Revocation of the manager in France: the complete guide for CEOs

As an SME manager, you may be faced with a situation of deadlock, serious disagreement or loss of trust with the manager of your company, whether it is a SARL, an SNC or another type of structure. Understanding the rules for the dismissal of a manager is therefore essential to regain control, secure governance and limit the risks of compensation litigation.

The objective of this article is to give you a complete vision, both pedagogical and operational, of the regime for the dismissal of managers, the different types of revocation (ad nutum, for just cause, judicial), the majorities required, the risks of abuse and the best practices to put in place in your articles of association or pacts.

1. What is a manager's revocation? Definition and challenges for PMs

The dismissal of the manager is the decision by which the partners end the social mandate of the manager early, without waiting for the scheduled deadline or the dissolution of the company. It is different from resignation (initiative of the manager) and from the normal arrival of term (end of the term provided for in the statutes or the appointment decision).

For an SME, the dismissal of the manager is a governance tool: it makes it possible to react to poor management, a persistent conflict or a change in strategy. But it can also be a source of tension, or even costly litigation, especially if the manager believes that he was dismissed without just cause or under vexatious conditions.

1.1. Manager, manager, corporate officer: who are we talking about?

In LLCs, the manager bears the title of “manager”, partner or not. In SNCs, we also speak of manager, often associated. In other forms (SA, SAS), we will rather speak of president, chief executive officer or member of the board of directors, but the logic of “dismissal of the manager” remains similar, even if the legal regime differs.

The manager exercises a social mandate: he represents the company in relation to third parties, signs contracts, manages accounts and leads the strategy on a daily basis. This term of office may be for a fixed or indefinite term, free of charge or paid, and its conditions are established by the statutes and the appointment decision.

1.2. Revocation of the manager and revocation of the mandate: what are the differences?

The dismissal of a company manager is part of the corporate mandate, governed by the Commercial Code and not only by the rules of civil mandate. In a logic of governance, the partners have a reinforced power of control and can end the mandate of the manager under conditions provided for by the law and the articles of association.

In practice, the dismissal of the manager is often accompanied by a modification of the articles of association (if the manager was named in the articles of association) and formalities in the commercial and companies register. Revocation also leads to the need to appoint a new manager to ensure the continuity of operations.

2. The legal framework for the dismissal of the manager of an SARL

For SME managers, the most frequent situation is that of the dismissal of the SARL manager. The Commercial Code provides a framework for this decision, while leaving a margin of freedom for partners via the articles of association.

2.1. Legal basis: article L.223-25 of the Commercial Code

Article L.223-25 of the Commercial Code provides that the manager of a SARL may be dismissed by decision of the partners, under the majority conditions of article L.223-29, the statutes may provide for a stronger majority, but not unanimity. The text adds that if the revocation is decided without just cause, it may result in damages.

Concretely, this means that the dismissal of the manager is free in principle (the partners are never “locked in” with a manager for life), but regulated in its terms and conditions: majority, just cause, absence of abuse.

2.2. Majority required for the dismissal of the SARL manager

In principle, the dismissal of the manager is decided by one or more partners representing more than half of the shares. Statutes may require a larger majority (for example, two-thirds or three-quarters of the shares), but cannot require unanimity, which would virtually prevent revocation.

In the absence of a majority during the first consultation, a second meeting may be convened, where the revocation decision is taken by a majority of the votes cast, unless there is a more stringent clause. In a sole shareholder SARL, the sole shareholder himself makes the decision to dismiss the manager by a unilateral decision recorded in writing.

2.3. The particular case of the majority managing partner

If the manager is a majority shareholder, he can, in principle, participate in the vote on his own revocation, unless otherwise provided for in the articles of association. In this case, “internal” revocation by the other partners is practically impossible, for lack of a sufficient majority.

Minority partners will then have to resort to a judicial dismissal of the manager (see below) by appealing to the court, by showing a legitimate cause (poor management, violation of the law or statutes, conflict of interests, etc.). This is a frequent situation in family SMEs or LLCs controlled by a founder.

3. Fair reasons for the dismissal of the manager: criteria and examples

Even when the law allows for “free” revocation, practice shows that managers often challenge their eviction, citing the lack of just cause or the abusive nature of the decision. Hence the importance, for an SME manager, to clearly identify the right reasons for revocation and to document grievances.

