How Is Management Remunerated in a French SARL?

Executive Summary

The remuneration of a gérant in a French SARL sits at the crossroads of company law, tax, and social security. It touches governance (who decides, how often, with what safeguards), corporate interest (what is an acceptable level and structure of pay), and litigation risk (abuse of majority, misuse of corporate assets, management fault). French case law draws fairly bright lines: shareholders set the pay, judges do not; a manager may combine corporate office with an employment contract under conditions; bonuses and benefits in kind are possible, but excess is policed civilly, criminally, and fiscally. What follows is a detailed, practice-oriented map of the rules, grounded in the authorities you cited and written for a professional audience.

• Who decides? Shareholders fix the gérant’s remuneration by ordinary decision (> 50% capital). Articles may permit written consultation or unanimous deed. Judges do not set the amount.

• Abuse controls. A minority shareholder can attack abusive pay (annulment within 3 years; damages within 5). Abuse is found where increases favour the manager and harm the corporate interest (e.g., doubling pay over four years reducing profits; or a raise that crashes net result from €164,375 to €375).

• Dual status. A minority or equal manager may also hold an employment contract for distinct technical duties under subordination, with separate pay. Keep roles and documentation clean.

• Bonuses and benefits. Bonuses are permissible; disclose exceptional bonuses near a sale to avoid disputes. Benefits in kind are taxable salary supplements and subject to contributions. Cap and document.

• Suspension/waiver. Pay cannot be suspended merely because the manager is ill or less active—unless shareholders decide otherwise. For temporary relief, adopt a formal waiver before 31 December and align accounts; otherwise “unpaid” pay may still be taxed.

• Fixed vs variable. Fixed pay is simple but inflexible. Variable or hybrid models (e.g., % of EBE) align incentives—define the base precisely and timetable the calculation.

• Excess is policed 3 ways.

  1. Criminal (abus de biens sociaux): convictions for excessive pay; reimbursement of the excess.

  2. Civil (L. 651-2): excessive pay can be a management fault leading to personal liability for debts.

  3. Tax: excess is non-deductible and taxed as investment income for the manager.

• Voting rights. Setting the manager’s remuneration is not a regulated agreement; the manager may vote on his own pay. Clauses removing that vote are vulnerable. If majority/equality is abused, courts can appoint a representative to unlock the vote (they still do not set the amount).

• Attachment & IFI. Managerial remuneration is not protected by wage-attachment caps unless subordination is proven. For IFI partial exemption on business property, ensure normal office pay representing > 50% of professional income.

• Bottom line. Use clean shareholder decisions, reasonable levels tied to performance and capacity, precise drafting for variables and benefits, and proper tax/social handling of waivers and extras. Done right, remuneration supports the corporate interest and keeps the gérant clear of civil, criminal, and fiscal pitfalls.

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1. Fixing the Remuneration of SARL Managers (“gérants“)

1.1 Who sets the remuneration of SARL Managers —and how often?

The starting point is simple and mandatory: the manager’s remuneration must be fixed either by the articles or by a decision of the shareholders’ assembly (Cass. com., 25 Sept. 2012, no. 11-22754). In practice, nobody locks the amount into the articles: any change would require a formal amendment. The living rule is therefore a collective decision of the shareholders adopted by one or more shareholders representing more than half of the share capital.

Most companies take the decision annually, at the meeting approving the accounts. That said, the shareholders can choose a different cadence—quarterly fine-tuning is uncommon but not prohibited. Where the articles so provide, the remuneration may also be decided by written consultation or by unanimous consent recorded in a deed (C. com., art. L. 223-27). The point is not the ceremony; it is the legitimacy of a collective act traceable to the shareholders.

Governance tip. Even when relying on written consultation, memorialise (i) the resolution text (amount, structure, effective date), (ii) any caps on benefits in kind, and (iii) a brief rationale tied to turnover, margins, workload, or market benchmarks. This is not about “proving” reasonableness to a court ex ante; it is about keeping a clean file if the decision is later challenged.

1.2 What if the majority misuses its power?

A minority shareholder who considers the voted remuneration abusive may sue. Two time limits apply:

• Annulment + restitution within 3 years of the vote; and

• Damages within 5 years of the vote (Cass. com., 30 May 2018, no. 16-21022).

Abuse is not shorthand for “I disagree”. The claimant must show that the decision favours majority interests to the detriment of the common interest and without a legitimate corporate rationale. We return to concrete abuse scenarios in Section 3 (increases and their limits).

