Legal guide for company directors and CEOs in France

Because environmental, social and governance (ESG) is such an increasing focal point of good corporate governance, we address ESG duties and responsibilities first. For more general duties and responsibilities of directors and CEOs, please scroll down the page or use the navigator to jump to the relevant section. 

In France, ESG reporting became mandatory for listed companies in 2001, with requirements – particularly with regard to climate change – and scope broadened in 2010 and then 2015. Extra-financial reporting was then transformed into the Extra-Financial Performance Statement (EFPS) to comply with the 2014 European directive on transparency and publication of non-financial information (NFRD).

In December 2023, the EU 2022/2464 Corporate Sustainability Reporting Directive (CSRD) was transposed into French law and French companies will have to file a new chapter in their management report: the sustainability report. It replaces the aforementioned EFPS.

Company managers are in charge of implementing these policies in order to comply with the legal obligations. 

All companies, regardless of their size, status or sector of activity, can implement a corporate social responsibility (CSR) approach. The larger companies, depending on their size and their public or private status, will have to file a sustainability report (see below). 

Managers are in charge of reporting and their duties will vary depending on the size of the company and its related obligations. 

If the company falls within the scope of the CSRD, part of the managers’ variable bonus objectives will have to be linked to ESG performance criteria. 

Since 2019, all French companies, without exception, must “take into consideration” environmental and social issues in the management of their activities. This establishes a minimum legal basis for integrating these CSR dimensions into the conduct of economic affairs. Voluntary companies can adopt the status of a company with a mission by including a raison d'être with social and environmental objectives in their articles of association. However, this requires monitoring by a specific committee, controlled by a third party. 

Larger companies and listed companies are increasingly subject to specific regulations. For the past 15 years, they have been required to publish information on their environmental and social impacts (ESG reporting or EFPS). Since 2017, large companies must also put in place monitoring measures that prevent environmental (e.g. pollution), social (e.g. human rights violations) and governance (e.g. corruption) risks in their production units, subsidiaries and at their suppliers. 

As suppliers or subcontractors of large companies, medium-sized companies are also increasingly encouraged to adopt such an approach. This can be seen in particular in the calls for tenders or purchasing policies of major client groups, which are increasingly demanding details of their suppliers’ environmental, social and governance measures. More and more companies are taking this into account and selecting the most virtuous. 

In comparison with the above-mentioned NFRD, CSRD introduced the following main changes:

• Harmonised and more demanding reporting standards: along the principle of "double materiality" (see below), companies have to report detailed information on their material sustainability risks, opportunities and impacts according to European sustainability reporting standards (ESRS).
  The European Commission recently adopted a new directive extending from 30 June 2024 to 30 June 2026 the deadline for adopting sector-specific ESRS standards and standards specific to branches and subsidiaries of companies established outside the EU (EU 2024/1306 Directive of 29/04/2024 amending EU 2013/34 Directive of 26/06/2013). However, this directive specifies that the Commission must endeavour to adopt eight of these standards as soon as they are ready. The rationale was for companies to focus first on the inter-sectorial ESRS standards.
• Double materiality: the principle of "double materiality" is the cornerstone of the CSRD. It requires companies to report the information necessary to understand not only the effects of sustainability issues on their financial position and performance (internal / financial materiality), but also their impact on the environment and society (external / impact materiality). The double materiality analysis carried out by companies should make it possible to identify sustainability topics reflecting the main ESG risks, opportunities and impacts of the company due to its activities and its value chain. This analysis should also enable to identify material information to report on those issues (indicators, contextual information, etc.), in accordance with the ESRS.
• Wider scope: a significantly higher number of companies fall within the scope of the CSRD, compared with NFRD. In particular, all companies listed on European regulated market (except micro-businesses) are concerned with this reporting obligations. In addition, in France, where previously mostly sociétés anonymes (joint stock companies) or sociétés en commandite par actions (partnership limited by shares) were impacted, now most kinds of companies fall within the scope of the CSRD obligations if they exceed the relevant thresholds.
• Harmonised specific chapter of annual report: sustainability information shall be disclosed in a dedicated section of the management report.
• Single electronic reporting format: companies have to prepare their management report, including the sustainability report, in a xHTML electronic format. In addition, sustainability information will have to be tagged/flagged in accordance with a to-be-adopted digital taxonomy.
• Certification of the sustainability report by statutory auditors or independent certification providers. The CSRD requires first a "limited assurance" level and introduces a possible transition to "reasonable assurance" from 2028. This option is not in the scope of French authorities at the moment. In addition, auditors have to apply European assurance standards as well as the requirements set out in the Audit directive and regulation. The sustainability auditor(s) will have to be appointed by the shareholders the year before the first sustainability report is submitted to the shareholders.
• Consolidated scope: the thresholds below are measured both on an individual and a consolidated level. When a consolidated sustainability report is prepared by the consolidating company of a group, the subsidiary companies can be exempted from the sustainability reporting obligations (if they fall individually within the scope of CSRD). Minimum information must however be provided in the subsidiary’s management report (statement on the exemption, reference to the consolidated report, etc.). This exemption does not apply to large companies listed on a regulated market.

