You must act within the powers imposed by the
French Commercial Code and the company’s Articles of Association. As a company director you are required to act in good faith, with due managerial care and with loyalty.
Duties – skill and care
In exercising directors’ powers, you are required to exhibit due managerial care, ie act with due loyalty and with necessary knowledge and diligence. The test of due managerial care is what another reasonably diligent person would do in a similar position.
Duties – general
Directors are obliged to exercise their office with due managerial care, with the term being defined as acting with:
- loyalty to the company
- the required knowledge
In addition, and more specifically, directors are expected to:
- You must possess the correct qualifications in accordance with the activities of the company.
- You must always act in the interest of the company (duty of loyalty) and must not compete with the company. You therefore must not hinder any opportunities that the company may have (duty of good faith).
- For management purposes, you must report regularly to the shareholders, including information relating to any changes or the difficulties they face as shareholders relating to, for example, economical, financial or employment factors.
- You must ensure you have obtained the shareholders’ approval for any operations or agreement to be entered into by the directors with third parties, where such approval is required by the articles of association of the company.
- You must prepare any required reports, eg relating to the preparation of the annual accounts and to convene all meetings of shareholders as required or appropriated requested.
- You must ensure the completion of all the required legal registers (“livres inventaires”, “registre du personnel”, “registres comptables” “registre des assemblées générales”, “registre des mouvements de titres”).
- As a director you are the official contact for the employees and you shall act in a precautionary manner in order to maintain a good working relationship.
- You must take into consideration the company’s and/or the group’s interest before undertaking any action particularly where the action may be considered risky.
Duties – other
There are several specific responsibilities and liabilities that directors should be aware of that are commonly noted in France:
- You must comply with Anti-Bribery and Corruption legislation, including the UK Bribery Act and the US Foreign Corrupt Practices Act, and must understand, follow and promote internal policies and procedures.
- You must comply with all competition law and regulations. If a director or employee fraudulently takes a personal and decisive part in anti-competitive practices including anti-competitive agreements or abuse of a dominant position, that person may be punished by a prison sentence of up to four years and a fine of up to EUR75,000.
- You must comply with all areas of tax law and regulations. The President may be held accountable for tax liabilities, ie fraudulent representation or for the serious and repeated breach of tax obligations. The officer may only be held liable if their fault makes it impossible to levy the relevant tax.
- There is a duty on directors to ensure certain records are maintained, although this does not necessarily have to be on the premises of the registered offices, if a corporate secretarial provider is used. If this is the case, it is recommended that directors sign an additional original copy of documents for the records of the company, to be kept in the premises of the company and to transfer the original documents to the corporate secretarial provider so as to ensure the company books are always updated. Always remember that it is ultimately your responsibility to ensure that the records are held appropriately and in accordance with application legislation.
Data privacy requirements
An entity processing data must take all necessary precautions with respect to the nature of the data and the risk presented by the processing, this is to ensure the preservation of the security of the data and, amongst other things, prevent alteration, corruption or access by unauthorised third parties. The entity must ensure they work:
- to notify the file and its characteristics to the Commission nationale de l’informatique et des libertés/ Commission on Information Technology and Liberties (CNIL), except when exempted by law or by the CNIL.
- to ensure that citizens are in a position to exercise their rights as prescribed by law.
- to ensure data security and confidentiality and to protect the information from distortion or disclosure to unauthorised third parties.
- to accept on-site inspections by the CNIL authority, and reply to any requests for information.
Health and safety
The Directors have to ensure the enforcement of the legislation. This obligation is included in Article L 4121-1 of the French Labour Code concerning health and safety at work. The Article states that “the employer shall take the necessary measures to ensure the safety and protect the physical and mental health of workers. These measures include professional risk prevention actions; information and training actions; the establishment of an organisation and appropriate resources. The employer shall ensure the adaptation of these measures to take into account the changing circumstances and to improve existing situations.” Therefore, if a breach of hygiene, safety and sanitation applicable to a company is committed by an employee, then the Directors can be held liable.
Any serious accidental injury or environmental breaches must be reported in accordance with company policy. There are also various other statutory requires, including:
- You must work to ensure the indemnification of work accidents or work-related illnesses.
- You must ensure specific measures are in place to prevent passive smoking in the workplace.
- You have an obligation to prevent the deterioration of working conditions.
- You must work to ensure the protection of the employees’ physical and mental health (eg removal of hazards and prevention of harassment and/or, bullying).
Specific liability can be incurred in the event of administration or liquidation proceedings. Where proceedings for judicial reorganisation or compulsory liquidation are brought, a director may be held liable for the debts of the company and the following sanctions can apply: ‘Action en comblement de passif’ (payments of the company’s liabilities by the director). This is only the case where there has been a management fault which contributed to the excess indebtedness of the company.
Latest version updated
22nd March 2018