1.3 Can the SARL manager hold an employment contract as well?

Yes, under conditions. A minority manager may, in addition to corporate office remuneration (acts of management, representation toward third parties), receive employment remuneration for distinct technical functions performed under a genuine subordination. The same analysis extends to an equal manager. The dual status does not inflate powers; it separates corporate and employee tasks—and pays.

Drafting tip. If a dual status is contemplated: (i) draft a crisp job description for the employment role; (ii) show distinct reporting lines (someone must have authority to give directions); (iii) set a pay scale consistent with the labour market and the company’s means. Keep annual appraisals separate from board/shareholders’ minutes.

1.4 Bonuses for the SARL Manager : who decides and how are they scrutinised?

Bonuses sit within the shareholders’ remit—but litigation shows some nuance. When a manager unilaterally decided to grant himself a bonus, a shareholder opposed payment on the ground that no meeting had authorised it. The claim failed for lack of proof that the irregularity caused the shareholder any concrete harm (CA Caen, 1st civ., 23 Jan. 2007, Dr. soc. 2008, 57). In another matter, an exceptional bonus voted shortly before a company sale could not be annulled at the buyer’s request because the sale deed explicitly mentioned the bonus; neither fraud nor abuse could be established—even if the bonus seemed “excessive” or “contrary” to the corporate interest (Cass. com., 13 Jan. 2021, no. 18-21860).

Practice point. Transparent documentation blunts attack. If a bonus is decided in proximity to a sale, disclose it in the data room and in the deed. Where a bonus is discretionary, minute the reasons—outperformance against budget, strategic achievement, or turnaround milestones.

2. Changing the Remuneration of the SARL Manager: Process, Agenda and the Abuse Frontier

Sometimes a SARL needs to adjust the manager’s pay. When it does, the change follows the same rules as the original decision: the partners decide, agenda practice applies, and courts step in only to curb abuse that harms the company’s interest.

2.1 The process of changing the remuneration of the SARL Manager is the same as for initial fixing

Any increase (or reduction) must be decided again by the shareholders under the same majority rule (ordinary decision, > 50% of capital). If the manager is dissatisfied, he cannot ask a court to increase pay; nor can a judge substitute for the shareholders in case of refusal. The corporate organs decide.

Agenda flexibility. A change may be decided without being listed as a stand-alone agenda item if it flows implicitly from the accounts review or from the appointment of a co-manager (CA Versailles, 21 Oct. 2002, Bull. Joly 2003, 184). Do not abuse this flexibility: for material changes, put remuneration on the agenda and circulate the draft resolution.

2.2 Equal shareholders and the “threefold refusal” problem

An equal shareholder who three times refuses to vote for an increase of the co-manager’s remuneration does not automatically commit abuse. To prove abuse of equality, the claimant must show how the refusal contradicts the corporate interest. The key threshold is whether the refusal blocks an essential operation (Cass. com., 31 Mar. 2009, no. 08-11860). Put differently: a pattern of “no” is not abusive per se; it becomes abusive when it paralyses the company against its interest.

2.3 When does an increase become an abuse of majority?

The line is drawn where the majority uses its voting power to extract value for itself at the expense of the company.

• In one case, a majority manager repeatedly voted increases for himself while profits were allocated to reserves. The courts of first instance accepted the reserves given “weak profits”, but the Court of Cassation quashed: the low profits were a by-product of the pay increases—the manager had nearly doubled his remuneration over four years. The decisions were taken solely in his interest and against the corporate interest (Cass. com., 20 Feb. 2019, no. 17-12050).

• In another, the manager’s raise collapsed the net accounting result from €164,375 to €375. Abuse of majority was retained (Cass. com., 15 Jan. 2020, no. 18-11580).

• Conversely, a bonus and salary increase unaccompanied by an increased workload did not amount to abuse where turnover justified the change (Cass. com., 14 Oct. 2020, no. 18-24732).

Reading these together. Courts will consider the economic footprint of the raise on the accounts and the business rationale. Where the company’s result is gutted by pay decisions without operational justification, expect scrutiny.

3. Suspension or Suppression: Can the SARL Manager’s Pay Be Stopped?

It may sometimes be necessary to envisage a reduction or even a pause in a manager’s pay, due to financial difficulties of the company.

3.1 High pay amid financial difficulty

A manager may continue to receive a high remuneration despite financial difficulties if (i) the remuneration did not contribute to those difficulties, and (ii) those difficulties are due to external causes beyond the manager’s control (Cass. com., 20 Sept. 2016, nos. 14-22189 and 14-24282). The theme is constant: causation and corporate interest. Not all storms are of the manager’s making.

