Extract
[...] Court of Appeal of Paris, 25th Chamber, Section B October 2003, n° 2002/03107, SA Sydelis Ingénierie Luthi and another - The regulated conventions requiring prior authorization from the board of directors Court of Appeal of Paris, 25th Chamber, B October 2003 (SA Sydelis Ingénierie c/Luthi and another) In this judgment, the Court of Appeal had to determine whether the intra-group agreements concluded between a parent company and its subsidiary, relating to the rental of real estate, the detachment of personnel and the commitment of common expenses, must be qualified as regulated conventions requiring prior authorization from the board of directors in accordance with Article L. 225-38 of the Commercial Code? The Court of Appeal of Paris confirms the judgment of the Commercial Court of Créteil and rejects the arguments of the subsidiary. It considers that the disputed conventions relate to common intra-group operations. The charges invoiced, corresponding to the cost of production, testify to normal conditions in the sense of Article L. 225-39 of the Commercial Code. Therefore, the absence of prior authorization from the board of directors provided for in Article L. [...]
[...] It first notes that the conventions in question were necessary for the proper functioning of the subsidiary. The provision of premises, personnel and administrative services constituted essential support, without which the subsidiary would have had to resort to other providers at similar or higher costs. Then, the Court highlights that these conventions were concluded in normal conditions: the charges invoiced corresponded strictly to their cost of production, without any abuse, or excessive overcharging being able to be characterized. Finally, it dismisses any complaint of personal enrichment or intention to harm: the director did not benefit from these conventions, and no fraudulent intention can be attributed to him. [...]
[...] On the one hand, regulated agreements, subject to Article L. 225-38, which must be authorized in advance by the board of directors in order to prevent potential conflicts of interest or abuse of power. On the other hand, common agreements concluded at normal conditions, governed by Article L. 225-39, which are part of the usual functioning of a group of companies and do not require prior authorization provided they are concluded in accordance with market practices. In confirming the qualification of common agreements, the Court of Appeal validates their regularity and recognizes the legitimacy of the judges of fact to assess sovereignly the nature and conditions of intra-group agreements. [...]
[...] The absence of nullity of the agreements in the absence of proven prejudice On the one hand, the absence of prior authorization from the board of directors provided for in Article L. 225-38 of the Commercial Code cannot lead to the nullity of the agreements, in the absence of damaging consequences for the subsidiary On the other hand, no fault of management is retained against the manager, the company not being able to function without these dispositions, which would have generated equivalent costs by other means A. [...]
[...] 225-38 of the Commercial Code cannot lead to the nullity of the conventions, in the absence of damaging consequences for the subsidiary. Finally, no fault of management is retained against the manager, the company not being able to function without these dispositions, which would have generated equivalent costs by other means. Thus, the Court of Appeal recalls the exception to the procedure for regulated conventions: conventions relating to current operations and concluded under normal conditions and thus confirms the absence of nullity of these conventions in the absence of proven prejudice (II). [...]
