Recognition Of The Existence Of A Manifestly Unlawful Disturbance Resulting From The Failure To File Annual Accounts And Statute Of Limitations Applicable To Actions Based On Ordinary Law Provisions

• Published date: 30 June 2021
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Corporate and Company Law, Contracts and Commercial Law, Civil Law
• Law Firm: Soulier Avocats
• Author: Ms Sophia El Makhoukhi

While many company managers fail to comply with their obligation to file annual accounts, the Cour de cassation (French Supreme Court) has decided to reinforce the applicable sanction mechanism in an unprecedented decision issued on March 3, 2021¹.

Wishing to obtain financial information on their former supplier (the "Supplier"), two companies specializing in the distribution of bedding products (the "Distributors") applied to the Summary Judge to have the Supplier ordered to file its annual accounts for the period from 2008 to 2015, subject to a periodic penalty payment.

The claim brought by the Distributors was based on the ordinary law provisions set forth in Article L. 232-23 of the French Commercial Code, combined with those of Article 873 '1 of the French Code of Civil Procedure which allow to initiate summary proceedings to put an end to a manifestly unlawful disturbance.

The Versailles Court of Appeals, in a judgment dated February 15, 2018, held that the Distributors' claim was admissible, but the Supplier appealed to the Cour de Cassation.

The Supplier claimed that the summary proceedings to ensure compliance with the legal obligation to file accounts could only be initiated under the conditions provided for by the special provisions set forth in the French Commercial Code, in particular those set forth in Article L. 123-5-1 of said Code.

It also argued that the Distributors' claim was inadmissible because it was time-barred pursuant to Article 1844-14 of the French Civil Code.

In its decision of March 3, 2021, the Cour de Cassation held for the first time that the special provisions allowing a third party to request in court that the annual accounts of a company be filed did not exclude the application of ordinary law provisions.

Moreover, since the purpose of the injunction to file the annual accounts was to put an end to a manifestly unlawful disturbance, the Cour de Cassation inferred that the limitation period provided for in Article 1844-14 of the French Civil Code was not applicable.

The unprecedented recognition of the non-exclusive nature of the special provisions set forth in the French Commercial Code

Legal actions initiated by third parties wishing to compel a company to file its annual accounts are expressly addressed in the French Commercial Code.

Article L. 123-5-1 of the French Commercial Code stipulates that: "At the request of any interested party or the public prosecutor, the presiding judge of the court, ruling in summary proceedings, may enjoin, subject to a periodic payment penalty, the manager of any legal entity to file with the clerk of the registry of trade and companies the documents and instruments which this legal entity is required to file pursuant to legal or regulatory provisions."

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