In a decision handed down on November 20, 2024 (No. 23-17.842), the Commercial Chamber of the French Court of Cassation clarified the conditions under which a company director’s criminal liability may be incurred within a corporate group. The court held that the director of a parent company can only be held criminally liable for the insufficient assets of a subsidiary if they have been formally appointed as a permanent representative and granted powers in accordance with the subsidiary’s bylaws.
This ruling reaffirms the principle of the legal separation of corporate entities within a group and limits the automatic extension of liability to individuals who are not expressly designated in official documents. It highlights the importance for companies to rigorously document the appointment of their directors and legal representatives. In the absence of such formal designation, criminal liability cannot be established, even in cases of mismanagement or indirect involvement in decisions leading to insolvency.
This judgment reflects a broader judicial trend toward strictly regulating the criminal prosecution of directors, while also reminding companies of the critical importance of compliance in corporate governance.