The Practice of Statutory Audit in French Companies

Rules on registration, independence, confidentiality, responsibilities, and mandate duration

The role of the commissaire aux comptes (statutory auditor, or CAC) in France is governed by a strict legal and ethical framework. The purpose is to ensure that auditors remain independent, reliable, and trustworthy guardians of financial transparency.

The statutory auditor’s mission is regulated by the French Commercial Code and professional ethical rules. To exercise their functions, auditors must be registered, comply with strict incompatibility rules, respect professional secrecy, and carry out their mission within defined time limits and under the supervision of the High Authority for Audit (Haute Autorité de l’Audit or H2A).

This article provides a clear overview of the main conditions for exercising statutory audit in French companies:

• registration requirements,
• incompatibilities and independence rules,
• confidentiality obligations,
• scope of responsibility,
• supervision of the profession,
• disclosure of fees and network membership,
• and the rules governing the duration of mandates.

1. Registration of the Auditors on the Official List of Auditors

No one may act as a statutory auditor in France without being registered on an official list of auditors (Commercial Code, art. L.821-13).

Audit firms may also carry out statutory audit missions, provided they comply with strict rules on voting rights and management (Commercial Code, art. L.821-16). This guarantees that control over audit firms remains in the hands of qualified professionals.

2. Rules Governing Independence and Incompatibilities of Auditors

a. Strict Incompatibility Rules

To safeguard independence, statutory auditors are subject to strict rules preventing conflicts of interest.

Auditors cannot combine their role with:

• most forms of salaried employment, except teaching or work for another auditor/accountant;
• any commercial activity, whether carried out directly or through an intermediary.

b. Permitted Exceptions

Certain limited exceptions exist, such as:

• commercial activities that are ancillary to the profession of chartered accountant;
• activities conducted through a multi-professional practice company (SPE), as allowed under the PACTE Law of 2019.

c. Clarifications from the H2A

The H2A (successor to the H3C) has clarified that “commercial activity” refers to the repeated performance of acts of commerce under Articles L.110-1 and L.110-2 of the Commercial Code. Occasional acts for personal daily needs do not fall under the prohibition.

Independence rules cover both:

• direct exercise (activities carried out personally by the auditor), and
• exercise through an intermediary (when a third party, individual or company, acts under the influence or control of the auditor).

Ban on Gifts and Solicitations

Auditors are expressly forbidden from soliciting advantages or accepting gifts, except for items of negligible value (threshold to be set by regulation).

3. Professional Secrecy Imposed on Auditors

Statutory auditors, their staff, and their experts are all bound by strict professional secrecy regarding any facts, acts, or information obtained in the course of their mission (Commercial Code, art. L.821-35).

Exceptions to Secrecy

The law allows disclosure in limited cases:

• reporting irregularities or inaccuracies to shareholders;
• reporting criminal acts discovered during the mission;
• providing information to the court president in the context of an alert procedure.

In addition, auditors of a parent company and those of its subsidiaries are released from secrecy between themselves, allowing effective consolidation audits.

4. Responsibilities of the Auditor

Statutory auditors are bound by an obligation of means rather than an obligation of result. This means:

• They are not expected to check every single operation or detect every error.
• They are responsible only for the consequences of their own negligence or faults.

They are not civilly liable for wrongdoing committed by company directors, unless they knew about it and failed to disclose it in their audit report (Commercial Code, art. L.821-37).

Actions in liability against auditors must be brought within three years from the harmful event, or from the time it was revealed if initially concealed (Commercial Code, art. L.821-38).

5. Supervision of the Profession

Since January 2024, the High Authority for Audit (H2A) has replaced the former High Council for Statutory Auditors (H3C).

The H2A is responsible for:

• supervising the profession,
• monitoring compliance with ethics and independence rules,
• and ensuring the quality of statutory audit in France.

6. Transparency on Fees and Networks

When a statutory auditor belongs to a national or international network, they must inform the company in writing of this affiliation (Commercial Code, art. L.821-4).

They must also disclose:

• the nature of services provided by the network to the audited company, its parent, or subsidiaries,
• the total amount of fees received by the network for these services.

Shareholders are entitled to access detailed information about fees paid to each statutory auditor at the registered office of the company.

7. Duration of the Mandate

7.1 Standard Duration

In principle, statutory auditors are appointed for a six-year mandate, ending at the general meeting that approves the accounts of the sixth financial year (Commercial Code, art. L.821-44). Mandates may be renewed without limitation.

