Director of a listed company sued personally by minority shareholders

The situation

The director of a listed French company, behind an innovative aeronautical programme, was sued personally by minority shareholders after the project was halted. The cause lay in the abrupt withdrawal of the public funding that had been promised, which put an end to an initiative pursued in good faith. The shareholders brought a liability claim on combined company law and securities law grounds, seeking compensation for their economic loss from the person who had embodied the project. Personal claims of this kind, resting on alleged breaches of disclosure and governance obligations, are becoming more frequent in listed companies faced with reversals in public funding.

The difficulty

Answering the claim meant first of all refusing to conflate the failure of a project with fault on the part of its director. What was at stake was at once financial, with a potentially heavy personal award, and reputational, in a sector where credibility is not easily rebuilt. The grounds relied on, mixing securities litigation with company law, further called for a technically precise and closely coordinated response.

Our involvement

We built the defence around a single line, moving the argument onto the ground of causation rather than answering the claimants’ complaints point by point. By reconstructing the chronology of the public commitments and of their withdrawal, then by defining precisely the obligations of the director under his corporate office, the defence showed the absence of any personal breach capable of giving rise to liability. The director was exonerated.