3.2 Temporarily waiving pay: the tax mechanics matter

If a manager (who is also a shareholder) wishes to forgo remuneration temporarily to help cash flow, the cleanest method is to grant a waiver of debt (remise de dette) before 31 December of the tax year. The company should cease to account for the salary (and, if required, cancel sums credited to the manager’s current account). If these steps are not taken, the tax administration may still tax the remuneration—even if the manager refrained from collecting it (CE, 12 Jan. 1987, no. 48825; BOFiP-IR-BASE-10-10-10-40, §§ 100–150, 12/09/2012). In a dispute, the manager would need to prove that the company’s cash position made payment impossible.

Best practice. Do not operate through informal “we’ll skip pay this month” arrangements. Put a shareholder decision on record specifying the period, the amounts concerned, and whether the waiver is definitive or a deferral. Align the accounting entries to the legal act.

3.3 Can pay be suspended because functions are not exercised?

No. As long as the manager has not been dismissed, he remains entitled to remuneration absent a contrary decision regularly taken by the shareholders (Cass. com., 18 Nov. 1997, no. 95-19085). In the same vein, remuneration must continue to be paid even in case of illness (Cass. com., 21 June 2017, no. 15-19593). If the company needs to adjust pay due to prolonged absence, it must use the corporate process—not unilateral withholding.

3.4 Suppression of pay is not dismissal—context matters

Suppression by the ordinary meeting of a €1,067.14 monthly managerial remuneration was not tantamount to dismissing the co-manager where he also held an employment contract remunerated at €9,146.94 per month (CA Versailles, 31 Oct. 2002). The decision hinged on overall income and the coexistence of statuses: removing corporate pay did not remove the employment pay or the office itself.

3.5 Tacit renunciation—or mere deferral?

When a statutory clause provided for remuneration but the manager never asked to receive it, the judges inferred a renunciation (Cass. com., 26 Feb. 1974, no. 72-14056). There, the de jure manager repeatedly acknowledged that a de facto manager actually ran the company. By contrast, the Rennes Court of Appeal observed that the absence of any claim at AGMs might simply reflect a choice to defer collection in the company’s interest—not a final waiver (CA Rennes, 2nd comm. ch., 28 Apr. 2009, Dr. soc. 2009, no. 223).

Drafting tip. If a manager wishes to defer, not waive, record it. Precision avoids later arguments that silence equals renunciation.

4. May a Shareholder-Manager Vote on His Own Pay?

4.1 Judges do not set the amount

Courts have been clear for decades: judges do not substitute for corporate organs competent to set remuneration (Cass. com., 11 Jan. 1972, no. 69-11205; 31 Mar. 2009, no. 08-11860). Where the articles say that remuneration is set by the AGM, it is for the manager to request a collective decision; absent such a decision, courts lack competence to determine the amount (Cass. com., 14 Nov. 2006, no. 03-20836).

Remedy in deadlock. If the majority or equality is abused to block a fair decision, a judge may appoint a representative to convene the meeting and vote instead of those whose voting has been judged abusive—in the corporate interest. The court still does not fix the number; it unlocks the process.

4.2 Is the pay decision a regulated agreement?

No. The determination of the manager’s remuneration by the shareholders’ meeting is not a regulated agreement (Cass. com., 4 May 2010, no. 09-13205). Practical consequences follow:

• No need to include the item in a special report for shareholders’ approval; and

• The manager may participate in the discussion and vote on his remuneration. A clause stripping him of that voting right would likely be annulled (Cass. com., 9 Feb. 1999, no. 96-17661).

Indexation example. A resolution index­ing remuneration to EBITDA/EBE, voted by the sole shareholder with a personal interest (allowing him to take half of profits), was upheld: the remuneration was a justified payment for work and not abusive (Cass. com., 4 Oct. 2011, no. 10-23398). Likewise, granting an exceptional bonus is treated as an ordinary operation: the shareholder-manager may vote (Cass. com., 31 Mar. 2021, no. 19-12057).

5. Choosing the Remuneration Method for a SARL Manager

5.1 Two main routes—and a preliminary question

A SARL manager typically chooses between:

• Return on capital / current account: dividends voted by the AGM or interest on shareholder current account; or

• Cash remuneration tied to office (fixed, proportional, or mixed).

