What an SCI Gérant Can Sign Alone - And when the shareholders must approve

What an SCI gérant can sign alone - and when the shareholders must approve

Before a bank lends to an SCI (société civile immobilière), a notary completes a purchase, or a buyer signs with one, the same question has to be answered: can the gérant sign this alone, or do the members have to approve it first? The answer runs on a spectrum. Ordinary management the gérant handles alone; the sale or mortgage of the property, a change of the company's tax regime, and other significant acts are normally reserved to the members; and a deal between the company and the gérant themselves must be reported to the members for their control. Overlaying all of this is a rule that matters to every outsider: towards third parties the gérant binds the company for anything within its object, whatever the internal limits say. This guide sets out what the gérant can sign alone, what the members must approve, how the two-sided rule works for banks and notaries, and how deals between the company and its gérant are controlled.

The distinction is practical, not academic, because it is asked at the moment of closing and getting it wrong holds up - or unravels - a transaction. A gérant who signs a reserved act without the members' authorisation exposes themselves to removal and damages even where the act binds the company; a counterparty who relies on the gérant for something outside the object gets no protection; and a family that leaves the object too wide finds the gérant can commit them beyond their intention. Knowing exactly where an act falls is what lets a deal close cleanly and a company be controlled the way its members meant.

What the gérant can sign alone

In the ordinary management of a company holding a property, and absent a statutory limitation, the gérant can conclude the current acts the running of the company requires - including the ordinary credit operations needed to give the company the means it must have. The gérant holds the powers necessary to ensure the company's current management, and in principle even the power to dispose of the company's assets or to grant security where those operations contribute to the realisation of the company's object. So the day-to-day running of the property - letting it, collecting the rents, ordinary maintenance and repairs, dealing with tenants and suppliers, arranging the routine finance - is the gérant's to handle without going back to the members each time.

The gérant also runs the company's governance machinery: unless the articles provide otherwise, the gérant convenes the members' meetings or sets a written consultation in motion and fixes the agenda, and must comply with the legal requirements, in particular to convene or consult the members at least once a year. And on the finance side, a point that reassures lenders: a mortgage or other real security can be granted over the company's assets under powers resulting from resolutions or delegations made by private deed, even though the mortgage itself must be granted by authentic deed (C. civ. Art. 2326). So the gérant's authority to charge the property, where the object allows it, does not have to be conferred by a notarial power - a private-deed resolution suffices.

There is a limit to how far the gérant can pass the role on. Because of the personal character of a civil company and the personal choice of its manager, the gérant cannot delegate the whole of their powers to a third party. They can, however - unless the articles forbid it - delegate their powers for a particular operation, while remaining answerable to the company for the faults of the person they delegate to. So a gérant can appoint an agent to handle a specific transaction, but cannot hand over the management as a whole; the office stays with the gérant, and so does the responsibility.

What the members must approve

The members can freely fix the extent of the gérant's powers in the articles, and typically reserve the most significant acts - limiting the gérant's authority over borrowing, the disposal of the company's assets, a change of the company's tax regime and the operations that could trigger one. Where such a clause requires the members' authorisation, the articles must set how that authorisation is given; failing which, unanimity would be required. So the reserved acts are whatever the articles say they are - but two of them are reserved in practice almost universally.

The first and most important is the sale or mortgage of the property. The general statutory formula does not, by itself, empower the gérant to dispose of the company's assets: a gérant cannot sell or mortgage the company's building where the company's sole object is the management of that building, because to do so would empty the company of its substance. In case of doubt the gérant must obtain the members' authorisation, taken at unanimity or at the majority the articles set for amending them. In practice, very many SCI articles do not expressly authorise, within the object, the sale of the company's buildings - the buying and selling of property being a commercial activity that could push the company into corporation tax - so the gérant will normally have to obtain the members' authorisation, at the reinforced majority, before signing a sale. The most consequential act an SCI can undertake is therefore the members' decision, not the gérant's.

The second is a change of the tax regime. Opting for corporation tax, or carrying out an operation that would trigger the passage to it, has lasting consequences for the company and the members, and is the kind of significant act the articles reserve to a members' decision rather than leaving to the gérant. A gérant who ignores an internal reservation and signs a reserved act anyway does not necessarily invalidate the act towards a good-faith outsider - but they breach a limit that is enforceable against them, exposing them to removal for just cause and to damages for any loss the company suffers. So the reservation protects the members through their recourse against the gérant, even where it does not undo the act itself.

