A shareholder excluded from a SAS must take part in the vote on his exclusion. In a ruling handed down on May 29, 2024, the French Supreme Court (Cour de cassation) clarifies the rules and the right to participate in this procedure.
A partner excluded without having taken part in the vote
This case concerned a société coopérative d'intérêt collectif par actions simplifiées (simplified joint stock cooperative) with variable capital, whose associates included several associations. The company's bylaws stipulated that a member could be excluded by a collective decision of the members. The associate whose exclusion was likely to be pronounced could not take part in the vote relating to his exclusion.
In October 2016, the associates met at a general meeting and decided to exclude an association without it taking part in the vote. The association claimed that this decision was irregular, as it had not taken part in the vote, and requested that it be overturned.
A clause deemed unwritten
Firstly, the lower court ruled that the company's bylaws could validly exclude a partner from voting on his exclusion. They pointed out that, in accordance with the provisions of article L 227-9 of the French Commercial Code, the articles of association of a simplified joint stock company (SAS) may derogate from the principle that any partner whose exclusion is under discussion must take part in the vote. Dissatisfied with this verdict, the partner concerned appealed to the French Supreme Court.
Relying on Articles 1844 and 1844-10 of the French Civil Code and Article L 227-16 of the French Commercial Code, the French Supreme Court (Cour de cassation) overturned the appeal ruling. In its ruling of May 29, 2024, it states that the bylaws may provide for the exclusion of a partner by a collective decision of the partners. However, any clause whose purpose or effect is to deprive the partner whose exclusion is being challenged of his right to vote on this decision is deemed unwritten.
Protecting associates' rights
Despite the statutory freedom enjoyed by SAS, it would appear impossible for these companies to consider excluding a partner when its articles of association include a clause preventing his participation in the vote relating to his exclusion.
The Cour de cassation's position can be explained by a desire to protect the rights of associates, in particular their right to participate in collective decisions. Indeed, exclusion is a measure that can affect the partner's property and non-property rights. It is important that he be able to put forward his arguments to try and convince the others not to exclude him. To deprive him of this possibility is tantamount to denying him his right to participate in collective decisions.
The French Supreme Court (Cour de cassation) has ruled that a clause in the articles of association depriving a shareholder of his right to vote on a decision to exclude him is deemed unwritten. This decision concerns SASs, but the highest court bases its reasoning on general provisions applicable to all companies.