Minority Shareholder Investigation in SARLs (Expertise de gestion)

Minority shareholders of an SARL (limited liability company) have a powerful tool at their disposal: the ability to request a judicial investigation into management operations. Known in French as expertise de gestion, this procedure allows shareholders to seek an independent expert report when they suspect irregularities or questionable decisions by the managers.

This mechanism is designed to protect minority rights, ensure transparency, and hold managers accountable without requiring the prior approval of the general meeting.

1. Who Can Request a Minority Shareholder Investigation in a SARL ?

The law sets strict eligibility conditions to prevent abusive claims:

• Shareholding threshold: One or more shareholders representing at least 10% of the share capital may apply to the commercial court (Commercial Code, art. L.223-37). The request can be made individually or collectively, regardless of the form of grouping.
• No prior questions required: Unlike other shareholder rights, the request does not depend on first sending written questions to the manager. It is a direct action before the court.
• Exclusions:
  • Shareholders holding only industry shares (contributions in know-how or work) are excluded, since these do not count towards share capital.
  • The 10% ownership threshold is assessed at the date of the court application. Once the application is validly filed, it remains admissible even if the shareholder later loses their stake (Cass. com., 6 Dec. 2005).
• Joint ownership of shares (indivision): Co-owners of shares may collectively request an investigation if together they hold 10% of the capital. Courts have confirmed this applies to SARLs (Cass. com., 4 Dec. 2007).
• Other applicants: The public prosecutor and the Social and Economic Committee (CSE) (in companies with at least 50 employees) may also apply.
• Preventive expertise (in futurum): Shareholders may also request an expert report in order to preserve evidence for possible future litigation.
  
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2. What Does the Minority Shareholder Investigation Cover?

The scope of the investigation is limited, and it can only concern management operations of the SARL itself, not those of subsidiaries. Furthermore, the request must target specific transactions or decisions, not the company’s management in general. Courts require precision: the investigation cannot be a “fishing expedition” (CA Versailles, 25 Oct. 1990).

Examples of suspicious acts that might justify such an investigation include:

• risky loans or guarantees granted without justification,
• asset transfers that disadvantage the company,
• related-party transactions on unfair terms,
• excessive remuneration or hidden benefits for managers.

3. Appointment and Role of Experts

If the court grants the request:

• The president of the commercial court appoints one or more independent experts in summary proceedings. The manager is formally notified.
• The scope of the mission is defined by the court, which must specify the operations to be examined.
• Experts may access company documents, interview managers, and request information necessary to complete their analysis.
• The costs may be charged to the company.

The final expert report is communicated to:

• the applicant shareholder(s),
• the public prosecutor,
• the CSE,
• the statutory auditor (if one exists), and
• the company manager.

It must also be annexed to the statutory auditor’s report for the next general meeting and made public in the same way (Commercial Code, art. L.223-37).

4. Legal Effects and Use of the Report

The expert’s report is filed with the court registry and becomes an official document. It may be used to:

• support claims of mismanagement against managers,
• form the basis of a request for damages,
• trigger the dismissal of managers,
• or inform broader shareholder decisions at the general meeting.

Important clarifications:

• Summons of the company: The company is summoned through its manager; there is no need to sue the manager personally (CA Versailles, 20 Apr. 1995).
• Arbitration clauses: An arbitration clause in the shareholders’ agreement does not bar a request for judicial investigation. Courts have confirmed that minority rights cannot be waived in advance.
• Parallel complaints: Filing a criminal complaint against a manager does not prevent a shareholder from seeking an investigation. The company itself must respond to the request, regardless of pending proceedings (CA Paris, 25 Oct. 2002).
• Provisional administrators: In some cases, a shareholder may simultaneously request the appointment of a provisional administrator and a preventive expert investigation (CA Paris, 4 Oct. 2002).

5. When is a Minority Shareholder Investigation Request in an SARL Admissible?

Not every request for a minority shareholder investigation (expertise de gestion) is automatically granted. French courts apply strict rules to ensure that this exceptional procedure is only used where there are serious indications of irregularities in management.

5.1 Focus on Specific Management Operations

The court will only order an investigation if there are presumptions of irregularities affecting one or more specific operations. General complaints about overall management or attempts to challenge the regularity of the company’s financial statements are not sufficient.

For example, courts have accepted investigations when statutory auditors reported uncertainties about a subsidiary that posed a threat to the parent company’s interests. However, vague challenges to financial statements alone are usually rejected.

Because this procedure is an exception to normal corporate governance, it must be based on a determined, suspect operation where minority shareholders’ interests appear at risk.

Importantly, the court is not required to judge whether the contested operation was, in the end, beneficial or harmful. Even if the operation involved both risks and advantages, the presence of irregularities is enough to justify investigation.

5.2 Operations with a Suspect Character

If a shareholder provides credible evidence that business relations between companies closely tied by their managers or shareholders appear suspect or questionable, and statutory auditors have raised concerns (for instance about excessive advertising expenses), the court will admit the request.

Importantly, admissibility is not dependent on:

• filing liability actions against directors or seeking annulment of resolutions,
• whether minority shareholders knew about the disputed operations, or
• proving that corporate bodies diverted powers from the company’s interest.

