Panorama of legal news - Corporate life
Written in collaboration with our trainees :
- Marie Gava – Student at the University of Paris Ouest Nanterre La Défense.
- Esther Leguil – Student at the University of Paris Panthéon-Assas.
Modification of a company's corporate purpose and abuse of minority rights.
In a ruling handed down on March 13, 2024, the French Supreme Court (Cour de Cassation) reiterated that a refusal to modify the corporate purpose of a company (in this case, a SARL) may constitute an abuse of minority rights. It ruled that “the refusal of a minority shareholder to modify the corporate purpose may be contrary to the general interest of the company”. As a reminder, abuse of minority rights is characterized by a vote contrary to the company's corporate interests, whose sole purpose is to favor the interests of the minority shareholder (Cass.com, March 13, 2024, no. 22-13.764).
Revocation of a Chief Executive Officer's term of office: useful clarifications
On April 4, 2024, the French Supreme Court handed down a ruling (Cass. com., April 4, 2024, no. 22-19.991) on the termination of a corporate mandate following a corporate transaction.
In the Court's view, the decision by the Board of Directors of a public limited company to entrust its Chairman with the general management of the company, putting an end to the dualist governance previously voted by the directors, does not constitute a disguised dismissal of the Managing Director, nor does it stem from a desire to oust him, unless the latter succeeds in demonstrating that the decision was taken with this precise aim in mind.
Consequently, such dismissal does not give rise to a right to compensation for lack of just cause. This is a novel solution. Formulated in relation to a public limited company, it appears transposable to other forms of company.
Management agreement and abnormal act of management.
In a ruling handed down on April 26, 2024 (CE 26/04/2024 n°458958), the Conseil d'Etat reiterated that reimbursing the remuneration of employees seconded to manage a company does not constitute an abnormal act of management, provided that they work exclusively for the company, effectively manage it and that the sums reimbursed are not excessive.
Société civile immobilière (non-trading property company): scope of the absence of an express mention in the corporate purpose of the option to make a property owned by the company available to the partners free of charge.
When the articles of association of a real estate civil company do not expressly mention the ability to make a property it owns available to the partners free of charge, this provision cannot be decided by the manager alone and must be authorized by the general meeting of partners, acting under the conditions provided for amending the articles of association (Court of Cassation, 3rd Civil Chamber, May 2, 2024, No. 22-24.503).
