The entry in the trading certificate is not sufficient proof of the powers of representation of the CEO of a simplified joint-stock company registered under French law

In a decision dated 25 May 2022^[1], the Court of Cassation criticised a Court of Appeal for considering that a Chief Executive Officer ("CEO") of a simplified joint stock company registered under French law ("SAS") entered in the trading certificate was its legal representative without investigating whether the company's bylaws provided for his power of representation.

As a reminder, while the chairman of an SAS is the corporate body specifically responsible for representing the company vis-à-vis third parties, the bylaws may provide for the conditions under which a CEO and/or a deputy Chief Executive Officer may also represent the company. In this case, the CEO and/or the deputy Chief Executive Officer is/are entered in the trading certificate.

In the case submitted to the Court of Cassation on 25 May 2022, a company that had been the subject of a visit and seizure by the customs administration reproached the latter for having refused to give the CEO present on the premises a copy of the order of the Judge of liberties and detention authorising the agents of the customs administration to carry out this visit and seizure on the grounds that the CEO was not authorised to represent the company. The company then appealed to the First President of the Paris Court of Appeal to have the inspection and seizure operations annulled, arguing that the CEO should have been considered as a "representative" of the SAS solely by virtue of his position as CEO.

In a decision dated 21 October 2020^[2], the Delegate of the First President of the Paris Court of Appeal upheld the SAS's requests, considering that the customs administration should have notified the order authorising the visit and seizures to the person entered as CEO in the trading certificate.

The Commercial Chamber overturned this decision, considering that the judge should have "investigated whether the company's bylaws [...] provided that it could be represented vis-à-vis third parties by a person with the title of CEO ".

The solution of the Commercial Chamber must be read in the light of the opinion of the Coordination Committee of the Trade and Companies Register of 26 September and 25 October 2012^[3], which specified the interpretation to be adopted, about simplified joint stock companies registered under French law, for Article R. 123-54 of the French Commercial Code setting out the reporting obligations concerning the composition of the corporate bodies of companies. On the one hand, a simplified joint stock company registered under French law must declare to the trade register the members of a statutory corporate body to whom the bylaws individually or collectively confer the power to direct, manage or commit the company on a regular basis. On the other hand, all members of a "supervisory board" created in an SAS, if any, must also be declared regardless of the nature and extent of their powers. This second interpretation can be applied to all persons bearing a title mentioned in Article R. 123-4 of the French Commercial Code ("members of a supervisory board" but also "CEO") who must therefore be entered in the trading certificate independently of their power to direct, manage or commit the company on a regular basis, as the Court of Cassation considered in this case.

Therefore, following the decision of the Court of Cassation on 25 May 2022 mentioned above, it should be considered that the fact that a person is entered in the trading certificate of an SAS in the capacity of CEO or deputy Chief Executive Officer has only an informative value but no evidential value as to his power of representation.

However, this decision should not prejudice the interests of third parties, who may rely on commitments made on behalf of an SAS by a CEO or deputy Chief Executive Officer without the company being able to invoke the lack of statutory powers of its executives^[4].

Finally, it should be noted that, although the decision of the Court of Cassation of 25 May 2022 was taken regarding a CEO, it seems to be applicable without difficulty to a deputy Chief Executive Officer of an SAS.

In this context, it is strongly recommended that SAS with a CEO and/or a deputy Chief Executive Officer check that their bylaws provide not only for the conditions of appointment but also for their powers of representation in order to ensure in particular that the procedures initiated by the SAS are valid. Our team of lawyers is of course at your disposal to assist you in this process.

  
[1] Court of Cassation, 25/5/2022 no. 20-21.460 F-D.

[2] Court order from the Delegate of the First President of the Paris Court of Appeal no. 19/02402.

[3] CCRCS, Opinion no. 2012-031.

[4] Court of cassation, 9/7/2013 no. 12-22.627 F.