FRANCE Law and Practice Contributed by: Samuel Sauphanor, Alexandra Szekely, Timothée de Saint Viance and Benoît Barré, Le 16 Law
ever, public law bodies such as municipalities or public institutions may be held liable for offences committed in the context of activities that could have been delegated to private actors. Sanctions applicable to legal entities include fines (which may be up to five times those imposed on natural persons, per Article 131- 38), dissolution, placement under judicial super - vision, exclusion from public procurement and confiscation of assets. These penalties may be imposed cumulatively, depending on the seri - ousness of the offence and the corporate entity’s role in its commission. 3.2 Claims Against Ultimate Beneficial Owners French law does not recognise piercing the corporate veil as a general principle. However, claims may be brought directly against ultimate beneficial owners (UBOs) in specific circum - stances where they are personally implicated in the fraudulent conduct. Criminal liability may be incurred where a UBO has knowingly participated in, orchestrated or benefitted from the fraudulent scheme. This includes offences such as money laundering (Article 324-1 of the French Criminal Code), mis - use of corporate assets ( abus de biens sociaux , Articles L.241-3 and L.242-6 of the French Com - mercial Code), or receiving the proceeds of crime ( recel , Article 321-1 of the French Criminal Code). Liability requires demonstration of per - sonal involvement or knowledge. UBOs may also face liability under civil law if their conduct meets the criteria for personal fault under Article 1240 of the French Civil Code, or in the context of fraudulent representation, par - ticularly where the corporate entity has been
used abusively as a façade to shield personal misconduct. Identification of beneficial owners is supported by the national register created pursuant to Arti - cles L.561-45-1 et seq of the French Monetary and Financial Code, although access to this register is now restricted following a decision of the Conseil d’État in 2023. In practice, judi - cial authorities may compel production of this information in the context of investigations or proceedings involving financial crime. 3.3 Shareholders’ Claims Against Fraudulent Directors French law provides shareholders with the ability to bring claims against directors whose conduct, such as fraud, concealment or misappropriation, has harmed the company or its shareholders. This may take the form of a derivative or per - sonal action. The derivative action ( action sociale ut singuli ) allows shareholders to bring an action to claim damages for the harm suffered by the company, against one or more directors for breaches of duty. It is governed by: • Article L. 225-252 of the French Commercial Code ( société anonyme ); • Article L. 223-22, paragraph 2 of the French Commercial Code ( société à responsabilité limitée ); • Article L. 227-12, by reference to Article L. 225-252, of the French Commercial Code ( société par actions simplifiée ); and • Article 1843-5 of the French Civil Code ( société civile ). These actions may be initiated without prior shareholder approval. If successful, any dam - ages awarded are paid to the company itself.
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