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

Company Law (en cours)

The supervisory board is composed of at least three members . The articles of association set the maximum number of board members, which is limited to eighteen. The members of the supervisory board are appointed by the constituent general meeting or by the ordinary general meeting. However, the first members of the supervisory board are designated in the articles of association. The duration of th …

Supervisory body

The supervisory board is composed of at least three members . The articles of association set the maximum number of board members, which is limited to eighteen. The members of the supervisory board are appointed by the constituent general meeting or by the ordinary general meeting. However, the first members of the supervisory board are designated in the articles of association. The duration of their functions is also determined by the articles of association, not to exceed six years. They are eligible for re-election, unless otherwise stipulated in the articles of association. In accordance with Article L. 225-72 of the Commercial Code, the articles of association may require each member of the supervisory board to own a number of shares in the company, as they determine. If, on the day of their appointment, a member of the supervisory board does not own the required number of shares or if, during their term, they cease to own them, they are deemed to have resigned automatically if they have not regularized their situation within six months .

Article L. 225-79 states that the statutes may provide that the supervisory board includes members elected either by the company's personnel or by the personnel of the company and its direct or indirect subsidiaries whose registered office is located on French territory . The number of supervisory board members elected by employees cannot exceed four or more than one-third of the number of other members. When the number of members elected by employees is equal to or greater than two, engineers, executives, and similar personnel must have at least one seat.

The statutes must provide for an age limit for serving as a member of the supervisory board, applicable either to all members of the supervisory board or to a determined percentage of them. In the absence of an express provision in the statutes, the number of supervisory board members who have reached the age of seventy cannot exceed one-third of the current supervisory board members. In the absence of an express provision in the statutes providing for another procedure, when the statutory or legal age limit set for supervisory board members is exceeded, the oldest supervisory board member is deemed to have resigned automatically. A supervisory board member placed under guardianship is also deemed to have resigned automatically.

In accordance with Article L. 225-70, a legal entity may be appointed to the supervisory board. Furthermore, an individual cannot simultaneously hold more than five mandates as a member of the supervisory board of joint stock companies with their registered office in French territory. The organization of the supervisory board is the same as that of the board of directors. It elects from among its members a chairman and a vice-chairman who, in accordance with Article L. 225-81, must necessarily be individuals.

Pursuant to Article L. 225-81 , the supervisory board elects from among its members a chairman and a vice-chairman or several vice-chairmen responsible for convening the board and directing its discussions. It may determine their remuneration if it so chooses. It is up to the URSSAF to demonstrate that the chairman of the supervisory board actually engages in a professional activity to subject him, with respect to his remuneration, to the payment of the personal family allowance contribution . The general meeting may allocate to the members of the supervisory board, as remuneration for their activity, a fixed annual sum, the amount of which it determines without being bound by statutory provisions or previous decisions. This amount is charged to operating expenses. Its distribution among the members of the supervisory board is determined by the latter.

In accordance with Article L. 225-82, the supervisory board can only validly deliberate if at least half of its members are present. Unless the statutes provide for a stronger majority, decisions are made by a majority of the members present or represented. The text now provides, in its version resulting from the law of 13 June 2024 , that unless otherwise provided by the statutes or internal regulations, members of the supervisory board who participate in the meeting by means of telecommunication allowing their identification and ensuring their effective participation are deemed present for the calculation of the quorum and majority. As before, the statutes may still limit the nature of decisions that can be made at a meeting held under these conditions and provide a right of opposition for a determined number of supervisory board members. Now, provided that it is stipulated that any board member can oppose the use of this method, the statutes may also provide that the decisions of the supervisory board or some of them can be made by written consultation of its members. In this case, the chairman of the supervisory board may decide that the board members can communicate their response by electronic message to the indicated email address. The statutes may allow voting by correspondence using a form whose content will be determined by decree. Unless otherwise provided by the statutes, the chairman of the meeting's vote remains, as before, decisive in the event of a tie.

The supervisory board exercises permanent control over the management of the company by the management board , without being able to interfere in this management . Its chairman convenes the board and directs the discussions . At any time of the year, the supervisory board conducts the verifications and controls it deems appropriate and can request the documents it considers necessary to fulfill its mission. At least once a quarter, the management board presents a report to the supervisory board. After the close of each fiscal year and within three months , the management board presents the financial statements to it for verification and control.

