Key points
- The removal (révocation) procedure takes a person out of office, whether a company executive, a board member or a civil servant.
- It must comply with the law, which varies with the company form, and with the articles of association; some corporate officers can be removed ad nutum (at any time, without cause).
- The scope of just cause varies: an SARL manager or the chief executive officer of an SA removed without just cause may obtain damages.
- The key steps include identifying the competent body, consulting the articles of association, holding a meeting of that body (board of directors or general meeting) and notifying the decision.
- Removal without just cause, where the law requires one, may lead to the payment of damages.
The removal procedure concerns various sectors, whether in business with the removal of corporate officers or in the civil service with that of civil servants. It often involves legal concepts such as just cause or the company’s articles of association. This article explores in detail how the procedure works, its implications and the key elements for carrying out a removal.
What is a removal procedure?
The removal procedure is the process by which a person is taken out of their office or position. Found in private companies and in the public sector, it may concern company executives, board members or civil servants. The main objective is to align the management of an entity with its current needs.
In company law, removing corporate officers is no trivial matter. It must comply with the rules specific to each company form, the company’s articles of association and, where applicable, the employment contract. One significant point is whether the removal is “ad nutum”, that is to say possible at any time without just cause: this is the case for board members (administrateurs) of an SA (public limited company, société anonyme), who may be removed at any time by the ordinary general meeting (Article L. 225-18 of the French Commercial Code, Code de commerce), and for the chairman of the board of directors (Article L. 225-47). For more information, you can consult an employment law lawyer for executives and managers (in French).
Just cause: at the heart of removal
A key concept in removal procedures is just cause (juste motif). It refers to reasons serious enough to justify ending a person’s term of office. Its scope depends on the company form: the manager (gérant) of an SARL (private limited liability company) removed without just cause may obtain damages (Article L. 223-25 of the Commercial Code), as may the chief executive officer (directeur général) of an SA, unless they also chair the board of directors (Article L. 225-55). In an SAS (simplified joint-stock company), the articles of association set the conditions under which the company is managed (Article L. 227-5): it is the articles that organise removal.
It is therefore prudent for the competent body to set out the reasons for the removal clearly, in order to prevent any abusive removal. A significant breach by the officer of their duties may, for example, constitute just cause.
Key steps in removing a company officer in France
Carrying out a removal procedure involves several steps that require attention. Following them strengthens the procedural soundness of the decision and limits the risk of legal action.
Here are some essential steps in removal procedures:
- Recording the reasons justifying the removal.
- Consulting the articles of association to check consistency with the internal rules.
- Meeting of the competent body: board of directors for the chief executive officer of an SA (Article L. 225-55), ordinary general meeting for board members (Article L. 225-18), decision of the shareholders (associés) for the SARL manager (Article L. 223-25), body designated by the articles of association in an SAS.
- Compliance with any notice periods provided for by the articles of association or, where the officer also holds an employment contract, by that contract.
- Formal notification of the decision to the person concerned.
Role of the general meeting
The general meeting plays a role in some removals. In an SA, the ordinary general meeting removes board members (Article L. 225-18), whereas the chief executive officer is removed by the board of directors (Article L. 225-55). In an SARL, the manager is removed by a decision of the shareholders under the conditions of Article L. 223-29, unless the articles of association require a larger majority (Article L. 223-25).
During this meeting, each participant may put forward arguments for or against the removal. Keeping accurate minutes ensures the transparency of the process and serves as evidence in the event of a later legal challenge.
Legal and financial consequences of removal
The consequences of a removal go beyond the mere loss of a position, including financial issues such as the payment of damages where the removal takes place without just cause in the cases provided for by law (Articles L. 223-25 and L. 225-55 of the Commercial Code).
Ignoring the normal procedures can expose a company to costly proceedings that harm its image. From a financial point of view, it is wise to attend to every detail, from preparing the file to concluding the procedure. Also, where roles overlap, the question of combining an employment contract with a corporate office (in French) is essential to consider.
Notice and compensation
Removal ad nutum can take place at any time, without the company having to show just cause. Articles L. 225-18 and L. 225-47 of the Commercial Code provide for no notice period; notice may, however, result from the articles of association or, where the officer also holds an employment contract, from that contract.
As regards compensation, the damages due in the event of removal without just cause make good the loss suffered by the officer. Compensation linked to any employment contract is governed by employment law. Laying solid foundations when concluding these agreements limits future disputes.
Emotional aspects of removal
Beyond the technical and legal considerations, there is a human dimension to consider in a removal procedure. Corporate officers remain human beings who may be affected by their removal. Compassion combined with good communication helps to ease tensions.
Poor handling of the emotional side can lead to a drop in motivation or a toxic atmosphere within the remaining team. A respectful and open attitude limits the negative impact of the removal.
Effective internal communication
A transparent internal communication strategy prevents harmful rumours from spreading. It relies on clear information about the reasons for the removal and on attention to employees’ feelings.
Holding regular meetings with staff fosters a calm atmosphere. Involving teams in upcoming strategic decisions can also reassure them about the values the entity stands for.
