Filling a position of corporate governance in France: a practical introduction

Purpose – The purpose of this article is to provide a practical overview of the personal liabilities (criminal, civil and other) that a governor of a French company may incur, to consider the chances that a corporate governor will actually incur personal liability, and to explain the forms of protection available. Design/methodology/approach – This article is based on an analysis of French legal provisions and case law, as well as on both French and English‐language commentary. It is written from the perspective of a governor of a French company and, especially, of a privately‐held French subsidiary of a foreign parent. This article analyzes in a general manner the entire spectrum of possible liabilities that a corporate governor may incur. Findings – There exist particularities of French law which often come as a surprise to foreigners. The corporate governors involved in an LBO of a French target must structure the acquisition carefully in order to avoid violating French criminal law. There has been an increasing trend in France to make corporate governors accountable, and French case law is full of examples of corporate governors being held liable by reason of their position, on the basis of many types of violations. A corporate governor may be at least partially protected from personal liability with insurance, with increased cash compensation, and/or with one or more delegations of powers. Practical implications – Enables both foreign multinationals and those they appoint to positions of governance of French companies to obtain a full understanding of the legal issues involved. Originality/value – First English‐language analysis of the legal issues involved in serving as a governor of a French company, from the perspective of a governor. This article is useful for both foreign parent companies who seek to fill a position of corporate governance of their French subsidiaries, and those who contemplate filling such a position.