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When a manager of a limited liability company (SARL) has paid himself compensation that was not established either by the articles of incorporation or by a resolution of the shareholders, the obligation to compensate the company for the resulting loss is not seriously disputable. The court also notes that, in summary proceedings, the existence of a dispute on the merits is not sufficient to preclude the granting of protective or remedial measures.
Court of Cassation, Commercial, Financial, and Economic Chamber, March 11, 2026, No. 24-15.111
The case involved two partners in an SARL ( a French LLC) who each held half of the capital.
One of them accused the manager of having awarded himself, effective January 1, 2020, substantial compensation without authorization, totaling 139,527.02 euros.
A summons for summary proceedings was filed to obtain an order requiring the manager to reimburse this amount to the company.
The Court of Appeal dismissed these claims. It found that a serious dispute existed. In its view, it was not possible to hold simultaneously that the manager was keeping the company afloat through his work and that the entirety of his unauthorized compensation, in and of itself, caused harm to the company.
The Court of Cassation overturned this decision, taking a firmer stance toward the manager.
It first noted that, pursuant to Article L. 223-18 of the Commercial Code, the remuneration of the manager of an SARL must be set either by the articles of association or by a resolution of the body of shareholders.
The Court of Cassation derived a clear rule from this:
“when the manager has paid himself remuneration, even though it was not determined either by the articles of association or by a resolution of the body of shareholders, the obligation to compensate the company for the resulting damage cannot be regarded as seriously disputable.”
The debate does not concern the value of the work performed by the manager. It concerns, first and foremost, the legality of the remuneration. If this remuneration was not authorized in the manner prescribed by law, its improper nature is sufficient to justify the company’s action.
The judge hearing the application for interim relief is therefore not required to dismiss the claim on the grounds that the manager may have, in other respects, contributed to the company’s operations or results.
The ruling also highlights an important distinction regarding summary proceedings.
The partner sought an injunction prohibiting the payment of remuneration to the manager without prior authorization from the general meeting, as well as the disclosure of several documents.
On this point as well, the Court of Appeal had cited the existence of a serious dispute.
The Court of Cassation also criticizes the Court of Appeal’s decision on this point.
It notes that, for the measures provided for in Article 873, paragraph 1, of the Code of Civil Procedure, “the mere finding of a serious dispute regarding the merits of the case is insufficient.” The judge was required to determine whether there was a manifestly unlawful disturbance or imminent harm.
The practical implications of this decision are significant. In disputes between partners, the manager cannot hide behind his involvement in the company to justify, in summary proceedings, compensation that has never been authorized. If the articles of association are silent and no collective decision has set this compensation, the grounds for a serious dispute become narrow for the manager who has received compensation in violation of legal and regulatory rules.
The ruling therefore strengthens the effectiveness of summary proceedings regarding the compensation of company executives.
It reinforces a simple principle: the manager’s compensation is not subject to an implicit adjustment based on services rendered. It requires a valid decision. In the absence of such a decision, a partner acting on behalf of the company can quickly obtain a ruling from the court through summary proceedings.
This decision sends a clear signal to managers of limited liability companies (SARLs). Remuneration cannot be self-awarded, even when the manager is operationally indispensable to the company.
In practice, companies would be well advised to clearly formalize, either at the time of incorporation or through a subsequent collective decision, the terms of the manager’s compensation to prevent a governance debate from turning into a rapid and potentially costly liability dispute.
By Olivier VIBERT,
Attorney, Paris