 requires that the questions included in the agenda be worded so that their content and scope are clear, without the need to refer to other documents. Once finalized, the agenda is immutable, meaning the meeting can only deliberate on items set forth in the agenda. Thus, a resolution of a general meeting of an SA that terminates a dealership agreement is subject to annulment if such a sanction was not announced in the agenda attached to the notice of meeting . An exception to this rule is provided in Article L. 225-105. It concerns the dismissal and replacement of directors or members of the supervisory board, which can occur at any time, regardless of the agenda's content .

Regarding quorum conditions, Article L. 225-98 provides that the ordinary general meeting can only validly deliberate on the first call if the shareholders present or represented hold at least one-fifth of the shares with voting rights. In companies whose shares are not admitted to trading on a regulated market, the statutes may provide for a higher quorum. On the second call, no quorum is required.

Furthermore, Article L. 225-107 specifies that any shareholder may vote by mail using a form whose terms are set by Article R. 225-76. Any contrary provisions in the statutes are deemed unwritten. This form must allow a vote on each resolution in the order they are presented at the meeting and offer the shareholder the possibility to express a favorable or unfavorable vote on each resolution or their intention to abstain from voting. It must also clearly inform the shareholder that any abstention expressed in the form or resulting from the absence of a voting indication will not be considered as a vote cast. The form may, if applicable, appear on the same document as the proxy form. It includes: the shareholder's usual name, first name, and domicile; the indication of the form, registered or bearer, under which the securities are held and their number, as well as a note confirming the registration of the securities either in the registered securities accounts held by the company or in the bearer securities accounts held by an intermediary; and the signature, possibly electronic, of the shareholder or their legal or judicial representative. It also indicates the date by which, in accordance with the statutes, it must be received by the company to be considered. The form must also be accompanied, notably, by the text of the proposed resolutions with an explanatory statement and the indication of their author; a request for the sending of documents and information mentioned in Article R. 225-83 and informing the shareholder that they may request to benefit from the provisions of the third paragraph of Article R. 225-88; if it concerns the ordinary general meeting provided for in Article L. 225-100, the statement and documents provided for in Article R. 225-81.

For the calculation of the quorum, only the forms received by the company before the meeting of the assembly are taken into account. Forms that do not indicate any voting intention or express an abstention are not considered as votes cast.

If the articles of association provide for it, shareholders participating in the meeting via videoconference or telecommunications means allowing their identification are deemed present for the calculation of the quorum and majority.

Furthermore, Article L. 225-103-1 states that the statutes may provide that, without prejudice to the provisions relating to voting by correspondence, ordinary general meetings are held exclusively by means of telecommunication allowing for the identification of shareholders.

Cass. com., 26 October 1968, LawLex202300006072JBJ, dismissing the action for annulment brought by the former CEO and shareholder against the general meeting that approved the accounts of the fiscal year of the SA in favor of a subsidiary request for correction, since the irregularities reported, for which he is partly responsible, are not fraudulent and have not compromised the proper functioning of the company.

Paris, 4 September 2000, LawLex202300003178JBJ, holding that the holding of an ordinary general meeting convened for the purpose of appointing new directors may be postponed by the summary judge when their identity depends on the outcome of a pending trial court case concerning the validity of a share transfer, which could drastically alter the distribution of share capital and the control of the company.

CA Paris, 2 July 2002, LawLex202300013802JBJ.

Cass. com., 7 November 1989, LawLex202200006561JBJ, considering that while the board of directors of a joint stock company is obligated to include on the agenda of the ordinary general meeting the issue of replacing a director whose term has expired, it is not required to propose the re-election of the person concerned.

Cass. com., 7 March 1984, LawLex202300012112JBJ.

Cass. com., 1 July 2008, LawLex202200003617JBJ, considering that the mandate given by a shareholder to be represented at a general meeting necessarily involves, unless otherwise instructed by the principal, the exercise of the power of revocation insofar as it can be exercised in all circumstances, independently of the agenda.

Company Law (en cours)

476. Competence and functioning

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Les notions juridiques connexes

476. Competence and functioning

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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