Removing the Gérant of an SCI

Removing the gérant of an SCI: majorities, court routes, and damages

Removing the gérant of an SCI (société civile immobilière) is, in principle, a matter for the members and a simple majority of the capital - but it is surrounded by rules that decide whether the removal is clean or costly. The gérant has a right to be heard, a removal without just cause can trigger damages, a gérant who holds enough shares can block their own removal, and a removed gérant who is a member may have a right to be bought out. This guide sets out the removal majority and how a meeting is forced where the gérant will not call one, the defence rights and the damages exposure, what counts as just cause and what does not, the court route when the members cannot remove the gérant themselves, and what happens to a removed gérant-member afterwards.

The subject is a live-conflict one, and it rewards knowing the rules before acting rather than after. A removal carried out abruptly, or without the just cause the situation actually supports, can leave the members paying damages to the very manager they wanted rid of; a removal blocked by a gérant-member can stall a company for years unless the court route is used correctly; and a removed gérant-member's withdrawal can oblige the company to find the money to buy their shares. Handling a removal properly - the right majority, the right procedure, the right cause, and an eye on the consequences - is what turns a governance dispute into a resolved one.

The removal decision: a majority of the capital

Unless the articles provide otherwise, the gérant is removed by a decision of the members representing more than half the shares (C. civ. Art. 1851, paragraph 1). The law draws no distinction between a gérant named in the articles and one appointed separately: both are removed by that same majority, without needing the higher majority required to amend the articles, and the regular removal of a gérant named in the articles simply causes the statutory mention to lapse. So the starting point is a straightforward majority of the capital - subject to whatever the articles have done to reinforce or reduce it.

A gérant will rarely convene the meeting that is to decide their own removal, and the law provides a way around that. One or more non-manager members can put the gérant on notice to call the consultation on a precise agenda; if there is no response within a month, they can ask the president of the court to appoint an ad hoc agent to convene the meeting. So a gérant cannot indefinitely avoid a removal vote by refusing to call the members together. A usufructuary of shares, though not a member, can likewise ask for an agent to be appointed to provoke a deliberation on the gérant's removal where the question directly affects the enjoyment of the shares they hold in usufruct.

One feature of the vote shapes many disputes: a gérant who is also a member takes part in the vote on their own removal. That means a gérant-member with enough shares can defeat the removal, and even a decision taken unanimously does not stop a gérant-member with a legitimate interest challenging it. Where the gérant can block the vote, the members are not left without a remedy - but the remedy is then the court, considered below. The removal vote is the ordinary route; it works where the members opposed to the gérant hold the majority, and it is frustrated where the gérant holds or can block it.

Defence rights and the damages exposure

However clear the majority, the members must respect the gérant's right to defend themselves. Even a non-member gérant must be convened and invited to justify their conduct, and must be able to explain themselves, in a genuine exchange, on the complaints made against them before the removal is decided. A removal decided abruptly - the classic case is demanding, in the middle of a meeting, that the gérant hand over the keys and the company's documents and not return - is brusque and vexatious, and gives rise to damages: a removal inspired by a vexatious intention, contrary to the company's interest, shows a wish to harm that is itself a fault. The gérant cannot, however, insist on being represented by a lawyer at the meeting that decides the question.

Beyond the procedure, there is the substance. A removal decision regularly taken by the members cannot be annulled by a court, even where it is not justified by a just cause. But a removal decided without just cause gives rise to damages (C. civ. Art. 1851, paragraph 1): the fact that the members simply willed the removal does not, by itself, exonerate them. The articles can go further and provide that a removal will carry no damages even where it is unjustified - the case law appears to accept such a clause, and it is valid beyond a mere difference of majority - but inserting it during the life of the company needs a unanimous decision, including the gérant-member's own agreement. And even where damages are excluded, the procedural guarantees of the defence still apply, so a removal that is abusive by its vexatious or untimely character opens a right to damages notwithstanding the clause.

The practical lesson is that a removal has two exposures to manage: the procedure and the cause. Convening the gérant, hearing them properly, and documenting the grounds protects against the procedural claim; establishing a genuine just cause protects against the damages claim on the merits. A removal that is both procedurally correct and supported by a real just cause is secure; one that is hasty, or that rests only on the members' change of mind, is where the damages are paid.

Just cause: what counts and what does not

Just cause is faulty conduct by the gérant that has caused, or is certain to cause in a foreseeable future, harm to the company - including acts liable to engage the gérant's civil or criminal responsibility. The courts have recognised as just causes, removing without damages, a range of failings: reckless expenditure due to the gérant's notorious misconduct or incapacity; the unjustified abandonment of the functions; incompetence revealed by the poor state of the company; the violation of legal or statutory provisions, in particular on establishing and approving the accounts; acts of unfair competition; a serious disagreement between co-gérants liable to compromise the company's interests; and the conclusion of contracts disadvantageous to the company from which the gérant alone profits. For an SCI specifically, a failure to insure the company's buildings, or plainly insufficient cover given the risks, would be a serious fault of the same kind. And in a family SCI, where a gérant changed the management so as to let the whole property and deprive the other family members of using it, the members could legitimately contest that management and require a change of gérant.