Managers are in charge of the ESG reporting, along the following axes:

Scope 

The progressive implementation of the CSRD and the different categories of companies concerned are specified in the table below: 

Content 

The main ESG topics of the sustainability report are as follows:

• Environment: adapting to climate change and mitigating its impact; participating in the circular economy; implementing measures to preserve biodiversity and ecosystems; managing resources sustainably; reducing pollution.
• Social: promoting equal opportunities; improving working conditions and pay; respecting human rights and fundamental rights.
• Governance: explaining the role of governance bodies (ethics charter, anti-corruption policy, etc.); relations with external stakeholders (suppliers, political commitments, etc.); integrating sustainability issues into decision-making, risk management and setting up internal control bodies. 

The sustainability report will be structured as follows:

• A brief description of the company's business model and strategy with regard to sustainability issues.
• A description of the company's sustainability objectives and its progress towards achieving these objectives.
• A description of the role of the administrative, management and supervisory bodies in relation to sustainability issues.
• A description of the company's sustainability policies.
• A description of the incentives related to sustainability issues granted by the company to members of the administrative, management or supervisory bodies.
• A description of
  • the due diligence procedure implemented with regard to sustainability issues;
  • the main actual or potential negative impacts related to the company's value chain, including its own activities, products and services, business relationships and supply chain;
  • the actions taken, and their results, to prevent, mitigate or remedy actual or potential negative impacts.
• A description of the main risks to the company related to sustainability issues and how they are managed.
• Indicators relevant to the above information. 

The information to be published in the sustainability report is precisely defined by the ESRS, which constitute a list of major topics to be covered. 

Vigilance plans were introduced in France in 2017. Large companies are obliged to publish and act in order to avoid or reduce the human rights and environmental impacts of their activities and those of their entire supply chain. The vigilance plan must be published in the company’s universal registration document. 

Vigilance plans are particularly scrutinised by NGOs, which are now using this legal mechanism to denounce companies’ failings before the courts. 

Scope 

SAs employing, at the close of 2 consecutive financial years, at least 5,000 employees in France in their own or in their direct or indirect subsidiaries, or 10,000 employees worldwide. 

Content

• risk map
• regular assessment procedures for the value chain
• appropriate actions to mitigate risks or prevent serious harm
• a mechanism for alerting and collecting reports
• a system for monitoring the measures implemented and evaluating their effectiveness. 

CSDDD: anticipating the extension of the French duty of vigilance to small and medium-sized companies 

In February 2022, the European Commission took up the concept of due diligence by publishing its proposal for a directive. The Directive was adopted on 24 May 2024. It is still to be transposed in French law. The rules will start to apply to companies, with a gradual phase-in between 3 and 5 years after entry into force. The CSDDD (Corporate Sustainability Due Diligence Directive) insists on the same principles as those put forward in our national law. The CSDDD is detailed in the EU-wide chapter of this guide.

The carbon/ESG footprint is intended to identify the potential for reducing greenhouse gas emissions. It must be updated every 4 years. 

