Director liability — defence and claims

Director liability lawyer Paris: measuring personal exposure.

Fault, damage, causal link: a claim against a director always rests on this framework. The firm acts as a director liability lawyer in Paris, defending directors who have been sued and conducting claims brought by shareholders and creditors — the company's action, the derivative action (ut singuli), separable fault and shortfall in assets.

Actions against a director are in principle subject to a three-year limitation period: the exposure audit and the defence strategy are built from the first warning sign, not after the writ of summons.

Director liability · Paris

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Director facing a claim or shareholder bringing a claim: send the articles of association, the minutes and the documents supporting the complaint. The firm replies within 24 business hours, in complete confidence.

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In the media

  • Lexbase

Kohen Avocats, Paris 17

Director liability: what really decides the case

Reda Kohen, lawyer at the Paris Bar
Reda KohenLawyer at the Paris Bar

Company law · Paris 17th

What a director liability lawyer in Paris does

  • Paris Bar
  • Company law
  • Firm in Paris 17th

Lawyer at the Paris Bar — liability of company officers.

Three actions coexist: the company's action (compensation for the harm suffered by the company, brought by it or derivatively by any shareholder — any clause to the contrary being deemed unwritten), the individual action (distinct personal harm, a loss in value of the shares not being enough) and the action by third parties, which requires a fault separable from the director's functions. In liquidation, the action for shortfall in assets is subject to a three-year limitation period running from the judgment. Prevention: officers' insurance, documented delegations of authority, written traceability of sensitive decisions.

Send what you have, even if incomplete: the firm will prioritise and complete the file with you. In an emergency, call +33 6 46 60 58 22.

Official profile in the directory of French lawyers (CNB)Firm at 11 rue Margueritte, 75017 Paris

Mismanagement, not failure

An unfortunate decision does not give rise to liability; negligence that departs from the conduct of a reasonable director does: failure of supervision, missing accounts, continuing a loss-making business, remuneration paid without a corporate decision.

Separable fault, the barrier for third parties

A third party can reach the director's personal assets only if the director intentionally committed a fault of particular gravity that is incompatible with the normal exercise of the director's functions.

Shortfall in assets, the major risk

In judicial liquidation, a management fault that contributed to the shortfall in assets exposes the director to bearing all or part of the liabilities (Article L. 651-2 of the French Commercial Code).

The actions

Company, individual, third parties: three distinct routes

Four rules structure a director's civil liability.

  1. The triptych: attributable fault, measurable damage, causal link — on the basis of Articles L. 223-22 (SARL), L. 225-251 (SA), L. 227-7 (SAS) or 1240 of the French Civil Code (Code civil) towards third parties.
  2. The derivative action (ut singuli) on behalf of the company (Article 1843-5 of the Civil Code) allows any shareholder to act in the company's name; the damages go to the company and any clause hindering the action is deemed unwritten.
  3. The individual action requires distinct personal harm: a fall in the value of the shares, a mere reflection of the harm suffered by the company, is inadmissible.
  4. A fault separable from the functions is a precondition for third-party actions: an intentional fault of particular gravity incompatible with the normal exercise of the functions (Cass. com., 20 May 2003, No. 99-17.092, Sati judgment).

In judicial liquidation, the action for shortfall in assets (Article L. 651-2) exposes the director — de jure or de facto — to bearing all or part of the liabilities where a management fault contributed to it, with joint and several (in solidum) orders possible between co-managers. Simple negligence has been excluded since the Sapin 2 law: the distinction is argued on the documents.

Your documents

What to gather depending on your position

Written traceability of decisions is a director's first line of defence.

Position A

Director facing a claim

  • Articles of association, mandate, delegations of authority
  • Minutes and accounts for the financial years in dispute
  • Warning emails, reports, warnings received or given
  • Officers' liability insurance policy

Position B

Claimant (shareholder, company, creditor)

  • Evidence of the fault: decisions, hidden agreements, accounting records
  • Quantification of the damage and causal link
  • Standing to sue: company action, derivative action or individual action
  • In insolvency proceedings: judgment, liquidator's report

Common mistake: relying solely on the loss in value of the shares — a reflective harm, inadmissible in an individual action.

The firm also covers:

  • Shortfall in assets (L. 651-2)
  • De facto director
  • Delegation of authority
  • Officers' liability insurance

The method

How the firm supports you

Knowing the stages makes it possible to act within the time limits and to settle at the right moment.

Step 1

Exposure audit

Written risk mapping, review of the articles of association, the mandate and the insurance policies, identification of sensitive matters.

