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

Company Law (en cours)

Pursuant to Article L. 821-3 of the Commercial Code , the profession of statutory auditor consists of performing the tasks of certifying accounts and information on sustainability or any other task assigned to them by law or regulation . They may also provide services and attestations that do not fall under one of these tasks . The statutory auditor's mission only begins at the start of the fiscal year during which they are appointed .

1) Certification of accounts and sustainability information

The statutory auditor's mission is to certify, by justifying their assessment, that the annual accounts are regular and sincere and provide a true and fair view of the results of operations for the past fiscal year, as well as the financial position and assets of the company at the end of that fiscal year . The same applies to the certification of consolidated accounts when the company is required to prepare them . To this end, the auditor's report intended for the body responsible for approving the accounts must specify, in addition to the mentions provided for in Article R. 821-105: the identity of the company whose accounts are being certified, indicating the body to whom the report is addressed; the annual or consolidated accounts covered by the report and the fiscal year to which they relate; the accounting rules and methods applied to prepare the accounts; the scope of their mission, as well as the professional standards in accordance with which it was carried out; and, if applicable, significant uncertainties related to events or circumstances that may call into question the continuity of operations . They may, if necessary, make any useful observations. Furthermore, the statutory auditor must declare either that they certify that the annual or consolidated accounts covered by the report are regular and sincere and provide a true and fair view of the results of operations for the past fiscal year, as well as the financial position and assets of the person or entity or all persons and entities included in the consolidation at the end of the fiscal year, or that they qualify the certification with reservations, or that they refuse to certify the accounts, or that they are unable to certify the accounts. In all cases, they must justify their assessments and specify the reasons for their reservations, refusal, or inability to certify the accounts . Additionally, the statutory auditor must comment on the sincerity and consistency with the annual accounts of the information provided in the management report for the fiscal year and in the documents sent to shareholders regarding the financial position of the company and all the companies included in the consolidation, as well as on the annual and consolidated accounts .

Finally, the report on the certification of accounts must be signed by the statutory auditor, a natural person. When the mandate is entrusted to a company of statutory auditors, the signature must be affixed by the statutory auditors who are natural persons, associates, shareholders, or executives of this company .

Article L. 821-54, para. II of the Commercial Code specifies that in companies required to include sustainability information within a separate section of their management report , the statutory auditor appointed to certify them must issue an opinion on compliance with the requirements set out in Articles L. 232-6-3, L. 233-28-4, and L. 22-10-36 of the Commercial Code, under which sustainability information must enable an understanding of the impact of the company's activities on sustainability issues, as well as how these issues affect the development of its business, its results, and its situation. Sustainability issues include environmental, social, and corporate governance issues.

The statutory auditor must also issue an opinion on the compliance of sustainability information with the requirements of the “Accounting” Directive of 26 June 2013 , including with the sustainability reporting standards adopted under its Articles 29 ter or 29 quater (relating to sustainability reporting standards applicable to small and medium-sized enterprises), the compliance of the process implemented by the company to determine the published information with the aforementioned standards, and, when applicable, compliance with the obligation mentioned in the sixth paragraph of Article L. 2312-17 of the Labor Code, as amended by the ordinance of 6 December 2023 , the compliance of the tagging of sustainability information provided for in Article 29 quinquies of the Accounting Directive, and compliance with the information publication requirements provided for in Article 8 of the regulation of 18 June 2020 . The statutory auditor's opinion must be the subject of a certification report intended for the body responsible for approving the accounts . Finally, Article L. 821-55 of the Commercial Code emphasizes that the statutory auditor's missions of certifying accounts and sustainability information do not consist of guaranteeing the viability or quality of the management of the person or entity audited.

Pursuant to Article L. 821-54 of the Commercial Code, the statutory auditor has the ongoing duty, excluding any interference in management, to verify the values and accounting documents of the company for which he is responsible for certifying the accounts and to ensure that its accounting complies with the applicable rules . Before certifying the accounts, he is required to examine them carefully and conduct sufficient sampling to verify their accuracy and detect anomalies . To this end, the statutory auditor of an SAS must, by implementing audit procedures, assess the risk of fraud at the beginning of his mandate, analyze its factors, and identify the internal mechanisms for monitoring fraud . He must also verify the sincerity and consistency with the annual accounts of the information provided in the management report of the board of directors, the executive board, or any governing body, and in the documents sent to the shareholders regarding the financial situation and the annual accounts . Therefore, a statutory auditor fails in his duties by approving the annual accounts without reservation, without conducting investigations with management that would have allowed him to discover the existence of a regulated agreement that was concealed from him .

