Responsibilities of the board (supervisory)

Board structure

Is the predominant board structure for listed companies best categorised as one-tier or two-tier?

One-tier structured public limited companies (SA) are largely predominant, representing about 80 per cent of large issuers. About two-thirds of them are led by a CEO who is also the chair of the board. Two-tier structured SAs represent about 15 per cent, and limited partnerships about 5 per cent.

Board’s legal responsibilities

What are the board’s primary legal responsibilities?

The board of directors is the corporate body in charge of setting the main lines of the company’s business activity and strategy and of ensuring their implementation, in accordance with the powers reserved by law to the shareholders and the company’s executives. If the board is legally entitled to deal with any issue it considers relevant, it has by law exclusive competence in the following matters:

  • drawing up of the annual (consolidated) accounts and management report;
  • suggestion of dividends allocation;
  • convening of shareholders’ meetings and fixing their agenda;
  • appointment and removal of the company’s executives;
  • authorisation of guarantees granted by the company and of transactions with related parties; and
  • bonds’ issuance (unless reserved to the shareholders’ meeting by the articles of association).


In two-tier structures, the supervisory board’s role is mainly to appoint (and remove if permitted by the articles of association), control and supervise the executive board (eg, review of the accounts, management reports and strategy, and prior approval of transactions with related parties) and refer matters to the shareholders’ meeting. The executive board and the supervisory board may each convene shareholders’ meetings.

Board obligees

Whom does the board represent and to whom do directors owe legal duties?

The board has no legal personality and is only a corporate body that promotes and defends the company’s interests.

Ultimately, the board is responsible to the shareholders, who can decide, at each meeting, to remove any of its members (including all of them). However, civil and criminal liability of directors may be sought where applicable either by the company itself or by shareholders (or third parties in limited cases and the public prosecutor as regards criminal liability).

Enforcement action against directors

Can an enforcement action against directors be brought by, or on behalf of, those to whom duties are owed? Is there a business judgement rule?

Legal actions may be brought against directors individually or collectively. The ‘corporate’ derivative action aims at indemnifying against losses suffered by the company itself as a result of faults of its directors. It can be initiated for the account of the company either by the company’s legal representatives or by a shareholder acting on behalf of the company. Shareholders may also bring an action in order to be indemnified for losses that they have directly suffered.

These actions may only be brought if directors have committed a breach of law or of the company’s articles of association, or mismanagement acts. As regards mismanagement, there is no business judgement rule as such in France, but since the claimant must evidence that a fault has been committed, this is a similar conclusion as to the directors' liability regime in common law countries. When the fault is committed collectively, the enforcement action is led against all directors taken individually, but each member of the board may elude its liability if it can prove that it opposed the disputed decision.

Criminal liability may be sought in specific cases, mainly in the event of misuse of corporate assets, abuse of powers, distribution of fictitious dividends and publications of untrue accounts. It may be initiated by any purported victim, but the legal action is controlled by criminal judges.

No distinction is made by law between the directors depending on whether they are interested or disinterested, executive or independent. They are all under the same liability regime, and the difference only resides on the grounds of evidence and the ability of the claimant to establish the facts that give rise to liability of any such directors.

Care and prudence

Do the duties of directors include a care or prudence element?

Directors owe a duty of care to the company at all times. Case law has promoted a specific duty of loyalty by board members if these directors hold sensitive information and are involved in share transactions with other shareholders.

Internal rules of the board often describe more precisely the scope of this duty (eg, attendance of members and conflict of interests).

Board member duties

To what extent do the duties of individual members of the board differ?

The duties of the various board members are the same and considered on an equal basis.

Directors may be members of specific board committees (audit (which is compulsory in listed companies), appointment, compensation, strategic, ethical, etc) and their work (and exposure) may so differ in practice. Usually, members of specific committees are chosen among directors with skills and experience corresponding to their field of expertise.

Delegation of board responsibilities

To what extent can the board delegate responsibilities to management, a board committee or board members, or other persons?

The board may delegate to the management some of its specific powers, such as the authorisation of guarantees (by law) or the issuance of new shares (upon shareholders’ approval).

The board may create committees in charge of monitoring specific matters. It can also appoint any person to perform specific tasks. However, the aim of these committees or appointments is only to facilitate or improve the work of the board and its decision-making process. Directors cannot ignore any of the matters discussed in board meetings; committees or individuals that the board has appointed always act under its authority.

Non-executive and independent directors

Is there a minimum number of ‘non-executive’ or ‘independent’ directors required by law, regulation or listing requirement? If so, what is the definition of ‘non-executive’ and ‘independent’ directors and how do their responsibilities differ from executive directors?

Companies listed on a regulated market must appoint at least one independent director to their audit committee. This is a minimum, and the law implicitly leaves it to the soft law corporate governance codes to determine the appropriate proportion of independent board members and the criteria of independence. For example, the Afep-Medef Code requires that at least half of the directors are independent in an uncontrolled company, or one-third in the case of a company controlled by a majority shareholder or a group of shareholders, and that independent directors should represent two-thirds of the audit committee and the majority of the appointment and compensation committee if applicable.