The investigation itself is precisely meant to establish these facts. Even if the shareholder did not vote at the meeting approving the operation or failed to challenge the decision afterwards, the request remains valid. Courts also refuse to dismiss applications simply on grounds that shareholders might pursue personal motives — what matters is whether the operation could harm the company’s corporate purpose.

5.3 Manager’s Remuneration

Requests concerning the manager’s remuneration are treated with nuance:

• If the remuneration is fixed by the shareholders’ general meeting, it is not a management act and cannot be challenged through expertise.
• However, gratifications or bonuses unilaterally decided by the manager do qualify as management acts and can be examined.
• A request must be rejected if it concerns a salary increase approved unanimously by shareholders, or if the applicant cannot prove the abnormal nature of a pay rise (such as a 65% raise for an employee).
• Employment contracts granted to managing partners are treated as regulated agreements, but only a serious ground will justify judicial expertise.

5.4 Regulated Agreements and Conventions

Even if a regulated agreement has been formally approved by the shareholders, it can still be reviewed through an expertise. Courts emphasize that approval by the assembly does not transform the decision into one of the shareholders — it remains a managerial act subject to scrutiny.

Examples include:

• transfer of financial and administrative management to another company,
• leasing premises to a company linked to the manager.

5.5 Irregularities of Any Scale

A request may succeed even if the disputed operation involves small amounts or is not obviously damaging. The Court of Cassation has ruled that the existence of presumptions of irregularity, regardless of financial impact, is sufficient for admissibility.

5.6 Favorable or Confidential Operations

The admissibility of the request does not depend on whether the operation was ultimately favorable to the company. For instance, if a lease-management contract was not submitted to the regulated agreements procedure, an investigation may be ordered even if the company did not suffer harm.

Similarly, the alleged confidentiality of a service agreement does not block shareholders from requesting an investigation into its existence and invoicing.

5.7 Independent Right, Not Subsidiary

The right to request a minority shareholder investigation is not subsidiary. Shareholders do not need to prove that they exhausted other information rights before applying to the court. The Court of Cassation has confirmed that this action stands on its own, without the need for prior steps.

5.8 Companies in Liquidation

Even in the case of judicial liquidation, minority shareholders may still challenge management operations that occurred before the “suspect period.” Courts have admitted such requests where shareholders held more than 10% of the capital.

That said, other cases have rejected requests where the investigation would have offered no real benefit to shareholders in liquidation, demonstrating that courts weigh the usefulness of the measure in context.

5.9 Applicant Shareholders and Fault

Courts cannot refuse a request on the ground that the requesting shareholder may have engaged in questionable conduct themselves. For example, even if a minority shareholder had previously created a competing business with the co-manager, this does not bar them from demanding an investigation into management acts.

6. When Is a Minority Shareholder Investigation Request in an SARL Inadmissible?

To be admissible, a request for minority shareholder investigation in an SARL must:

• target specific operations, not general management;
• show indications of irregularities, even if the amounts are small;
• remain valid even if the operation was favorable to the company or confidential;
• be exercised independently of other rights of information;
• and, in liquidation, demonstrate a genuine interest or benefit for shareholders.

This strict framework ensures that the procedure is used as a precise accountability tool, not as a way to broadly challenge management decisions.

French courts apply a clear principle: a minority shareholder investigation (expertise de gestion) in an SARL is only admissible when it targets specific suspect management operations, not overall company management.

But expertise cannot be used to challenge the shareholders’ resolutions themselves; such disputes belong to annulment actions.

Requests Rejected by Courts

French courts consistently refuse minority investigations when requests are too broad or abusive. Examples include:

• attempts to review all of management or all financial accounts,
• challenges to the regularity of consolidated or annual accounts,
• tracing all payments to shareholders across financial years to prove de facto management,
• reviewing decisions that fall under general meeting competence (capital increases, contributions of assets, employee buyouts),
• targeting purely accounting irregularities,
• requests filed by a dismissed manager seeking to delay liability proceedings,
• actions motivated by personal vendettas or harassment,
• raising too many diverse questions amounting to general criticism,
• contesting decisions to allocate profits to reserves.

In these cases, courts underline that expertise must remain a precise accountability tool, not a weapon for systematic challenge or procedural abuse.

Key Takeaways

The minority shareholder investigation in SARLs is a powerful legal safeguard. It allows shareholders to:

• obtain independent evidence of potential mismanagement,
• ensure that the company’s interests are protected,
• bypass managerial obstruction,
• and prepare for litigation or collective shareholder action.

This mechanism reinforces accountability of managers and ensures that minority investors are not left powerless when facing suspicious or opaque decisions.

• Threshold: Must hold at least 10% of capital (excluding industry shares).
• Scope: Limited to specific management operations of the SARL (not subsidiaries).
• Applicants: Shareholders, the public prosecutor, or the CSE may apply.
• Court oversight: The judge defines the expert’s mission and appoints them.
• Legal force: The report is official, widely communicated, and annexed to the statutory auditor’s report.

For minority shareholders, this is an essential tool to safeguard their rights and maintain financial transparency in the SARL.