Introduction

Matrix organization

Mergers by absorption

Risks related to the expansion of the scope of criminal liability of legal entities

Validity conditions

Proof of delegation

Exemption from individual liability of delegator

Attribution of offense to legal entity

Delegations of authority

Criminal risk management within business organizations

Complicity in crimes against humanity

Breaches of secrecy

Personal data breaches

Theft

Extortion

Blackmail

Fraud

Misappropriation

Receiving/concealment of unlawfully obtained property (recel)

Attacks on automated data processing systems

Money laundering

Misappropriation by public official (concussion)

Corruption and influence peddling

Unlawful acquisition of an interest

Favoritism

Forgery and use of forgeries

Violation of Criminal Code

Offenses under the Monetary and Financial Code

Offenses under the Commercial Code

Environmental Code violations

Offenses arising from other codes

Types of offenses

Offenses under the Criminal Code, the Commercial Code, or the Environmental Code, Criminal procedure

White Collar Crime (en cours)

The concept of fictitious dividends, which is not clearly defined in the legal provisions, arises from the provisions of Article L. 232-12 of the Commercial Code. Under this provision, the general meeting must first approve the annual accounts and confirm the existence of distributable profits before deciding on the portion to be distributed to shareholders as dividends (Article L. 232-12, para. 1 …

Concept of fictitious dividends

The concept of fictitious dividends, which is not clearly defined in the legal provisions, arises from the provisions of Article L. 232-12 of the Commercial Code. Under this provision, the general meeting must first approve the annual accounts and confirm the existence of distributable profits before deciding on the portion to be distributed to shareholders as dividends (Article L. 232-12, para. 1). A dividend is deemed fictitious if it is distributed without prior approval of the annual accounts and without verification of a distributable profit .

Advance payments on dividends may, as an exception, be distributed before the approval of the financial statements for the fiscal year, when a balance sheet prepared during or at the end of the fiscal year and certified by a statutory auditor shows that the company has made a profit since the close of the previous fiscal year, after the necessary depreciation and provisions have been made, and after deducting, if applicable, previous losses as well as amounts to be allocated to reserves pursuant to the law or the articles of association, and taking into account the retained earnings (Art. L. 232-12, para. 2, Commercial Code).

The decision of the general meeting of shareholders to distribute, in the form of dividends, all or part of the profits made during the fiscal year, grants them a legal existence . Thus, the distributed dividends do not constitute fictitious dividends when a management report of the general meeting mentions that a distribution will take place in view of the company's good cash flow, mainly due to the contribution of funds by certain partners, and the annual result shows that the expenses and revenues are of the same order of magnitude as those of previous years . Any dividend distributed otherwise, that is, in violation of the rules set out in Article L. 232-12, constitutes a fictitious dividend (Art. L. 232-12, para. 3) . Also, the distribution of an advance on dividends characterizes a distribution of fictitious dividends, even if this distribution has been ratified a posteriori by the general meeting, as long as the certification of the accounts has not been carried out by the statutory auditor, contrary to the provisions of Article L. 232-12 of the Commercial Code . Indeed, only a dividend that corresponds to the company's financial situation and whose reality has been verified can be distributed in a regular and lawful manner.

CA Riom, 13 September 2017, LawLex202300000178JBJ.

Cass. com., 19 September 2006, LawLex202200003074JBJ; 28 November 2006, LawLex202200008596JBJ, which holds that dividends do not have legal existence before the approval of the financial statements of the fiscal year by the general meeting, the acknowledgment by it of the existence of distributable sums, and the determination of the share allocated to each partner; Douai, 29 September 2022, LawLex202300000187JBJ, which dismisses the fictitious nature of dividends distributed following a decision of the general meeting whose validity has not been contested.

CA Paris, 18 March 2021, LawLex202300000175JBJ.

Cass. crim., 31 October 2007, LawLex202300002345JBJ, which notes that dividends distributed following a transfer of shares are fictitious in nature when no general meeting resolution, inventory, or approval of accounts has been formalized.

CA Bastia, 5 October 2016, LawLex202300000148JBJ. See also Cass. 1re civ., 20 March 2014, LawLex202300007728JBJ.

White Collar Crime (en cours)

207. Concept of fictitious dividends

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

207. Concept of fictitious dividends

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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