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MONACO LAW REVIEW | DECEMBER 2025 | COURTROOM INSIGHTS
and, accordingly, the powers of the executive manager (Civil
Code, Article 1672-1(9°)). Unlike French law, Monegasque
law does not confi ne the manager’s powers to the limits of
the corporate objects (French Civil Code, Article 1849 -1) nor
require the manager to act in accordance with the corporate
interest (French Civil Code, Article 1848 -1). It is therefore
diffi cult to identify any rule of Monegasque contract law or
company law that would allow a hypothecary suretyship
granted by a civil company to be annulled on the ground
that it does not serve the company’s corporate interest or
that no consideration is received. The ground of appeal
alleging a violation of the law did not put forward any such
rule: it relied solely on the aforementioned French case law,
which has no relevance in the Principality... Accordingly,
the Court of Revision refused to transpose to Monaco the
rule established by the French courts whereby a security
is valid only if the company granting it derives an interest
from it — meaning that the guarantee must not expose the
guaranteeing company to an excessive risk and that it must
receive some form of consideration. No such rule exists
in Monaco, and none should be invented: no statutory
provision offers even the slightest basis for such a limitation
on the powers of the executive manager, which would
generate regrettable legal uncertainty.
Unfortunate though it may be in France, the solution would
be even more so in Monaco, where the organisation of a
company is largely left to contractual freedom. In Monaco,
a breach of the corporate interest may provide grounds for
bringing proceedings against a company offi cer, or may
support a claim of abuse of majority or minority by partners
who have misused their political prerogatives, in particular
their voting rights. But such a breach cannot, in itself, suffi ce
to invalidate an act performed in the name and on behalf of
the company. The court must refrain from intruding into the
internal life of the company — a risk that arises if it claims
to be better placed than the partners to determine whether
an act complies with the corporate interest. This is especially
true where the company is a civil company, which is merely
a vehicle for holding immovable property and whose own
corporate interest is diffi cult to distinguish from that of its
benefi cial owner, as the judgment underscores in noting
that the disputed security was granted “to guarantee the debt
of its executive managing partner and benefi cial owner.” An
executive manager empowered by the articles of association
to grant hypothecary security acts validly in doing so, and
in Monaco a civil company cannot evade its undertaking by
asserting that it was given without suffi cient regard for the
corporate interest. It is to be welcomed that this unfortunate
judge-made doctrine has not crossed the border.
FXL
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