To prepare for managing personal and non-personal interests in case they can no longer handle them alone or in the event of their death, a business leader can use two types of mandates: the future protection mandate (articles 477 to 488 of the Civil Code) and the posthumous mandate (articles 812 to 812-1-4 of the Civil Code).
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The future protection mandate for the business leader
For general information on the future protection mandate, read complete information on the future protection mandate.
What is the advantage of a future protection mandate for entrepreneurs?
The life of a business follows a timeline that can seem incompatible with the time required for a guardianship judge to implement a protection measure. Thus, the future protection mandate allows an entrepreneur, concerned about the continuity of their business, to designate one or more agents in advance, without resorting to the judge, to manage their professional assets if they can no longer manage their own interests (Article 477 of the Civil Code).
For example, the future protection mandate could apply in cases of cognitive disorders due to a stroke or Alzheimer's disease, preventing the person from managing their own interests independently.
What is the preferred form when the future protection mandate concerns the management of professional assets?
The future protection mandate can be established in two forms: by notarial act or by private deed, with the assistance of a lawyer, for example (Article 477, paragraph 4 of the Civil Code). The notarial form of the mandate is recommended because only an authentic act grants the agent extended powers (Article 490 of the Civil Code) and provides for the agent's supervision by the notary (Article 491 of the Civil Code).
Indeed, the continuity of a business sometimes requires executing disposition acts such as selling business assets or renewing a commercial lease. Only a future protection mandate by authentic act can achieve these objectives and benefit from the notary's advice for customized drafting of the mandate's content.
The business leader can stipulate in the mandate that the agent takes their place in the business (e.g., management of the company, attendance, and voting rights at meetings). The mandate can also include counter-powers to the agent’s management of the business. Additionally, the mandate may provide for the agent’s remuneration, although this is not mandatory (Article 419, paragraph 5 of the Civil Code).
The posthumous mandate for the business leader
What is the purpose of the posthumous mandate for the entrepreneur?
Ordinary power of attorney terminate upon the death of the principal. Accessing a recurring request from notaires, the legislator has conceived the posthumous
The posthumous mandate came into effect on July 1, 2007. By establishing it, the legislator responded to a strong demand from the notarial community. The posthumous mandate allows a person, before their death, to designate an agent who, from the opening of their succession, will be responsible for the administration and/or management of all or part of their assets in place of their heirs (Articles 812 and following of the Civil Code).
Consequently, it allows the business leader to designate, during their lifetime, the appropriate person to manage their business after their death, thus avoiding any paralysis of the company's operations.
What form should the posthumous mandate take?
A posthumous mandate must be drawn up in authentic form (art. 812-1-1 al. 3 of the French Civil Code). This means that it must be drawn up by a notary.
What are the conditions for a posthumous mandate?
According to Article 812-1-1 of the Civil Code, "The mandate is valid only if it is justified by a serious and legitimate interest concerning the heir or the succession's assets, precisely motivated." For example, the principal may decide to appoint a friend to manage their company until their minor heirs reach adulthood.
The agent can be a natural person, including an heir (Article 812, paragraph 2 of the Civil Code), or a legal entity such as a company. The agent must have full civil capacity and not be forbidden from managing when professional assets are involved (Article 812, paragraph 3 of the Civil Code).
The business leader designates during their lifetime the person they deem most capable of managing their business in the event of death.
The mandate is given for a period of two years, which can be extended to five years, depending on the incapacity, age of the heirs, or the need to manage professional assets. It can be extended by judicial decision (Article 812-1-1, paragraph 2 of the Civil Code).
What is the role of the posthumous mandatary?
The posthumous agent designated by the business leader must act on behalf of and in the interest of one or more identified heirs (Article 812, paragraph 1 of the Civil Code). Thus, the agent represents the heirs and manages the business on their behalf. If the heirs have not accepted the succession, the agent can only perform conservatory or supervisory acts (Article 812-1-3 of the Civil Code). Thereafter, the agent benefits from extended powers as provided in the mandate.
If the business is operated as a sole proprietorship, the agent will be responsible for its operation. If the business is a company, the agent exercises the prerogatives of a partner. The mandate can also stipulate that the agent takes over the management of the company.
It is important to note that the agent is not liable for the business’s debts; it is the heirs who bear them. Additionally, the heirs are taxable in their own names.
The agent can only be remunerated if the posthumous mandate specifies it (Article 812-2 of the Civil Code).
Each year and at the end of the mandate, the agent must report on their management to the heirs and inform them of the actions taken (Article 812-7 of the Civil Code).
The agent's liability can be sought in the event of fault.
The mandate ends for one of the reasons provided in Article 812-4 of the Civil Code: the expiry of the term, the agent's resignation, judicial revocation, the conclusion of a conventional mandate between the heirs and the agent, the sale of the assets covered by the mandate by the heirs, the death or placement under protection of the agent, the death of the heir, or the decision of the guardianship judge to terminate the mandate.