The SARL Gérant's Liability in France: Civil, Tax, Social and Criminal

The gérant's liability: civil, tax, social and criminal exposure mapped

The SARL limits the shareholders' liability — never the gérant's. Around the manager's office French law has built four distinct liability systems that operate independently and sometimes cumulatively: civil liability towards the company, the shareholders and third parties; tax solidarity that can make the gérant personally answer for the company's unpaid taxes; a dedicated insolvency regime that shifts the liquidation shortfall onto managers whose faults contributed to it, backed by personal bankruptcy and management bans; and criminal liability, dominated in practice by the misuse-of-company-assets offence (abus de biens sociaux). Each system has its own trigger, its own standard of fault, its own claimants and its own clock. This guide maps all four — who can sue the gérant, for what, within which time limits, and which defences actually work — with the case law that decides these disputes, because in this field almost every rule is judge-made.

Civil liability: the three grounds and the loyalty duty

The code gives three grounds on which any gérant answers in damages, towards the company and towards third parties alike (c. com. art. L 223-22): breach of the laws and regulations governing SARLs — unperformed incorporation formalities, unpublished statutory amendments; violation of the statuts — deciding alone what a clause reserved to prior shareholder authorisation; and management fault (faute de gestion), which needs no fraud or scheming — spending out of proportion to the company's resources, supervision so lax an employee could divert funds, accounting irregularities uncovered by the tax authority. On top of the special text, ordinary tort law remains available against the gérant.

Case law has grafted a demanding duty of loyalty onto the office. A gérant breaches it by creating a competing company (Cass. com. 6 June 2001, no. 98-16390), by starting a competing activity after resigning but while still serving the notice period the statuts imposed, or by negotiating a deal in the same field as head of another company. The escape is consent: a gérant who obtains the shareholders' prior unanimous agreement to run a competing activity commits no breach — and the agreement need not be given in a meeting. Loyalty also polices share deals: the manager who buys a shareholder's parts without disclosing the negotiations he is running with a third party for their resale breaches the duty whatever the negotiations' stage of advancement.

Three structural rules complete the civil regime. Co-gérants answer individually, each for his own faults in proportion to the damage he caused — so where one co-gérant alone committed the management fault, he alone can be sued — with joint liability only where the acts are attributable to all without any possible allocation. Quitus protects nothing: no shareholder decision can extinguish a liability claim against the gérant for fault in his mandate, which strips the customary discharge vote of most of its comfort. And prescription runs fast: 3 years from the harmful fact or, where concealed, from its revelation — 10 years where the fact is a crime. The short period covers de jure managers only; de facto managers face the ordinary five-year tort prescription. A damages action over a forbidden current-account overdraft follows the three-year rule, and postponing the start of the clock for concealment requires proving the gérant's intentional dissimulation, not mere silence (Cass. com. 24 January 2024, no. 22-13230).

Who can sue the gérant — company, shareholders, third parties

The company sues through its legal representative — typically the new gérant against the old — and keeps its own right of action regardless of what the shareholders do. The shareholders hold the action sociale: any of them can sue the gérant for the company's harm, damages going straight to the company; shareholders holding at least one tenth of the capital can jointly appoint one or more of their number to carry the action at their expense. The company must be joined to the proceedings — and where the conflict of interest sits precisely between the company and the gérant who represents it, a mandataire ad hoc must be appointed to speak for it. Any statutory clause making the action conditional on the meeting's prior opinion or authorisation, or waiving it in advance, is deemed unwritten.

A shareholder suing for himself must show personal harm distinct from the company's (Cass. com. 17 January 2018, no. 16-10266). Lost dividends fail that test; so does the loss of value of the shares, even where the gérant organised the company's ruin to take over the business alone. What passes: the moral harm caused to a corporate shareholder violently denigrated in the annual management report. One point often missed — the shareholder's individual action does not require any separable fault; that filter is reserved for third parties.

Third parties face the strictest test: the gérant answers personally only for an intentional fault of particular gravity incompatible with the normal exercise of his functions — the faute séparable. The catalogue of what qualifies is concrete: letting an employee drive an uninsured company van that then injured a motorcyclist; anticipated profit drawings so excessive they pushed the company into insolvency; omitting a subsidiary's claim from the liquidating parent's declared liabilities to advantage the parent; deliberately deceiving a counterparty about the company's solvency; certifying to buyers and notary that pledged shares were unencumbered; multiplying court challenges to rival property projects, outside the corporate purpose, for personal enrichment; organising the SARL's insolvency through a consignment contract with another company he also managed; and exploiting a previous employer's confidential business data for the company's benefit. An intentional criminal offence suffices in itself — failing to take out the compulsory ten-year builders' insurance or the mandatory liability cover for a paragliding school — and the gérant alone, not the company, repairs the intentional criminal fault. The criminal chamber goes further still: after an acquittal, civil liability can rest on a civil fault shown within the limits of the facts prosecuted, without any separability finding. The boundary in the other direction: filing accounts late is a contravention, not an intentional offence, and cannot found personal liability towards a customer who says he would never have contracted had he seen the accounts. Procedure follows substance — the three-year prescription applies to third-party claims, except for faults predating the appointment, which fall under the five-year rule, and suing the gérant in his personal name rather than in his capacity does not defeat the claim where the fault is separable.

