MANAGEMENT FAULT
LexInter | December 2, 2008 | 0 Comments

MANAGEMENT FAULT

The directors have the obligation to manage the company in a competent and diligent manner and in respect of the corporate interest, by ruling out any personal interest and the violation of this obligation brings into play the civil liability of the directors.

The sanction of mismanagement

Management misconduct is penalized in terms of civil liability   within the framework of an in bonis  company  by article L 225-251 (formerly articles 244 paragraph 1 of the law of July 24, 1966), on liability for ”  faults committed in their management  ”which comes under company law    and in the context of a company in receivership or liquidation by article L 624-3   (former article 180 of the law of January 25, 1985) concerning liability for ”  mismanagement ” which falls under the law of insolvency proceedings. This is the application of the general principle of personal liability (cf. Deen Gibirila, Le Dirigeant de Société, p. 422) and more particularly of the responsibility of the agent vis-à-vis the principal .

Criteria for mismanagement

The mismanagement can be either based on economic criteria or on   legal criteria .

It is based on legal criteria when the manager does not manage the company in the corporate interest, but in his personal interest.

Management fault and management expertise

Management fault can be established with the help of old art management expertise. 226 of the law of July 24, 1966) or by the expertise in futurum of article 145 of the NCPC.

 It can result from indisputable facts. ” The leaders must ensure good management, creator of wealth, respecting the object and the social interest  ” such are the principles recalled by   the President Bézard   (P. Bézard, “The competence and the duty of the social leaders in French law” , 1987, Vol. 10, 3 rd Franco-US day, Journal Soc. Comparative Legislation ). In the definition of the violation of the social interest “  there is for the judge this reference to the personal interest of the manager and for the expert, which effectively relieves him in his quest. There is also the equality of shareholders and partners to be respected. It is a measure that we find everywhere “. (P. Bézard, Conclusion of the colloquium, The expert faced with the fault of management, Rev. J. com. Special n °, sept. 2000, p. 83.).

Insufficient assets and mismanagement

On December 15, 2000, the commercial chamber ruled that “When the reorganization or judicial liquidation of a legal person reveals a lack of assets, the court may, in the event of a management fault, even a single one, having contributed to this insufficiency (…), decide that the debts of the legal person will be borne, in whole or in part, with or without solidarity, by all de jure or de facto managers, remunerated or not, or by some of them. However, if the amount of the sentence pronounced falls within the sovereign appreciation of the trial judges as long as it does not exceed the insufficiency of assets, it is important, when several management errors which have contributed to this insufficiency of assets are retained, that each ofbetween them is legally justified “,

This decision to approach that of 1 st December 2009 has been considered an innovation “under the Supreme technical ” and ” extensive application of the proportionality principle ” by the Court

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