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

Company Law (en cours)

Even if they do not assume the general management of the joint stock company, the directors may incur liability for their failures in the exercise of their functions . The liability of directors towards the company or third parties is expressly provided for in Articles L. 225-251 et seq. of the Commercial Code .
Pursuant to Article L. 225-251, they are liable individually or jointly, as the case m …

Individual or joint liability

Even if they do not assume the general management of the joint stock company, the directors may incur liability for their failures in the exercise of their functions . The liability of directors towards the company or third parties is expressly provided for in Articles L. 225-251 et seq. of the Commercial Code .

Pursuant to Article L. 225-251, they are liable individually or jointly, as the case may be, to the company or to third parties, either for breaches of legislative or regulatory provisions applicable to joint stock companies, or for violations of the statutes, or for faults committed in their management. When the director is a legal entity, it cannot invoke the lack of publicity of its appointment to evade the liability attached to functions it has not denied accepting and exercising . Its liability may be sought directly or through its permanent representative within the SA .

Article L. 225-252 provides that, in addition to the action for compensation for personal harm , shareholders may, either individually or by grouping together, bring a derivative action for liability against the directors . They must represent at least one-twentieth of the share capital, unless the share capital exceeds 750,000 euros, in which case the threshold is reduced . The status of shareholder must exist at the date of the request. It is assessed at the time of the initiating request, so that the subsequent loss of this status does not affect the continuation of the action by the person who initiated it .

The ut singuli action brought by a shareholder against the directors of the SA, subsequent to the cancellation of their shares as part of a capital reduction operation, is therefore inadmissible in view of the loss of shareholder status .

Constituting management faults that generate liability, an administrator's failure to oppose the decision that approved inaccurate accounts for a fiscal year and concealed the accounting difficulties of the establishment , encouraging shareholders to invest in or retain securities due to withheld information, false information, and inaccurate account presentation , or demonstrating passivity in holding general meetings and preparing annual accounts, in violation of their obligation for serious oversight and control of the company's management, which led to the company's liquidation . Furthermore, administrators incur liability towards minority shareholders when they proceed with a capital reduction falsely justified by the existence of cash surpluses but whose real purpose is to eliminate them . Finally, the dismissal of the CEO of the public limited company under brutal conditions, due to the offensive and vexatious nature of the terms used and the manifestly humiliating attitude of the board of directors towards the individual, incurs the liability of the administrators .

The action for liability against the directors or the chief executive officer, both social and individual, is subject to a three-year statute of limitations , starting from the harmful event,  or if it was concealed, from its disclosure . The statute of limitations for non-concealed faults attributed to the directors, consisting of failing in their obligations regarding internal control and abstaining from discussing the annual accounts, runs at the latest from the date on which the board of directors approved the accounts of the last relevant fiscal year . Similarly, in the absence of concealment, the statute of limitations for an action for liability against directors who undervalued the actual sale value of a business branch runs from the harmful event, which lies in the sale transaction itself, and not from the expert report highlighting the value discrepancy . The action is admissible only if the company is properly implicated through its legal representatives, so that an action brought against the company's liquidator, and not against the company itself, without implicating the company, is inadmissible .

Any clause in the articles of association that would have the effect of making the exercise of the corporate action subject to prior notice or authorization by the general meeting, or that would involve a prior waiver of the exercise of this action, is deemed unwritten. No decision of the general meeting can have the effect of extinguishing an action for liability against the directors or against the chief executive officer for a fault committed in the performance of their mandate .

Cass. com., 31 May 2011, LawLex202100001613JBJ, considering that the director of a joint stock company, a de jure manager even if he does not assume general management, can incur liability in the context of an action for the recovery of liabilities.

Cass. com., 11 October 2023, LawLex202300012321JBJ, holding that shareholders cannot bring a liability action against persons who are neither the directors nor the chief executive officer of the company on whose behalf the action is exercised.