Stock options do not directly apply to SARLs. There is no “right” answer: the decision is contextual (profitability, cash needs, social security cost, IFI exposure). A case-by-case analysis of total cost and risk is essential.

Define the base. Whatever structure you adopt—participation in net or gross profit, or a percentage of turnover—specify the base precisely (EBIT/EBE? before or after depreciation? treatment of extraordinary items?).

5.2 Attachment of remuneration: are Labour Code caps applicable?

No, unless subordination is proven. The Labour Code rules limiting the attachable portion of wages (C. trav., arts. L. 3252-1 and R. 3252-1) do not apply to managerial remuneration—unless the manager acts under a state of subordination vis-à-vis the company (Soc., 11 Mar. 1982, no. 81-10241). Absent an employment tie, a creditor can attach more extensively.

5.3 IFI (real estate wealth tax) angle

Real estate (or rights) owned directly or indirectly and made available or leased to the operating company subject to corporate tax that the manager runs can be partially exempt from IFI (CGI, art. 975, III). One condition is that the manager receives normal remuneration from the office, providing more than half of his professional income. This adds a strategic dimension: too little office pay may jeopardise the IFI exemption.

5.4 Fixed vs proportional (or both)

• Fixed. Fixed salary offers predictability but, in inflationary periods, invites frequent adjustments. If the manager does not control the vote, these adjustments depend on the shareholders’ goodwill. A practical tactic is to vote an annual figure (with monthly advances), allowing mid-year re-calibration via a single follow-up resolution.

• Proportional. Linking (part of) pay to business metrics incentivises performance and aligns interests. Common bases include turnover, gross margin, or EBE. Ensure the formula is auditable and that the computation timetable is clear (e.g., quarterly closings, with year-end true-up).

Hybrid models are frequent: a modest fixed component for stability plus a variable tied to realistic, well-defined metrics. Resist the temptation to pile on too many KPIs; simplicity reduces disputes.

5.5 Benefits in kind and expense policy

Managers may receive benefits in kind (housing, car) for personal use. Fiscally, these are salary supplements that must be valued and declared. Socially, they are subject to contributions. The general meeting should decide on benefits in kind and—ideally—cap their value or the eligible categories.

For expenses incurred performing managerial functions, choose between reimbursement against receipts and lump-sum allowances. The company deducts these expenses from profit, but if total pay (salary + benefits + allowances) is excessive relative to services rendered, the excess is reintegrated into corporate taxable profit and taxed in the manager’s hands as distributed income. Keep a written expense policy aligned with URSSAF grids and stick to it.

6. When Remuneration Becomes “Excessive”: Civil, Criminal, and Fiscal Risks

6.1 Misuse of corporate assets (abus de biens sociaux)

Using majority control to obtain excessive salaries given the company’s resources and financial condition can constitute misuse of corporate assets. The jurisprudence is steady:

• Managers who exploited their majority to vote excessive pay and then received it were convicted (Crim., 19 Oct. 1971, no. 70-90661).

• The “excessive character” is itself the offence (Crim., 13 Dec. 1988, no. 87-82268).

• When convicted on this ground, the manager must reimburse only the excessive portion (Crim., 7 Dec. 2016, no. 15-86731).

Company in difficulty. Receiving a gross salary of 22,000 francs (≈ €3,353.90), plus a company car and paid restaurant bills (valued at 8,000 francs ≈ €1,220/month), while the company posted losses of 419,161 francs (≈ €63,901) constituted misuse (Crim., 15 Oct. 1998, Rev. soc. 1999, p. 184). The logic is clear: where the company is hemorrhaging cash, lavish extraction will be policed.

6.2 Civil liability for insufficiency of assets

Even outside the criminal arena, excessive remuneration may amount to a management fault that contributes to an insufficiency of assets. In liquidation, the director can be ordered to bear all or part of the debts under Article L. 651-2 (Cass. com., 4 Jan. 2000, no. 97-10389). The civil and criminal tracks are not mutually exclusive: the same conduct can ground both sanctions (subject to rules against double recovery).

6.3 Tax treatment of excess

On the fiscal side, unjustified or excessive remuneration is taxable, for the excess, as investment income in the hands of the manager. At the corporate level, the excess is non-deductible and must be reintegrated into taxable profit. This double hit is precisely the policy lever designed to deter disguised distributions through “salary”.

Compliance tip. Benchmark pay annually—briefly but seriously. Tie it to objective measures (size, sector, margins, complexity of operations). Minute the benchmark basis. It is not window dressing: it evidences the shareholders’ effort to align pay with corporate interest.