Step 2

Characterising the action

Coordination of the company, individual and third-party actions, consistency of the legal bases, quantification of the damage.

Step 3

Amicable resolution

Mediation, out-of-court adversarial expert assessment, settlement agreement where the balance sheet justifies it.

Step 4

Defence or action on the merits

Writ of summons or defence before the commercial court of the registered office, request for evidence, oral argument, follow-up of enforcement.

Benchmarks: three-year limitation period for the company and individual actions (ten years for facts classified as a serious crime); three years for shortfall in assets, running from the liquidation judgment.

The timetable

The timeline of a claim against a director

The typical procedural sequence, from the first warning to the judgment.

  1. Harmful event

    Day 0. Accounts disputed, hidden agreement discovered, insolvency proceedings opened.

  2. Framing

    Weeks 1-4. Formal notice or request for information, coordination of the legal bases, initial quantification.

  3. Amicable stage

    Months 2-4. Mediation, negotiation, out-of-court adversarial expert assessment, possible settlement agreement.

  4. Writ of summons

    Months 4-6. Commercial court of the registered office, individual or derivative characterisation, requests for evidence.

  5. Proceedings

    Months 6-18. Pre-trial case management, written submissions, possible court-appointed expert assessment, oral argument.

  6. Judgment and aftermath

    Order against the director or dismissal, enforcement, possible appeal, activation of the insurance.

The checks

What the firm checks before acting or defending

No writ of summons and no defence without having validated these points.

  • Complete triptych: fault, damage, causal link — supported by documents.
  • Standing to sue and route chosen: company, derivative, individual, third party.
  • Separable fault genuinely established for a third-party action.
  • Boundary between an unfortunate decision and mismanagement, documented by the context at the time.
  • Limitation periods: three years, ten years for serious crimes, three years for shortfall in assets.
  • Insurance cover and prevention levers: delegations of authority, traceability.

Summary

Situation, risk, document, decision

The most frequent configurations seen at the firm on directors' liability.

Situation

Minority shareholder challenges an act of the manager

Main risk: Derivative action (ut singuli) brought in the name of the company.

Defence document: Minutes, accounts, warning emails.

Recommended decision: Prepare the documentary defence before any writ of summons.

Situation

Third-party creditor thwarted by a dissolved company

Main risk: Action based on a fault separable from the functions.

Defence document: Corporate decisions, timeline of the transactions.

Recommended decision: Demonstrate the economic coherence of the decision.

Situation

Judicial liquidation with substantial liabilities

Main risk: Action for shortfall in assets (L. 651-2).

Defence document: Annual accounts, declaration of cessation of payments.

Recommended decision: Distinguish simple negligence from mismanagement.

Situation

Co-management with a late resignation

Main risk: Possible joint liability for shared faults.

Defence document: Dated resignation letter, duly notified.

Recommended decision: Notify the resignation formally and prove the date.

Situation

Delegation of authority not formalised

Main risk: The director's liability is maintained.

Defence document: Written instrument of delegation, autonomy of the delegate.

Recommended decision: Formalise the delegation in writing and record the checks carried out.

Situation

Heir of a deceased director targeted by an action

Main risk: Passive transmission of the compensation debt.

Defence document: Certificate of inheritance (acte de notoriété), inventory of the estate.

Recommended decision: Assess whether renouncing the inheritance is advisable.

Frequently asked questions

Your questions: director liability

What is the difference between simple fault, mismanagement and fault separable from the functions?

A simple fault, taken in isolation, does not make the director personally liable towards third parties: only the company answers for it. Mismanagement (Articles L. 223-22 and L. 225-251 of the French Commercial Code) engages the director's liability towards the company and the shareholders and is the basis of the company's action. A separable fault, which is more demanding, is one committed intentionally with a particular gravity incompatible with the normal exercise of corporate functions: it alone opens the way to a claim by a third party (Cass. com., 20 May 2003, No. 99-17.092).

Who can bring a civil liability claim against a director?

There are three categories of claimant: the company itself (company action brought by a new director or by the liquidator), shareholders (derivative action (ut singuli) for the benefit of the company, or individual action in case of distinct personal harm), and third parties (creditors, counterparties), who must in addition demonstrate a fault separable from the functions. The firm checks standing to sue before any proceedings are started.

What is the limitation period for an action against a director?

Three years from the harmful event or, if it was concealed, from its discovery, under Articles L. 223-23 (SARL) and L. 225-254 (SA, SAS) of the French Commercial Code (Code de commerce). Ten years where the act is classified as a serious crime. The action for shortfall in assets (Article L. 651-2) is also subject to a three-year limitation period running from the liquidation judgment. Any strategy begins with a rigorous check of the dates.

