An SARL is managed by one or more statutory directors, called gérants in French. The gérant is the legal representative of the company and ensures its management in accordance with the law and the articles of association. The appointment of the gérant is therefore an essential step in the life of a SARL.
1. What are the conditions for appointing managers (“gérants”) in a SARL?
The appointment of the manager(s) of a SARL constitutes an essential step in the incorporation or the day-to-day management of this corporate form. This choice, although regulated, benefits from a certain statutory flexibility. Here is everything that must be known.
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a. How many managers can be appointed in a SARL?
The law leaves great freedom to the shareholders: the number of managers is freely set in the articles of association of the SARL (Article L. 223-18 of the Commercial Code).
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There may be a single manager, or several managers.
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In case of plurality, the shareholders may create a management board, notably when a SARL is a management structure for another company (e.g.: a SAS).
The functioning of the management board is not governed by any legal text. It must therefore be defined in the articles of association: distribution of powers, rules of majority, procedures of meeting, etc.
In the absence of precision, each manager may act alone and bind the company.
Attention: This distribution of roles has no value with regard to third parties: any manager registered with the RCS may act alone in the name of the company alone.
b. No substitute manager possible
The appointment of a substitute manager or replacement manager in case of impediment of the principal manager is not authorized by the texts. Such a designation cannot be registered with the Trade and Companies Register (RCS) (Opinion CCRC5 2018-002 of 25 April 2018).
c. Can the manager be a shareholder of the SARL ?
Yes. The manager may be:
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a shareholder of the SARL,
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or an external person (non-shareholder of the SARL).
However, the articles of association may reserve the function of manager to the sole shareholders. Such a clause is lawful and enforceable.
d. Conditions of capacity: who can be manager of a SARL?
Only natural persons may be managers of a SARL.
Legal persons (e.g.: another company) cannot be appointed managers of a SARL.
As regards couples: both spouses may be co-managers, even if they are the sole shareholders of the company (art. 1832-1 Civil Code). The same applies to PACS partners and cohabitants.
The matrimonial regime has no impact on the capacity to be manager.
As regards foreigners: they may also be managers of a SARL subject to the restrictions laid down by their national law applicable to their civil status. A citizen of the European Union may be appointed manager without restriction. A non-EU citizen must hold a residence permit authorizing the exercise of a non-salaried activity in France. If he does not reside in France, he may be manager of a SARL as a non-resident manager.
2. Who cannot be appointed as manager in a SARL?
The manager of a SARL must fulfil a certain number of conditions of capacity, but he is also subject to legal prohibitions, to rules of professional ethics, as well as to statutory restrictions that may impact his appointment or the exercise of his mandate.
a. Legal incompatibilities applicable to the manager of a SARL
Certain situations legally prohibit the exercise of the functions of manager. These prohibitions aim to protect the interests of third parties and to guarantee responsible management of the company.
In particular, the following are prohibited from exercising the functions of manager:
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Persons subject to prohibition of management (criminal or commercial sanctions),
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Persons convicted for misuse of company assets, fraud, money laundering, or certain economic offenses,
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Persons subject to personal bankruptcy or personal judicial liquidation.
These prohibitions are verified at the time of registration with the RCS. The clerk’s office may refuse the registration of a manager prohibited from management.
b. The manager must meet additional conditions in companies carrying out a regulated activity
If the SARL carries out a regulated activity (e.g.: insurance, transport, health professions, real estate, security, etc.), the manager must fulfil specific conditions, such as:
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possession of a professional diploma,
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obtaining of a professional card,
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or justification of a minimum experience.
Failing this, the company cannot legally carry out the activity concerned.
c. The manager must meet all the conditions laid down by the articles of association of the SARL to be manager
The articles of association of the SARL may provide specific conditions for the appointment or the dismissal of the manager: For example, the articles may:
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Require that the manager be a shareholder of the company,
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Impose the holding of a specific diploma or professional title,
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Prohibit or limit the cumulation of corporate mandates in other companies (e.g.: clause providing that the manager must devote 100% of his time to the company),
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Provide for an age limit: unlike public limited companies (SA), no legal age limit is imposed to be manager of a SARL. However, the articles of association may provide one, and for example prohibit the appointment of a manager older than 70 years.
