On 18 September 2019, the Court of Cassation handed down a ruling deciding whether the director of a company who had committed an intentional fault could turn against his company in order to make it responsible for paying damages.

In this case, the company director was found guilty of complicity in the misuse of corporate assets committed to the detriment of another company. Sentenced to pay damages to the other company, he claimed that his company was liable on the grounds that his actions had been committed in the course of his duties and in the company’s interest.

Contrary to what the convicted executive argued, his powers cannot be derived from an agency contract: the relationship between a company and its executive is governed by legal provisions, so that the disputed contract entered into by him constituted a personal act and not an act performed in the exercise of his duties, in the name and on behalf of his company.

It is settled case law that a criminal offence cannot be detached from the duties of a director unless it is intentional. The company that he manages cannot therefore be held liable for his actions and thus bear the financial consequences.

This interpretation is a logical extension of the case law arising from the trial of Alain Carignon, according to which an illegal act committed by the directors of a company with the company’s funds is necessarily contrary to the company’s interests, even if it is intended to obtain public contracts or procurement contracts. Such actions expose the legal entity to a criminal risk that would have the effect of damaging its reputation and image.

With this ruling, the Court of Cassation reiterated the nature of the link between the director and the company he or she directs, and the responsibilities he or she must assume in the event of criminal conduct.

To read the full judgment, click here : Com. 18 Sept. 2019, F-P+B, no. 16-26.962