In a French société à responsabilité limitée (SARL), collective decision-making is a fundamental aspect of corporate governance. While the manager (gérant) enjoys extensive powers in day-to-day management, certain strategic or structural decisions can only be taken collectively by the shareholders (associés). These decisions are usually made in a shareholders’ meeting, following formal procedures designed to ensure both the transparency and legality of the process.
This article provides a complete overview of how meetings of shareholders are convened and conducted in a French SARL, including who may initiate them, under what conditions they are held, and what legal remedies exist when irregularities occur. It also clarifies the interaction between assemblies, written consultations, and judicial interventions when management fails to act.
1. The Shareholder Meeting as the Classic Form of Collective Decision-Making in SARLs
1.1 A Mandatory Rule for Certain Decisions
Under French company law, collective decisions in an SARL are, as a matter of principle, taken during an assembly of shareholders. This traditional mechanism is expressly required for specific matters such as the approval of the management report, the company’s annual accounts, and the inventory of assets and liabilities. These deliberations form what is customarily known as the ordinary annual meeting, which must be held within six months of the close of each financial year.
This requirement is not merely a formality. It ensures that shareholders have the opportunity to review and challenge the management’s performance, to question the company’s financial position, and to vote on the allocation of profits or dividends. Failure to convene this annual meeting within the prescribed timeframe can expose the manager to civil liability and, in some cases, lead to judicial intervention.
1.2 Alternative Decision-Making Methods
For decisions other than the approval of annual accounts, the law allows greater flexibility. The articles of association may authorize shareholders to deliberate by written consultation or by unanimous consent expressed in a signed deed. These alternative modes are particularly appreciated in smaller SARLs with few shareholders, as they simplify formalities while preserving legal certainty.
Nevertheless, this flexibility is limited by protective provisions. Even if the articles allow written consultation, one or several shareholders who collectively hold at least half of the company’s shares—or one-tenth of the shares if they represent at least one-tenth of the shareholders—may demand that a formal assembly be convened. Any clause attempting to restrict this right would be deemed unwritten.
1.3 Majority Rules and Voting Requirements
The law provides that the majority required for adopting a resolution depends on the nature of the decision. For example, the appointment or removal of the manager requires, at first consultation, a majority of votes representing more than half of the total shares. The principle remains that more sensitive or structural decisions demand stricter majorities or even unanimity, while ordinary management matters may be decided by a simple majority.
1.4 Incompatibility Between Assembly (Shareholder Meeting) and Written Consultation
When the articles of association permit both written consultation and meetings, the manager must choose one form or the other for a given decision. It is strictly prohibited to combine both methods simultaneously—for instance, to gather some shareholders in a meeting and to consult others in writing for the same resolution. This prohibition ensures equality among shareholders and the coherence of collective decision-making. French courts have consistently reaffirmed this rule, emphasizing that hybrid procedures are incompatible with the principles of corporate deliberation.
1.5 Decisions Reserved to the Assembly
Certain decisions may never be adopted through written consultation. The issuance of bonds, for instance, must always be decided by the shareholders assembled in a meeting. The law expressly requires collective deliberation for such financial operations, recognizing their potential impact on the company’s liabilities and long-term structure.
2. The Convocation of the Assembly: Who Can Call It and How
2.1 Initiative of the Manager
The initiative to convene the shareholders generally lies with the manager (gérant). It is both a right and an obligation. The manager must call an assembly to approve the accounts of each financial year within six months of its closing. Beyond that, he must also convene meetings in various legally prescribed situations, such as:
- When the company’s net equity falls below half of the share capital;
- When the number of shareholders exceeds one hundred;
- When an agreement is concluded between the company and one of its managers or shareholders requiring approval;
- Or when one or more shareholders holding at least half of the shares—or one-tenth of the shares if they represent one-tenth of the shareholders—formally request the meeting.
Failure by the manager to convene the assembly under these circumstances constitutes a breach of his duties and may justify judicial measures.
2.2 Failure or Absence of the Manager
If the company finds itself without a manager—for instance, following resignation, death, or incapacity—the law provides mechanisms to ensure continuity. In such cases, the statutory auditor (if one exists) or any shareholder may convene the shareholders within eight days to appoint a new manager. The meeting is then chaired by the shareholder representing the largest number of shares.