3.1. What is a fair reason for the dismissal of the manager?

Case law defines “just cause” as conduct by the manager that is incompatible with the pursuit of his duties:

• Violation of the law or the statutes (non-compliance with the rules for convening meetings, non-compliance with regulated agreement procedures, ignorance of the rules on the approval of accounts).
• Serious breach of social mandate obligations (poor management, lack of supervision, reckless risk taking, lack of reporting).
• Situation contrary to the social interest or to the proper functioning of the company (conflicts of interests, paralysis of social bodies, systematic opposition to the strategy decided by the partners).

A judgment illustrates, for example, the dismissal for just cause of a manager who had failed to comply with his legal obligations to approve the accounts annually and fix his remuneration, as well as the rules applicable to regulated agreements.

3.2. Concrete examples of fair grounds for revocation

Some examples that are often recognized as just reasons for the dismissal of an SARL manager:

• Repeated non-convening of the general meeting to approve the accounts, despite reminders from the partners.
• Deterioration of the financial situation attributable to the manager (hazardous investments, lack of cash flow control, systematic non-collection of large debts).
• Creation by the manager of a competing company or embezzlement of customers.
• Loss of trust among partners based on objective factors (opacity of accounts, refusal to communicate social documents, important decisions taken without authorization).

On the other hand, a simple difference in strategic vision, not accompanied by mistakes or objective shortcomings, will be more difficult to be recognized as a just reason, especially in the event of litigation.

3.3. Just cause and abusive or vexatious revocation

Even in the presence of just cause, the dismissal of the manager must not be abusive. In particular, a revocation is qualified as abusive:

• Implementation under humiliating or vexatious conditions (brutal public announcement, abusive remarks recorded in the minutes).
• Decided without respect for the contradictory, without allowing the manager to present his observations, even though he is personally implicated.
• Intervening at a time chosen to harm the manager (for example, just before a variable remuneration deadline, for no objective reason).

In these cases, the revocation remains valid (the manager is indeed removed from office) but he can obtain damages for the moral and financial damage suffered.

4. Revocation ad nutum, revocation for just cause, judicial revocation: make a clear distinction

To organize the governance of your company, it is useful to distinguish the main revocation regimes.

4.1. What is an ad nutum revocation of the manager?

Ad nutum revocation refers to free revocation, at any time, without the obligation to provide a specific reason. In practice, this regime mainly concerns certain managers of SA or SAS when the articles of association expressly provide for revocation at any time, without requiring reasons.

Even in this case, the revocation must not be abusive (no brutal, vexatious or unfair conditions), under penalty of damages. For an SME, ad nutum revocation gives partners great flexibility, but can make the position of manager less attractive, which justifies sometimes negotiating contractual compensation mechanisms.

4.2. Revocation subject to just cause

In other companies, the law or the articles of association make the dismissal of the manager subject to the existence of just cause. This is particularly the case for the manager of an SARL, for whom the absence of just cause does not prevent revocation but entitles the owner to compensation.

To secure your leadership position or to oversee governance, it is possible to include examples of just reasons in the statutes or in a pact: violation of the law, repeated breaches of partners' decisions, serious conflicts of interest, etc.

4.3. Judicial dismissal of the manager

When the partners fail to obtain the majority necessary to remove the manager (for example majority managing partner) or when there are serious breaches, they can request the judicial dismissal of the manager in court.

The judges then assess whether a legitimate cause for revocation exists:

• Characterized management faults.
• Violation of legal or statutory rules.
• Behavior that is contrary to social interest or that paralyzes the functioning of society.

It was considered, for example, that the violation of legal and statutory obligations, poor management compromising the social interest or even the loss of trust of partners justified by an objective situation are legitimate causes of judicial dismissal.

5. How to dismiss a SARL manager? The step-by-step procedure

For an SME manager, the central question is often: how to effectively dismiss the manager of an SARL in accordance with the rules and while limiting the risks of litigation.

5.1. Convening of the meeting and agenda

The dismissal of the manager must be decided at a meeting of the partners, except in the case of a single partner. All partners must be convened in the form provided for by law and statutes (registered letter, deadline for convening, mention of the agenda).

It is prudent to include explicit wording such as: “Revocation of the manager Mr. X from his duties as manager” on the agenda in order to avoid any dispute over the scope of the decision. When specific grievances are reproached to the manager, it is recommended to recall them in the summons or in an attached note, in order to respect the adversarial principle.