The Afep-Medef Code sets out that to be considered as independent, directors must not have any particular relationship (majority shareholder, employee, family or other) with the company or the company’s executives. According to these criteria, an independent director is someone who:

  • has not been an employee or an executive officer for the past five years in the company or a related company;
  • is not a significant client, supplier, adviser or banker; and
  • has not been an independent director for longer than 12 years (renewal included).


While they are expected to be particularly cautious of the company’s interests, their liability does not differ by law from that of the other directors.

Board size and composition

How is the size of the board determined? Are there minimum and maximum numbers of seats on the board? Who is authorised to make appointments to fill vacancies on the board or newly created directorships? Are there criteria that individual directors or the board as a whole must fulfil? Are there any disclosure requirements relating to board composition?

The board size of between three and 18 members is ultimately determined by the shareholders. If they do not provide otherwise, no more than one-third of the directors may be over 70 years old. The same threshold applies for employees of the company.

In listed companies and large companies (ie, companies that had, for three consecutive financial years, over 250 permanent employees and a total turnover or balance sheet of more than €50 million), the proportion of board members of a specific gender must represent at least 40 per cent of the total. As an exception to the 40 per cent requirement, in boards made up of eight members or less, the gender gap cannot be larger than two directors.

Before their appointment, shareholders may request information on the candidates’ curricula vitae during the last five years, and in listed companies a brief summary of their expertise is always available. Apart from the specific requirement regarding the independent member of the audit committee, expertise is not required by law.

Criminal records are only provided to the French stock exchange authority (AMF) for listed companies during initial public offerings, but directors or supervisory board members in all companies must demonstrate that they have not been restricted from running a business owing to criminal proceedings.

The (supervisory) board may appoint temporary new members in the event of a vacancy, subject to confirmation by the next shareholders’ meeting, while only the shareholders may create new directorships.

Board leadership

Is there any law, regulation, listing requirement or practice that requires the separation of the functions of board chair and CEO? If flexibility on board leadership is allowed, what is generally recognised as best practice and what is the common practice?

Laws and governance codes do not require the separation or joining of these functions but organise decision-making processes (including in terms of transparency) in this respect.

Historically, these functions were joint, and this structure still prevails today (about two-thirds of SAs with a one-tier structure are managed by a CEO who is also the chair of the board).

Board committees

What board committees are mandatory? What board committees are allowed? Are there mandatory requirements for committee composition?

The audit committee is mandatory in companies listed on a regulated market, but the board of directors may decide to take over its functions directly. In these cases, when the agenda of the board meeting handles relevant matters of the audit committee, executive members of the board must temporarily leave. Only board members may be part of the audit committee, of which at least one independent director must have specific financial expertise.

Otherwise, the board may set up whatever committees it considers appropriate and has complete flexibility to organise them.

Board meetings

Is a minimum or set number of board meetings per year required by law, regulation or listing requirement?

Legally, in one-tier structures, the board must meet at least once per year to draw up annual accounts and convene the annual shareholders’ meeting (twice in listed companies, which have to publish half-year accounts).

In two-tier structures, the supervisory board must meet at least four times a year to review the executive board’s report.

However, in listed companies, corporate governance codes require more frequent meetings: the MiddleNext Code recommends a minimum of four meetings a year, whereas the Afep-Medef Code does not set a minimum requirement but provides that the number of meetings must be sufficient to enable the board to perform an in-depth review of all topics that are put on its agenda and that one meeting per year must be held without the presence of the executive officers.

Board practices

Is disclosure of board practices required by law, regulation or listing requirement?

The board of a listed company is required by law to disclose specific information on its operations and on the company’s governance in general. This information includes the structure of the board, the number and the overall attendance of the meetings during the last year, which governance code it applies and a review of the company’s compliance with that code. Explanations on the items it has chosen not to enforce must be disclosed under the ‘comply or explain’ principle.

Board and director evaluations

Is there any law, regulation, listing requirement or practice that requires evaluation of the board, its committees or individual directors? How regularly are such evaluations conducted and by whom? What do companies disclose in relation to such evaluations?

The board of directors, or the executive board in a two-tier structure, of a listed company must issue each year a report on the corporate governance in place within the company. The supervisory board, in a two-tier structure, must approve the terms of this report. The statutory auditors must also give their views on it.

The content of this report addresses most corporate governance issues: the frequency of the board meetings, options chosen when the comply or explain principle applies, description of the board and the committees’ work, description of the compensation policies for executives and directors, review of the independence criteria applicable to the directors, etc. The Afep-Medef Code issued a recommendation on a board evaluation process including an evaluation of the effective contribution of each director to the work of the board.

Every year, the AMF reviews a sample of these reports and delivers a study, which is a major source of sound practices in corporate governance. The latest AMF report notes that only a limited number of companies include an evaluation of the individual contribution of each director in their annual report and stresses the importance of this measure to ensure the improvement of corporate governance.

Law stated date

Correct on

Give the date on which the information above is accurate.

13 April 2020