A corporate officer is a natural person appointed to take care of day-to-day business and make a number of management decisions. It is also a person appointed by a legal entity to represent it within the company.
It plays a key role within a company, which is why it's important to understand its scope, missions and challenges.
As the person responsible for the day-to-day running of the company, the corporate officer often wears two hats. In a SAS, this is frequently the Chairman or Managing Director. In a SARL, it is often the manager.
The definition of these prerogatives is left to the discretion of the company's partners. These are set out in the company's Articles of Association. As a general rule, a corporate officer is entrusted with three main missions:
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Managing the day-to-day business of the company. For example, drafting and organizing letters convening the Annual General Meeting.
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Take the management actions needed to ensure the company's long-term future. For example, drafting a business report, creating a business development strategy or launching a new commercial partnership.
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Represent the company and be accountable to third parties. For example, he may sign a contract with a customer, supplier or partner.
The duties of the corporate officer may be freely extended or reduced at the discretion of the shareholders. All that is required is for the company's Articles of Association to set out an exhaustive list.
The corporate officer is generally elected by the company's general meeting of shareholders, or appointed under an agency agreement. The term of office and conditions of removal are specified in the company's bylaws. The maximum number of times a corporate mandate can be renewed is 3 or 5, depending on the company's legal status.
The corporate officer is not necessarily a partner in the company.
He or she may be an employee of the company. If so, he or she is bound to the company by an employment contract. If not, his or her status as a corporate officer is assessed according to two key criteria.
Firstly, its ability to represent the company's managers in dealings with third parties. Secondly, the nature of the management body which has assigned him this role (for example, the general meeting of shareholders).
As a corporate officer, you are entitled to demand remuneration for your work, although this is optional.
The amount of remuneration must be specified in the corporate officer's appointment document or in the company's articles of association.
Only corporate officers with an employment contract providing for the performance of technical tasks in return for appropriate remuneration are eligible for social protection.
It is necessary to study the social security system for directors in relation to the legal status of your company. But this is not the only criterion: their ability to represent the company in dealings with third parties and the ownership of shares are other factors to be taken into consideration.
Corporate officers pay no social security contributions if they have no social security coverage. However, this does not prevent them from taking out private insurance policies to cover themselves.
A corporate officer's greatest responsibility is probably his or her ability to commit the company to third parties. He or she may also be held personally liable under civil and criminal law, should a decision be contrary to the law or the company's bylaws.
Such actions may result in the immediate dismissal of the corporate officer, as well as legal proceedings.
Civil liability means that any person who suffers damage as a result of the professional's actions can call him or her into question. Many professionals take out specific civil liability insurance to cover this risk.
The corporate officer is also liable to the company and its partners. In the event of mismanagement prejudicial to the company, he or she may be ordered to pay compensation.
The role of corporate officer is a vital one within a company, given the usual scope of his or her responsibilities. It is also a status governed by the French Commercial Code, to guarantee an organized and protective working environment for all parties.
Written by our expert Paul LASBARRERES-CANDAU
June 21, 2021
