French Insurance Code
In forceI.-Any agreement entered into directly or through an intermediary between a mutual insurance company and one of its directors, members of the supervisory board, members of the management board or salaried managers must be submitted for prior authorisation by the board of directors or the supervisory board.
The same applies to agreements in which one of the persons referred to in the previous paragraph has an indirect interest.
Agreements between the mutual insurance company and a company are also subject to prior authorisation if one of the directors, members of the supervisory board, members of the management board or salaried managers of the mutual insurance company is the owner, partner with unlimited liability, manager, director, member of the supervisory board or, in general, manager of this company.
Where more than one third of the members of the board of directors or supervisory board of the mutual insurance company are directors, members of the supervisory board, members of the management board, managers or partners of a single legal person governed by private law not covered by the provisions of this code, agreements between that legal person and a director, member of the supervisory board, member of the management board or salaried manager of the mutual insurance company are subject to the provisions of the first paragraph.
II - The provisions of I are not applicable to agreements relating to current operations and concluded under normal conditions.
However, such agreements shall be communicated by the party concerned to the Chairman of the Board of Directors or the Chairman of the Supervisory Board. The list and purpose of such agreements shall be communicated by the Chairman to the members of the Board of Directors, the members of the Supervisory Board and the Statutory Auditors.
III - The director, member of the Supervisory Board, member of the Management Board or executive employee concerned must inform the Board as soon as he is aware of an agreement to which I of this article applies. In the case of a director or Supervisory Board member, he may not take part in the vote on the authorisation sought.
IV - Each year, the General Meeting is asked to vote on :
1° A special report by the statutory auditors on all agreements authorised under the terms of I of this article;
2° A special report by the Statutory Auditors on insurance contracts of any kind taken out with the company by its directors, members of the Supervisory Board, members of the Executive Board, salaried executives and their spouses, ascendants and descendants. The Chairman of the Board of Directors or the Supervisory Board informs the Statutory Auditors of these contracts, indicating which have been taken out on preferential terms compared with those applied to other members. In order to prepare their report, which must include details of these preferential conditions, the statutory auditors analyse the characteristics of the contracts taken out, in particular, in the case of life insurance, the sums paid out by the company during the year per beneficiary and the terms of remuneration obtained by the beneficiary.
V.- Agreements authorised by the Board of Directors or the Supervisory Board, whether or not they have been approved by the General Meeting, are binding on third parties, unless they are cancelled in the event of fraud.
Even in the absence of fraud, the consequences, prejudicial to the company, of disapproved agreements may be charged to the person concerned and, where applicable, to the other members of the Board of Directors, the Supervisory Board or the Management Board.
VI - Without prejudice to the liability of the director, member of the Supervisory Board, member of the Management Board or executive employee concerned, the agreements referred to in I of this article and entered into without the prior authorisation of the Board of Directors or the Supervisory Board may be nullified if they have had harmful consequences for the company.
An action for nullity shall be barred after three years from the date of the agreement. However, if the agreement was concealed, the starting point of the limitation period is postponed to the day on which it was revealed.
Nullity may be covered by a vote of the General Meeting on the basis of a special report by the Statutory Auditors setting out the circumstances that led to the authorisation procedure not being followed. The interested party or parties do not take part in the vote.
VII.-On pain of nullity of the contract and, as regards the directors or members of the supervisory board elected by the employees, subject to the provisions of article L. 313-1 of the French Construction and Housing Code, directors, members of the Supervisory Board, members of the Management Board and salaried executives are prohibited from taking out loans from the company in any form whatsoever, or from having the company grant them a current account overdraft or any other overdraft, or from having the company guarantee or endorse their commitments to third parties.
The same prohibition applies to the spouses, ascendants and descendants of the persons mentioned in this article and to any intermediary.