2.3 The Role of the Statutory Auditor
When the manager fails to act, the statutory auditor may assume a subsidiary power of convocation. This safeguard, derived from Article L.223-27 of the Commercial Code, allows the auditor to ensure the proper functioning of the company when management is deficient. Although the Code provides detailed procedures for public limited companies, the auditor of an SARL is expected to follow similar principles, notably:
- Sending a registered letter with acknowledgment of receipt to the management to establish the deficiency;
- Determining the agenda of the meeting;
- Choosing an appropriate venue if necessary;
- And, in the case of multiple auditors, acting jointly or, if they disagree, seeking authorization from the president of the commercial court.
The company bears the costs of such a meeting.
This procedure is generally used in well-defined situations: absence or disorganization of management, refusal of the manager to include specific matters on the agenda, or failure to take necessary measures in the company’s interest. However, auditors often prefer to remain neutral in internal disputes between shareholders and may suggest that the shareholders resort to judicial remedies instead.
2.4 Convocation by Co-Managers
When several managers share authority, the articles of association usually specify whether each can independently convene an assembly or whether they must act jointly. In the absence of explicit provisions, French case law considers that each manager may individually convene the meeting. This is because the convocation is not an act of management but a procedural step relating to the shareholders’ collective rights.
Nevertheless, if the articles expressly require the signatures of multiple managers, failure to respect this rule will render the meeting irregular and expose its resolutions to annulment.
2.5 The Role of External Advisors
In practice, many SARLs entrust their legal secretariat to their chartered accountant, who assists in convening meetings, drafting minutes, and completing statutory filings. The Court of Cassation has recognized that this role involves not only administrative assistance but also advisory responsibilities to ensure that meetings are held in compliance with the law.
3. Judicial Convocation of the Assembly
3.1 Appointment of a Court-Appointed Agent
When management persistently refuses to convene a meeting despite formal requests from the shareholders, the law provides for a judicial remedy. Any shareholder, regardless of the number of shares held, may petition the president of the commercial court to appoint an agent responsible for convening the meeting and setting its agenda.
The order is rendered in chambers, without the need to demonstrate urgency. This procedure must not be confused with the appointment of a provisional administrator, which requires proof that the company’s functioning has become impossible. The judicial agent’s mission is limited to ensuring that the shareholders can deliberate on matters within their competence, not to manage the company.
Before applying to court, the requesting shareholder must have formally asked the manager (and, if applicable, the auditor) to convene the meeting. Only when these requests remain unanswered can the judicial route be taken.
3.2 Common Situations Leading to Judicial Convocation
Several situations may justify the appointment of such an agent:
- Persistent refusal by the manager to provide information or include an item on the agenda;
- The need to deliberate on the dismissal or replacement of a manager who refuses to convene the shareholders;
- The company’s affairs being at a standstill due to conflicts among shareholders;
- The resignation of a manager without proper measures to organize succession.
In all these scenarios, the judge’s role is to restore the company’s normal operation and safeguard the shareholders’ collective rights.
3.3 Persons Entitled to Apply
Not only shareholders but also other stakeholders may, in limited circumstances, seek judicial intervention. The Social and Economic Committee (comité social et économique), when one exists, can request the appointment of an agent. Likewise, a usufructuary—though not technically a shareholder—may apply if the convocation concerns decisions that directly affect his right of enjoyment over the shares.
This inclusive approach underscores the French courts’ pragmatic view that corporate deliberation must remain accessible whenever the company’s interest is at stake.
3.4 Admissibility and Purpose of the Request
Courts assess each application based on whether it serves the corporate interest. A request will be deemed admissible if it enables the company to function normally or to address unresolved questions essential to its future, such as the termination of guarantees, the repurchase of shares, or international expansion projects. The guiding principle is that judicial intervention must protect—not hinder—the company’s interests.
4. The Consequences of Irregular Convocations
4.1 Grounds for Annulment
An assembly that has been irregularly convened may be declared null and void. However, this sanction applies only if the irregularity has caused actual prejudice and if not all shareholders were present or represented. When all shareholders attend and participate, the courts generally consider that the irregularity has been cured by unanimous consent.
