The liability of shareholders of French companies

Delphine Caramalli and Guilhem Bremond ask what liabilities shareholders of French companies are exposed to in cases of bankruptcy No statutory rules on shareholders liability as such exist under French law but, in certain circumstances, French judges can hold shareholders liable should the company they invested in be liquidated as a result of a bankruptcy proceeding. Article L. 651-2 of the French Commercial Code1 defines the liability exposure of a de facto director (as well as a de jure director) who engaged in specific acts of mismanagement resulting in an excess of liabilities over assets of the underlying company. As de facto directors (as well as de jure directors) may be individuals, 3 legal entities, or individuals who serve as legal representatives of legal entities (Article L. 651-1 of the French Commercial Code), shareholders can be qualified as de facto directors if it is demonstrated that they acted as directors of a company.