Commercial company with variable capital: lawfulness of the clause in the articles of association which does not specify the grounds for exclusion

Court of Cassation, Commercial Chamber, 9 November 2022, n° 21-10.540

In a judgment of 9 November 2022, the Court of Cassation, citing Article L. 231-6 of the Commercial Code, ruled that a clause in the articles of association of a variable-capital commercial company stipulating that any shareholder may be excluded from the company for just cause is lawful, even if the clause does not specify the grounds for exclusion.

I. The provisions of the Commercial Code

Article L. 231-6 of the Commercial Code states that :

“Each member may withdraw from the company when he deems it appropriate unless otherwise agreed and unless the first paragraph of Article L. 231-5 applies.

It may be stipulated that the general meeting has the right to decide, by the majority fixed for the amendment of the articles, that one or more of the members shall cease to be part of the company. […] “

II. The lawfulness of an exclusion clause that does not specify the reasons

1. The facts

A natural person acquires shares in the capital of a limited liability company with variable capital.

At the same time, this natural person is hired as network and public relations manager by an EIG, of which the company of which he is a shareholder is a member.

A few months later, this person was dismissed by the EIG.

Subsequently, the company wishes to implement the statutory clause allowing the exclusion of a partner.

This clause stipulates that “any partner may be excluded from the company for just cause by a decision of the partners in a general meeting ruling by the majority fixed for the amendment of the articles“.

At a general meeting, the partners of the company vote to exclude this partner.

Citing the absence of any indication of the reasons for the exclusion of a partner in the company’s articles of association, the excluded partner sued the company, on the one hand, for annulment of the exclusion clause and, on the other hand, for nullity as a result of his exclusion.

His application was rejected by the commercial court and he appealed the judgment.

According to the Montpellier Court of Appeal, it cannot be argued that the clause inserted in the articles of association is null and void on the sole ground that the causes of exclusion of the partner are not precisely defined.

The disputed clause provides that the exclusion must be justified by a just cause, which, according to the Court, obviously “obliges the general meeting, ruling by the majority fixed for the amendment of the articles of association, to exclude the member only for a serious and legitimate reason“.

On the point of the assessment of the serious and legitimate reason, the Court recalls that “the implementation of the statutory exclusion clause is subject to the control of the courts as regards the assessment of both the reason for exclusion and the regularity of the procedure“.

In her view, the first judge was therefore right to :

• considered that the exclusion of the partner was not abusive,
• and dismissed his claim for reinstatement in the company’s capital and his claim for damages.

Dissatisfied with the Court of Appeal’s analysis, the excluded partner appealed to the Court of Cassation, arguing in particular that a clause in the articles of association stipulating the right to exclude a partner can only be lawful if it specifies the causes justifying this exclusion.

2. The opinion of the Court of Cassation

According to the Court of Cassation, ” it follows from Article L. 231-6, paragraph 2, of the Commercial Code that a clause in the articles of a société commerciale à capital variable stipulating that any member may be excluded from the company for just cause by a decision of the members at a general meeting ruling on the basis of the majority laid down for the amendment of the articles is lawful, even though this clause does not specify the grounds for exclusion.

Consequently, it confirms the reasoning developed by the Montpellier Court of Appeal and dismisses the excluded partner’s appeal.

The reasoning of the Court of Cassation is here totally consistent with the letter of the text. Indeed, Article L. 231-6 of the Commercial Code does not require the exclusion clause to detail the specific causes justifying such a decision.

On the other hand, there is nothing to prevent the articles of association from being more detailed and limiting the exclusion of its members to certain specific reasons.

In any case, it will always be up to the judicial courts to assess the grounds for exclusion invoked and the regularity of the procedure implemented.

The margin of appreciation will, however, be narrower where the grounds for exclusion are specifically detailed, as the parties wish.