Nevertheless, even in cases of full attendance, shareholders retain the right to challenge deliberations if they can demonstrate a substantive grievance—such as deception or concealment of information. Conversely, when certain shareholders were not invited, the defect is considered substantial and cannot be remedied.
4.2 Standing to Challenge the Assembly
Only shareholders have standing to request the annulment of an assembly. A manager who is not a shareholder may not bring such an action. However, a shareholder may challenge the meeting even if he voted in favor of the disputed resolution. French jurisprudence recognizes that the right to contest irregularities is distinct from the act of voting itself, as the shareholder’s consent may have been influenced by defective information or procedure.
4.3 Limitation Period and Proof
The action for nullity must be brought within three years from the date of the meeting. Beyond that, the defect can no longer be invoked as a cause of annulment, though the exception de nullité—a defensive argument raised in litigation—remains perpetual. If a shareholder was unaware that a meeting had taken place, the limitation period runs from the date of the assembly unless concealment can be proven.
The burden of proof regarding the regularity of the convocation lies with the manager. If challenged, it is up to him to demonstrate that all shareholders were duly informed and that the meeting complied with legal and statutory requirements.
4.4 Judicial Power to Ratify or Sanction
Courts possess wide discretion when assessing irregularities. They are not bound to declare nullity automatically upon finding a procedural defect. If evidence shows that the shareholder, despite irregular convocation, later approved the acts implementing the contested resolution, the judges may consider that he tacitly ratified it. For example, granting discharge to the management without reservation or approving accounts reflecting the disputed operation may constitute implicit validation.
4.5 Shareholder Liability
Shareholders who deliberately violate the rules governing convocations and deliberations may incur personal liability. For instance, dismissing a manager in flagrant disregard of procedural requirements could be deemed an intentional act of harm. However, when the dismissal is based on legitimate grounds and serves the company’s interest, the courts may exempt the shareholders from liability.
5. Practical Insights for SARL Managers and Shareholders
5.1. Transparency as a Cornerstone
The procedural rules governing meetings in SARLs are not mere technicalities—they safeguard the balance of power among shareholders and protect minority interests. A transparent convocation process ensures that each shareholder has access to the same information and can exercise voting rights effectively.
5.2. Importance of Documentation
Every convocation should be carefully documented: date of dispatch, proof of receipt, agenda, and relevant documents made available for consultation. In an era of electronic communication, managers must still ensure compliance with the formalities prescribed by law and the articles of association. Courts place significant weight on evidence of proper notification.
5.3. Managing Conflicts Through Lawful Channels
Disagreements among shareholders are common, particularly in family-owned or closely held SARLs. The law provides multiple mechanisms—managerial initiative, auditor intervention, and judicial recourse—to prevent paralysis. Resorting to these channels in a timely and orderly manner not only preserves the company’s stability but also avoids costly litigation.
5.4. The Role of Legal Counsel
Given the procedural complexity and potential liability involved, both managers and shareholders are well advised to seek legal counsel when planning or contesting an assembly. Lawyers specialized in French company law can help draft compliant convocations, review agendas, and ensure that deliberations remain unassailable in court.
6. Conclusion: The Legal Architecture of Collective Will
The rules governing general meetings in a French SARL illustrate the delicate balance between flexibility and legal rigor. The law recognizes the autonomy of shareholders to choose their mode of deliberation—assembly, written consultation, or unanimous deed—but it also maintains strict safeguards to prevent abuse and ensure that corporate decisions reflect a genuine collective will.
For managers, the obligation to convene assemblies at proper intervals is both a procedural duty and a sign of good governance. For shareholders, the right to demand a meeting, to challenge irregularities, and to seek judicial intervention are powerful tools of oversight.
In short, the system of convocations and assemblies forms the institutional backbone of the SARL, ensuring that even in small and medium-sized enterprises, transparency, accountability, and fairness prevail. Observing these formalities may seem burdensome, but it is the very condition for maintaining legitimacy and trust among shareholders—foundations without which no company can thrive.
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