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

Company Law (en cours)

Articles L. 227-9 et following of the Commercial Code list the decisions that necessarily fall under the purview of the body of shareholders and define the penalties incurred in case of violation of the prerogatives of the meetings.

1) Scope

Pursuant to Article L. 227-9 of the Commercial Code, the following must be decided exclusively by the body of shareholders: capital increases , amortization …

Collective decisions made by the partners

Articles L. 227-9 et following of the Commercial Code list the decisions that necessarily fall under the purview of the body of shareholders and define the penalties incurred in case of violation of the prerogatives of the meetings.

Pursuant to Article L. 227-9 of the Commercial Code, the following must be decided exclusively by the body of shareholders: capital increases , amortizations or reductions of capital , mergers, spin-offs, dissolutions, any transformation into a company of another form, any appointment of statutory auditors , as well as measures to be taken regarding annual accounts  and profits.

Similarly, the approval  and exclusion clauses of a partner  can only be adopted or modified by a decision collectively made by the partners under the conditions and forms provided by the statutes . Finally, decisions regarding the inalienability clauses of shares  and any change of control occurring within an associated company  can only be adopted or modified unanimously by the partners .

In accordance with the third paragraph of Article L. 227-9, in companies with only one shareholder, the management report, annual accounts, and, where applicable, consolidated accounts are approved by the president. The sole shareholder approves the accounts, after the report of the statutory auditor if there is one, within six months from the end of the fiscal year. They cannot delegate their powers. Their decisions are recorded in a register. When the sole shareholder, a natural person, personally assumes the presidency of the company, the filing, within the same period, with the trade and companies register, of the inventory and duly signed annual accounts constitutes approval of the accounts.

Decisions made in violation of these prescriptions may be annulled at the request of any interested party . However, the shareholder of one of the parent companies of the SAS, ousted during a capital reduction and increase operation, cannot, as an "interested person," seek annulment of the operation based on Article L. 227-9, para. 4, of the Commercial Code, as it was duly decided by the body of shareholders .

In addition to the sanction of invalidity, the fact that a president or an officer of a simplified joint-stock company fails to consult the shareholders under the conditions provided by the statutes in the event of an increase, amortization, or reduction of capital, merger, spin-off, dissolution, or transformation into a company of another form is punishable by six months' imprisonment and a fine of 7,500 euros .

Cass. com., 28 November 2018, LawLex202200005536JBJ, considering that the assembly of an SAS that decides on a capital increase through cash contributions without simultaneously deciding on a capital increase reserved for employees does not need to be reconvened when a subsequent assembly has regularized the situation by deliberating on this latter resolution; Paris, 4 April 2023, LawLex202300006848JBJ, emphasizing that a resolution authorizing the capital increase with the removal of shareholders' preferential subscription rights is adopted in the corporate interest of an SAS, as long as an alert procedure has been triggered by the statutory auditor, in a context of an acute dispute between partners with operational responsibilities for more than a year, which has affected the operation of the business, and only a strengthening of equity allows for considering a recovery; Versailles, 30 November 2021, LawLex202300006083JBJ, indicating that the terms of issuance of convertible bonds into shares voted by the general assembly of an SAS are not irregular, solely because the body of partners has not set a minimum value, as long as it has given full power to the president of the company to determine the terms of the issuance contract and sign it; Paris, 30 June 1995, LawLex202300002866JBJ, specifying that the judge may order the convening of a new extraordinary general assembly to proceed with the capital increase provided for by an agreement protocol, in order to compel one of its signatories who voted against this capital increase at a first assembly to execute it; Aix-en-Provence, 13 June 2024, LawLex202400004598JBJ, holding that when an investment protocol and a shareholders' agreement provide that after a certain period the investor's claims may be converted into shares, without including a clause obliging the company to convene a general assembly for the purpose of increasing the share capital, the latter is not entitled to seek the forced execution of these agreements by asking the judge to order the parties to organize such an assembly, especially before the expiration of the agreed period.

Cass. com., 4 January 2023, LawLex202300001974JBJ, RJDA 2023, No 148; JCP E 2023, No 1184, obs. DONDERO, holding that the resolution deciding to reduce the capital of an SAS to zero cannot legally take effect, except by depriving the company of all capital, when at the same time, the capital increase that was to follow has been suspended; 7 May 2019, LawLex202200008803JBJ, specifying that resolutions deciding on a capital reduction followed by an increase, in the absence of real difficulties for the company, must be annulled when they aim only to fraudulently exclude a partner and not to preserve a corporate interest.

Paris, 16 December 2022, LawLex202300008336JBJ.

Paris, 20 June 2013, LawLex202300001705JBJ, emphasizing that the use of a contribution auditor for special benefits is not required in SAS, as long as they do not make a public offering.

Versailles, 23 November 2017, LawLex202300008351JBJ, considering that the period within which the decision to approve the accounts of an SAS must be made cannot exceed nine months, as this is the maximum limit for implementing a distribution of dividends.

Commercial Code, Art. L. 227-19, para. 2.

Company Law (en cours)

585. Collective decisions made by the partners

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

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

585. Collective decisions made by the partners

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