The articles of association may also require prior authorization from the supervisory board for the conclusion of the transactions they list . Sureties, endorsements, and guarantees, except in companies operating a banking or financial establishment, require authorization from the supervisory board. The supervisory board may, within a total amount it sets, authorize the management board to provide sureties, endorsements, or guarantees on behalf of the company. This authorization may also set, per commitment, an amount beyond which the company's surety, endorsement, or guarantee cannot be given. When a commitment exceeds either of the amounts thus set, the authorization of the supervisory board is required in each case. The duration of these authorizations cannot exceed one year, regardless of the duration of the sureties, endorsements, or guarantees . If sureties, endorsements, or guarantees have been given for a total amount or exceeding the limit set for the current period, the excess cannot be opposed to third parties who were not aware of it, unless the amount of the invoked commitment alone exceeds one of the limits set by the supervisory board's decision. However, the board may give this authorization globally and annually without a limit to guarantee commitments made by controlled companies within the meaning of II of Article L. 233-16. It may also authorize the management board to provide, globally and without a limit, sureties, endorsements, and guarantees to guarantee commitments made by controlled companies within the same II, provided that the latter reports to the board at least once a year. The management board may also be authorized to provide sureties, endorsements, or guarantees to tax and customs administrations on behalf of the company, without a limit.

When a transaction requires the authorization of the supervisory board and the board refuses, the management board may submit the dispute to the general meeting of shareholders, which decides on the course of action for the project .

The supervisory board of a joint stock company has exclusive authority to determine the remuneration of the members of the management board . Thus, the engagement letter of a management board member that mentions the amount of their remuneration must necessarily refer to a decision of the supervisory board regarding its determination . However, the supervisory board cannot retroactively reduce the remuneration of the management board members without their consent, even if the amounts due to them have not yet been paid . The determination of the remuneration of the management board members of a joint stock company can be delegated to an ad hoc committee established for this purpose by the supervisory board, provided that the board retroactively validates this decision .

Finally, Articles L. 225-86 and L. 225-87 grant the supervisory board the authority to approve agreements between a member of the management board or the supervisory board, following a procedure similar to that of regulated agreements provided for in joint stock companies with a board of directors.

Article L. 225-257 considers that members of the supervisory board are liable for personal faults committed in the execution of their mandate. A member of the supervisory board who provides misleading and false information about the progress of a reclassification operation of shares sold by outgoing shareholders and deliberately places their peers in a position where they cannot react effectively, commits a fault that engages their civil liability . However, members of the supervisory board do not incur any liability due to management acts and their results. They can, however, be declared civilly liable for offenses committed by the executive board members if, having been aware of them, they did not disclose them to the general meeting . Furthermore, since they only perform a supervisory mission over the management of the company by the executive board and not a management function, members of the supervisory board cannot be subject to a management ban .

Cass. com., 15 November 2011, LawLex202200005862JBJ, considering that a member of the supervisory board is deemed to have resigned automatically if, on the day of their appointment, they did not hold the number of shares in the company as determined by the statutes, and did not regularize the situation within the legal timeframe, in the absence of account registration of the share that was transferred to them under a loan for consumption.

Cass. com., 16 July 1985, LawLex202200005220JBJ.

Cass. com., 4 January 2023, LawLex202300002363JBJ, RJDA 2023, No 201.

Cass. com., 10 February 2009, LawLex202200005850JBJ.

Cass. com., 26 March 2008, LawLex202300012415JBJ.

Cass. com., 13 February 1996, LawLex202200006946JBJ.

See, for an application, Cass. com., 6 February 1979, LawLex202100001624JBJ.

Cass. com., 8 January 2020, LawLex202200005008JBJ.

See Cass. soc., 23 November 2022, LawLex202300008284JBJ, specifying that the appointment of two employee representatives as members of the supervisory board by the company's Social and Economic Committee must be annulled when there is a group committee, which alone can proceed with their appointment.

Decree No 2024-537 of 13 June 2024 aimed at increasing the financing of undertakings and the attractiveness of France, OJ 14 June 2024.

Cass. soc., 25 January 2001, LawLex202200005011JBJ.

Commercial Code, Art. L. 225-68, para. 2. - See, for applications, Cass. com., 8 January 2020, LawLex202200005008JBJ, holding that the members of the supervisory board of a joint stock company only perform a supervisory mission over the management of the company by the management board and not a management function; Cass. soc., 25 January 2001, LawLex202200005011JBJ; Cass. com., 9 October 1990, LawLex202300007950JBJ.

Cass. com., 12 July 2005, LawLex202100001612JBJ, D. 2005, AJ 2071, note LIENHARD, holding that the gathering by three shareholders of more than the majority of the company's share capital and votes on the supervisory board, which grants them the power to dismiss the chairman of the management board, is not sufficient to characterize the exercise, by them, together or separately, and independently, of a positive management activity in the company.

Cass. soc., 25 January 2001, LawLex202200005011JBJ; Cass. com., 9 October 1990, LawLex202300007950JBJ, considering that the powers conferred on the supervisory board and its chairman by the company's statutes cannot alter its nature as an organ exclusively responsible for oversight, so that the latter cannot be regarded as performing functions of direction, management, or administration.

Company Law (en cours)

510. Supervisory body

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

510. Supervisory body

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise