#Removing a Company Director in France

Your situation and your risks

You are considering ending the term of office of a director: gérant (manager), président, chief executive officer (directeur général) or member of the management board (directoire). The decision lies with the shareholders or with a corporate body, depending on the company’s legal form and the office held. An irregular or poorly justified removal exposes the company to a claim for damages. Conversely, you may be the director concerned and wish to check whether the decision was lawful.

The corporate office and the employment contract are two separate relationships. For a member of the management board, the law states that removal from office does not terminate their employment contract (Article L. 225-61 of the French Commercial Code (Code de commerce) (in French)). The termination of any employment contract follows the rules of employment law and must be handled separately. The same distinction applies to any director who holds both a corporate office and an employment contract.

Rules for removing a director in France

The removal of a corporate officer is governed by the Commercial Code. The rules vary by legal form:

• Gérant of an SARL (French limited liability company): the gérant is removed by decision of the shareholders under the conditions of Article L. 223-29 of the Commercial Code (in French), which in principle requires a majority of more than half of the shares, unless the articles of association require a larger majority. Removal without just cause may give rise to damages. Any shareholder may also ask the court to remove the gérant for legitimate cause (Article L. 223-25 of the Commercial Code (in French)).
• Chief executive officer of an SA (French public limited company): the CEO may be removed at any time by the board of directors, as may the deputy chief executive officers on the CEO’s proposal. Removal without just cause may give rise to damages, except where the chief executive officer is also chair of the board (Article L. 225-55 of the Commercial Code (in French)).
• Chair of the board of directors: the board may remove the chair at any time, and any provision to the contrary is deemed unwritten (Article L. 225-47 of the Commercial Code (in French)). Board members (administrateurs), for their part, may be removed at any time by the ordinary general meeting (Article L. 225-18 of the Commercial Code (in French)).
• Members of the management board: they may be removed by the general meeting and, if the articles so provide, by the supervisory board. Removal without just cause may give rise to damages (Article L. 225-61 of the Commercial Code).
• Président and other officers of an SAS (simplified joint-stock company): the articles of association set the conditions under which the company is managed (Article L. 227-5 of the Commercial Code (in French)). The competent body, the majority, the grounds and any compensation are therefore found first in the articles, then in the shareholders’ agreement.

These provisions do not define just cause. Whether it exists is assessed case by case, in light of the facts alleged and the documents that establish them. The financial consequences of a removal also depend on the terms of the appointment, the articles of association and the shareholders’ agreement.

How we can help

• Identifying the applicable rules: legal form, office held, articles of association, shareholders’ agreement and any employment contract.
• Analysing the grounds under consideration and the documents supporting them.
• Preparing the decision: notice convening the competent body, agenda, draft resolution and minutes, consistent with the rules of your general meeting (in French).
• Dealing separately with the employment contract where the director has one.
• Reviewing what happens to the director’s remuneration and to any compensation provided for in the company’s documents.
• Assisting the company or the removed director in any dispute over the removal or its consequences.

What is at stake for you

For the company, the cost of a removal often turns on just cause, where the rules for the office give a right to damages. A procedure that complies with the rules and documented grounds narrow the scope for a dispute. For the director concerned, the priority is to check compliance with the law and the articles, then to assess a possible claim for compensation. Every situation is different: the rules depend on your company’s legal form, the office held and the documents that govern it.

Every situation is different: the information on this page is general and does not replace legal advice tailored to your case. The firm makes no promise of outcome; it commits to the means it deploys.