Chapter I: Liability for insufficient assets.

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Article L651-2

French Commercial codeIn force
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Updated 7 Nov 2023

Where the judicial liquidation of a legal entity reveals a shortfall in assets, the court may, in the event of mismanagement having contributed to the shortfall in assets, decide that the amount of the shortfall in assets will be borne, in whole or in part, by all or some of the de jure or de facto managers who contributed to the mismanagement. If there is more than one manager, the court may, by reasoned decision, declare them jointly and severally liable. However, in the event of simple negligence on the part of the de jure or de facto director in the management of the legal entity, the director may not be held liable for any shortfall in assets. Where the compulsory liquidation concerns an association governed by the law of 1st July 1901 relating to the contract of association or, where applicable, by the civil code applicable in the departments of Bas-Rhin, Haut-Rhin and Moselle and not subject to corporation tax under the conditions provided for in 1 bis of article 206 of the general tax code, the court shall assess the existence of mismanagement with regard to the volunteer status of the director.

Where a judicial liquidation has been opened or pronounced in respect of the business of a sole trader with limited liability to which assets are assigned, the court may, under the same conditions, order that trader to pay all or part of the shortfall in assets.

Where judicial liquidation has been opened or pronounced in respect of a sole trader covered by the status defined in Section 3 of Chapter VI of Title II of Book V of this Code, the court may also, under the same conditions, order this trader to pay all or part of the shortfall in assets. The sum payable by the entrepreneur is deducted from his personal assets.

The action is time-barred after three years from the judgment ordering the judicial liquidation.

Sums paid by the directors or the individual entrepreneur with limited liability are included in the debtor's assets. They are distributed among all the creditors on a lump-sum basis. The managers or the individual entrepreneur with limited liability may not participate in the distributions up to the amount of the sums they have been ordered to pay.

Mariela Petrova

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Working with a corporate lawyer in France — Q&A

Any time a strategic decision changes how the company is owned, governed or contractually bound — incorporation, fundraising, M&A, restructuring, shareholder agreements, or major commercial contracts. Earlier engagement always costs less than later remediation.

A notary (notaire) is a public officer who authenticates specific deeds (mainly real-estate transfers and certain family-law acts). A corporate lawyer (avocat) advises on strategy, negotiates and drafts company documents, and represents you in disputes. The two roles complement rather than overlap.

Yes — most of our clients are foreign suppliers, investors or holding entities. We bridge the gap between French law and your home jurisdiction's expectations and deliver everything bilingually.

The SAS (Société par Actions Simplifiée) is the default choice for most international structures: flexible governance, single shareholder allowed, no minimum capital, and works cleanly with foreign holding entities. We assess SARL, SA, SCI on the merits when the situation calls for it.

Yes — communications with a French avocat are protected by the secret professionnel (Article 66-5 of the Law of 31 December 1971). This protection is broader than the common-law attorney-client privilege and applies to written and oral exchanges.

We work on fixed fees for clearly scoped engagements (incorporation, contract drafting, audits) and on monthly retainers for ongoing advisory. Hourly billing is the exception, not the default. You always know the cost before work starts.

Typical timeline is 2–3 weeks from KYC kick-off to RCS registration, assuming standard documentation. Holding-company structures, foreign-shareholder identification or in-kind contributions can extend this — we flag the gating items at the first meeting.

Absolutely. We routinely coordinate with your in-house counsel, expert-comptable or notaire — pragmatic collaboration is the norm, not the exception. We send them everything they need to do their part without duplicating work.

Mariela Petrova

Mariela Petrova

Avocate au Barreau de Paris

Toque #C2396

15+ Years In Corporate Practice

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Communications protected by professional secrecy — secret professionnel de l'avocat, Article 66-5 of the Law of 31 December 1971.

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