Cass. com., 9 March 2010, LawLex202200001923JBJ, French Company Law 2010, No 109, note COQUELET; RPC 2011, No 16, note MARTIN-SERF; Rev. sociétés 2010, 230, note LE NABASQUE; BJS 2010, 538, note SCHMIDT; JCP E 2010, No 1483, note SCHILLER, specifying that the plaintiffs do not have to establish without having to prove that the faults they attribute to them are intentional, of particular gravity, and incompatible with the normal exercise of corporate functions. - Also see Limoges, 17 January 2013, LawLex202300007910JBJ, holding that shareholders who were induced either to subscribe or to retain shares by the maneuvers of their directors to give a distorted image of the company's situation suffer personal harm and are entitled to seek the liability of the directors who did not discuss the difficulties brought to their attention by the statutory auditors and did not express reservations about the information transmitted to the public.

Cass. com., 31 January 1995, LawLex202300007926JBJ.

Cass. com., 8 November 2005, LawLex202300007930JBJ, considering that the directors incur liability towards the minority shareholders, as they proceeded with a capital reduction corresponding to the amount of capital held by the latter and repurchased their shares for a value significantly lower than the actual value, and falsely justified the operation by the existence of cash surpluses when it was intended to eliminate the minority shareholders.

Paris, 30 June 2016, LawLex202300007912JBJ.

Cass. com., 23 October 1990, LawLex202100003124JBJ.

Cass. com., 2 May 1983, LawLex202300007936JBJ.

Limoges, 17 January 2013, LawLex202300007910JBJ; Cass. com., 31 January 2006, LawLex202300007935JBJ, considering that the starting point for the limitation period of the liability action against directors who decided to allocate shares reserved for an employee and prevented him from exercising his purchase option, must be set on the day the concealment of the resolution was revealed, by an expert report explicitly confirming the fault committed.

Cass. com., 9 January 2019, LawLex202300007925JBJ; 26 January 1988, LawLex202300007924JBJ.

Cass. com., 20 February 2007, LawLex202300007937JBJ; 23 October 1990, LawLex202100003124JBJ.

Cass. com., 9 July 2025, LawLex202500006498JBJ.

Cass. com., 26 January 1988, LawLex202300007924JBJ. - Cf. Cass. com., 23 March 1982, LawLex202200008564JBJ, considering that the director, who resigned from his duties at a time when the company's situation was flourishing, cannot be pursued for covering the company's liabilities solely on the grounds that his resignation was not published in the Trade and Companies Register.

Cass. com., 7 October 1974, LawLex202300007940JBJ.

Cass. com., 8 January 2020, LawLex202200005209JBJ, RJDA 2020, No 232; 8 January 2002, LawLex202100001622JBJ, holding that a director cannot claim to avoid an action for the recovery of insufficient assets by invoking the fault of another director.

Cass. com., 15 January 2002, LawLex202300007927JBJ: a shareholder cannot exercise the individual action mentioned in Article 225-252 of the Commercial Code against a director if the damage they have suffered, due to the management faults committed by the latter, in having to bear the corporate losses, is merely a corollary of that caused to the company and does not have any personal character.

Cass. com., 19 March 2013, LawLex202300007931JBJ, considering that the provisions of Article L. 225-252 of the Commercial Code only authorize shareholders to exercise the corporate action for liability against natural or legal persons who have the status of directors or chief executive officer.

Cass. com., 18 June 2025, LawLex202500006525JBJ.

Paris, 10 March 2022, LawLex202200011204JBJ, BRDA, 2022, No 13.

Cass. com., 30 March 2010, LawLex202100001762JBJ; 25 March 1997, LawLex202100001632JBJ, considering that the director of a joint stock company who refrains from requiring the chairman to file for insolvency commits a management fault that engages his liability, from which he cannot be exonerated by invoking the presence of compliant members devoted to the chairman on the board.

Company Law (en cours)

500. Individual or joint liability

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500. Individual or joint liability

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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