Scope 

Companies with more than 500 employees (250 in the French overseas departments). 

It must cover Scope 1, i.e. direct emissions directly linked to the manufacture of the product, and Scope 2, i.e. indirect emissions associated with energy. It is also strongly recommended that Scope 3 be covered, i.e. upstream emissions (raw material purchases, freight, employee travel, etc.) and downstream emissions (waste, product or service use, etc.). This scope generally represents 75% of a company’s emissions. 

During the post-COVID-19 recovery plan, the Minister for the Economy stated that he was in favour of a simplified greenhouse gas assessment requirement for companies with more than 50 employees by 31 December 2023 (1 year earlier for companies with more than 250 employees). 

The carbon footprint will be prepared alongside the sustainability report of the companies within the scope of the CSRD. 

It is highly likely that regulations will continue to evolve in the future, and that the greenhouse gas emissions balance (BEGES) will apply to SMEs and VSEs that are below the scope of the CSRD. That's why it's a good idea for them to be prepared. 

Carbon Border Adjustment Mechanism (CBAM) Regulation 

On 1^st October 2023, the CBAM entered into application in its transitional phase, that will last until its full effect in 2026. The CBAM imposes payment on the carbon emitted during the production of carbon intensive goods that are entering the EU from non-EU countries. CBAM participants can register and buy (non-tradable) CBAM certificates that allow them  to bring carbon intensive goods into the EU. 

As an EU Regulation, CBAM applies in the same way to all EU countries, and it is detailed in the common EU chapter.

The Professional Equality Index aims to put an end to professional inequalities between sexes by making it possible to uncover and understand any pay gaps at work in certain companies. Despite the principle of “equal pay for equal work” enshrined in law, women’s pay remains on average 9% lower than men’s. 

Scope 

All companies with more than 50 employees must now publish this index, based on 100 points, and transmit it to the labour administration. If a company does not comply, a financial penalty of up to 1% of its wage bill may be imposed. 

Content 

• pay gap between sexes
• difference in the distribution of individual pay rises
• number of female employees who receive a rise after returning from maternity leave
• sex parity among the 10 highest paid employees
• distribution gap in promotions (only in companies with more than 250 employees) 

The Professional Equality Index will be be prepared alongside the sustainability report of the companies within the scope of the CSRD integrating the criteria set out in the ESRS. 

The aim of an anti-corruption plan is to facilitate the detection of certain offences such as influence peddling and corruption. 

Scope 

Companies with more than 500 employees, or which belong to a group with more than 500 employees; and also those with a turnover (or consolidated turnover) of more than EUR 100 million. In addition to companies, managers are also made responsible under this new scheme. 

Content 

• code of conduct defining and illustrating the various behaviours to be avoided in order to prevent acts of corruption or influence peddling
• risk map that identifies, analyses and prioritises the company’s internal and external exposure risks according to its activity and geographical areas of exposure
• procedure for assessing the situation of customers, first-tier suppliers and intermediaries with regard to risk mapping
• internal or external accounting control procedures designed to ensure that accounting elements (books, registers and accounts) are not used to conceal corruption or influence peddling
• training for managers and employees most at risk, as well as an internal alert system
• a disciplinary system to punish employees for violations of the code of conduct
• an internal control and evaluation system for the measures implemented.  

The anti-corruption plan will be be prepared alongside the sustainability report of the companies within the scope of the CSRD integrating the criteria set out in the ESRS. 

The SFDR has been in force since 1^st January 2023. It brings sustainability information disclosure obligations on professionals of the financial markets, such as investment services providers, asset managers, investment advisors, pension and investment funds and fund managers. 

As an EU Regulation, SFDR applies in the same way to all EU countries, and it is detailed in the common EU chapter. 

Like the SFDR, the Taxonomy Regulation has been in force since 1^st January 2023. It implements a taxonomy (i.e. a uniform classification system) for economic activities that are “environmentally sustainable”. 

As an EU Regulation, Taxonomy Regulation applies in the same way to all EU countries, and it is detailed in the common EU chapter. 