Can your gérant sign this alone?

Some acts the gérant handles alone; others need the members. Pick the act - the check shows where it falls.

The two-sided rule for banks, notaries and buyers

An outsider dealing with an SCI is governed by a different rule from the members, and it is the one that decides whether a deal is safe to close. Towards third parties, the gérant binds the company for acts falling within the company's object (C. civ. Art. 1849, paragraph 1), and clauses limiting the gérant's powers within the object are unenforceable against third parties, even where they knew of them. The limit on the gérant's external power is therefore the object of the company, not the company's interest, which the third party does not have to assess, and not the internal restrictions the members have set. A bank, notary or buyer can rely on the gérant for any act within the stated object, regardless of an internal clause reserving it to the members.

This cuts both ways, and both sides matter at a closing. For the counterparty, it means the gérant's authority is read off the object clause: if the act is within the object, the company is bound, and the legal representatives do not have to justify express powers resulting from the articles or a later collective decision - towards third parties they are invested with the power to bind the company for acts within the object, and can act, or delegate for a particular operation, even under private-deed instruments. For the members, it means the object clause is where their exposure is set: a too-wide or imprecise object can bind them beyond their intention, because the counterparty can rely on anything the object appears to cover. So the practical rule at a closing is to read the object: an act within it binds the company and needs no separate proof of powers, while an act outside it does not bind the company at all, and no internal authorisation can cure that.

Where an internal limit is breached but the act is within the object, the company is still bound towards a good-faith third party, and the members' remedy is against the gérant, not against the counterparty. That is why a notary completing a sale will nonetheless require the members' authorisation: not because the buyer needs it to be protected, but because a sale of the property is normally outside what the general formula and a narrow object authorise the gérant to do alone, so without the authorisation the gérant may be acting beyond the object rather than merely beyond an internal limit. Distinguishing an act outside the object - which does not bind the company - from an act within the object but beyond an internal limit - which does - is the heart of the closing analysis, and it is worth getting a lawyer to confirm before signing.

What a bank or notary needs to check

At a closing, the gérant's authority for the specific act is what has to be confirmed. Pick the act - the check shows what to verify.

Deals between the company and the gérant: regulated agreements

A particular control applies where the SCI contracts with its own gérant. A civil company that has an economic activity must present a report on the agreements entered into between the company and one of its gérants, or a legal person connected with the gérant (C. com. Art. L. 612-5). The reach of this is wide for property companies: an economic activity means any production, transformation or distribution of movable or immovable property and any provision of services, and civil companies used for the construction, commercialisation or management of buildings are treated as contributing to that economic activity - so a typical SCI that manages or develops property falls within the rule.

The control has clear boundaries. It does not apply to current agreements concluded on normal terms which, by their object or their financial implications, are not significant for any party - but every agreement that is not both current and non-significant is caught, whether or not it is habitual and repetitive. Nor does it reach agreements between the company and a non-manager member; it is the agreements with a gérant, direct or through an interposed person, and with another company in which a gérant of the SCI plays a defined role, that are controlled. So an arm's-length, routine dealing with the gérant escapes the procedure, while any material or non-standard one does not.

Crucially, the agreements do not have to be authorised in advance. The control is exercised by the members after the agreement is concluded, on a report from the gérant, most often at the meeting that approves the accounts: the gérant presents the members with a report on the agreements entered into during the year, and the members vote on it, approving or disapproving each agreement. Where the company has a statutory auditor (commissaire aux comptes), it is the auditor who prepares and presents the report, and the gérant must inform the auditor of the agreements within a month of becoming aware of them. A separate, special vote must bear on the agreements - approving the accounts and the management report does not count as a decision on them. So a gérant can deal with their own company, but must disclose it and submit it to the members' distinct scrutiny after the event.

What the gérant can sign alone - at a glance

Frequently asked questions about what an SCI gérant can sign

This article is for general information only and states French law as published in the sources available at the date shown above. It does not constitute legal advice. Whether the gérant can sign a given act alone depends on the object, the articles and the nature of the act. Always seek qualified legal advice before signing on behalf of, or with, an SCI.