FRANCE Trends and Developments Contributed by: Karl Hepp de Sevelinges and Nicolas Martin, Jeantet
Jeantet 11 rue Galilée 75116 Paris France Tel: +33 1 45 05 80 08 Email: communication@jeantet.fr Web: www.jeantet.fr
Distribution of Dividends in France in Light of the Recent French Supreme Court Decision On 12 February 2025, the French Supreme Court ( Cour de cassation ) issued a decision prohibit - ing the distribution of dividends collected from the retained earnings account ( report à nouveau ) outside the annual ordinary general meeting of the shareholders approving the annual accounts. This decision is particularly of interest to share - holders, notably in light of the upcoming distri - bution of dividends in the context of the closure and approval of the 2025 annual accounts. This article looks at the conditions under which divi - dends may be distributed in France, consider - ing the recent decision of the French Supreme Court, and provides recommendations in order to avoid having such a distribution being consid - ered as null and void. Under Which Conditions May Dividends be Distributed in France? The distribution of dividends is a process strict - ly regulated by the French Commercial Code to ensure it is carried out in alignment with the corporate purpose of the company and does not negatively impact its financial stability.
In accordance with French law requirements, dividends can only be distributed if: • the annual accounts of the company have been approved by the shareholders during the annual ordinary general meeting ( Assem- blée générale ordinaire annuelle ); (a) this shareholder meeting must take place within six months following the end of the financial year. Such approval of the accounts confirms the accuracy and reli - ability of the company’s financial state - ments and provides a legitimate basis for profit allocation; and • distributable benefits are available. The French Commercial Code provides that dis - tributable benefits shall be calculated by (i) tak - ing the net income of the financial year, (ii) sub - tracting any losses carried forward from previous years and the amounts that must be allocated to reserves in accordance with the law or the arti - cles of association, and (iii) adding the retained earnings from previous years. Such distribution of dividends, if decided by the shareholders, must be carried out within a period of nine months as of the end of the rel - evant financial year (ie, end of September in case
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