Version ordinateur

Responsibility of the leader: Consequences on their personal assets?

Home > French Business Law | Published 2014-11-18

Can the leader limit his liability to his business assets?

Yes, but obviously only to some extent.

A person can only have one heritage: the principle of a single heritage.

However, it was necessary to quickly distinguish between professional and personal lives to protect their own assets of entrepreneurs. The law came into place and created limits on the impact of trade and personal assets of the leader: Limitation of Liability appraiser as well as protection of the home.

Thus, some mechanisms such as the Dutreil agreement, legal forms of companies (SARL, EIRL, SAS, ...) or the status of auto-entrepreneurship came to limit the principle of uniqueness, allowing the entrepreneur to create two separate funds, his own and that of the company or legal person. However, these mechanisms have their limits in cases of fault management, civil or criminal liability of the leader.

How to instill responsibility of the manager?

The law provides a number of cases where the liability of the entrepreneur may be instituted: the case relating to violation of labor regulation, social regulation, or non-compliance with hygiene rules and security...

The case came to bring a limit to the principle "no one is punishable for his own act" by allowing liability of the entrepreneur in case of misconduct by one of its employees. Of course this requires a combination of conditions. But because the duty of control and surveillance imposed upon it, the entrepreneur may be held liable even though he did not directly commit the offense. This applies even if just one of his subordinates had committed a breach of law/regulations applicable in general or to the business of the company. The simple fact that the offense occurred and lead to a presumption of recklessness or negligence may exempt it under certain conditions (exclusive fault of the victim or of the employee, the employee information on the regulation...) although, in practice, only the delegation of authority can exonerate the person responsible for the wrongdoing.

What about the liability of the entrepreneur?

Any misconduct by the officer causing injury to the company and / or third sufficient is subject to civil liability of leadership.

The Commercial Code contains certain provisions relating to "breaches of laws or regulations applicable [...] or violations of statutes or of negligence in their management" applicable to the officers of SA and SARL.

The law requires a detachable fault of its functions (committed outside the exercise of its functions) that must meet the following criteria: be intentional, particularly serious and incompatible with the exercise of its functions. In these conditions, the liability of the entrepreneur may be committed.

What is the impact on the heritage of leadership?

Apart from criminal penalties ranging from fines to imprisonment, the particular monetary civil penalties will impact more or less seriously the personal assets of leader: repayment of misappropriated funds, payment of late penalties, payment of damages....

Any person who has suffered damage can then engage the responsibility of the leader in the civil courts, and even criminal redress. The leader may be required to compensate victims of his own funds, because under Article 1382 of the Civil Code which provides that "any act whatever of man that causes damage to another obliges him by whose fault it happened to repair it."

Can the entrepreneur be relieved of responsibility?

No status, contractual clause or agreement cannot relieve the entrepreneur's responsibility. Therefore, the officer thought preserve their personal wealth by choosing a legal form of company such as SARL, the EIRL or SAS, makes a mistake. Indeed, the mechanisms of complete or partial protection of personal assets apply only in respect of the company's creditors.

The choice of the legal form of the company, the matrimonial regime, the insurance underwriting ... here are their limits. Moreover, the insurance will not work in case of fault of the leader.

In case of any problems, the business law attorney is there to advise and assist you. In proceedings, he will implement the complex mechanisms of the law and jurisprudence to defend your case and limit the impact of possible sanctions on personal wealth. Anticipating risks, securing your wealth and as well as your interests are his top priority.

This article is available online for public information purposes. It is updated regularly, as needed. Due to the constant evolution of the laws and the legal system, we cannot guarantee that the information in this article is still applicable. We invite you to contact us with any legal questions or concerns you have regarding this topic at +33 1 56 79 11 00. In no way can this firm be held liable for articles that contain inaccuracies or are now out of date.

Add your comment