Reform of Corporate Nullity Law
- A recent ordinance in France seeks to simplify and clarify the legal framework surrounding corporate nullities, addressing concerns about complexity and uncertainty within the existing...
- n ° 2025-229, March 12, 2025, reforming the regime of nullities in corporate law
- The ordinance is part of a broader legislative effort, stemming from Law No.
Overhaul of corporate Nullity Laws in France Aims to Boost Legal Certainty
Table of Contents
- Overhaul of corporate Nullity Laws in France Aims to Boost Legal Certainty
A recent ordinance in France seeks to simplify and clarify the legal framework surrounding corporate nullities, addressing concerns about complexity and uncertainty within the existing system. Ordinance No. 2025-229,issued March 12,2025,modifies corporate law regarding nullification.
The ordinance is part of a broader legislative effort, stemming from Law No. 2024-537 of June 13, 2024, which authorized the goverment to reform corporate nullity laws. The reform is informed by a March 27,2020,report from the high Legal Committee of the Paris financial center,recommendations from the Council of State on july 4,2024,and observations from legal professionals.
The changes aim to modernize corporate law by:
- Simplifying nullity rules to reduce legal uncertainty.
- Aligning French law with European Directive 2017/1132 to ensure consistent interpretation.
- Strengthening legal certainty by preventing cascading nullities.
By aligning with European standards, the ordinance introduces stricter criteria for recognizing nullities, limiting their scope and request to bolster legal security. The reform targets redundant provisions in the Civil and commercial Codes, which have contributed to legal insecurity. The reform clarifies Articles 1844-10 et seq. of the Civil Code as the common law for nullities in corporate law, repealing conflicting provisions in the Commercial Code and integrating some into the Civil Code. The new rules take effect Oct. 1, 2025.
Causes of Nullity (Civil Code, Art. 1844-10)
The ordinance seeks to narrow the causes of nullity subject to judicial review.
Nullity of a Company
Article 1 of the ordinance amends Article 1844-10 of the Civil Code, limiting the causes of company nullity to instances of founder incapacity and violations of minimum partner number requirements. This aligns with Article 11 of European Parliament and Council directive 2017/1132.
The revised paragraph specifies that company nullity can only result from “the inability of all the founders or the violation of the provisions fixing a minimum number of two partners.”
Regime of illegal Statutory Clauses
The second paragraph now states that any statutory clause violating an imperative provision of “corporate law” is deemed unwritten. This replaces the previous location-based rule with a material criterion,reflecting existing case law.
Paragraph 3 states that the nullity of social decisions can only result from violating an imperative provision of corporate law, with an exception for Article 1833, or one of the causes of nullity of contracts in general. The concept of “social decision” replaces “acts or deliberations of the company” to exclude conventions with third parties and opinions from non-decision-making bodies. The nullity regime applies to internal decision-making acts, including bond assembly nullities.
New Regime of Nullity for Violation of the Statutes
Article 1 creates a new paragraph in Article 1844-10, stating that unless otherwise provided by law, violating the articles of association does not constitute a cause of nullity.
Action for Nullity (C. civ., Art. 1844-14)
Article 1844-14 of the Civil Code specifies who can bring an action for nullity.
Regularization of Nullity
The action for nullity is extinguished when the cause of nullity has disappeared on the day the court rules on the merits in the first instance. Moreover, in the event of nullity of the company due to a vice of consent or the incapacity of a partner, the action for nullity is also extinguished if, after the cancellation decision, the company confirms the membership or the partner confirms his commitment.
Effects of Nullity (C.civ., art. 1844-15)
The effects of nullity are specified in Article 1844-15 of the Civil Code.
Retroactive Effect of Nullity
The cancellation of the company results in the dissolution of the company from the date of the decision that became res judicata. It is supplemented by the addition of a new article 1844-15-1 which specifies that the cancellation of a social decision takes effect on the date of this decision, unless the judge decides to set a different date.
Postponement of the Effects of Nullity
A new article 1844-15-2 of the civil Code states that when the retroactivity of a social decision’s nullity is likely to produce manifestly excessive effects for social interest, the effects of this nullity can be deferred. This provision authorizes the judge to postpone the effects of nullity, depriving it of its retroactive effect, when retroactivity would harm social interest.
Effects of Nullity on Third Parties (C. civ., Art. 1844-16)
The effect of nullity on third parties remains unchanged. The Civil Code states that neither the company nor the partners can claim nullity against third parties in good faith. However,nullity resulting from incapacity or a vice of consent remains enforceable against third parties by the incapable party,their legal representatives,or the partner whose consent was vitiated.
Liability Action Due to Nullity (C.civ., Art. 1844-17; ord., Art.9)
The reform addresses uncertainties concerning the terminology “of acts and deliberations” by replacing it with “social decisions.” This excludes conventions with third parties and opinions from non-decision-making bodies, limiting the nullity of social decisions to the internal decision-making acts of the company. The nullities of bond assemblies are also subject to this regime.
Liability action based on the cancellation of society or “social decisions and later contributions” is prescribed by three years from the day the cancellation decision came into force of res judicata.
However, the disappearance of the cause of nullity does not impede action for damages compensating for the damage caused by the vice affecting society, ”social decision or contribution.” This action is also prescribed by three years from the day nullity was covered.
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