Limitation of the Executive Directors’powers in the by-laws: third parties can rely on it

A company’s by-laws can restrict or limit the Executive Directors’powers. It was admitted that these limitations could not be opposed by the company to third parties. Conversely, it was not clarified yet if they could be opposed to the company by third parties (except in some limited fields); this is the position adopted by the Supreme Court in a judgment of 14 June 2018 (N° 16 – 28.672) : a third party is entitled to the benefit of the by-laws and to invoke the excess of powers committed by its Directors, in order to cancel the deed executed in breach of such a statutory clause. In light of this decision, the companies should secure their contracts by revising their by-laws as appropriate.