Court of Cassation Ruling on SAS President's Remuneration and Abuse of Majority
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SAS, president, remuneration, regulated agreements, Commercial Code, Article L22710, abuse of majority, collective decision, shareholders, social interest, Court of Cassation
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Abstract
The Court of Cassation ruling on November 4, 2014 (n° 13-24.889) clarifies the conditions governing the remuneration of the president of a SAS (Simplified Joint-Stock Company) as per its statutes. The case revolves around whether the president's remuneration, decided by a collective decision of the shareholders, should be subject to the regulated agreements control procedure under Article L. 227-10 of the Commercial Code. The Court ruled that when the company's statutes provide for the president's remuneration to be set by a collective decision of the shareholders, such remuneration is not subject to the regulated agreements control procedure. This decision underscores the importance of a company's statutes in determining the remuneration of its president and highlights the distinction between collective decisions made by shareholders and contractual agreements. The ruling also addresses the issue of abuse of majority, affirming that the president's remuneration of 55,000 euros was reasonable given the company's net profit of 410,000 euros and did not unfairly favor the majority shareholder, thus not constituting an abuse of majority. This judgment emphasizes that collective decisions are taken within the framework of the powers of the partners and are not subject to the rules of regulated agreements, providing clarity on the governance and decision-making processes within SAS.
Extract
[...] 227-10 of the Commercial Code, as no regulated agreement was necessary in this case. Regarding the issue of abuse of majority, the Court of Cassation also rejected the company's argument, finding that the president's remuneration, set at 55,000 euros for a company that had achieved a net profit of 410,000 euros, was neither excessive nor contrary to the social interest. The Court ruled that the remuneration was reasonable in light of the president's functions and did not aim to unfairly favor the majority. [...]
[...] Abuse of majority is only applicable in the context of a collective decision, what makes individual decisions immune to this notion. Class Notes This is not an obligation institutional), but it can come from a convention, the statutes decide. In this case, it comes from the statutes so Ø procedure of regulated conventions ? Advantage: allows the manager to receive a salary without authorization Regarding the abuse of majority: 2 conditions ? Dominique Schmids: the social interest should not be confused with the common interest of shareholders, but it must take it into account. [...]
[...] Question of law : The main question posed to the Court of Cassation was whether, in the case where the company's statutes provide that the president's remuneration must be set by a collective decision of the shareholders, such remuneration should be subject to the regulated agreements control procedure under article L. 227-10 of the Commercial Code. The Court was also required to rule on the validity of the shareholders' decision, dismissing the allegation of majority abuse in light of the social interest. Solution : The Court of Cassation responds by the negative, in rejecting the appeal of the minority company. The Court clarifies that the articles of association of the SAS had provided that the remuneration of the president would be set by a collective decision of the majority shareholders. [...]
[...] com November 2014, n° 13-24.889 Facts : A SAS held a meeting with its associates to determine the remuneration of its president. The decision was adopted by a simple majority. Procedure : A company, shareholder minority, contests this decision and sues the SAS and the majority shareholder, but the Bastia Court of Appeal rejects his requests. It considers that this remuneration was in line with the statutes of the company, which provided that it be decided by the majority of the shareholders. Thus, the procedure for regulated agreements was not necessary. [...]