7.2 Shorter Mandates

In certain cases (voluntary appointments or small-enterprise audits), the mandate may be limited to three years (Commercial Code, art. L.821-46).

7.3 Replacement and Resignation

• If an auditor is appointed to replace another (due to resignation or death), their mandate lasts only until the original end date of the predecessor’s mandate.
• Auditors may resign only for legitimate reasons, and the H2A must be informed.
• If the court appoints an auditor because the shareholders failed to do so, the judicial mandate ends once the general meeting makes a valid appointment.

7.4 Termination of Statutory Auditors’ Duties

The functions of statutory auditors in French companies are not always carried out to the end of their six-year mandate. French law provides several mechanisms by which an auditor’s role can be challenged, terminated, or not renewed, in order to preserve both independence and the proper functioning of the company.

7.5 Challenge for Just Cause

Shareholders and stakeholders may seek the challenge (récusation) of a statutory auditor if serious concerns arise.

• A request may be filed by one or more shareholders holding at least 5% of the share capital, the Social and Economic Committee (CSE) in companies with more than 50 employees, or the public prosecutor (Commercial Code, art. L.821-49).
• The action applies to all statutory auditors, whether principal or alternate, including those appointed by court order.
• The request must be based on a just cause, which is assessed by the commercial court.

Importantly, a simple disagreement over accounting treatment or audit procedures is not sufficient grounds for challenge.

If the court accepts the request, it will appoint a new statutory auditor, who will remain in place until the general meeting has designated a replacement. The request must be submitted within 30 days of the auditor’s appointment, and the president of the commercial court rules under an accelerated procedure on the merits.

7.6 Dismissal for Misconduct or Impediment

An auditor may also be dismissed (relèvement de fonctions) before the normal end of their mandate in cases of:

• serious misconduct, or
• inability to perform their duties.

The request may be made by the manager, the CSE, one or more shareholders representing at least 5% of the capital, or the public prosecutor (Commercial Code, art. L.821-50).

When the court orders dismissal, the alternate statutory auditor automatically steps in to replace the removed auditor.

Grounds for dismissal may include failure to comply with professional standards of diligence or serious breaches of duty. As with recusation, the president of the commercial court rules under an accelerated procedure.

7.7 Non-Renewal of the Mandate

At the end of a statutory auditor’s six-year mandate, the general meeting may decide not to renew their appointment. In such cases:

• The auditor must be given the opportunity to address the general meeting if they request it (Commercial Code, art. L.821-51).
• There can be no interruption of the audit mandate: a new statutory auditor must be appointed at the meeting approving the accounts of the sixth year audited.

If exceptional circumstances prevent the appointment of a new auditor at that meeting, the agenda must include a resolution calling for another general meeting to make the appointment.

If such a resolution is included, the outgoing auditor has no further obligations regarding the temporary absence of a successor. However, if no such resolution is placed on the agenda, the outgoing auditor must report the irregularity and inform the public prosecutor (Commercial Code, art. L.821-10; CNCC, EJ 2014-63).

7.8 Special Situations

• Judicial liquidation: The auditor’s mandate continues until the company is dissolved, as annual accounts must still be approved.
• Transfer of registered office abroad: The mandate ends upon registration in the host country and deregistration in France. Until then, the auditor’s duties continue, including alert procedures and disclosure of criminal acts.
• Absorption of an audit firm: If an audit firm is absorbed by another, the absorbing firm continues the mandate until its normal expiry.

Key Takeaways

The French Commercial Code provides several safeguards to ensure that statutory auditors remain both independent and effective:

• They can be challenged shortly after appointment if just cause exists.
• They can be dismissed during their mandate for serious misconduct or incapacity.
• Their non-renewal at the end of a mandate must be carefully managed to avoid any gap in statutory audit oversight.

These mechanisms protect shareholders, employees, and third parties by ensuring that statutory audit remains a reliable tool of financial governance.

Conclusion

The exercise of statutory audit is tightly regulated to ensure independence, confidentiality, and professional integrity. From the moment of registration, auditors are subject to strict rules on incompatibilities, secrecy, and responsibility.

Their work is supervised by the High Authority for Audit (H2A), and transparency is reinforced through disclosure of fees and network affiliations. Mandates are normally six years, but flexibility exists for smaller entities and voluntary appointments.

Overall, the framework seeks to guarantee that statutory auditors can carry out their mission without conflicts of interest, without interruptions, and with full accountability, thereby reinforcing trust in French companies and their financial reporting.