Co-management of a SARL: a co-manager may be held individually liable

In a decision handed down on January 25, 2023, the French Supreme Court (Cour de cassation) ruled that the fact that a SARL has several managers (co-management) does not prevent a co-manager from being held individually liable.

Multiple managers in a SARL: how does it work?

When setting up a limited liability company (SARL), the partners may decide to appoint one or more managers to head the company, as stipulated in article L223-18 of the French Commercial Code. This decision may be taken for a variety of reasons: to lighten the workload and responsibilities of the sole manager, to improve company management, or to establish mutual control between the co-managers.

In SARLs (limited liability companies), co-managers may be appointed directly in the articles of association when the company is created, or in a separate deed, known as an "acte de nomination de co-gérant de SARL" or "PV de nomination du co-gérant de SARL". Where the term of office of the co-managers is not specified, it corresponds by default to the term of the company.

Once appointed, the co-managers manage and administer the company. Their role is to conclude contracts in the company's name and on its behalf, and to sign official documents (invoices, contracts, etc.).

Liability of SARL co-managers

It should be remembered that the joint managers of SARLs are liable individually or jointly and severally to the company or to third parties in the event of :

  • breaches of the legal or regulatory provisions applicable to this type of company,
  • violation of the articles of association,
  • misconduct in the management of the company.

When several managers are liable for the same acts, it is up to the court to determine each manager's share of the damages.

In a recent case, the French Supreme Court (Cour de Cassation) nevertheless ruled that the fact that there were several managers did not prevent one of them from being held individually liable. The case concerned an individual who owned a restaurant business in a shopping center. She was also co-manager of a SARL operating a supermarket in the same shopping center. Following her resignation, the SARL incurred civil liability on the grounds that she had committed a management error by making her pay for the electricity consumed by her restaurant business. In her defense, the former manager asserted that the SARL should have taken action against all the co-managers, not just her. However, the French Supreme Court did not rule in her favor. In a decision dated January 25, 2023, the Commercial Chamber ruled that the SARL could take action against the former manager for mismanagement committed even though there were several managers.

Consequently, the decision to prosecute only one manager is at the discretion of the company, and is often guided by the possibility of proving fault on the part of the manager being prosecuted.