Manager, Partner, Director, President?
We often use these terms interchangeably. But in creating a company in France, depending on the legal entity form, they take on different meanings, have different roles and responsibilities, fall into different employee categories, have different tax implications, and fall under different social regimes with different financial implications. So it is important to draw some distinctions.
Owners / founders / general managers of SAS or SASU LLC form are designated as presidents. They may be referred to other titles that translate to director, managing director, CEO, and on but the traditional designation is that of a president.
With the SARL form of LLC, it is a little more extensive, given that it is led by a partner who may be a majority or minority shareholder. So to illustrate, the following are essential differences between a manager of a SARL (SAS or a SASU equivalent is a president) who is a minority or majority partner.
Manager
In short, the manager’s role is to manage. She or he deals with the day-to-day activity of the company as well as with the company’s strategy. They represent and are responsible for the company, including reporting to its investors and shareholders and explaining its strategy.
The manager defines the objectives and the means to achieve them and undertakes the operations and different functions of the company (sales, marketing, managing the staff, purchasing, developing products and services, etc.).
In American corporate terms, the French designate of “manager” includes anything from a general manager, managing director terms, president, or chief executive officer (CEO).
Partner
A partner owns shares in the company because he acquired its capital at its creation or afterward. Because of this, the partner has certain rights – the right to vote on important decisions taken in meetings, the right to relevant information, and the right to dividends where the company is profitable and distributes earnings.
Partner versus Manager Responsibilities
While the responsibility of a partner is limited to the amount of his financial contribution (in the partner’s unique role), the manager’s responsibilities are extensive.
The manager is responsible for the compliant operation of a company and can be held accountable for both civil and criminal infractions of a company. They are criminally liable for fraud, labor, health, and safety violations and for civil infractions such as causing damage to third parties.
In a SARL, the partner does not have the right to speak on the company’s behalf, sign contracts in its name, or commit the company to any commercial engagements.
In general, a partner and a manager have two different roles in the French corporate structure. It gets more complicated when partners are managers – managing partners
Managing Partner
This double role is typical in small LLCs such as EURL and SARL. The partner (or the president in the case of SAS and SASU) is also the company’s manager.
There is another subdivision in the SARL, depending on whether the managing partner owns more or less than 50% of the shares. The manager-partner who owns more than 50% of the shares is a majority manager and a minority manager if ownership is less than 50% of the shares.
A majority manager-partner does more or less what he wants. If he has more than 2/3 of the shares, he can even modify the articles of incorporation because 33% of minority shareholders are required to block majority actions.
Minority manager-partners have the double role of managing a company’s operations and voting on decisions that affect the company’s operations and direction. They must balance the decisions they make as managers and the votes they make as partners. As minority managers, a simple majority of partners can remove them.
Different Social Security Regimes
The primary differences between minority and majority managers are their social and fiscal status. The social regimes – payroll taxes/social contributions, complementary pension, right to unemployment – are distinctly different and with significant cost implication depending on the form of company incorporation.
Minority (Shareholder) Managers’ Social Regime
The general social security regime of salaries and wages (assimilated employee) applies to single or married employees who, along with their spouses, minor children, and co-managers, own a maximum of 50% of a SARL’s capital. It also applies to a minority partner who becomes an employee and to the president of a SAS/SASU.
Majority (Shareholder) Managers’ Social Regime
Majority Managers of SARL fall under the non-salaried worker regime “TNS” (travailleurs non-salarié), which applies to those who alone, with a spouse, minor children, and possible co-managers, own more than 50% of the capital
Social Contributions to the Social Security System
- Minority managers (presidents of SAS/SASU) pay both the standard employer and employee contributions if they receive compensation. They do not pay contributions if they are unpaid.
- Majority managers pay contributions even if they receive no compensation and fall under the supplementary pension scheme for self-employed persons.
- The supplementary pension scheme for executives and minority managers is the same.
- Majority managers get no unemployment benefits. They must subscribe to voluntary unemployment insurance (weighing the cost-benefit of saving or contributing to such insurance).
- Minority managers are covered by unemployment insurance if they have an employment contract and there is a tangible legal subordination link between them and the other partners.
Different Taxation
There is a distinction between compensation for work and company dividends. Managers and ordinary executives are taxed on compensation. If they receive dividends as a partner, these are taxed as “income from movable property.”
