Usufructuary Rights in Company Decision-Making

Extract

[...] The rights of the usufructuary are then reinforced. The reinforcement of the rights of the usufructuary The Court of Cassation ruled in this case that the usufructuary can exercise their right to vote on a decision to merge-absorb the company; the position of the appellate court consisting in judging the statutory clause reserving the right to vote to the usufructuary as illicit ignores article 1844, Civil Code. It was admitted in doctrine that the suppression of the bare owner's right to vote should not be possible when the substance of the thing is at issue, in accordance with article 578 of the Civil Code. [...]

[...] Thus, the usufructuary may be attributed the exclusivity of the exercise of the right to vote. The nature of the collective deliberation at stake as well as the type of general meeting (ordinary or extraordinary) matters little, unlike what a judgment rendered on 23 October 2007 might have suggested. However, the only reservation to this validity lies in the respect of the right to participate in the assemblies recognized to the bare owner, which is translated by the assistance to the debates, the convocation to the assemblies and the right to issue a consultative opinion. [...]

[...] In fact, the decision notes that 'the associate who transfers the bare ownership of their shares loses their status as an associate, regardless of the extent of the voting rights granted to the usufructuary by the statutes'. This solution seems to be justified in that only the one who, in exchange for a contribution, receives the ownership of the social titles, the one who is in a situation to be qualified as an associate. However, an evolution in this matter seems to be emerging. [...]

[...] The Court of Cassation does not use the notion of abuse of majority in one of its decisions. However, it is at the visa of the cumulative conditions of the abuse of majority that the high jurisdiction of cassation breaks the decision of appeal. Indeed, the Court of Cassation, acting as a pedagogue, reproaches the Court of Appeal for not having investigated whether the usufructuary had used his right to vote for use contrary to the interest of the company, with the sole intention of favouring his own personal interests to the detriment of those of the other shareholders". [...]

[...] By a judgment of 19 February 2008, the Court of Appeal of Caen grants his request and annuls the deliberations adopted during the general meeting. The usufructuary parent then files a cassation appeal. The question arises as to whether, in the event of a division of shares, the statutes of a civil society can reserve the right to vote for the usufructuary to the extent that these statutes do not disregard the right of the bare owner to participate in collective decision-making. By its judgment of 2 December 2008, the Commercial Chamber of the Court of Cassation responds positively. It responds in two stages. [...]