Sanctions against an abusive SCI manager in 2026

Managers (gérants) of an SCI (French property holding company) have wide powers to run the société civile immobilière, but these prerogatives are not without limits. Where a manager exceeds his or her functions or abuses his or her powers, the partners have several remedies to sanction such harmful conduct. Recent developments in case law and the adaptation of professional practice in 2026 strengthen the control mechanisms and the sanctions applicable against a defaulting manager.

Identifying abuse of power by the SCI manager

Definition of abuse of power by an SCI manager

Abuse of power by an SCI manager is characterised by the exercise of his or her prerogatives in an interest contrary to that of the company or its partners. This notion covers several forms of reprehensible conduct that may infringe the partners' rights or jeopardise the SCI's corporate purpose.

The abusive manager may in particular misappropriate the company's assets for his or her personal benefit, enter into acts manifestly contrary to the interests of the SCI, or exercise his or her powers in a discriminatory manner towards certain partners. Such conduct constitutes a breach of the statutory and contractual obligations incumbent on the manager.

Concrete forms of abuse of power

Abuse of power takes various forms in the day-to-day management of the SCI. The manager may thus sell buildings at derisory prices for the benefit of third parties or relatives, incur lavish expenditure unrelated to the corporate purpose, or unjustifiably refuse the partners access to corporate documents.

Personal use of the SCI's assets is also a common form of abuse. A manager who occupies free of charge a dwelling belonging to the company without the partners' authorisation, or who uses the SCI's accounts to pay personal expenses, commits a clear misappropriation.

Gross negligence in management may also be classified as abuse of power, in particular where the manager deliberately allows the properties to deteriorate or fails to collect the rents, causing financial loss to the company.

Sanction procedures against the abusive manager

Prior formal notice

Before taking heavier sanctions against the manager, it is generally advisable to send a formal notice to the defaulting manager. This step makes it possible to set out formally the complaints and to give the manager the opportunity to correct his or her conduct.

The formal notice must be precise and detailed, listing the facts complained of with their dates and their financial consequences for the company. It sets a reasonable period for the manager to stop the disputed practices and, where appropriate, to make good the loss caused.

This preliminary step has the advantage of providing evidence of the manager's bad faith if he or she persists in the abusive conduct. It may also lead to an amicable resolution of the dispute, thus avoiding lengthy and costly legal proceedings. The dispute resolution procedures and the mechanisms for protecting minority partners are presented in our article on disputes between partners.

Removal of the manager by the partners' meeting

Removal of the SCI manager is the most radical sanction available to the partners. This measure may be decided by the general meeting of partners in accordance with the procedures laid down in the company's articles of association.

Removal may take place on legitimate grounds, in particular in the event of proven abuse of power, gross negligence or breaches of statutory and contractual obligations. The partners must be able to justify their decision with concrete and convincing evidence.

The articles of association of the SCI generally determine the majority required to remove the manager. In the absence of specific provisions in the articles, removal requires the consent of a majority of the partners representing at least half of the shares.

Judicial removal for just cause

Where removal by the partners proves impossible, the partners may apply to the court for the judicial removal of the abusive manager. This procedure requires proof of just cause (juste motif), that is to say conduct by the manager that is incompatible with the continuation of his or her mandate. The procedure for removal of an SARL manager and the means of challenging it are set out in our dedicated article, which is useful for comparison with the SCI regime.

The court has sovereign discretion to assess whether just cause exists, taking into account the seriousness of the facts complained of, their repetition and their consequences for the company. Abuse of power by an SCI manager undeniably constitutes just cause for judicial removal.

Judicial removal has the advantage of being binding even on partners who may have supported the defaulting manager. It also allows the court to order urgent protective measures to preserve the company's interests during the proceedings.

Applicable civil sanctions

Civil liability of the manager

The abusive manager is liable in civil law towards the company and the partners for the loss caused by his or her wrongful conduct. This liability may be contractual, based on breach of the obligations arising from the management mandate, or tortious in the event of a fault committed in the exercise of his or her functions. On the conditions for engaging the liability of a director for mismanagement in commercial companies, see our analysis devoted to this action.

The principle of liability extends to direct and indirect damage resulting from the abuse of power. The partners may thus claim compensation for the financial losses suffered by the company, but also for the reduction in value of their shares.

Enforcing this liability requires proof of a causal link between the manager's fault and the loss suffered. Accounting and property valuation expert reports are often key evidence in this type of litigation.

Repayment of misappropriated sums

In the event of misappropriation of funds or misuse of the SCI's assets, the manager must repay in full the sums or benefits unduly received. This repayment obligation is generally accompanied by the payment of late payment interest calculated at the statutory rate.

The court may order restitution in kind where possible or, failing that, order the manager to pay compensation equivalent to the value of the misappropriated assets. This compensation is assessed on the date of the judgment, taking into account changes in the value of the assets concerned.

