The general manager’s liability and general meeting

July 13th 2016

 

"No decision of the general meeting may prevent a liability action against the directors or against the general manager for a fault committed during their term of office.”

This is set forth in paragraph 2 of Article L.225-253 of the French Commercial Code applicable to public limited companies and simplified joint-stock companies, upon referral to Article L227-8 of said Code.

This situation is set forth by the Cour de cassation (French Civil Supreme Court) in its ruling of March 8, 2016.

A director intended to transfer the company’s business. He had the amount and principle validated by the general meeting.

Subsequent to the transfer, a minority shareholder challenged the director for having carried out the transfer which he considered to be contrary to the company’s interest due to the minimal price.

The director relied on the authorisation granted by the general meeting which had been duly held.

The lower court judges, approved by the Cour de cassation, dismissed his argument: they acknowledge that the director “had acted reprehensibly to the company by accepting a price that was much lower than its value, without justifying the search for a purchaser offering a better price, nor any price determination method”.

Raphaël Oualid