In a “société anonyme” or SA, a company is legally required to appoint a board of directors (C“ onseil d’administration”) with at least one managing director (D“ irecteur general”) and, if any, one or several deputy managing directors (“Directeur general délégué”) or a supervisory board (“Conseil de surveillance”) with a management board (“Directoire”). Directors can be legal persons (see below) but managing directors and deputies must be natural persons. 

In a “société par actions simplifiée” or SAS, shareholders have the power to freely determine the organisation of the management bodies in the articles of association. However, shareholders must at least appoint a president (“Président”) who represents the company in its relationships with third parties. 

Certain restrictions exist regarding persons who are entitled to be appointed. In particular, persons who have been disqualified from acting as a director or manager, and persons without legal capacity to act (mentally impaired or non-emancipated minors), cannot be appointed.

Directors or managers do not have to hold qualifying shares. However, the articles of association may include such a requirement, except in state-owned companies. In listed companies, it is recommended that directors hold a significant number of shares, however. 

The articles of association may also contain other requirements, for example a requirement for specific skills (confirmed by a diploma or professional qualification) or an age limitation.

A director or manager is not required to be a French national, nor must he/she be resident in France. 

In a SA, a legal entity can be appointed as director. In this case, a permanent representative (“représentant permanent”) must be appointed to represent the legal entity on the board. This permanent representative must satisfy all the eligibility requirements which apply to directors. In a SAS, unless otherwise provided for in the articles of association, the managers and, in particular, the president may be legal persons. In this case, the managers of the legal person are subject to the same conditions as if they were president or manager in their own name. 

The board of directors of a SA must comply with a certain degree of balance between women and men. In listed companies, and in large and medium-sized limited companies, the proportion of directors of each sex in boards of directors cannot be lower than 40%. Warning: any appointment that would not respect this mandatory minimum proportion would be null and void.

The articles of association may provide that some directors must be elected by employees, and SAs which employ more than 1,000 employees in France, or more than 5,000 employees worldwide including subsidiaries, must organise the election or appointment (various methods are available) of one or two directors by employees of the company. 

At the time of the company’s incorporation, the first directors or managers of a SAS are designated in the articles of association. 

Following the incorporation of a SA with a board of directors, the directors (other than directors elected or appointed by employees) are appointed at the ordinary general shareholders’ meeting.

If there is a vacancy on a board of directors (through death or resignation), the board of directors can temporarily fill such vacancy. Any such temporary appointment must be ratified at the next general shareholders’ meeting. 

In a SA with a board of directors, all relevant information about proposed directors must be communicated or made available to shareholders prior to any general meeting convened in order to decide on their appointment. The articles of association set out the length of the term of office which may not exceed 6 years. As a general practice, to avoid terms of office lapsing between general meetings, directors are appointed until the end of the annual general meeting (i.e. the general meeting that votes on the accounts approval) of their last year of term. 

Directors are eligible for re-appointment unless the articles of association provide otherwise. Upon the expiry of a director’s term of office, the board of directors of a SA must convene a general meeting to consider the vacancy. 

In SAs with a management board and a supervisory board, members of the latter are appointed in the same way as directors (see above), whereas members of the management board are appointed by the supervisory board. 

The method of appointment of the president and other managers of a SAS is freely determined by the articles of association. A collective decision of shareholders is not necessarily required. 

The appointment of a director or manager must be published in a legal notice bulletin, filed with the office of the commercial court (“greffe du tribunal de commerce”), registered with the trade and companies register and notified through the official bulletin of civil and commercial notices. 

Details of directors’ and managers’ remuneration are set out in a report on the annual accounts, but only in a listed SA or in a SA that is controlled by a listed company. 

In a SA with a board of directors, directors, managing directors and deputy managing directors may be dismissed at any time by the shareholders in ordinary general meetings (for directors) and by the board of directors (for managing and deputy managing directors). There is no need to provide reasons for the dismissal. However, such a decision must not be taken in insulting or hurtful circumstances, but only after a “proper hearing”. Otherwise the company could be liable to pay damages. Directors may resign at any time, without giving any reason.

