Duties of the managers (“gérant”) of a French General Partnership (“SNC”)
The managers (“gérants”) of a French General Partnership (“SNC”) have the duty to manage the company in compliance with its corporate interests and French laws.
In the event of violation of their duties, and depending on the circumstances, they may incur civil, criminal or tax liability.
Civil liability of the managers of a French General Partnership to third parties
A manager of a General Partnership in general may not be liable to third parties for acts or omissions committed in the performance of his duties as manager (“gérant”), as he/she acts on behalf of the Partnership. It is therefore the General Partnership which would incur liability towards third parties for breach of contract, or acts or omissions attributable to it.
The manager of the General Partnership may however be personally held liable in the event he / she commits a fault that is separable from his or her duties and attributable to him or her personally.
Generally speaking, the managing director may be liable in the following cases:
- breach of the articles of association of the General Partnership
- acts committed by the manager in breach of his limitations of powers
- acts committed by the manager in breach of legal and regulatory provisions
- mismanagement, etc.
Any shareholder who has suffered a personal loss may bring an individual action against the managing partners.
The action for damages suffered by the company as a result of faults committed by its managers, known as the corporate action, is governed by the rules set out in article 1843-5 of the French Civil Code.
The manager’s liability may be only partial if the partners have themselves committed a fault, for example by entrusting difficult duties to a manager who is notoriously inexperienced.
If there is more than one managing director, each is liable for his or her own faults. The same applies if tasks are divided between the managers. However, if the managers have committed a fault jointly, or if the articles of association require them to act jointly, each may be sued for the whole.
If a legal entity is a manager, its directors incur the same civil liability as if they were managers in their own name, without prejudice to the joint and several liability of the legal entity they manage (French Commercial Code, art. L 221-3, para. 2).
Manager’s liability in the event of insolvency of the French General Partnership (“SNC”)
In the event of insolvency proceedings being instituted against the company, the managers may be required to bear the company’s liabilities and be subject to certain prohibitions and disqualifications.
Criminal liability of the managers (“gérants”) of a French General Partnership (“SNC”)
The managers of a French General Partnership may be criminally liable in various cases, such as:
- breach of trust (abus de confiance) (Art. 314-1 and seq. of the French Criminal Code), for example when the manager has paid with the funds of the French General Partenship personal expenses of the manager (such as fines, legal fees of his personal lawyers, etc.)
- breach of the provisions relating to the appointment of statutory auditors when the company is required to appoint such
If a legal entity is a manager, its directors incur the same criminal liability as if they were managers in their own name (French Commercial Code, art. L 221-3, para. 2).
Tax liability of the managers of a French General Partnership
The managers may be held personally liable to pay taxes and penalties owed by the company if, through fraudulent maneuvers or serious and repeated non-compliance with tax obligations, they has made it impossible for the tax authorities to collect such taxes and penalties from the company.