The concept of de facto management is a complex legal concept that requires rigorous proof to be established. A simple declaration by the de jure manager, or the fact that he or she is a partner or employee, is not sufficient to prove the existence of de facto management. This position is supported by the long-standing and consistent case law of the French Cour of Cassation, as set out in the rulings of 23 January 1990 and 25 January 1994.
In the decision of 23 January 1990 (Cass. com., 23 January 1990, no. 88-15.235), the Court of Cassation rejected the request for recognition of de facto management in the absence of sufficient evidence. The Court emphasized that in order to claim the existence of de facto management, it is necessary to demonstrate a positive management activity exercised in a sovereign and independent manner. Mere declarations by the de jure manager are not sufficient to establish this status.
The decision of 25 January 1994 (Cass. com., 25 January 1994, no. 91-20.007) reinforces this position and sets out the 3 criteria for de facto management, namely:
- management activity,
- exercised with sovereignty
- and in complete independence.
The French Cour of Cassation uses a cluster analysis to determine the existence of de facto management. The clues may include concrete management actions, strategic decisions taken without consulting the de facto manager, and other tangible evidence of autonomous authority.
References:
https://www.legifrance.gouv.fr/juri/id/JURITEXT000007093386
https://publications-prairial.fr/bacaly/index.php?id=1611