In SAs with a management board and a supervisory board, members of the latter are dismissed in the same way as directors (see above), whereas members of the management board are dismissed by the supervisory board.

Managers of a SAS are dismissed in accordance with the procedure set out in the articles of association. The articles of association will determine whether the shareholders, a group of shareholders or a supervising body may have the right to dismiss a manager. A dismissal decision does not have to be justified unless required by the articles of association. In any case, such a decision must be taken only after a “proper hearing” and not in insulting or hurtful circumstances. The articles of association may provide for the payment of damages in the event of a manager’s removal and set out the basis of the payment. Managers may resign at any time in accordance with the procedure set out in the articles of association (such as complying with notice provisions).

However, in both a SA or SAS, when the resignation is reckless, the manager or director may be ordered to pay damages to repair any loss suffered by the company. 

The removal of a director or manager must be published in a legal notice bulletin, filed with the office of the commercial court, registered with the trade and companies register and notified through the official bulletin of civil and commercial notices. The removal does not put an end to the director’s or manager’s liability for the past. He/she can still be liable if he/she has breached directors’ or managers’ duties prior to his/her removal. 

The board of directors of a SA determines the company’s strategy and supervises its implementation in accordance with the company’s corporate interest and taking into account the social and environmental impact of its business. It has all the powers to carry out the company’s corporate object, except for matters expressly reserved to the general shareholders’ meeting by law or by the articles of association. Practically, the managing director exercises most of these powers. 

The board of directors of a SA carries out such inspections and verifications as it considers appropriate. The chairman or the managing director is required to send all documents and information needed to perform this task to each director. However, certain decisions are expressly reserved to the board: convening general meetings, drawing up the company’s accounts and annual management reports, co-appointing directors, and nominating and dismissing the chairman and managing director. 

In SAs with a management board and a supervisory board, the latter plays a more limited role than a board of directors (e.g. they only control the accounts and do not draw them). The management board manages the company in the same capacity as a managing director.

The president of a SAS (and any manager empowered to do so by the articles of association), the managing director (and any deputy managing director) in a SA with a board of directors, the president of the management board (and any of its members empowered to do so by the supervisory board) in a SA with a management board and a supervisory board, represent the company in its relationships with third parties. They are called legal representatives. A legal representative has all the powers to fulfil the corporate object of the company in all circumstances and in the name of the company. A legal representative does not need a power of attorney. 

However, the articles of association may limit the powers granted to the legal representative in his/her relationships with the shareholders, board of directors or supervisory board. Such restrictions are purely internal: they are not enforceable against third parties. In the absence of legal provisions, the powers of the other managers must be precisely set out in the articles of association. In principle, they are not legal representatives of the company as regards third parties, but they may be granted a delegation of powers by the president. The delegated powers, however, are necessarily limited. 

A SA with a board of directors must have at least three directors, and at the most eighteen excluding directors elected by employees. The articles of association set out the number of directors required within these limits.

The board of directors of a SA is a collegiate body. Its decisions must be taken by an absolute majority of the directors present or represented. In principle, the chairman of the meeting has a casting vote. 

What contractual relationship does a director or a manager have with the company?

Agreements entered into between the company and a director or manager are “free” (i.e. no need for any authorisation or approval) only if they are arm's length agreements and relate to ordinary business. These “free” agreements are not subjected to a prior authorisation process. 

Several specific agreements are prohibited to a director who is not a legal entity: loans raised from the company, overdraft agreements and guarantees given for his/her commitments towards a third party. 

All other agreements entered into, directly or indirectly, between the company and one of its directors, or one of  its shareholders holding more than 10% of voting rights in the company, have to follow a specific procedure. 

In a SA with a board of directors, such agreements must first be authorised by the board of directors. If such authorisation is not obtained, these agreements may be terminated if they have been harmful to the company and the directors concerned will be liable for the harmful consequences suffered by the company. Moreover, these agreements must be approved by the general shareholders’ meeting following the presentation of a special report from the auditors. If such approval is not obtained, these agreements may not be terminated but the directors concerned will be liable for the harmful consequences suffered by the company. 

