Liability of Managers in SARL: Complementarity between Fault and Regulated Conventions

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Liability of Managers in SARL: Complementarity between Fault and Regulated Conventions

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Themes

Manager liability, regulated conventions, corporate law, SARL, Commercial Code, Article L. 223-19, Article L. 223-22, social interest, conflict of interest, shareholders' assembly, approval of conventions, liability for fault of management, duty of care, formal regularity, control of management, company law, business management, judicial control, cassation court, general meeting, cross-services agreement, limited liability company, business collaboration agreement, managerial responsibility, contractual liability, company interests, shareholder protection, judicial sanction, management fault, regulated agreements, convention approval, liability action, business law terminology, corporate governance, director accountability, French commercial law, business law, company director liability, legal framework, regulatory compliance, business agreements, contractual obligations, business management practices, corporate compliance, legal liability, business regulations, management accountability, business law compliance, SARL regulations, commercial legislation, business governance, director responsibility, company law regulations, business judicial control.

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Abstract
Extract

Abstract

The Court of Cassation clarifies that a manager's liability can be engaged on two distinct foundations: unapproved conventions and management fault, highlighting that approval of a regulated convention does not exclude liability if the act is prejudicial to the company.

Extract

[...] - The coexistence of actions: an unapproved convention engages the liability of the manager on the basis of L. 223-19, but an approved convention can also bethree attackedis based on L. 223-22. - Illustration by prior jurisprudence B. Strengthening the control of the manager's management by the shareholders and the judge - The interest of allowing shareholders to act jointlyme apriss the approval of a convention, to avoid abuses of majority. - The judge's intervention to sanction harmful conventions despite their approval. - A pragmatic approach allowing for better protection of social interests. [...]

[...] 223-22 of the Commercial Code. It estimated that l'approval of the disputed agreements by the general meeting did notexonwas not responsible for the management of his responsibility if these agreements had been concluded in disadvantageous conditions for the company. The manager then appealed to the cassation court, arguing that only the action based on Article L. 223-19 of the Commercial Code could be exercised, and not that provided for in the preceding article.view at thearticle L. 223-22. The decision of 18 February 2025 thus puts thus in the lightisis a fundamental question in corporate law: the approval of a regulated agreement by the shareholders' meeting protectsisdoes it make him the manager against any challenge to his liability ? [...]

[...] - The judicial confirmation that approval does not protectisnot the manager in case ofatteinte in the social interest. B. A responsibility based on social interest and not on formal regularity alone - The obligation for the manager to act in the interest of the company, regardless of the respect of formalitiess. - The analysis of the characterisis unfavorable to contentious conventions as a criterionisof the playing of responsibility. - A counterstrengthened role of the judge on the substance of the approved conventions, and not only on their compliance with the procedures.dures. [...]

[...] The manager, in defense, argued that this action was inadmissible. According to him, the partners should have acted on the basis of the special provisions of Article L. 223-19 of the Commercial Code, which provides for a specific sanction when regulated agreements are not approved by the general meeting. He deduced that, since some of the disputed agreements had been approved by the partners, his liability could no longer be sought on the basis of the common law of the liability of managers. [...]

[...] In this case, a company with responsabilityis limited (SARL) has concluded with its manager a collaboration agreement establishing a systemishas provided cross-services between the company and the individual business of the latter. A few years later, the individual business of the manager.manager a was transformed into a company with limited liability responsabilitis limited, of which he held 99% of the capital, and the convention was transferred to this new structure. Several amendments were subsequently added to this convention in order to modify its conditions. The general meeting of the partners approved the initial convention as well as the majority of the amendments, with the exception of the last two. [...]

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