Management in French companies

Résumé du document

An essential distinction is drawn in French labor law between the status of an employee and that of officer. The distinction is significant because it determines whether managers are covered by the labor law legislation, including those concerning employee dismissals. As a general principle, a person who manages or conducts a company is not considered an employee as such and therefore is not normally covered by standard labor law protection regarding dismissals. The manager of a French Limited Liability Company ("SARL"), the Managing Director and the members of the Board of Directors, Managing Board and Supervisory Board of French Limited Joint stock Company ("SA"), and the President of a French Simplified Limited Liability Company ("SAS") are all regarded as company officers. Nevertheless, managers can have regular employment contract with the company under certain conditions, depending on the type of company and the interests of the person involved.

Extraits

[...] The maximum number is set in the Bylaws and cannot exceed 24. A member of the Board must own at least the number of shares required by the Bylaws. A member of the Board can be either an individual or a legal entity. If a legal entity is appointed as member of the Board of Directors, it shall appoint an individual as permanent representative. This individual shall fulfill all the requirements imposed to the individual to be appointed as member of the Supervisory Board and, will be liable as if he was appointed himself. [...]

[...] No one can be member of more than two managing board of French limited liability companies. The members of the managing board are appointed by the supervisory board. The Supervisory Board designates the Chairman of the Managing Board. One ore more members of the Managing Board can be appointed as Managing Director, if provided so in the Bylaws. The Chairman and the eventual Managing Directors have equal powers to represent the company vis-à-vis third party. The term of their position may be set by the bylaws at any period from two to six years, if no such provision exists the term is four years. [...]

[...] The Board merely oversees the Chairman and Managing Director in managing the Company. Nevertheless, some decisions can only be made by the Board of Directors such as: - to convene of the shareholders' meetings; - to settle of the financial statements for the year ending; - to authorize agreements involving the company and one of its officer or a shareholder holding more than 10% of the share capital; - to appoint or dismiss the Chairman of the Board, the Managing Director and to fix their compensation; - to fix the members of the Board's compensation. [...]

[...] The Board of Directors has the exclusive power to set the Managing Director's compensation. It is not a contract subject to prior approval of the Board. The amount of the Managing Director's compensation and any benefits in kind must be mentioned in the annual management report (“rapport de gestion”) Limited Joint Stock Company with a Managing Board and a Supervisory Board The Managing Board conducts the general management and affairs of the Company, represents the company vis-à-vis third party and has full authority to act on behalf of the Company consistent with its corporate purpose. [...]

[...] However the Supervisory Board cannot intervene in the management of the Company. The Supervisory Board presents the annual financial statements to the annual general shareholders' meeting. Also the Supervisory Board has specific powers which include among others: - to appoint and propose removal of the members of the Managing Board; - to give prior approval to agreements entered into between the company and one of its officer or a shareholder holding 10% or more of the share capital; - To approve certain decisions of the Managing Board. [...]