5.2. Holding of the meeting, debate and vote

During the meeting, the manager must be able to explain the criticisms made, even if he does not have a right of veto. The debate must remain professional and focused on social interest and the governance of society.

The vote then takes place, under the conditions of quorum and majority provided for by the law and the statutes. In the absence of a clause to the contrary, the associate manager can participate in the vote, which poses a particular problem in the case of a majority manager.

5.3. Drafting of the minutes and formalities

The minutes of the meeting must record:

• The regular convening of partners.
• The statement of reasons for the revocation (at least summarily).
• The result of the vote (number of votes for, against, abstentions).
• The revocation decision and, where appropriate, the appointment of a new manager.

Formalities must then be completed: filing the document at the registry office, updating the statutes if the manager was a statutory shareholder, amending entry in the Trade and Companies Register, publication in Bodacc by the registry office. These formalities make the revocation of the manager enforceable against third parties.

5.4. Revocation of the manager in case of emergency or crisis

In case of emergency (for example, serious danger to the company, embezzlement, acts clearly contrary to the social interest), the partners may be led to quickly convene a meeting to remove the manager. It is therefore crucial to respect the minimum rules of summons and motivation in spite of everything, to avoid an action by the manager for abusive revocation.

At the same time, precautionary measures may be envisaged (blocking certain banking powers, reinforced control of payments) while respecting the powers of the manager until its effective revocation.

6. Revocation of the manager according to the legal form: SARL, SNC, foreign regimes

The notion of dismissal of the manager is found in several social forms, with nuances depending on the structure.

6.1. Revocation of the manager of SARL

The dismissal of the SARL manager is based on the decision of the partners holding more than half of the shares, subject to more stringent statutory provisions. In practice, it presupposes the existence of just reasons in order to avoid a conviction to pay damages.

The procedure involves an assembly, minutes and formalities at the registry office. In the event of a blockage linked to a majority manager, judicial revocation may be requested.

6.2. Revocation of the SNC manager

In SNC, the partners are indefinitely and jointly liable, which reinforces the importance of choosing the manager. The articles of association play an essential role in defining the conditions for the appointment and dismissal of the manager.

In general, the dismissal of the SNC manager requires the unanimous agreement of the partners, unless there is a statutory clause to the contrary. When the manager is himself a partner, his revocation may have consequences on his status as a partner, which must be contractually anticipated (exclusion clauses, forced repurchase of shares, etc.).

6.3. Revocation of the manager of an SARL under OHADA law

In the OHADA area (West and Central Africa, in particular), the dismissal of the manager of an SARL is subject to a Uniform Act inspired by the French model but with certain specificities. Again, the dismissal of the manager may be decided by the partners for just cause, the procedure being governed by the Uniform Act relating to the law of commercial companies.

For a group with subsidiaries in several countries, it is essential to check the applicable OHADA text, local case law and to adapt the statutory drafting and governance (for example, provide for revocation clauses in line with the group's policy).

7. Revocation of a minority or majority manager: power issues

In SMEs, the distribution of capital (minority, egalitarian or majority manager) often determines the revocation strategy.

7.1. Revocation of the minority manager of SARL

When the manager of an SARL is a minority, the majority partners in principle have the right to dismiss him, as long as they meet the required majority and act for serious reasons.

For them, the risk is above all that of an action by the manager for dismissal without just cause or abusive. Hence the importance:

• To document breaches (emails, reports, meeting decisions).
• To respect a fair procedure (regular meeting, possibility for the manager to explain himself).
• To avoid offensive formulations or public humiliations.

7.2. Revocation of the majority manager of SARL

The dismissal of the majority manager of SARL is much more complex. Although he can participate in the vote, the majority manager often prevents the majority required for his own revocation from being obtained.

Minority partners then have several levers:

• Attempt to negotiate an exit (repurchase of its shares, reorganization of the capital).
• Provide, in advance, statutory clauses excluding the manager from voting on revocation or adjusting voting rights in the event of a conflict.
• Initiate an action for judicial revocation by demonstrating a legitimate cause (poor management, violation of the statutes, conflict of interests).

In practice, these situations frequently give rise to heavy litigation, where procedural strategy and the establishment of a solid case are decisive.

8. Consequences of the dismissal of the manager

Ask yourself the question “What are the consequences of a dismissal of the manager? ” is essential before initiating any procedure.

8.1. On the social level: end of mandate

Revocation results in the immediate termination of the corporate mandate from the date of the decision of the partners (unless otherwise stipulated, for example temporary maintenance until the appointment of a successor). The manager then loses his powers of representation and management.