In a SA with a management board and a supervisory board, such agreements are authorised by the supervisory board, which works in a similar way to a board of directors. 

In a SAS, such agreements must be approved by the shareholders following the presentation of a special report from the statutory auditors. By way of derogation, where the company has only one shareholder, agreements entered into directly or through intermediaries between the company and its manager, its sole shareholder or, in the case of a shareholder company, the company controlling it, shall only be recorded in the register of decisions. 

Under specific conditions, a director or manager may be an employee with an active status. The entry into, or modification of, an employment agreement with a director or manager in the exercise of his/her duties must follow the prior approval procedure mentioned above. 

Directors of a SA may be remunerated by directors’ fees of an annual basic amount to reward their regular attendance at board meetings. Additional extraordinary remuneration may be granted by the board to directors who carry out specific activities (specific missions or mandates). This must be approved using the specific “control” procedure detailed above. The remuneration of the chairman and managing director is determined by the board of directors. Details of such remuneration are published in the corporate governance report, but only in listed companies or in companies which are controlled by a listed company. In listed companies, a say on pay shareholder procedure must be followed regarding the compensation of corporate officers. 

The articles of association of a SAS may freely determine the terms and conditions of managers’ remuneration.

Beyond the above-mentioned prior authorisation procedure for some contracts, according to case law, if a director or manager has a personal interest in a decision which is to be voted upon, he/she may still participate in the vote unless his/her conflict of interest goes against the corporate interest.

When there is a conflict between the corporate interest and his/her interests as a shareholder, a director or manager must favour the company’s interest. 

The director or manager must act in accordance with the corporate object. The board of directors or management board of a SA and the president of a SAS have only powers within the framework of the corporate purpose. However, this rule only has effect in relation to the shareholders. Indeed, in its relationships with third parties, the company is bound by deeds signed by legal representatives on behalf of the company, even when such deeds exceed the corporate purpose.

A director / member of a supervisory board must attend board meetings. Even if he/she is absent, he/she is still liable for board decisions that are harmful to the company or third parties. 

When opposing a board decision, a director should have his/her dissenting opinion recorded in the board minutes, in order to limit his/her liability if such decision proves harmful for the company.

The director has a duty of confidentiality in respect of the board’s proceedings. 

Generally, the director or manager must always act according to the corporate interest. He/she must also be particularly careful if the company has financial difficulties. If the company is subject to insolvency proceedings and if it is proved that the director or manager’s actions or decisions were instrumental in the company’s insolvency, he/she may be held liable by the court in charge of the proceedings. 

A director or manager may be held liable for the following categories of breaches towards the company, shareholders and third parties: 

• breaches of the law and regulations applicable to a SA or SAS 
• breaches of the articles of association, and
•  mismanagement. 

Directors or managers are personally liable towards third parties who are not shareholders only if the breach of their duties committed by them is an intentional and serious one, qualifying as not intrinsically connected with the performance of these duties. 

A director or manager is only liable if the breach he/she has committed has caused personal damage to the victim. 

Directors may be liable individually or jointly depending on whether a director individually, or several directors collectively, have breached their directors’ duties. Directors may also be criminally liable for offences committed during the exercise of their duties. Directors may be liable for certain specific offences such as misuse of company property, commingling of assets, misuse of power and distribution of fictitious dividends.

As mentioned above, in the event of bankruptcy, a specific action may be brought against directors or managers who may be ordered to pay off all or part of the company’s debts.

Liability suits brought against directors or managers by third parties suffering damages, by shareholders acting individually or on behalf of the company (“action ut singuli”) lapse 3 years from the commission of the harmful act. 

French law prohibits any limitation of directors’ or managers’ liability in the articles of association. Articles of association which require the consent of a shareholders’ meeting for an action to be brought against a director or manager, or provide an anticipated waiver of this action, will be ineffective. Regardless of any decision passed by the shareholders in a general meeting, a director or manager who acted outside the scope of his/her powers may still be sued. 

