French High Court Rules SAS Articles of Association Take Precedence Over Extra-Statutory Acts Even if Unanimous

In a ruling dated July 9, 2025, the Commercial Chamber of the French High Court (Cour de cassation) reiterated that, with regard to the dismissal of managers and corporate executives of a simplified joint stock company (SAS), a decision by the shareholders, even if taken unanimously, may supplement the articles of association but may not derogate from them.

The articles of association of the SAS set out the conditions under which the company is managed, including the procedures for dismissing managers (Articles L. 227-1 and L. 227-5 of the Commercial Code). The articles of association may thus provide that the manager or chief executive officer (CEO) of the SAS may be dismissed for certain reasons or ad nutum, in other words, without cause. They may also specify whether  dismissal will result in compensation.

However, it is also possible for the corporate officer(s) to enter into a mandate agreement with the company, approved by the shareholders, which may supplement or derogate from the articles of association. This raises the question of which regime should prevail.

In this case, two contradictory texts governed the dismissal of the CEO:

• The articles of association provided for dismissal ad nutum, which therefore allowed the CEO to be dismissed without cause.
• An extra-statutory act, in this case a mandate approved unanimously by the partners at a general meeting, listed exhaustively the grounds on which the CEO could be dismissed.

When a dispute arose over the dismissal of the company's CEO, the CEO invoked the mandate’s provisions, while the company relied on the articles of association, which allowed dismissal without cause.

In the first instance and on appeal, the judges ruled in favor of the CEO, with the Court of Appeal (CA Paris, November 16, 2023, No. 22/10344) emphasizing that the conditions for dismissal set out in the mandate had been approved "unanimously by the partners at a general meeting," which demonstrated "the express desire of the partners to derogate from the articles of association by means of a collective decision taken under the conditions required to amend the articles of association."

This ruling was overturned by the Commercial Chamber of the French High Court (Cass. com., July 9, 2025, No. 24-10.428), which noted, with reference to the aforementioned articles, that "it follows from these texts that the articles of association of a simplified joint stock company set the conditions under which it is managed, in particular the procedures for dismissing its managers. While a decision by the shareholders may supplement the articles of association on this point, it may not derogate from them, even if it was taken unanimously."

In other words, the fact that the extra-statutory act was taken unanimously, as noted by the Court of Appeal, under the conditions required to amend the articles of association, does not allow for any derogation from them.

This decision is certainly wise, since the opposite solution would have contributed to creating a degree of legal uncertainty, as there could have been a proliferation of cases in which the articles of association and extra-statutory acts, adopted unanimously, would have contradicted each other, without it being possible to determine which should prevail.

Finally, even though the issue was only debated on appeal and not before the French High Court, it should be added that dismissal must not take place in sudden and unfair conditions. Thus, if a company can benefit from favorable statutory provisions relating to the ad nutum dismissal of a manager, it must implement such dismissal while respecting the manager's rights (respect for the rights of defense, absence of vexatious actions, etc.).

Law clerk Anaïs Devillers contributed to this LawFlash.