Court of Cassation, Commercial Chamber, 7 May 2025, appeal no. 23-15.931

“The shareholders have an individual right to seek compensation for the damage suffered by the company, which is not affected by the company’s concurrent action.”

The facts

In a ruling handed down on 7 May 2025, the Commercial, Financial and Economic Chamber of the Court of Cassation had to rule on the admissibility of a shareholder action (action ut singuli) brought by two partners of a limited liability company against a former manager. The latters sought compensation for damage caused to the company [D]. [R].

A shareholder action is an law suit brought by one or more partners of a company to claim compensation on behalf of the company for damage suffered by the latter as a result of breaches of management by its directors.

With regard to limited liability companies, action by a shareholder is provided for in Article L223-22, paragraph 3, of the Commercial Code:

« In addition to an action for compensation for personal damage, the partners may, either individually or by grouping together under the conditions laid down by decree of the Council of State, bring a corporate liability action against the managers. The plaintiffs are entitled to seek compensation for the entire loss suffered by the company to which, where applicable, damages are awarded. »

The procedure

The Basse-Terre Court of Appeal had declared the shareholders’ claims inadmissible.

It ruled that the shareholders action had to be regarded as subsidiary: the partners would have no interest of their own in bringing proceedings if the company itself were pursuing the same claim.

The legal issue

The issue was whether the shareholders action was still admissible when the company was simultaneously bringing proceedings for the same facts.

The ut singuli action was normally presented as subsidiary to the action brought by the company itself. In other words, the partners could act on behalf of the company if the company itself did not exercise this right.

There was therefore a risk that the company would file a claim but defend its interests poorly, whether intentionally or not.

The solution of the Court of Cassation

The Court of Cassation overturned the appeal ruling.

It ruled that, in accordance with Article L. 223-22 of the Commercial Code, the partners have their own right to take legal action on behalf of the company, independently of the exercise of this action by the company itself. It ruled that the Court of Appeal had violated this text by denying the partners any interest in taking action.

Scope of this decision.

The high court clarifies a point of uncertainty in case law: shareholders action is not dependent on the company’s failure to act.

However, legal doctrine and case law, in particular a ruling of 27 May 2021, No. 19-17568, had suggested that shareholders action was subsidiary in nature.

With this new decision of May 2025, the shareholder action no longer appears to be considered subsidiary. Shareholders may take action even if the company is taking action at the same time, which strengthens the protection of the company’s interests.

This ruling seems to me to be a clear affirmation of the autonomy of corporate action by partners.

This recognition of the autonomy of this action strengthens the protection of shareholders. Shareholders can defend the interests of the company without being opposed by the legal entity itself on the grounds that an action is already pending. In our view, this independence ensures real protection for shareholders, avoiding debate on whether or not the company should bring an action and on the effectiveness of such action.

By Olivier VIBERT, lawyer at the Paris Bar

Kbestan, business law firm in Evreux and Paris.