Furthermore, the statutory auditor must specifically certify the accuracy and sincerity of the information regarding the remuneration and benefits of any kind paid to each corporate officer. Additionally, they are required, if applicable, to verify the sincerity and consistency with the consolidated accounts of the information provided in the group management report. The statutory auditor must also ensure that equality has been respected among the partners . Finally, the statutory auditor is required to report to the next general meeting any irregularities and inaccuracies noted during the performance of their duties or services and must disclose to the public prosecutor any criminal acts they became aware of during their duties or services, without their liability being engaged by this disclosure . Without prejudice to the obligation to disclose criminal acts, the statutory auditor is required to implement the obligations related to combating money laundering and terrorist financing as defined in Chapter I of Title VI of Book V of the Monetary and Financial Code .

The statutory auditor must be convened to all meetings of the board of directors or the executive board and the supervisory board, or the collegial administrative or management body and the supervisory body that review or approve annual or interim accounts and, where applicable, review and adopt the report on sustainability-related information, as well as to all shareholders' or partners' meetings .

A prison sentence of five years and a fine of 75,000 euros may be imposed on any manager of an SAS with a statutory auditor who obstructs the audits or inspections of the statutory auditors, or refuses them on-site access to all documents necessary for the performance of their duties, including all contracts, books, accounting documents, and minutes registers . Any negligence by the statutory auditors or the fact that other documents were potentially accessible to them, which could have allowed them to detect the anomalies that were attempted to be concealed, have no impact on the establishment of the criminal offense, which consisted of a manager voluntarily providing them with false information intended to be considered in the consistency check of the inventory, in order to thwart the audit . Similarly, providing falsified documents to the statutory auditor with the intent to distort their assessment of the regularity, sincerity, or accuracy of the company's accounts and to conceal a significant overvaluation of inventory constitutes an obstruction to the statutory auditor's duties .

Ord. No 2023-1142 of 6 December 2023 on the publication and certification of sustainability information and the environmental, social, and corporate governance obligations of commercial companies, OJ of 7 December 2023.

Commercial Code, Art. L. 232-6-3, L. 233-28-4, and L. 22-10-36.

Directive No 2013/34 of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive No 2006/43/EC of the European Parliament and of the Council and repealing Council Directives No 78/660/EEC and No 83/349/EEC, OJ EU of 29 June 2013.

"The Social and Economic Committee is consulted under the conditions defined in this section on:

1° The strategic directions of the undertaking;

2° The economic and financial situation of the undertaking;

3° The company's social policy, working conditions, and employment.

During these consultations, the committee is informed of the environmental consequences of the undertaking's activity.

During these consultations, the committee is consulted on the sustainability information provided for in Articles L. 232-6-3 and L. 233-28-4 of the Commercial Code and on the means to obtain and verify them, as long as the undertaking meets one of the following conditions:
1° It is subject to the obligation provided for in I of Article L. 232-6-3 of the Commercial Code or exempt from its application in accordance with the second paragraph of V of the same article;
2° It is subject to the obligation provided for in I of Article L. 233-28-4 of the Commercial Code or exempt from its application in accordance with V of the same article.

Regulation No 2020/852 of 18 June 2020 on the establishment of a framework to facilitate sustainable investment and amending Regulation (EU) 2019/2088, OJ EU of 22 June 2020.

Commercial Code, Art. L. 821-54, para. 5.

See for an application, Paris, 7 June 2023, LawLex202300011399JBJ, holding that Article L. 821-54 of the Commercial Code prohibits the statutory auditor from interfering in the management of the SAS whose accounts he audits, and imposes no obligation of information and advice on him in this regard.

CA Nîmes, 7 July 2022, LawLex202300011398JBJ.

Commercial Code, Art. L. 821-54, para. 2. - See CA Nîmes, 7 July 2022, LawLex202300011398JBJ, considering that, bound by a single best-efforts obligation, the statutory auditor may proceed only by sampling to ensure the accuracy of the accounts and detect anomalies.

CA Douai, 13 January 2022, LawLex202300008673JBJ.

CA Rouen, 20 February 2014, LawLex202300011391JBJ.

CA Bordeaux, 15 March 2021, LawLex202300011389JBJ.

Commercial Code, Art. L. 821-53, para. 1.

Commercial Code, Art. L. 821-53, para. 2.

Commercial Code, Art. R. 821-180, para. 1, by reference to L. 821-53, para. 4. - For the content of the certification report on sustainability information, see Art. D. 821-182.

Commercial Code, Art. R. 821-180, paras. 2 and 3.

Commercial Code, Art. L. 821-25, para. 1, by reference to Art. R. 821-180, para. 10. - For the report on the certification of sustainability information, See Art. D. 821-182, para. 4.

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