On the other hand, if he is also an employee (recognized separate employment contract), the revocation of the social mandate does not automatically lead to the termination of the employment contract, unless the functions are inextricably linked.

8.2. On the financial level: remuneration, compensation, damages and interests

Revocation puts an end to remuneration linked to the social mandate (fixed, variable, benefits in kind), except for special provisions (severance clause, for example). If the revocation is decided without just cause, the manager may claim damages to compensate for the loss of future income and moral damage.

In the event of abusive or vexatious revocation, even in the presence of just reasons, the manager can also obtain compensation. It is then up to the company (and sometimes the partners) to bear these costs, which can be significant for an SME.

8.3. Externally: enforceability against third parties and continuity of operation

The formalities at the RCS and the publication in the Bodacc make the revocation of the manager enforceable against third parties. As long as these formalities are not completed, the company remains committed to the actions carried out by the former manager in relation to third parties in good faith.

It is therefore crucial to quickly organize the appointment of a new manager, the distribution of banking powers and communication with partners (bank, customers, suppliers, suppliers, lessors, etc.).

9. Best practices for securing the dismissal of a manager in an SME

To limit the risks of blocking or litigation, it is recommended to anticipate the issue of revocation as soon as the articles of association and the shareholders' agreement are drafted.

9.1. Statutory clauses and shareholders' agreement

Some clauses can be particularly useful:

• Clause specifying the fair reasons for revocation (indicative list of faults or situations).
• Clause excluding the manager from voting on his own revocation, at least for the part of decisions aimed at him personally.
• Clause providing for a graduated procedure (formal notice, warning, possibility of submitting a brief) before revocation.
• Clause organizing the capital consequences of the revocation (repurchase of the manager's shares, price adjustment according to the reasons).

A partners' agreement can complete this system by framing coalitions, takeover options, good leaver/bad leaver clauses, etc.

9.2. Example of a manager's revocation clause (inspiration)

For example, a statute clause may provide, in the spirit of positive law: “The manager may be dismissed at any time by decision of the partners representing more than half of the shares. Revocation may take place for just cause, in particular in the event of a violation of the law or the statutes, gross mismanagement or a situation likely to compromise social interests. The revocation decision is preceded by the convening of the manager, who is in a position to present his written or oral observations. If the revocation is decided without just cause or under vexatious conditions, the manager may claim damages.”

This formulation will of course have to be adapted to each situation, according to the capital structure and the strategy of the partners.

9.3. Documentation and conflict management

Before starting a procedure to remove the manager, it is a good idea to:

• Gather evidence of breaches (letters, reports, reports, accounts, decisions not executed).
• Formalize grievances (formal notices, reminders, minutes).
• Attempt, when possible, an amicable resolution (mediation, initial negotiation) to avoid a long and uncertain litigation.

10. Educational framework: three typical scenarios for the dismissal of a manager

10.1. Scenario 1: dismissal of the minority manager for poor management

You are the majority partner of a service SARL. The manager, a minority shareholder, has not convened the annual meeting for two years, the accounts have not been approved and trade receivables are rising sharply.

In this case, you have good reasons to consider a revocation: breach of legal obligations (approval of accounts), poor management (cash flow). You call a meeting, present the grievances, have the dismissal voted and appoint a new manager. The decision, if properly motivated and formalized, will be difficult to challenge, even if the manager tries to obtain damages.

10.2. Scenario 2: dismissal of a majority manager via the judge

In a family SME, the manager is the majority partner. He blocks all accounting information, makes risky decisions without consulting other partners and diverts part of the business to a structure he controls.

Minority associates cannot gather a majority to remove him. They go to court to request the judicial dismissal of the manager for legitimate cause, by producing documents showing the mismanagement and the conflict of interests. If the judge considers that the social interest is in jeopardy, he may order the revocation and, if necessary, appoint a provisional administrator.

10.3. Scenario 3: revocation ad nutum in a SAS

A start-up structured in SAS provides in its statutes that the managing director can be revoked at any time by decision of the president, without requiring reasons. After strategic disagreements, the president put an end to the term of the director general, without any particular fault.

Revocation is legally possible “ad nutum”, but if it is carried out in a brutal or humiliating manner, the manager may seek damages for abusive revocation. Hence the importance of maintaining a certain level of loyalty (maintenance, reasonable notice, measured communication).

