You must be aware that mentioning a Managing Director (Directeur Général) on the K-bis of a French SAS (Société par Actions Simplifiée) isn’t sufficient for him to be considered as the legal representative of such company!
Although the law automatically recognises that the CEO / President mentioned on the K-bis has the authority to represent the SAS with regard to third parties, it only recognises the Managing Director’s authority to do so if provided for by the company’s articles of association.
This litigation started with the refusal of the customs authority, during a visit to the offices of an SAS, to remit to the Managing Director whose name figures on the SAS’s K-bis, a copy of the liberty and custody magistrate’s order authorising such visit.
The SAS claimed this was an infringement of the obligation to present the order to the premises’ occupant or his representative at the time of the visit (Article 64 of the French Customs Code) and therefore made a legal claim for the cancellation of the visit and the seizures made.
The Court of Appeal’s decision, which had upheld this request for cancellation, was overturned by the French Supreme Court (Cour de Cassation), which indicated that the status of legal representative cannot result from the sole mention of the Managing Director on the K-Bis but requires to verify that the articles of association give such powers to the Managing Director (Cass. com., 25 May 2022, n° 20-21.460, n° 322 F-D).
Effectively, although the law automatically recognises that the CEO / President named on the K-bis has the right to represent the SAS with regard to third parties, it only recognises that the Managing Director has such authorisation if so specified in the articles of association (Article L.227-6 of the French Commercial Code).
This obligation to describe the powers of representation in the articles of association supplements the obligation of registering the Managing Director’s standing as a management authority on the K-bis (Article R.123-54 of the French Commercial Code). Such registration must be established separately from the fact that the Managing Director has, or does not have, power of representation with regard to third parties.
Therefore, to ensure that a Managing Director has both the quality and powers of a legal representative of the SAS, the following cumulative obligations must be respected:
– registration as Managing Director on the company’s K-bis; and
– statutory provisions conferring upon the Managing Director the power to represent the company.
Finally, particular attention must be paid to the denominations given to the management authorities as well as to the formulation in the articles of association of the powers given to the latter, as you must bear in mind that:
– third parties may use commitments undertaken for an SAS by a Managing Director whose name figures on the K-bis without any possibility for the company to oppose the absence of statutory powers (Cass. com. 9-7-2013 n° 12-22.627 F-PB);
– third parties may also use the absence of powers of representation in the articles of association to contest the validity of an act signed by a Managing Director (Cass. 3e civ. 14-6-2018 n° 16-28.672 F-PB).
Don’t hesitate to contact our Corporate team in order to protect the commitments undertaken by your company executives and ensure that the formulation of your articles of association takes statutory requirements and case law into account.