Maximum Directorship Rules Summarized - International Law Office

Maximum Number of Directorships
Exception to Limitation

After many amendments, the rules relating to the maximum number of directorships that an individual may hold in France finally seem to be well established.

Maximum Number of Directorships

Article L 225(21)(1) of the French Commercial Code provides that the same individual cannot hold more than five directorships in different companies registered in France. This article concerns only the directors of companies with a board of directors. Similar rules concern companies with a supervisory board and a board of directors.

This update focuses on the rules which apply to the most common form of French company, the société anonyme, with a single board of directors and no supervisory board.

Article L 225(94)(1) governs the maximum number of directorships, supervisory board memberships and general managerial positions that an individual may hold in France. It provides that the same individual cannot hold more than five positions, whether as general manager, member of the board, single general manager, director or member of the supervisory board of a French registered company.

Exception to Limitation

There is an exception to the prohibition on the same person holding more than five directorships. Under Article L 225(21)(2) director or supervisory board member positions held by individuals in companies which are controlled by a company in which those individuals hold a director position are not taken into consideration for the purposes of the limitation.

Further, Article L 225(21)(3) provides that directorships held in non-listed companies controlled by the same company will be treated as a single position, if the number of positions held does not exceed a maximum of five. In practice, this complicated set of rules works like this:

• An individual may be a director of five different French registered companies;
  
  
• An individual may also be a director of any company which is ultimately controlled by any of those five companies. For instance, if A controls A(1), which controls A(1)(2), which controls A(1)(3), the individual may be a director of any of A's subsidiaries with no limitation; and
  
  
• An individual may hold a directorship in any four sister companies which are under the direct and immediate control of A, as well as a directorship in A itself. These five directorships will be treated as one position.

For further information on this topic please contact Daniel Azan at Paul Hastings Janofsky & Walker LLP by telephone (+33 1 42 99 04 50) or by fax (+33 1 45 63 91 49) or by email (d.azan@moquet-borde.com).