Is directors' and officers' liability insurance worthwhile?

Yes, in the vast majority of situations. This insurance covers defence costs (lawyer, expert assessment, proceedings) and compensates civil awards, within the limits of the policy. It does not erase the fault, but it helps prevent a reasonable director from being ruined by a claim. The firm systematically examines the general conditions and the exclusions before committing to a strategy.

Does a delegation of authority relieve the director of liability?

Partially, and subject to strict conditions. The delegation must be in writing, precise as to its subject matter, and given to a person who has the necessary authority, competence and resources. It does not relieve the director in case of personal fault or where the breach concerns obligations the director has reserved. A purely formal delegation erases neither civil liability nor criminal liability.

What are the conditions for a derivative action?

The derivative action (ut singuli), provided for by Article 1843-5 of the French Civil Code (Code civil) and taken up by L. 223-22 paragraph 3 (SARL) and L. 225-252 (SA, SAS), allows one or more shareholders to bring the company's action in the company's name. The damages go to the company, not to the claimant shareholder. No capital threshold is imposed for a shareholder's individual action for compensation of personal harm; a 5% threshold applies for the collective company action in SAs (Article R. 225-169).

How does the company's action work in insolvency proceedings?

Where the company is in judicial reorganisation or liquidation, the company's liability action against the director is brought by the court-appointed representative or liquidator. Shareholders in principle lose standing to sue, unless they show distinct personal harm. The liquidator may also bring the action for shortfall in assets, which is a route independent of the ordinary-law liability action.

What is an action for shortfall in assets?

Provided for by Article L. 651-2 of the Commercial Code, it allows the court, in a judicial liquidation revealing a shortfall in assets, to place all or part of that shortfall on the de jure or de facto directors, provided that a management fault that contributed to the shortfall is established. The Sapin II law of 9 December 2016 expressly excluded simple negligence. The court has sole discretion over the amount (Cass. com., 9 May 2018, No. 16-26.684).

Is a de facto director subject to the same liability as a de jure director?

Yes. Case law and statute (Article L. 651-2 in fine of the Commercial Code in particular) treat the de facto director like the de jure director for the purposes of liability actions. A de facto director is a person who, in complete independence and on a continuous basis, performs positive management functions that are added to, or replace, those of the de jure director. Proof rests on a body of evidence.

Is a corporate chairman of an SAS personally liable?

Yes. Where a legal entity is appointed chairman or director of an SAS, its own directors are subject to the same conditions and obligations and incur the same civil and criminal liability as if they were chairman in their own name, without prejudice to the joint and several liability of the legal entity they manage (Article L. 227-7 of the Commercial Code). Using a legal entity offers no additional protection.

Does resignation protect a director against future faults?

Yes for acts after the resignation, provided that it is dated, notified and enforceable against third parties (publication in the Trade and Companies Register). The Court of Cassation recently quashed an adverse judgment for acts after the resignation (Cass. com., 26 November 2025, No. 24-21.022). However, resignation does not cover faults committed while in office.

Can the heirs of a deceased director be sued?

Yes, in principle, within the limits of the estate and the rules of civil liability, unless the inheritance is renounced or accepted up to the net assets. The compensation debt passes to the heirs like any debt of the deceased. The firm advises assessing quickly whether to exercise an option over the inheritance, within the four-month period provided for by Article 771 of the Civil Code.

Is a settlement possible with a director who is being sued?

Often, yes. A settlement agreement (Article 2044 of the Civil Code) allows a dispute to be ended through reciprocal concessions. It is common where the exposure is established, where the cost of litigation is high, or where publicity presents a risk. The firm drafts the settlement agreement to secure the concessions and guarantee its res judicata effect.

Which court has jurisdiction over an action against a director?

The commercial court (tribunal de commerce) of the company's registered office, under Article L. 721-3 of the Commercial Code. For a company registered in Paris, this is the Paris commercial court. The articles of association may provide for an arbitration clause referring disputes to arbitration. The Paris court of appeal has jurisdiction over appeals.

How much does it cost to defend a director who is being sued?

The cost varies with the complexity of the case, the amount of the opposing claims and the likely length of the proceedings. An initial exposure audit generally costs between €1,200 and €2,500 incl. VAT. Defence on the merits before the commercial court starts from €4,500 incl. VAT, with expert fees and pleading fees in addition. Directors' liability insurance may cover all or part of these fees.

Let's discuss your liability case.

Director facing a claim or shareholder bringing a claim: send the articles of association, the minutes and the documents supporting the complaint. The firm replies within 24 business hours, in complete confidence.

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