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

Company Law (en cours)

One of the major innovations of the law of 24 July 1966 was the choice given to shareholders to opt for a classic joint stock company with a board of directors and management functions exercised either by its chairman, who then becomes chairman and chief executive officer (CEO), or by a chief executive officer, or a dualistic company composed of an executive board and a supervisory board.

In the first system, the board of directors consists of directors responsible for collectively making strategic decisions for the company and implementing them. It elects a chairman from among its members who organizes and directs the work of the collegial body to report to the shareholders' meeting. When the chairman does not also serve as the chief executive officer, the latter is responsible for external relations with third parties. The chief executive officer is indeed the legal representative of the company and has extensive powers to act on its behalf, provided that the actions taken fall within the corporate purpose and do not encroach on the powers of the meetings. Additionally, the chief executive officer manages the day-to-day operations of the company.

In the dualistic system, the management board, a collegial body, manages the company under the supervision of its chairman, who represents the company to third parties. The supervisory board's sole mission is to oversee the management conducted.

In 2021, 85.71% of the joint stock companies in the CAC 40 were public limited companies with a board of directors, while 8.57% opted for an executive board coupled with a supervisory board , with the remaining 5.71% being partnerships limited by shares. Once made, the choice is not irreversible. The change is made through a simple amendment to the statutes, in accordance with the provisions of Article L. 225-57 of the Commercial Code.

Report of the High Committee on Corporate Governance (HCGE), Nov. 2022.

497. Choice of management mode