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Directors of a French company

Directors of a French company

Updated on Monday 18th April 2016

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directors_of_a_french_company.jpgA company director in France is not required to have French nationality, nor must he/she be a permanent resident in France. Although the company’s articles of association may comprise certain other requirements mandatory for the director (such as a certain educational background and/or skills), there are few restrictions applicable in France for individuals who desire to become company directors.

The restrictions apply to:

- mentally impaired individuals;

- minors;

- persons who have been disqualified from acting as a director.

If the appointed director is a legal entity, a permanent representative has to be appointed to represent the legal entity on the board.

A company director’s duties

The director must attend board meetings. Even if he/she is not present, he or she will still be liable for the decisions that prove harmful to the company or any other third party. The director must keep the confidentiality of the board meetings and, in general, he/she must act for the best interest of the corporation and ensure the financial stability of the company.

Conflict of interests

According to the law, if a French company director has a personal interest in a decision which will be brought to the attention of the board and needs to be voted upon, he/she may still vote if the conflict of interests does not go against the corporate interest. Whenever there is a conflict between the corporate interest and the director’s interest as a shareholder, the director must vote in favor of the company.

Liability

A director can be held liable for the following breaches towards the company and/or third parties:

- breaches of applicable laws and regulations;

- breaches of the articles of association;

- mismanagement.

Directors can be individually liable towards third parties only if they breach their duties separate from their corporate duties.

Company directors can be accused of theft and fraud if they:

- misuse corporate assets of power;

- pay fictitious dividends;

- present false corporate accounts.

In the event of bankruptcy, the directors may be ordered to pay off all or part of the debt.

Taxation

The fees paid to company directors are subject to French income tax (employee’s regime), even if the director is not a French resident.

You may contact our French lawyers for more information regarding the legal responsibilities and liabilities applicable to company directors in France.

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