Corporate law
Nullity of an Ordinary General Meeting: absence of statutory auditors
Resolutions passed by an Ordinary General Meeting in the absence of the proper appointment of statutory auditors are legally null and void. They can only be declared null and void if no statutory auditors have been appointed or if they have been appointed irregularly.
SAS (société par actions simplifiée): equality abuse («abus d’égalité»)
It is considered an abuse of equality for a shareholder of an SAS with equal shares to prevent, by voting against, a decision that is essential for the company, with the sole aim of favouring his own interests to the detriment of the other shareholder.
SARL (société à responsabilité limitée) manager : responsibility for unfair competition
The manager of a SARL is responsible for mismanagement to the detriment of a company of which he is a former employee, even if the acts of unfair competition of which he is accused were committed when he was not yet the manager.The victim company may claim compensation for the loss resulting from the misappropriation of customers committed by the manager, as well as for the loss resulting from the sudden termination of commercial relations.
Tax
Tax support service for SMEs expanding across France
To better meet the needs of enterprises, the DGFiP (Direction Générale des Services Publics) has announced the implementation of its personalised tax support service for SMEs in 36 new departmental public finance directorates.The purpose of the SME tax support service is to respond to the specific fiscal problems encountered by SMEs, and to provide security for economic transactions where the stakes and risks are high. This support can be provided on a one-off or long-term basis, and takes the form of general answers or positions on specific points.1,500 enterprises have already benefited from tax support since 2019.Foreign companies can also benefit from this service, particularly when they are looking to invest in France.
Partners’ current accounts: maximum rate of deductible interest
The maximum rate of deductible interest paid on partners’s current accounts in companies closing at April 30, 2023 is of 3.46%.
The administration commits itself
The Conseil d’Etat has ruled that a tax return notice is enforceable against the tax authorities under article L 80 A, paragraph 2 of the «Livre des procédures fiscales».More recently, the Conseil d’Etat also accepted that comments in FAQ could include an interpretation of positive law enforceable.
Internal legal framework for mergers, demergers and partial contributions of assets amended
An ordinance reforming the regime governing mergers, demergers, partial contributions of assets and cross-border transactions by commercial companies, supplemented by its implementing decree, transposes into the French Commercial Code the provisions of EU Directive 2017/1132 of June 14, 2017, as amended by EU Directive 2019/2121 of November 27, 2019, relating to cross-border transactions (mergers, demergers, partial contributions of assets and transfers of registered office taking place within the European Union).The new provisions apply to domestic and cross-border transactions for which the project has been filed with the commercial court since July 1, 2023. Transactions filed prior to this date remain subject to the former regime.The purpose of this ordinance is to simplify the rules governing mergers, demergers and partial contributions of assets, and to clarify the French Commercial Code in this respect. Beware, however, that the ordinance goes beyond simple transposition, and modifies.
Employment law
Variable compensation/bonus: targets must be formulated in French
In a judgment of 7 June 2023, the labour chamber of the French Supreme Court (Cour de cassation) points out that the objectives required to determine employees’ variable contractual pay must be set in French if they are not received from abroad or intended for foreigners, even if the company’s working language is English.
Exclusivity clause for executives in employment law: valid only under specific conditions
Executives are often subject to an exclusivity clause in their employment contract.However, this clause is only valid under certain strict conditions.In practice, this clause is often declared null and void by the French courts. Insolvency
Third party personal liability action against the manager of a company in judicial liquidation
The admissibility of an action for personal liability initiated by a creditor against the manager of a company in insolvency proceedings, for events prior to the opening judgment, is subject to the allegation of a personal loss distinct from that of the other creditors resulting from a fault on the part of the manager that is separable from his functions. A court of appeal does not provide a legal basis for its decision if it does not investigate, as it was requested to do, whether the faults attributed to the manager were not the cause of a non-material loss, the reparation of which was unrelated to the reconstitution of the common pledge of the creditors and whether it did not therefore fall outside the liquidator’s exclusive power of action.
Country
