Be careful not to put in the shareholders’ agreements provisions that are contrary to the articles of association! They would be ineffective. A recent application on the dismissal of a CEO of SAS

In a decision of October 12, 2022, the French Supreme Court (Court of Cassation) recalls this principle. The articles of association provided for the possibility of dismissing the Managing Director of an SAS ad nutum (at any time, without any reason being necessary) and without compensation. In the case at stake, the dismissed Managing Director attempted to invoke a separate letter providing for compensation equal to 6 months' gross remuneration in the event of dismissal without cause.  The dismissed Managing Director was denied his request for the letter to be applied and this decision was confirmed by the French Supreme Court (Court of Cassation).

In the case at stake, the Court recalled that pursuant to law (L227-5), the articles of association are the ones that set the conditions under which the company is managed and that a shareholders’ agreement cannot derogate from the articles of association.

It is therefore necessary that managers be extremely careful when it comes to implementing management packages, the traps being very numerous in this area.

We remain at your disposal for any questions and to assist you in the negotiation and drafting of your agreements.

Dominique Dumas, Managing Partner of the business law firm Dumas Structure. Contact@dumas-structure.com. www.dumas-structure.net

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