11. FAQ — Revocation of the manager: your frequently asked questions

11.1. What is a manager's revocation?

The dismissal of the manager is the decision, taken by the partners or by the judge, to end the social mandate of the manager early, without waiting for the normal end of his functions. It can be decided at a meeting (amicable revocation) or pronounced judicially in case of legitimate cause.

11.2. How to dismiss a SARL manager?

To remove an SARL manager, you must:

• Convene a meeting of partners in accordance with the forms and deadlines.
• Include the dismissal of the manager on the agenda.
• Hold the meeting, allow the manager to explain himself and have the revocation voted by the required majority.
• Write the minutes, complete the formalities at the RCS and, if necessary, appoint a new manager.

11.3. What are the fair reasons for the dismissal of a manager?

Appropriate reasons for revocation include:

• Violations of the law or the statutes (non-convening of meetings, breaches of regulated agreements).
• Poor management that endangers society (deterioration of financial health, risky decisions, lack of follow-up).
• Situations contrary to social interest (conflicts of interest, justified loss of trust, paralyzing disagreement).

11.4. What are the consequences of a dismissal of the manager?

Revocation puts an end to the social mandate and the powers of the manager. It also terminates its executive remuneration, except for special clauses, and may result in the payment of damages if the revocation is without just cause or abusive. The company must also complete formalities to make the revocation enforceable against third parties.

11.5. What is an ad nutum revocation of the manager?

Ad nutum revocation is a free revocation, at any time, without the obligation to justify a reason, when the law or the statutes provide for it. However, it is accompanied by a requirement of loyalty: the revocation must not be abusive or vexatious, under penalty of entitlement to compensation.

11.6. What is a judicial dismissal of the manager of an SARL?

The judicial dismissal of the SARL manager is pronounced by the court, at the request of one or more partners, when there is a legitimate cause for dismissal (management errors, violation of the law or the statutes, conduct contrary to the social interest, objectively justified loss of trust). It is often used when the manager is in the majority and blocks any revocation by the partners.

11.7. Revocation of the manager of an SARL under OHADA law: what are the specificities?

Under OHADA law, the dismissal of the manager of an SARL is governed by the Uniform Act relating to commercial companies, which uses principles similar to the French model (decision of the partners, just cause, responsibility in the event of abusive revocation). However, it is necessary to check the texts and case law of the State concerned before acting.

11.8. Revocation of the SNC manager: what are the particularities?

The dismissal of the manager of SNC is in principle more stringent, due to the indefinite and joint responsibility of the partners. Unless otherwise specified, the unanimity of the partners is often required, and dismissal may have consequences on the manager's status as a partner.

11.9. Can a manager be dismissed without just cause?

On a strictly legal level, the manager of a SARL may be dismissed without just cause, but he may then claim damages to compensate for the unjustified termination of his mandate. In societies where revocation is ad nutum, there is no need to provide a reason, but the revocation should not be abusive.

11.10. Can a manager be dismissed by unanimity of the partners?

Nothing prevents the partners from unanimously deciding to dismiss the manager. On the other hand, for a SARL, the statutes cannot impose unanimity as a condition for revocation, as this would be contrary to the law which provides for a relaxed majority.

11.11. What precautions should be taken to avoid a dispute involving the dismissal of the manager?

To reduce the risk of litigation, it is advisable to:

• Provide clear clauses on revocation conditions from the outset.
• Document the grievances alleged against the manager.
• Respect a fair procedure (regular summons, contradictory debate, careful drafting of the minutes).

12. A regulated matter: the importance of legal assistance

The dismissal of the manager involves both company law, obligation law and, sometimes, employment law and criminal law (in the event of embezzlement, abuse of corporate assets, etc.). Each situation presents significant human, financial and strategic challenges for SMEs (risk of paralysis, protracted litigation, damage to image, loss of value).

It is a highly regulated subject with abundant case law, which evolves regularly. The personalized advice of a lawyer is therefore essential for:

• Analyze your situation (social form, distribution of capital, existing clauses, history of relationships).
• Choosing the right strategy (negotiation, statutory modification, amicable revocation, legal action).
• Write and secure key documents (convocations, minutes, memoranda of understanding, partner agreements).

Getting support early on often makes it possible to avoid years of litigation and to preserve what is essential: the continuity and value of your business.

Article written by Guillaume Leclerc, business law lawyer in Paris.

‍