Except as otherwise provided for in the articles of association, foreigners (EU residents or non-EU residents) may be directors or managers of limited companies. A director of a SA who is not chairman or managing director does not have to obtain a temporary visa (“carte de séjour temporaire”). The president, managing director or deputy managing director of a SAS does. 

A director’s or manager’s fees paid to directors or managers of limited companies are taxable in France whether or not the director or manager lives in France. The chairman’s and the managing director’s remuneration in a SA and the manager’s remuneration in a SAS are subject to income tax (employees’ regime).

In a SA, a director’s fees are not subject to the national insurance scheme as long as the director’s work is not salaried, i.e. the director is not an employee of the company. The chairman and the managing director of a SA and managers of a SAS are mandatorily subject to the national insurance scheme, even if they do not have an employment contract. 

In a SA with a board of directors, the chairman of the board and the managing director may be the same person if permitted by the articles of association.     

The chairman of the board is in charge of organising and managing the board. The chairman makes sure that the company’s management bodies are properly run and that the directors are capable of fulfilling their offices. The chairman may not substitute himself/herself for the board of directors or for shareholders’ general meetings. In practice, the chairman has a non-executive role (i.e. the chairman is not a legal representative), while the managing director fulfils the executive office. 

The chairman is selected from the directors of the company by an absolute majority decision of the board of directors, unless the articles of association prescribe a qualified majority. The chairman may be dismissed at any time by the board of directors; provisions in the articles of association which restrict this rule are considered ineffective. There is no need to provide reasons for the dismissal, but such a decision must be taken only after a “proper hearing” and not in insulting or hurtful circumstances. 

The managing director is in charge of the general management of the company. He/she has the power to act in the name of the company except in relation to matters which are expressly reserved to the general shareholders’ meeting or to the board of directors by law or by the articles of association. The managing director represents the company in its relationships with third parties. 

As regards third parties, the company is even bound by acts exceeding the corporate object, unless the company can establish that the third party was aware of this. The managing director is appointed and may be dismissed at any time by the board of directors. The managing director may be assisted in the exercise of his/her duties by a maximum of five deputy managing directors appointed by the board after a managing director’s proposal. A deputy managing director’s status is effectively the same as that of a managing director.

The appointment and removal of a chairman, managing director or deputy managing director must be published in a legal notice bulletin, filed with the office of the commercial court, registered with the trade and companies register and notified through the official bulletin of civil and commercial notices. 

A chairman and managing director must comply with strict rules as to the number of offices they can hold. Managing directors may hold a second office in a controlled company and a third one in a non-listed company. 

In principle the chairman and the managing director are liable in the same way as directors. However, their liability is likely to be invoked more often since they are in charge of day-to-day management. 

A SA with a “Directoire” and “Conseil de surveillance” has two collegial bodies: a managing board which has the power to carry out the corporate purpose of the company in all circumstances and to act in the name of the company, except in relation to such matters as are expressly reserved to the general shareholders’ meeting or to the supervisory board; and a supervisory board which has a permanent supervisory role to control management of the managing board. It therefore has specific powers such as the power to carry out any useful verification at any time, such as verification of the annual accounts. 

The managing board may comprise no more than five members, or seven if the company is a listed company. They must be individuals, but not necessarily shareholders of the company. They are appointed by the supervisory board. 

The supervisory board must comprise at least three, but not more than eighteen, members (without taking into account members elected by employees). The eligibility requirements for members of the supervisory board are effectively the same as those required to be a director of a SA with a board of directors. 

Members of the managing board may be dismissed by the general shareholders’ meeting or, if it is provided for in the articles of association of the company, by the supervisory board. Members of the supervisory board may be dismissed at any time by the ordinary general shareholders’ meeting. 

Finally, in a SAS, the shareholders’ meeting is considered to be a supervising body, mostly as they approve the annual accounts. 

The articles of association of a SAS may also provide for the appointment of a supervising body. In such a case, the articles of association provide for its composition and working rules. As in the case of a SA, certain SASs are subject to supervision by one or more statutory auditors.