Acts or resolutions of a shareholders' meeting contrary to the articles of association of a simplified joint stock company are voidable.

In a decision handed down on March 15, the Commercial Chamber of the French Supreme Court (Cour de cassation) ruled that the nullity provided for in article L227-9 of the French Commercial Code also applies to decisions (acts or deliberations of the shareholders' meeting) taken in violation of the company's articles of association. As such, it is possible to nullify extrastatutory acts that are contrary to the articles of association of a société par actions simplifiée (SAS).

The facts

A breach of the provisions of the Articles of Association concerning collective decision-making in a SAS may be sanctioned by nullity if it has an impact on the outcome of the decision-making process.

In this case, in December 2004, Vectora, the sole shareholder of SAS Larzul, and Société Française de Gastronomie (FDG), the sole shareholder of UGMA, agreed to increase the share capital of SAS Larzul through cash and in-kind contributions. FDG was also to acquire shares in Larzul from Vectora. These transactions were approved by Vectora in a series of deliberations.

On January 31, 2005, Vectora sold a number of SAS shares to FDG. On January 24, 2012, an irrevocable ruling annulled the deliberations of Vectora and declared the transfer agreement null and void. FDG, which considered that it had been deprived of its rights since that date, brought an action against Larzul seeking the annulment of its shareholders' meetings and the resulting collective decisions.

A reversal of jurisprudence

Initially, the Court of Appeal upheld FDG's claims and annulled the deliberations of the General Meeting, arguing that FDG had been unable to participate.

The Cour de cassation (French Supreme Court) has upheld the decision of the Court of Appeal, applying a line of reasoning hitherto applied only to SARLs. It now specifies that, for SASs, decisions (acts or deliberations of the general meeting) taken in breach of the articles of association may be annulled if they are of such a nature as to influence the outcome of the decision-making process.

Theruling handed down on March 15, 2023 substantially extends the scope of the nullity clause in article L227-9 of the French Commercial Code. It now applies to the first paragraph of this text, which stipulates that " the bylaws determine the decisions that must be taken collectively by the partners in the forms and under the conditions that they provide ". It also aims to affirm the binding force of SAS bylaws.

This reversal in case law may well open the way to a number of interpretations. Recently, the Commercial Chamber intervened in a case concerning an SAS and stated that " although extra-statutory deeds may supplement the articles of association, they cannot derogate from them ". There is therefore no general statement that the articles of association always take precedence over extra-statutory deeds.