Court of Cassation, Commercial Chamber, 17 December 2025 (No. 23-18.998)

Introduction

On 17 December 2025, the Commercial, Financial and Economic Chamber of the Court of Cassation delivered a ruling concerning the distinction between personal loss suffered by shareholders and damage sustained by the company itself. The Court partially quashed the decision of the Lyon Court of Appeal, clarifying the conditions under which shareholders may claim damages for losses allegedly arising from the diminution in value of their shares.

This decision addresses a fundamental principle of French company law: the loss in value of shares is not a personal loss to shareholders, but rather the corollary of damage caused to the company. The ruling provides important guidance for practitioners advising on shareholder claims and corporate liability disputes.

Factual Background

By letter dated 7 November 2010, the prospective purchaser committed to acquire the shares of Société Financière Bellecordière, which operated a hotel, held by the vendor family (a mother and her two children) in indivision, for the sum of €2,000,000.

On 20 June 2011, the vendor family transferred their shares to Société A l'Hôtel, then in the process of formation, in which the prospective purchaser held 480 shares out of 500, for a price of €1,900,000. Subsequently, by deed dated 10 July 2012, the vendor family sold the shares of Société Financière Bellecordière to a third party, Société MC & BC, for €894,832.

On 21 and 22 May 2013, the prospective purchaser and his brother commenced proceedings against the mother (one of the vendors) and Société Financière Bellecordière (which had become [5] Hôtel) seeking rescission of the share transfer agreement and restitution of sums paid to the mother. Sociétés[5] Hôtel and MC & BC intervened voluntarily in the proceedings and brought third-party claims against the two children (the other vendors) and the company's accountant. By way of counterclaim, the vendor family brought a claim against the prospective purchaser for damages to compensate for the loss of opportunity of not having been able to sell their shares at a better price, given the faults committed by him as de facto manager of the company.

The Court of Appeal's Decision

The Lyon Court of Appeal rendered its decision on 25 May 2023. The Court of Appeal held that the vendor family, whose intention to sell their shares was established as at 7 November 2010, had necessarily suffered direct loss as a result of the actions of the de facto manager, which caused them to lose the opportunity of obtaining a better price for their shares. Accordingly, the Court of Appeal ordered the de facto manager to pay the vendor family €100,000, to be apportioned as €75,000 to the mother and €25,000 to the mother and her two children in their capacity as members of the indivision, in proportion to their respective rights.

The Ground of Appeal

The de facto manager challenged the Court of Appeal's decision on the basis that the loss linked to the diminution in value of shares is not a personal loss to shareholders, being merely the corollary of damage caused to the company. He argued that in holding to the contrary, namely, that the vendor family had suffered personal and direct loss as a result of the sale of the Financière Bellecordière shares at a lower price than initially contemplated, the Court of Appeal had violated Article 1240 of the Civil Code.

The Court of Cassation's Ruling

The Court of Cassation recalled that pursuant to Article 1240 of the Civil Code, any act of a person which causes damage to another obliges the person by whose fault it occurred to make reparation.

The Court held that in reaching its decision without establishing that the vendor family had demonstrated a loss distinct from the corporate loss and which was personal to them, the Court of Appeal had deprived its decision of a legal basis. Accordingly, the Court of Cassation partially quashed the decision, but only insofar as it ordered the de facto manager to pay damages to the vendor family for their material loss. The matter was remitted to the Lyon Court of Appeal, differently constituted, for reconsideration on this point.

Key Principle

This decision reaffirms a well-established principle of French company law: shareholders may not claim damages for losses that are merely reflective of harm suffered by the company itself. In the Court of Cassation's eyes, the diminution in the value of shares is not a personal loss to shareholders; it is the corollary of damage caused to the company.

To succeed in a claim for damages, shareholders must demonstrate that they have suffered a loss that is:

• Distinct from the corporate loss; and
• Personal to them as shareholders.

The Court of Cassation's ruling makes clear that a court may not award damages to shareholders for loss arising from the diminution in value of their shares without first establishing that the loss is separate from, and not merely reflective of, damage sustained by the company.