Tax and social-contribution liability

Tax solidarity under LPF art. L 267. Where the person effectively directing the company — de jure or de facto, majority or minority gérant, shareholder or not — is responsible for fraudulent schemes or for grave and repeated non-observance of tax obligations that made recovery of the company's taxes and penalties impossible, the president of the tribunal judiciaire can declare him jointly liable for those taxes on his personal assets. The two conditions are alternative, not cumulative, and neither requires intent or bad faith. But the authority's path is guarded. It must first prove it exhausted its actions against the company itself. It must characterise, concretely and personally, each manager's responsibility during his effective mandate — inferring liability from the mere size of the debt and the company's liquidation is not enough, co-gérants cannot be condemned as a block, and the solidarity covers only taxes born of breaches committed while the gérant actually directed the company. The classic conviction pattern: repeatedly filing VAT returns late and keeping the VAT as working capital — the company's financial difficulties excusing nothing — or keeping the company artificially alive until recovery became impossible, a liability that passes to the gérant's heirs on his death. The defences are equally concrete: where the authority's own failures contributed — tax clearances issued without any checks despite obvious irregularities — the gérant's breaches were no longer the exclusive cause and solidarity fell; a payment plan granted to the company without formally warning the gérant of possible L 267 proceedings bars the claim; and a genuine delegation of powers to an equipped employee — a finance director with real authority — has been accepted.

Tax fraud. On criminal conviction for fraude fiscale — itself punished by fines and imprisonment — the court can additionally declare the gérant jointly liable with the company for the evaded tax and its penalties, and since the 2023 finance law, individuals convicted of aggravated tax fraud can be stripped of income-tax and property-wealth-tax reductions and credits as a complementary penalty.

Social contributions. The company owes the contributions; the gérant's personal civil liability requires a proven management fault, and a mere payment delay is never one by itself. Criminally, managers cannot be ordered to pay the arrears and late-payment surcharges — that burden stays on the company — but they face the penal sanctions themselves plus damages to the collecting body. One regime bites like tax law: the gérant found responsible, after a concealed-work citation (travail dissimulé), of fraudulent schemes or grave and repeated breaches of social obligations that made recovery impossible can be declared jointly liable for the contributions and penalties by the president of the tribunal judiciaire.

When the company fails: the shortfall action and personal sanctions

Liability for the asset shortfall

Where judicial liquidation reveals an asset shortfall, the court can order any de jure or de facto manager whose management fault contributed to it to bear that shortfall in whole or in part (c. com. art. L 651-2). The action's discipline sits in three requirements. Causation: the fault must have contributed directly to the shortfall — unpaid tax and social debts not yet due at the opening judgment are excluded from the analysis — though a fault need only be one of the shortfall's causes for full or partial condemnation. More than negligence: since the law excludes simple negligence, a merely negligent gérant cannot be made to fill the gap — and even omitting to declare insolvency within the legal period can remain simple negligence, including where the gérant knew of the cessation of payments. Timing: only faults predating the opening judgment count, and the action prescribes 3 years from the liquidation judgment, counted from the following day.

The decided fault patterns are a management-risk map in themselves: never attempting the capital increase the company's survival required — though failing to reconstitute the equity itself is the shareholders' failure, the gérant answering only for not convening them, and continuing business with equity below half the capital is no fault while the regularisation period still runs; running the company without any competent structure or reliable management tools; feeding a current account in proportions exposing the capital's inadequacy, then withdrawing it with disastrous effect; paying someone over €180,000 across roughly 5 years without proof of real work — payslips alone proving nothing; dressing the accounts to understate losses to the banks; incomplete or missing accounting that let a loss-making activity continue blind; pursuing a loss-making activity — reproachable even before cessation of payments, though unpaid invoices, rents and contributions alone prove no fault; abandoning management entirely to a co-gérant to focus on technical work — a fault, not a negligence; deliberately neglecting to collect the company's receivables; and leaving employment-tribunal claims unprovisioned while selling assets to repay one's own current account. The regime applies identically to unpaid managers; condemnation can cover unverified unsecured claims; sums paid go to the estate and are distributed rateably among all creditors; and co-gérants can be held jointly liable only by reasoned decision. The shortfall action can cumulate with criminal prosecution for the same facts — misuse of assets or tax fraud — but never with the ordinary company-law or tort actions, which stay open only where no shortfall is alleged. The gérant can settle the shortfall claim with the liquidator — never a personal-bankruptcy or ban claim. After the 3 years, one fallback remains: the mandatary's duty to account under c. civ. art. 1993. And an individual creditor can still sue the gérant personally — but only for harm personal and distinct from the creditors' collective harm, born of a separable fault: false accounts handed to the buyer of the shares, or the moral harm a shareholder-wife suffered from her gérant-husband's conduct. During redressement judiciaire, the gérant's own shares are frozen: he can sell them only on the court's terms, and the court can order their compulsory sale or make the plan conditional on his replacement.

