Key points
- Issue: following the death of its two partners, a property investment company (SCI) no longer had a manager or any partners to run it.
- Decision: the judge hearing the interim application found that there was an imminent risk, as the approval clause could no longer be invoked due to the lack of any surviving partner.
- Outcome: An insolvency administrator will manage the company for a period of one year, renewable, with the powers of a manager, and the SCI is liable for the administrator’s remuneration.
Both partners of an SCI have died: an interim administrator takes over management
By an interim order dated 26 September 2024 (RG No. 24/50560), the President of the Paris Judicial Court appointed an interim administrator for a property investment company (SCI) that had been left without a manager or partners, at the request of an heir. An interim administrator for an SCI without a manager enables the revival of a company that has been paralysed by successive deaths.
A family-owned SCI with no manager or partners
The SCI owned a property in Paris and had two shareholders: a father and one of his sons. The father died in 2018, having transferred a large portion of his shareholding to his son. The son, who was the company’s managing director, died in 2023. The articles of association stipulated that the admission of heirs was subject to the approval of the surviving partners.
The founder’s other son, an heir, also challenged these transfers of shares in court. He had no access to any of the company’s documents. Represented by Goldwin Avocats, he applied in summary proceedings for the appointment of an interim administrator.
The managing director’s heirs argued that the judge hearing the interim relief application lacked jurisdiction and that the application was inadmissible. They also claimed that a general meeting had been convened to appoint a new managing director.
Why the judge appointed an interim administrator for an SCI without a manager
The judge appointed an interim administrator for an SCI without a manager, having dismissed both procedural objections. The proceedings concerning the disposals did not relate to the operation of the SCI, meaning that the judge hearing the application for interim relief retained jurisdiction. The heir demonstrated a legitimate interest in bringing the proceedings, even without being a partner.
Article 835 of the Code of Civil Procedure allows the judge hearing the application for interim relief to order the necessary measures to prevent imminent harm. Such an appointment presupposes a company that is unable to function and is threatened by imminent danger. Without a partner to approve the heirs, no governing body could be re-established: the company was paralysed, not merely without a director.
The administrator retrieves the documents and funds, prepares the accounts and represents the SCI in ongoing legal proceedings. He exercises the powers of the manager until normal operations are restored.
How the ruling affects the heirs of SCI partners
An unapproved heir is not powerless in the face of a paralysed SCI. Gather the affidavit, the articles of association and proof of your unanswered requests. These documents establish your rights and the reality of the deadlock.
The mere absence of a manager is not always sufficient.Article 1846 of the Civil Code allows a partner to convene the others, or to have a representative appointed, in order to appoint a manager. You should therefore first check who is still authorised to convene the general meeting of the company in question.
Each situation must be analysed on a case-by-case basis, depending on the articles of association and the succession arrangements. Are you the heir of a partner in an SCI and is the company deadlocked? Contact one of our lawyers specialising in company law to examine your rights.
Related areas of expertise
Company law lawyer › Heirs of an SCI and the approval clause
Frequently asked questions about the interim administrator of an SCI
No.Article 31 of the Code of Civil Procedure allows any person who can demonstrate a legitimate interest to bring proceedings. An heir whose rights to the shares are at stake may therefore bring proceedings, even before any approval has been granted. The judge will verify the existence of this interest on the basis of the documents submitted, such as proof of parentage and any ongoing proceedings.
The company, in principle. In this case, the administrator’s remuneration is based on the court’s scale of fees and is payable by the SCI. The claimant must, however, pay an advance of €2,000 within one month; otherwise, the appointment becomes void. Please ensure you have this advance available before commencing the proceedings.
The period set by the judge, in this case one year, renewable. The administrator reports annually to the court on the progress of their remit and their expenses. Their remit ends when the company once again has governing bodies capable of functioning, for example following the appointment of a managing director.
Jonathan BELLAICHE
