How are the managers (“gérants”) of a French General Partnership (“SNC”) appointed?
The managers (“gérants“) of a SNC may be appointed:
- in the bylaws of the SNC
- by a separate resolution of the members of the SNC
If no managers have been appointed in the bylaws of the SNC or by a subsequent resolution of the members, then all members of the General Partnership are deemed to be managers.
Indeed, pursuant to article L 221-3 of the French Commercial Code, “All the partners are managers, unless otherwise stipulated in the Articles of Association, which may designate one or more managers, whether partners or not, or provide for their appointment by a subsequent resolution.
If a legal entity is a managing partner, its directors are subject to the same conditions and obligations and incur the same civil and criminal liability as if they were managing partners in their own name, without prejudice to the joint and several liability of the legal entity that they manage.”
However, the directors of the legal entity appointed as managers of the General Partnership (SNC) are not indefinitely and jointly and severally liable for the company’s liabilities, since they are not themselves partners.
According to French case-law, all partners become automatically managers when all managers have resigned from their positions and have not been replaced (French Supreme Court, 24 October 1977).
In the event of judicial liquidation of a French General Partnership (SNC), a partner who also had the capacity of manager of the company may be declared personally bankrupt, even if he has never been involved in the management of the company.
The appointment and termination of managing directors must be published.
Can a manager (“gérant”) of a French General Partnership hold an employment contract with the partnership?
According to the French Supreme Court, the status of manager (“gérant”) of a SNC, when the latter is also a partner of the SNC, is incompatible with that of an employee. Consequently, a manager of an SNC who is also a partner of the SNC cannot hold an employment contract with the latter.
A manager (“gérant”) of a “SNC” who is not a partner of the SNC, can combine his/her duties of manager with an employment contract, provided that the job carried out under the employment contract is real, and that it is distinct from his/her duties of manager, which presupposes the performance of distinct technical duties in a subordinate position and the existence of a specific remuneration.
What is the remuneration of the appointed managers (“gérants”) of a French General Partnership?
There is no legal provision for setting the remuneration of managing partners. The bylaws of the SNC may therefore either specify the method of calculating this remuneration (fixed, proportional to profits or sales, or a combination of the two), or leave it to a collective decision of the partners, taken by a majority determined by the bylaws.
Remuneration paid to a manager who is an individual and is not a partner of the SNC is subject to the salary and wages regime (“régime des traitements et salaires”).
Remuneration paid to a manager who is an individual but is also a partner in the SNC is attached to the share of corporate profits to which he or she is entitled as a partner, and is subject to income tax according to the rules specific to the category of profits or income to which the company’s activity belongs (industrial and commercial profits, profits from non-commercial professions, agricultural profits or property income). These rules do not apply when the company has opted for the capital company regime.
If the manager is a legal entity, the remuneration paid for his duties as manager constitutes an item of taxable profit, according to the tax regime applicable to the legal entity.
Social security scheme for appointed managers (“gérants”) of French General Partnerships
A manager who is not a partner of the SNC but receives remuneration is subject to the French general social security scheme for salaried employees (“régime général de la sécurité sociale des salariés »), in application of article L 311-2 of the French Social Security Code. The manager must also be subject to the legally-mandatory supplementary pension scheme for salaried employees (Agirc-Arrco single scheme).
The manager who is not a partner of the SNC and holds an employment contract is also eligible for employee savings schemes.
Managers who are not partners and are not paid for their duties, are not affiliated to any compulsory social security scheme. They may however benefit from health coverage under the French universal health protection scheme (“protection universelle maladie ») if they are resident in France. If the French General Partnership (“SNC”) employs at least one employee and less than 250, the non-partner manager not bound to the company by an employment contract may, under certain conditions, benefit from profit-sharing and participate in employee savings plans.
Non-partner-managers are covered by the Unédic unemployment insurance scheme if they combine an employment contract with their corporate mandate. If this is not the case, they may be eligible for the allocation of self-employed workers (“allocation des travailleurs indépendants, ATI”) provided for in article L 5424-25 of the French Labor Code, in certain circumstances.