SARL Manager: As a matter of principle, creating a competing company during one's term is prohibited

While still in office, the manager of a property trading limited liability company (SARL) established a competing business. He resigned shortly thereafter.

His partners sued him for damages, alleging a breach of his duty of loyalty.

The Court of Appeal dismissed the claim, ruling that the mere creation of a competing company does not in itself constitute a breach of the duty of loyalty and that no act of unfair competition had been established.

The Court of Cassation overturned the decision.

The duty of loyalty and fidelity incumbent upon the manager of a SARL prohibits them, as a matter of principle and independently of any act of unfair competition, from creating a competing company while still in office.