In a French SARL (société à responsabilité limitée), the remuneration of the manager (gérant) is not a matter of personal discretion. It is strictly regulated by company law. When a manager pays themselves without proper approval from the shareholders (associés), they expose themselves and the company to serious legal, fiscal, and even criminal risks.
This article examines in detail the risks of unauthorized remuneration, drawing on the French Code de commerce, the Code civil, and recent case law. We also provide practical guidance for managers and shareholders to avoid disputes.
Civil repayment, tax reassessment, and criminal exposure can be avoided with proper shareholder ratification and documentation.
1. Why Unauthorized Remuneration of SARL Manager Is So Risky
The principle is simple:
- Managerial remuneration must be fixed by the shareholders, either in the articles of association or by resolution of the general assembly.
- A manager cannot unilaterally decide their own salary.
When this rule is ignored, the remuneration is considered unauthorized. This exposes the manager to:
- Reimbursement obligations (civil liability).
- Criminal charges for misuse of company assets.
- Tax reassessments for the company.
Even if the amount is modest or the statutes provide for a paid gérance, failing to obtain shareholder approval makes the remuneration legally vulnerable.
2. Reimbursement Obligations of Unauthorized Managerial Remuneration: The Civil Risk
2.1 Who can demand repayment?
Several parties may bring an action to recover unauthorized remuneration:
- A shareholder, invoking Article L. 223-22 of the Code de commerce.
- A newly appointed manager, seeking to correct irregular practices.
- A buyer of the company, once they discover irregular payments.
- A court-appointed liquidator, during liquidation proceedings.
2.2 Repayment applies regardless of context
- The obligation to reimburse exists even if the principle of paid management is in the statutes.
- It applies even if the remuneration is low or symbolic.
In short, no excuse protects the manager from reimbursement when approval is missing.
2.3 The five-year limit (“prescription“)
There is only one protective barrier: the statute of limitations.
- Remunerations received more than five years ago are generally protected.
- Exception: if payments were made secretly (occult payments), i.e., not recorded in the company’s books, they may still be reclaimed after five years.
3. The Accountant’s Duty of Warning
The expert-comptable (chartered accountant) is not a passive observer. They have a professional obligation to warn the manager that their remuneration requires shareholder approval.
If they fail to provide this warning, they may be held liable. In a 2022 case, the Court of Cassation (Cass. com., 12 Oct. 2022, n° 19-25931) condemned an accountant who had failed to alert a manager, thereby depriving him of the chance to avoid condemnation.
This illustrates that not only managers, but also their advisors, face consequences when procedures are ignored.
4. Criminal Exposure: Abuse of Company Assets
Beyond civil reimbursement, unauthorized remuneration can qualify as abus de biens sociaux (misuse of company assets).
4.1 Legal definition
Under Article L. 241-3 of the Code de commerce, a manager who uses company property or credit contrary to the company’s interests, for personal gain, commits this offence.
4.2 When does it apply?
- As soon as remuneration is received without approval from the shareholders.
- The offence exists even if the remuneration is not excessive.
4.3 Penalties
- Up to 5 years imprisonment.
- €375,000 fine.
📌 Example: The Paris Court of Appeal (27 Feb. 1990) held that the mere fact of paying oneself without approval constituted abuse, regardless of the amount.
This shows how strictly French courts interpret unauthorized pay.
5. Tax Risks for the Company
Unauthorized remuneration is not only a problem for the manager — it can also harm the company.
5.1 Tax reassessment
If remuneration has not been approved by the shareholders, the tax authorities can reintegrate it into the company’s taxable profits (CE, 6 April 2001, n° 198233). This increases the corporate tax burden (impôt sur les sociétés).
5.2 Retroactive remuneration
In a more flexible interpretation, the Conseil d’État ruled (CE, 4 Oct. 2023, n° 466887) that not paying a manager in one year does not prevent paying them later, even retroactively — as long as the shareholders approve it.
This means unpaid salaries can be regularized, but only with proper shareholder decisions.
6. Ratifying Unauthorized Remuneration
Fortunately, French law provides a way to correct irregularities: ratification a posteriori.
6.1 Recognition by the courts
The Court of Cassation has accepted that shareholders can validate remuneration after it has already been paid (Cass. com., 15 Mar. 2017; Cass. com., 18 Dec. 2019).
6.2 Practical impact
- Ratification removes the risk of reimbursement.
- It also neutralizes the criminal risk.
- For majority managers, obtaining ratification is straightforward.
- For minority managers, it may be difficult if other shareholders refuse.
6.3 Best practice
To avoid recurring risks, shareholders should adopt resolutions covering multiple years rather than voting remuneration annually. For example, setting remuneration at €X per year “until further decision.”
7. Practical Scenarios and Risks
Scenario 1: A manager self-pays without approval
- Civil risk: reimbursement of all amounts from the last 5 years.
- Criminal risk: prosecution for abus de biens sociaux.
- Tax risk: re-integration of salaries into taxable profits.
Scenario 2: Majority manager forgets to seek approval
- Easy to regularize by ratification at the next general meeting.
- Still risky if challenged by a minority shareholder.
Scenario 3: Minority manager pays themselves
- Most vulnerable scenario. Without shareholder support, repayment is almost inevitable.
8. Best Practices for Managers and Companies
- Always seekshareholder approval before paying remuneration.
- Use multi-year resolutions to reduce administrative burden and risk.
- Ensure accurate accounting entries to avoid “occult payments.”
- Involve the expert-comptable and demand written confirmation.
- Ratify remuneration promptly if discovered late.
- Document everything — minutes, resolutions, and accounting entries.
9. Key Takeaways
- Unauthorized remuneration is never trivial.
- The risks are civil (reimbursement), criminal (prison and fines), and fiscal (tax reassessment).
- Ratification is possible but not guaranteed.
- Preventive governance is always the safest route. Protect Your Company & Managers from Liability
Unauthorized payments expose both managers and accountants. We help you implement compliant remuneration resolutions and governance safeguards.
Frequently Asked Questions (FAQs)
- Can a manager decide their own pay in a SARL?
No. Remuneration must be approved by the shareholders. Self-authorized pay is illegal. - What happens if remuneration is not approved?
The manager risks reimbursement, prosecution for abuse of company assets, and the company faces tax risks. - How long can remuneration be challenged?
Up to 5 years, unless payments were hidden in the accounts. - Can unauthorized remuneration be legalized after payment?
Yes, if the shareholders ratify it. But this is harder for minority managers. - What should accountants do?
They must warn managers of approval requirements. Failure to do so can make them liable. - Is retroactive pay possible?
Yes, provided the shareholders approve it. The Conseil d’État confirmed this in 2023.
Conclusion
The remuneration of a SARL manager is not simply a financial issue — it is a matter of strict corporate law compliance. Unauthorized pay exposes the manager to repayment orders, criminal prosecution, and reputational damage, while the company faces tax reassessments and disputes.
The good news is that French law provides solutions: proper shareholder approval, ratification, and clear resolutions. By respecting these rules, managers can secure their remuneration legally and protect the company from unnecessary risks.
At FrenchCo.Lawyer, we assist managers, shareholders, and accountants in structuring remuneration safely, drafting compliant resolutions, and avoiding costly litigation.
Unapproved remuneration—even from years past—can lead to personal liability or criminal prosecution. A legal audit can uncover and fix these issues early.