Personal bankruptcy, management bans, banqueroute

Beyond money, redressement or liquidation opens the door to faillite personnelle against managers guilty of listed grave acts: treating company assets as their own; trading through the company in a personal interest; abusively pursuing a loss-making operation in a personal interest that could only end in cessation of payments; diverting or concealing assets or fraudulently inflating liabilities; managing despite a ban; ruinous means of raising funds to delay the filing; disproportionate commitments for others without consideration; preferring one creditor after cessation of payments knowingly; obstructing the proceedings; or destroying accounting records, keeping none, or keeping fictitious or manifestly incomplete accounts — including the gérant who simply never fixed an accounting void he inherited. Faillite personnelle is a double sanction: a blanket ban on managing any enterprise, plus civic disqualifications. The court can instead impose the narrower management ban; both are capped at 15 years. Late filing has its own track: missing the 45-day window to declare cessation of payments can never ground faillite personnelle but can ground a ban — 4 years for a gérant who waited 4 months while debts piled up, the clock judged from when he became conscious of the cessation. A 6-year ban struck the gérant leasing himself a company car and drawing rents and salary out of proportion to the treasury; by contrast, "absence of legal follow-up" appears nowhere in the statute's fault list and supports no ban, a de facto manager can be banned only on findings of independent, positive management, and every ban must be reasoned against the manager's personal situation. Criminal banqueroute overlaps the worst of the list — ruinous funding means, asset diversion, fraudulent liabilities, fictitious or destroyed or absent accounting — at 5 years' imprisonment and a €75,000 fine plus complementary penalties; managers who sold assets to the parent company while already in cessation of payments were convicted on this basis. Since the Conseil constitutionnel struck down the enabling text, the criminal court convicting for banqueroute can no longer itself add faillite personnelle or a ban (C. constit. 2016-573 QPC, 29 September 2016; Cass. crim. 22 November 2017, no. 16-83549).

Criminal liability and the abus de biens sociaux

Criminal texts reach the de jure gérant and anyone who in fact managed the SARL through or in place of him — like the father, equal shareholder with his gérante daughter, who ran the business in her absence. The gérant's intentional criminal fault is by its essence separable from his functions, an act personal to him for which he alone owes reparation. And exits are policed: because a management change binds third parties only from publication, an ex-gérant was validly convicted for acts committed between the end of his mandate and its publication. The three flagship offences each carry 5 years' imprisonment and a €375,000 fine: misuse of company assets, presenting annual accounts that do not give a faithful image — which requires positive acts of presentation, knowledge of the inaccuracy and intent to conceal the company's position, all three — and distributing fictitious dividends. Failing to draw up accounts or present them to the meeting is only contraventional. Complementary bans on managing and on civic rights are available but must be reasoned on the facts, the offender and his personal situation. Prescription for these délits runs 6 years since 1 March 2017; for concealed offences — an ABS often is — it runs from discovery, capped at 12 years from commission.

The abus de biens sociaux catches the gérant who in bad faith uses the company's assets or credit in a way he knows contrary to its interest, for personal ends or to favour another enterprise in which he holds an interest. Its case law is unforgiving. Occult withdrawals are presumed made in the manager's personal interest unless he proves use in the company's sole interest. A debit shareholder current account is an ABS from the instant the account turns debtor — repayment before liquidation changes nothing. Transparency does not excuse; shareholder authorisation or ratification does not excuse; later restoration of the company's finances repairs nothing; mere exposure of the assets to a risk of loss suffices even where the operation ends without damage; and a deliberate abstention qualifies — like never repaying a sum erroneously debited to the company's account for the managers' own SCI. Unexplained fund flows to a related company, with no treasury or current-account agreement behind them, convict. In groups, financial support between related companies escapes only under the strict common-interest defence: a common economic, social or financial interest assessed against a group-wide policy, with consideration, and without breaking the balance between the companies' respective commitments — payments without any consideration to a company where the manager held interests convict. The convictions read like an audit file: selling 8 of the SARL's buses to his other company at prices far below value; nearly €132,000 of champagne plus clothing and travel on company money, the wife convicted of receiving. A shareholder recovers for an ABS only on personal harm distinct from the company's, flowing directly from the offence — and the criminal judge is never bound by the tax-offences commission's clean bill.

The SARL itself can be convicted for offences committed on its behalf by its organs or representatives (c. pén. art. 121-2) — the representative's fault sufficing without any distinct fault of the company — with fines up to five times the individual rate, and company and gérant prosecutable together for the same offence. The reach is wide: doormen holding a de facto delegation engaged a nightclub company's criminal liability for discrimination; an absorbing company now inherits the absorbed company's criminal liability for pre-merger offences, extended to pre-2020 mergers designed to escape prosecution; and every corporate fine must be reasoned against the company's resources and charges. Even road traffic reaches the office: the gérant must designate the driver of a company vehicle flashed for speeding within 45 days, non-designation being an offence chargeable to gérant and company alike.

Frequently asked questions

Key takeaways