7. Judicial Role: What Courts Will—and Will Not—Do

Courts protect process and corporate interest; they do not price salaries. Thus:

• A decision of the shareholders fixing remuneration in accordance with the articles cannot be modified by judicial decision unless the shareholders’ decision is irregular or abusive (Cass. com., 11 Jan. 1972, no. 69-11205).

• Where the articles assign remuneration to the AGM, it is for the manager to seek a collective decision; otherwise courts are not competent to set it (Cass. com., 14 Nov. 2006, no. 03-20836).

• In general, the judge will not substitute for the corporate organ (Cass. com., 31 Mar. 2009, no. 08-11860).

But if there is an abusive refusal (abuse of majority/equality), the judge may appoint a representative to convene the meeting and vote in place of the abusive votes. This is an institutional remedy, not judicial price-setting.

Finally, remuneration of the SARL manager—because it is decided by a collective shareholder act—does not fall within management expertise. Experts cannot be parachuted into pricing the manager’s pay under the banner of “expertise de gestion”.

8. Putting It All Together: A Practical Blueprint

To close, here is a compact, practitioner-friendly synthesis that reflects the rules and cases above without multiplying bullets.

Deciding and documenting. Each year (often at the accounts AGM), decide the manager’s remuneration by ordinary decision (> 50% capital). If the articles allow, use written consultation or unanimous deed. The resolution should specify (i) components (fixed, variable, benefits), (ii) calculation base (for variable), (iii) effective date, (iv) caps or policy limits, and (v) a short rationale.

Adjusting responsibly. Increases should be justified by business realities—turnover growth, scope expansion, restructuring leadership. Beware of increases that hollow out profits; the 2019 and 2020 decisions show the abuse threshold vividly. If equality blocks a necessary adjustment, consider the court-appointed representative route rather than judicialisation of the amount.

Coexisting statuses. Where the manager also holds an employment contract for distinct technical duties, separate the lines of authority, deliverables, and pay. Reassess the reality of subordination annually to avoid requalification issues and to manage seizability expectations.

Temporary waivers. If cash is tight, do not “forget” to pay. Adopt a formal waiver (remise de dette) before 31 December, adjust the accounts, and minute whether the waiver is definitive or a deferral. This avoids phantom salary being taxed despite non-payment.

Bonuses and benefits. Bonuses are legitimate. Exceptional bonuses near a sale are safer if disclosed in the sale deed. Benefits in kind carry social charges and taxation; set a policy and monitor levels. For expenses, choose between reimbursement on receipts and URSSAF-aligned lump sums.

Proportional pay. If linking to EBE or turnover, define the base with surgical precision: what counts as “EBE”? Are extraordinary items included? What is the calendar for calculation and payment? The 2011 case shows that indexation can be valid even with a sole shareholder voting, if the corporate interest is respected.

Guardrails against “excess”. Excessive pay is punished three ways:
(1) Criminally as abus de biens sociaux (with reimbursement of the excessive portion);
(2) Civilly as a management fault contributing to an insufficiency of assets (L. 651-2);
(3) Fiscally via non-deductibility and taxation as investment income.
Keep a minimalist benchmark file and review after material events (losses, capital erosion, big bonus proposals).

Continuity of pay. Do not suspend pay because the manager is ill or “less present”. Absent a regular decision of shareholders altering terms, remuneration continues (2017 illness case; 1997 non-exercise case). If the company seeks to recalibrate for long absences, use the shareholders’ process and consider the employment law overlay where applicable.

Voting rights. The manager may discuss and vote on his own remuneration; it is not a regulated agreement. Clauses stripping voting rights are likely void. If the majority (or parity) acts abusively, seek the mandataire remedy—not judicial price-setting.

IFI watchpoint. For managers relying on IFI partial exemption for business real estate, ensure that office remuneration is normal and represents > 50% of professional income. A “dividend-heavy, salary-light” mix may be efficient socially but costly for IFI.

Conclusion

Remunerating a SARL manager is not a box-ticking exercise. The law gives shareholders the decisional freedom and courts the disciplinary tools. Within that frame, three principles keep you safe:

1. Process: decide collectively, document clearly, and revisit periodically.

2. Proportionality: align pay with corporate capacity and contribution; avoid extraction that depletes results.

3. Precision: define bases for variables, write expense/benefit policies, and calibrate waivers properly.

Do these well, and you respect not only the letter of the law but the corporate interest it protects.