Criminal liability of managers in France: the complete guide for SME managers and CEOs

What is executive criminal liability?

La criminal liability of the manager is based on the fundamental principle set out in article 121-1 of the Criminal Code: no one is criminally responsible except for his own act. This means that you, as a natural person, can be held personally responsible for offenses committed in the course of your duties, regardless of company.

This regime is particularly applicable to managers of SMEs, where you often take on a direct operational role. For example, imagine that your construction SME omits to secure a construction site: if an accident occurs, the judges will examine whether you have personally failed to comply with your duty of care. The consistent case law of the Court of Cassation confirms that this responsibility is personal and unavoidable, unless there is evidence of special care.

The distinction from the liability of the legal person, provided for in article 121-2 of the Criminal Code, is crucial. Society can be condemned in parallel, but your personal sentences — fine, prison, ban on managing — remain distinct.

In what cases is the manager criminally liable?

To engage your criminal liability of the manager, the courts require two items: a hardware element (the reprehensible act or omission) and a intentional element (willingness to commit the offense or awareness of the risk).

Common intentional offenses in SMEs

Voluntary offenses are the most serious. Let's take itabuse of social assets (article L241-3 Commercial Code for LLCs): you use company funds for personal purposes, such as paying for your vacation with the business account. A manager of a Parisian SME was sentenced to 3 years in prison for having embezzled 150,000 euros in fictional invoices from complicit service providers.

Another concrete example: the distribution of fictitious dividends. At the end of the financial year, you pay dividends on a non-existent profit, masked by fraudulent inventory. The penalty? Up to 375,000 euros in fine and 5 years in prison.

Unintentional Offences: The Negligence Trap

Here, intent is replaced by serious misconduct: recklessness, negligence or breach of a security obligation (Article 121-3 Criminal Code). In an industrial SME, a manager was sued for manslaughter after a fatal accident: lack of machine training, non-compliance with ATEX standards. The Court of Appeal found his fault for lack of supervision, despite a delegation to a team leader.

Educational framework: The mistake of direction
Case law forges the concept of “misdirection”: you are responsible if you did not take measures to prevent or punish the offense. Example: an employee is tax evasion; if you were unaware of internal controls, your negligence is retained.

The main criminal offenses for SME managers

Your criminal liability of the manager can be involved in multiple areas. Here are the most frequent ones, with concrete examples.

Criminal liability of the manager in the event of bankruptcy

Bankruptcy (articles L654-1 et seq. Commercial Code) affects the manager who, faced with a suspension of payments, commits fraudulent acts. Example: abusive pursuit of a loss-making activity, such as a restaurant owner who accumulates 200,000 euros in supplier debts without alerting the court. Penalty: 5 years in prison and 75,000 euros fine.

La personal bankruptcy (L653-2 Commercial Code) often follows: ban on managing for up to 15 years. A recent case concerns a manager of tech SMEs who undertook excessive commitments without sufficient equity.

Criminal liability of the manager for social offenses and health and safety

In SMEs, breaches of the Labor Code are common. Offence of hindrance : you prevent employee representatives from exercising. Example: failure to provide mandatory documents during a URSSAF check.

For thehealth and safety, article R4741-1 Labor Code: endangering others. A manager of an agri-food SME was given a 2-year suspended sentence for not providing PPE, causing collective intoxication.

Other offenses: taxation, environment, competition

• Tax evasion : False VAT declaration. An SME craftsman was convicted for hiding 100,000 euros in cash receipts.
• Bleaching : Facilitation of illicit funds via your company.
• Environmental offenses : Illegal dumping of waste, punishable by 5 years in prison.

Case law example : Court of Cassation, 2023, a manager of a logistics SME convicted for abuse of power by forcing unpaid overtime, which is described as hidden work.

Penalties incurred by the criminal liability of the manager

Penalties vary, but they hit SMEs hard.

• Main penalties : Fines up to 1 million euros, prison term (e.g. 10 years for fraudulent bankruptcy).
• Additional penalties : Prohibition of management (definitely possible), confiscation of assets, judicial publication.

Concrete example: a SARL manager sentenced to 375,000 euros + 5 years for abuse of social assets, plus deprivation of civil rights. These sanctions are often accompanied by civil actions: filling personal liabilities.

How to limit your criminal liability as an SME manager?

Prevention is your best shield. Formalize written delegations of authority, like this one:

Model delegation clause (resulting from current practice) :
“I, [Name manager], delegate to [Delegated name], endowed with the necessary powers and means, the exclusive responsibility for [field: construction site safety]. This delegation is effective upon signature and can be revoked in writing.”

Other measures:

• Risk mapping : Identify sensitive areas (security, taxation).
• Compliance program : Annual training, internal audits.
• RC pro insurance covering criminal matters.

Box: Winning Strategy
In an SME with 20 employees, the manager avoided a conviction by proving a valid delegation and regular checks during an accident.

FAQ: Your questions on the criminal liability of managers

Is the manager's criminal liability automatic in the event of an offence in an SME?

No, you have to prove your personal fault. If you demonstrate a diligent organization, you often escape condemnation.

What are the penalties for bankruptcy for an SME manager?

Up to 10 years in prison and a fine of 750,000 euros, plus personal bankruptcy.

Can criminal liability be delegated in SMEs?

Yes, by written delegation with adequate resources, but you are still bound by a duty of supervision.

What is the difference between the criminal liability of the manager and the company?

The company is liable as a legal person; you, personally, for direct or managerial error.

How can a lawyer protect an SME manager?

Through compliance audit, drafting of clauses and legal defense.

The material of criminal liability of the manager is highly regulated and scalable. The personalized advice of a lawyer is essential in order to anticipate the risks specific to your SME and develop a tailor-made strategy.

Article written by Guillaume Leclerc, lawyer in commercial contracts and commercial litigation in Paris.

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