Co-managing an SARL: instructions for use

There are two key players in the governance of an SARL. First, the partners. They are the owners of the SARL's shares. Secondly, the manager(s). These are the executive officers of the SARL. In other words, they are responsible for the day-to-day running of the company.

The partners may appoint several managing partners: this is known as co-management. Each manager relies on the other to manage the company and steer it towards its objectives. Co-management offers undeniable advantages, but also increased risks.

Let's find out everything you need to know about being a co-manager of a limited liability company.

What is a co-manager?

Most SARLs are run by a single managing director. However, the law allows partners to appoint several managers. This mechanism is known as co-management. In most cases, both managers have the sameresponsibilities. The prerogatives of each of the two managers are the same as those of a single manager.

Co-managers may be :

• Majority This means that their aggregate shares exceed 50% of the company's share capital. Individually, they may be minority shareholders.
• Equal: this means that their aggregate shares are equal to 50% of the company's share capital.
• Minority: this means that their aggregate shareholding is less than 50% of the company's share capital.

What is the social security system for a co-manager?

The status of majority, equal or minority shareholder has consequences for the social security system. The majority manager is systematically affiliated to the social scheme for non-salaried workers (TNS) and contributes to the social scheme for the self-employed.

A minority or equal co-manager is affiliated to the general social security scheme.

He pays the employee contributions, while the SARL pays the employer's share. The minority co-manager may also benefit from unemployment insurance if he or she is also an employee of the company.

How is a co-manager appointed?

Each manager is appointed by a majority vote of the associates at a general meeting. To be elected, a manager must obtain the vote of associates representing at least 50% of the shares.

If there is no majority, a second vote is held. The person with the most votes is elected, with no particular threshold required.

What are the advantages of joint management?

Co-management offers several advantages.

Firstly, it allows responsibilities to be divided between several people, and limits their individual workloads.

The partners freely assign different responsibilities to the company's managers (supplier relationship management, customer relationship management, production management, etc.).

It also means that several managers with complementary skills can be recruited, for a better level of expertise. It alsoensures temporary continuity of management in the event of a manager's absence.

In some cases, joint management is useful to prepare for a gradual transfer of powers between two managers, with a view to retirement for example.

What are the disadvantages of joint management?

Co-management does, however, have a few notable drawbacks. The main risk is personal conflict at the head of the company.

A divergence of views can quickly lead to deadlock in corporate governance. This risk can be partially mitigated by allocating respective powers in the articles of association.

If there is no provision in the articles of association, then both managers have exactly the same prerogatives.

Each manager may object to a decision taken by another manager by bailiff or by registered letter with acknowledgement of receipt.

Clauses in the company bylaws governing the powers of managers are not enforceable against third parties (suppliers, social partners, etc.).

In other words, each manager, whatever the provisions of the articles of association, can hold the company liable to third parties as if he or she were the sole manager. It is therefore vital that the managing partners get on well together.

How do you resign or dismiss a co-manager?

Each co-manager is free to resign from his or her position by writing a letter of resignation to the partners of the SARL by registered letter with acknowledgement of receipt.

The partners may also dismiss a managing director without giving reasons for their decision. In both cases, the procedure for appointing a new manager must be initiated promptly.

Co-management is a governance model with undeniable advantages. On the other hand, you need to anticipate a number of bottlenecks so as not to undermine the proper governance of your SARL.