Such clauses are perfectly valid, provided they are clearly drafted.
d. Cumulation of the functions of manager of a SARL with an employment contract with the SARL
It is possible for a manager to be both corporate officer and employee of the same SARL. However, to be able to cumulate the functions of manager with an employment contract in a SARL, strict conditions must be fulfilled:
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The manager must have an actual job distinct from management, generally technical or operational, clearly defined in an employment contract.
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The manager must be subject to a real subordination link with respect to the company (hierarchical obedience, schedules, directives, etc.).
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The manager must receive separate remuneration paid under the employment contract.
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The manager must be a non-shareholder, or a minority shareholder (holding less than 50% of the shares, directly or indirectly).
A majority shareholder manager cannot cumulate his mandate with an employment contract. Case law is constant on this point.
The majority shareholder manager cannot cumulate his mandate with an employment contract. Case law is constant on this point, as it is considered that he/she may not be in a position of subordination vis à vis the company of which he is a majority shareholder and therefore has all decision powers.
The employment contract of the manager constitutes a regulated agreement. As such, when a manager of a SARL concludes an employment contract with the company, this contract is subject to the regime of regulated agreements provided for in Article L. 223-19 of the Commercial Code.
Therefore, the conclusion or modification of such a contract requires:
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The prior approval of the body of shareholders (ordinary general meeting).
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The exclusion of the shareholder manager from the vote: if he is party to the agreement, he cannot vote, and his shares are not taken into account in the calculation of the majority.
Finally, each year, the manager (or the statutory auditor, if there is one) must prepare a special report on the regulated agreements. This report must mention:
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the remuneration paid under the employment contract of the manager,
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as well as all other agreements concluded between the company and one of its directors.
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3. How is a manager (“gérant”) of a SARL appointed?
a. Appointment of the manager of a SARL at the incorporation of the company
The manager(s) may be:
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appointed directly in the articles of association of the SARL,
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or designated by a separate act, drawn up immediately after the signing of the articles of association.
Attention: If the managers are not appointed in the articles of association, their designation must take place without delay, because their identity must obligatorily appear in the legal notice. This formality conditions the registration of the company with the RCS, and therefore the legal existence of the company.
Conversely, if the managers are appointed in the articles of association, their change will require the holding of a general meeting in order to proceed with the modification of the articles of association.
b. Appointment of the manager of a SARL during the life of the company
In case of change of manager after the incorporation of the company (resignation, dismissal, death…), the shareholders may proceed to a new appointment.
Unless otherwise stipulated in the articles of association requiring a qualified majority, the appointment is decided by the majority of the shares (more than half of the shares – Article L. 223-18, para. 2 of the Commercial Code).
The articles of association may provide for a higher majority, for example two-thirds or unanimity (constant case law: CA Lyon, 9 Dec. 1971).
If the required majority is not reached on the first convocation, it is possible, in the absence of contrary provision in the articles of association, to convene a second meeting. This time, the appointment may be decided by a majority of the votes cast, even if the absolute majority is not reached.
c. The appointed manager must accept his functions
The functions of manager of a SARL being accompanied by obligations and responsibilities, the acceptance by the appointed manager of these functions is obligatory.
However, the acceptance of the mandate of manager of a SARL may be:
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express: by letter, or by the signature of the decision of appointment, preceded by the formula “Good for acceptance of the functions of manager”,
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or tacit, if the manager begins to exercise his functions without formality.
d. The appointment of the manager of a SARL must be subject of legal publicity
Once the manager is appointed, the act of appointment must be published in a journal of legal announcements and the registration with the Trade and Companies Register (RCS) must be carried out.
This formality includes:
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the publication in the official journal,
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the drafting of an M3 form,
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the filing of the supporting documents with the clerk’s office.
These formalities make it possible to ensure the enforceability of the appointment against third parties.
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