Restitution may also cover the fruits and income that the company would normally have received had the assets not been misappropriated. This approach allows full compensation for the loss suffered by the SCI and its partners.

Additional damages

In addition to repayment of the misappropriated sums, the manager may be ordered to pay damages to compensate for all the loss caused by his or her abusive conduct. These damages cover in particular the costs incurred by the company to remedy the consequences of the mismanagement.

The legal costs incurred by the partners to obtain the removal and the order against the manager may also be charged to him or her. This incentive measure is intended to deter abusive conduct by making the defaulting manager bear all the costs of the proceedings.

The non-pecuniary loss suffered by the partners, in particular in the event of a serious breach of their trust or the spoliation of their rights, may also give rise to compensation. The assessment of this loss nevertheless remains delicate and requires a case-by-case evaluation.

Criminal sanctions incurred

Criminal classification of abuse of power

The abusive manager's conduct may constitute criminal offences carrying specific penalties. Breach of trust (abus de confiance) is the classification most frequently used where the manager misappropriates funds or assets entrusted to him or her by reason of his or her functions.

Fraud (escroquerie) may also be established if the manager used fraudulent schemes to deceive the partners and obtain undue benefits. This classification requires proof of a deliberate intention to cause harm and the use of deceptive means.

The offence of presenting inaccurate accounts is another offence frequently alleged against SCI managers who falsify accounting documents to conceal their reprehensible conduct.

Penalties incurred

The criminal penalties applicable to abusive managers vary according to the seriousness of the facts and the amounts involved. Breach of trust is punishable by three years' imprisonment and a fine of €375,000, and these penalties may be increased to five years' imprisonment and a fine of €500,000 where there are aggravating circumstances.

Fraud exposes its perpetrator to the same penalties, with specific aggravating circumstances where false documents are used or the vulnerability of the victims is exploited. Fines may be increased to twice the amount of the fraud where this exceeds the amount of the fine provided for by law.

Additional penalties are an important aspect of criminal sanctions. The convicted manager may thus be prohibited from exercising management or administrative functions in civil or commercial companies for a period of up to five years.

Prevention and protection of partners

Strengthening control through the articles of association

Preventing abuse of power involves drafting the SCI's articles of association so as to frame the manager's powers strictly. The partners may thus provide for authorisation thresholds for certain management acts or establish collective control over the most important decisions.

Appointing a statutory auditor (commissaire aux comptes), even though this is not compulsory for SCIs, is an effective protective measure. This independent professional ensures that the accounts are in order and may alert the partners to irregularities in management.

A precise definition of the manager's powers in the articles of association avoids areas of uncertainty conducive to abuse. This preventive approach also makes it easier to identify and sanction any acts exceeding those powers.

Setting up monitoring mechanisms

The partners may set up mechanisms for the permanent monitoring of management, in particular by creating a supervisory board composed of partners who are not managers. This body may exercise regular control over the manager's acts and alert the general meeting to any malfunction.

Mandatory periodic reporting is also an effective preventive tool. The manager may thus be required to present regularly a statement of the financial and asset position of the SCI, facilitating the early detection of anomalies.

Internal alert procedures allow the partners to report suspicious conduct by the manager promptly. These mechanisms favour the rapid resolution of problems before they degenerate into clear abuse.

Developments in case law and outlook for 2026

Recent trends in case law

Recent case law shows a tendency towards heavier sanctions against abusive managers, particularly where the conduct infringes the fundamental rights of the partners. The courts no longer hesitate to hand down exemplary judgments to deter this type of conduct.

The assessment of the seriousness of faults is also moving towards a broader consideration of the indirect loss suffered by the partners. This development particularly benefits small shareholders who have limited means to defend their interests.

The recognition of anxiety loss (préjudice d'anxiété) suffered by partners who are victims of abuse of power is a notable development in case law. This form of non-pecuniary loss is compensated specifically, independently of financial loss.

Strengthening of legal tools

The legal tools available to partners are gradually being strengthened with the adoption of new legislative and regulatory provisions. These developments aim to better protect the rights of minority partners and to make it easier to sanction defaulting managers.

The development of group actions in the real estate field offers new prospects to partners who are victims of abuse of power. These collective procedures allow costs to be pooled and the injured interests to be defended more effectively.

Improved access to the financial and accounting information of SCIs is also an important area of progress. These transparency measures facilitate the detection of abuse and strengthen the partners' means of control.

Combating abuse of power by SCI managers draws on a full range of legal tools, combining civil and criminal sanctions. Removal of the abusive manager, together with action on his or her financial liability, is the appropriate response to such harmful conduct. Partners now have stronger tools to prevent and sanction such abuse effectively, provided that they follow the legal procedures and gather the necessary evidence. Given the complexity of these questions, it remains essential to consult a lawyer who focuses on real estate law for tailored assistance suited to each situation.