board of directors jointly exercises its powers to determine the company’s
policy and supervise its implementation. The CEO of a company is however
invested with the widest power to act in name of the company. Those powers are,
however, subject to the respect of the company’s purpose and to the powers
reserved to shareholders’ meetings and to the board of directors.
board of directors have the right to delegate some of its power to any
individual (usually the CEO) for one or more than one particular issue. The
board of directors can create several committees to examine and give
non-binding opinion on definite matters. The board of directors determines composition and attributions of any
committee that undertake its task under the board of directors’ responsibility.
Afep-Medef Code recommends that the listed companies create an audit,
nomination and remuneration committees.
is responsible to act within powers this means that the director should comply
with the company’s law and decisions made under the law and to put into effect
the powers only for the reasons for which they were given. Directors must act
in a manner to ensure the financial stability of the company. The director is
responsible to attend the board meetings. Even if any of the directors is not
present, he or she will be liable for the decisions that might prove harmful to
company or any other third party. The directors must keep the privacy of the
board meetings and they must act for the best interest of the corporation.
Director can be held responsible for the breaches towards the company and/or
third parties like:breaches of laws and regulations, breaches in the articles
of association or mismanagement.
Director should exercise reasonable skill, care and
judgement. This means that a director should be diligent, careful and very well
informed about the company’s affairs. Also If a director has particular
knowledge, skill or experience relevant to his role (for instance, he/she is a
qualified accountant and acting as a finance director), the expectations
regarding his role will be judged according to that.
directors can even be accused of theft and fraud if they misuse corporate power
or pay fictitious dividends or present a rosy picture of the corporate
accounts. In the event of Company going bankrupt, the directors can be ordered
to pay off all or the part of debt.
should not accept benefits from any of the third parties except the company
itself, by reason of being a director or doing anything as director. The
company may authorise acceptance (subject to its constitution), for instance to
enable a director to benefit from reasonable corporate hospitality. Director
should not declare any sort of interest in a proposed transaction or any sort
of arrangement. The declaration has
to be made before the transaction is
entered into and the prohibition applies to indirect interests as well as
of corporate assets is often the most common criminal offence that is found
against directors. It consists of using the company’s assets against the
company’s interest and for one’s personal benefit. It is punishable with a
five-year prison sentence and a fine amounting to EUR 375,000.
to French highest court (Cour de cassation), each of the director is assumed liable towards the
company and the shareholders in case of faulty decisions, whether intentional
or resulting from any sort of negligence and, in order to escape that
liability, a director should prove that he did not agree with the improper
decision. Directors can also be considered liable for not seeing properly the
management of the company.