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

Company Law (en cours)

Dissolution marks the end of the life of the civil company. It may result from one of the common causes of dissolution provided for by Article 1844-7 of the Civil Code, namely the arrival of the term , the achievement or extinction of the corporate purpose, the invalidity of the articles of association, a voluntary decision by the partners, or just grounds for dissolution, such as a disagreement a …

End of the company

Dissolution marks the end of the life of the civil company. It may result from one of the common causes of dissolution provided for by Article 1844-7 of the Civil Code, namely the arrival of the term , the achievement or extinction of the corporate purpose, the invalidity of the articles of association, a voluntary decision by the partners, or just grounds for dissolution, such as a disagreement among partners.

To trigger the dissolution of the company, the disagreement between the partners must, however, paralyze the functioning of the company . This is not the case when the company continues its activity for many years despite a misunderstanding between partners resulting from the behavior of the manager who acted in her personal interest , or the need to appoint an administrator to address the absence of convening the general meeting for several fiscal years and the existence of proceedings between the partners , or when the statutory provisions allow, despite the equal distribution of shares, the adoption of necessary resolutions and the prevention of any deadlock, and offer the partners the possibility to withdraw without preventing the continuation of the activity . Conversely, the dissolution of an SCI is justified when the relations between its partners, in litigation, are so conflictual that it is impossible to make any decision, such as the appointment of an accountant, given the equality of votes and the requirement of a general meeting decision for any expenditure exceeding one hundred and fifty euros . Similarly, dissensions between notary partners of a professional civil company, unresolved by a mediation attempt, which lead to a breakdown in the communication necessary for the functioning and development of the company's business, as well as damage to its reputation, indicate a disappearance of the affectio societatis justifying its dissolution . The same applies when one of the partners prevents any decision-making on routine management, makes transfers from the company's bank account, placing it in a debit balance, and suddenly denies the manager access to the office previously used by the company . Furthermore, the existence of a significant conflict between the two partners, lasting for several years, including after the appointment of two successive provisional administrators who both concluded that the situation was deadlocked and that it was impossible to carry out their mission, and which prevents the holding of a general meeting to make decisions in its own interest, makes the normal functioning of the structure impossible and thus constitutes a just ground for dissolution .

Dissolution may also result from the consolidation of shares in a single hand. However, it is not mandatory solely because there is only one partner holding the share capital, as long as a partner holding contributions in the form of services remains present . The closure of a judicial liquidation, or any other statutory cause, may also lead to the dissolution of the company. Article 1870 further specifies that a civil company is not dissolved by the death of a partner, but continues with their heirs or legatees, unless the statutes provide that they must be approved by the partners or that the death will lead to the dissolution of the company or that it will continue with the surviving partners only .

The dissolution of the company entails the obligation to liquidate the company's rights and obligations. When a company is placed in voluntary liquidation, creditors can only take action against the partners if they establish that the company's assets are insufficient to satisfy them .

See, Cass. com., 30 August 2023, LawLex202300010760JBJ, considering that the president of the Judicial Court seized by a partner may, within the year following the company's expiration date, authorize as a regularization measure a consultation with a view to this extension by the partners, if it is found that such is the intention of a number of partners representing at least the majority required for the amendment of the articles of association, whether or not this formality was omitted in good faith.

Cass. mixte, 16 December 2005, LawLex202300003404JBJ; Cass. 3e civ., 16 March 2011, LawLex202200003088JBJ, French Company Law 2011, No 106, COQUELET; Cass. com., 10 April 2019, LawLex202200011467JBJ, Rev. sociétés 2020, 29, note LECOURT; French Company Law 2019, No 120; CA Reims, 26 March 2024, LawLex202400002772JBJ, considering that disagreements among partners of an SCI regarding the valuation of shares or the advisability of selling the property owned by the company certainly characterize a disagreement, but one that cannot lead to the dissolution of the company in the absence of paralysis of its functioning.

See, for an application, Cass. 3e civ., 9 March 2023, LawLex202300005896JBJ, indicating that a civil company, which is not dissolved by the death of one of its partners and is presumed to continue with the heirs of the latter, is obliged, if it does not establish the existence of a contrary stipulation in the statutes, to guarantee its tenant against disturbances that these heirs, who are not third parties with respect to it within the meaning of Article 1725 of the Civil Code, have caused to its enjoyment by way of fact.

Cass. com., 29 November 2023, LawLex202400002078JBJ.

Cass. com., 19 March 2013, LawLex202300002208JBJ; Cass. 3e civ., 17 November 2021, LawLex202300002418JBJ.

Cass. 3e civ., 17 November 2021, LawLex202300002418JBJ.

Cass. 1re civ., 18 January 2023, LawLex202300000962JBJ, JCP E 2023, No 1112, obs. MARPEAU and DAMOUR.

Cass. 3e civ., 17 December 2020, LawLex202300002428JBJ.

Cass. 1re civ., 16 October 2013, LawLex202200003087JBJ, BJS 2014, 39, obs. FORGET.

Cass. 3e civ., 4 April 2019, LawLex202300009823JBJ. - See also Cass. com., 21 June 2011, LawLex202300002204JBJ.

CA Caen, 30 May 2024, LawLex202400004045JBJ.

Cass. 1re civ., 30 March 2004, LawLex202200003579JBJ.

Company Law (en cours)

674. End of the company

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674. End of the company

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