Throughout my career, I’ve often heard the same confident statement: “I’m protected. I have a holding company, my liability is limited.”. In reality and jurisprudence prove otherwise.
A recent ruling by the French Supreme Court (Commercial Chamber, Oct. 1, 2025, No. 23-12.234) serves as a powerful reminder.
💼 The case: a CEO ordered to personally cover €182,000 in company debts
A business leader whose company was placed in liquidation was ordered to personally pay part of the shortfall : €182,000.
He argued that his personal financial situation should be considered when setting the amount.
At first glance, a reasonable argument… but the Court of Cassation firmly rejected it.
⚖️ The Court’s position: only the fault matters — not the fortune
Under Article L. 651-2 of the French Commercial Code, when a company’s liquidation reveals an asset shortfall, the court may hold its managers personally liable if mismanagement contributed to the deficit.
But the ruling makes one crucial clarification:
👉 The amount owed depends solely on the number and gravity of the management faults committed.
👉 The director’s income or personal assets are irrelevant.
In other words — liability is not about solvency.
It’s about fault.
And fault is assessed objectively, based on what a prudent and diligent manager should have done under the same circumstances.
📚 A consistent line of jurisprudence
This ruling aligns with previous decisions where the French Supreme Court tightened standards for corporate governance.
In 2021 (Cass. com., Feb. 3, 2021, No. 19-20.004), it ruled that artificially maintaining a failing business or failing to declare insolvency within 45 days constitutes mismanagement, triggering personal liability.
The principle remains constant:
➡️ The role creates a duty of vigilance.
➡️ The corporate veil does not shield a director from their own inaction.
And this holds true regardless of the company’s structure : LLC, SAS, or even a multi-layered holding group.
🧠 Key takeaway
True protection for a business leader isn’t structural, it’s behavioral.
Courts don’t sanction the entity; they sanction the decisions.
To minimize risk, every leader should:
1️⃣ Document strategic decisions (minutes, reports, justifications).
2️⃣ Anticipate financial difficulties, including timely insolvency filings.
3️⃣ Delegate effectively, in writing, with defined scope and real authority.
The law doesn’t expect perfection.
It expects structure, foresight, and transparency.
📌 A sober reminder:
A director’s liability is measured by their conduct, not by their corporate setup.
This isn’t courtroom fiction or a rare precedent, it’s a daily reality for hundreds of businesses each year.