Just as important is what does not amount to just cause, because these are the situations where a removal, though valid, will cost damages. The courts have held that a change of majority among the members, an incompatibility between the members and the gérant, the wish of new members to appoint a gérant of their own choice where no management fault is shown, a loss of the members' confidence unaccompanied by any management fault, and losses suffered by the company where the gérant did not control the relevant policy, are none of them just causes. The same would apply where the members controlling the SCI had themselves set low rents that prevented the company from balancing its books, and then sought to remove the gérant for the resulting losses. Secondary disagreements that could have been overcome by an amicable approach, and disputes really concerning the members' personal relations - current-account arguments between brothers, for instance - do not justify a removal either. In all these cases the members may still remove the gérant, but the removal will entitle the gérant to damages.

Can you remove your gérant?

Whether and how you can remove the gérant depends on the shares and the situation. Pick yours - the check shows the route.

When the members cannot remove: the court route

Sometimes the members simply cannot carry a removal - because the articles require unanimity and the gérant is a member, because they require a reinforced majority and the gérant holds a blocking minority, or because the gérant alone holds more than half the shares. A gérant in that position is not, however, irremovable. Article 1851, paragraph 2, provides that the gérant is also removable by the courts for a legitimate cause at the request of any member. So the deadlock at the members' meeting is broken by an application to the court, and any single member can bring it.

The standard the court applies is a legitimate cause, and it is not the demanding standard that governs the gérant's personal liability to third parties. The requirement that liability supposes an intentional fault of particular gravity, incompatible with the normal exercise of the functions, applies only to that personal liability, and cannot be extended into a condition of the judicial removal of a civil-company gérant. The bar for judicial removal is therefore lower than for a liability claim - a legitimate cause, not an aggravated fault - though the burden of proving that cause falls on the members bringing the application, the reverse of the position on a members' vote, where a regular decision stands unless the gérant proves the absence of just cause.

What the courts have accepted as a legitimate cause gives the measure. A gérant who concluded a lease of the company's premises on terms particularly disadvantageous to the SCI, for the benefit of a second company in which the gérant was a member, was removed for legitimate cause; so was a gérant who failed to keep accounts and to render an annual account of their management, and who occupied the company's premises in their own interest rather than the company's. The family character of an SCI does not excuse a failure to render accounts - though where the members had never asked for a management report, a demand founded on that failure has been rejected on the family context. And the application is not conditional on all the members being joined to it, so a member need not marshal the whole shareholding before going to court. The court route is the answer to a blocked removal, and it turns on a genuine, provable cause going to the company's interest.

Is there just cause to remove the gérant?

Whether a ground is a just cause decides the damages - and the court route. Pick your ground - the check shows how it is treated.

After removal: no dissolution, but the withdrawal

Two consequences follow a removal, and both are set by the last paragraph of Article 1851. The first is reassuring: the removal of a gérant, whether or not a member, does not dissolve the company - subject to any contrary clause in the articles. So removing the manager does not, by itself, bring the SCI to an end; the company continues, and the members appoint a new gérant. A family or investment SCI is not put at risk simply because its manager changes.

The second consequence is the one to plan for. If the removed gérant is a member, they may - unless the articles provide otherwise, or the other members decide to dissolve the company early - withdraw from the SCI under the ordinary conditions for a member's withdrawal, and the decision to dissolve instead is taken by the members other than the gérant, who is deprived of the vote. A withdrawing gérant-member is entitled to be reimbursed the value of their shares, and where the value is not agreed it is fixed by an expert appointed by the president of the court under Article 1843-4 of the Civil Code - a value the articles cannot deprive them of. So removing a gérant who is also a substantial member can oblige the company to find the money to buy out their stake, which is a real cost and sometimes the decisive practical obstacle to a removal.

This is why the withdrawal right should be addressed in the articles at the outset rather than confronted in the middle of a dispute. The drafters can set the conditions on which a removed gérant-member may withdraw - reserving it, for example, to gérants of a certain seniority or to particular kinds of removal - and can fix the period for claiming reimbursement and the date at which the expert values the shares, such as the date of the withdrawal decision. What they cannot do is remove the right to reimbursement itself. Where a gérant will not, or cannot, be removed by a vote and the court route is uncertain, a negotiated departure - a resignation on agreed terms, with the current account and the shares dealt with - is often the cleaner resolution, and it is examined alongside the appointment and powers of the gérant in our pillar guide.

Removing an SCI gérant - at a glance

Frequently asked questions about removing an SCI gérant

This article is for general information only and states French law and case law as published in the sources available at the date shown above. It does not constitute legal advice. Whether and how a gérant can be removed, and the damages exposure, depend on the articles, the shareholding and the facts. Always seek qualified legal advice before removing or defending the gérant of an SCI.