Establishment of a French company
Please note that the information herein is of a general nature and you should not act or refrain from acting on it without professional advice on the specific facts of your case. No liability is accepted by the author or Sykes Anderson Perry Limited in respect of this article. French company law is a complex subject and the above is a basic outline only and is intended only as a general guide. Nothing herein constitutes financial advice.
Setting up a company in France involves various stages set out below. French companies are not bought “off the shelf” but specifically formed.
The main characteristics of the company
Before the company is created, the investors have to agree on the following:
the business objective “objet social”
the legal form of the company
the duration of the company. If the company statutes say nothing the company will be establish for 99 years old maximum.
the name of the company
The company statutes are the company’s constitution documents like an English company’s memorandum and objects. According to Article L.210-2 of the French commercial code, you have to include in them: the form, the duration, the name, the head office, the object and the amount of the capital. They have to be in writing and signed by the founders.
Contributions to the company
The contributions are made by transfers to the company of the investors assets (sum of money, securities, building, business etc.). The individuals who transfer the assets receive shares or “actions” in the company. According to Article 1832 of the French civil code, each shareholder must make a contribution. However, it is not necessary that the contributions of the partners be of equal value. If the company is dissolved the contributions are to be be restored to the partners. This is obviously subject to the company trading successfully.
Various contributions by investors to the company
“Apports en numéraire” “Contribution in cash”: is any contribution of money.
“Apports en nature” “Contribution in Kind”: is any contribution of property other than a sum of money. Any movable asset, real property, physical or immaterial counts as a contribution.
“Apports en industrie” “Contribution in industry”: Only in certain structures (SARL and SAS) can an investor bring his “industry”, i.e. his knowledge, his work or his services, as a contribution.
After the signature of the statutes by the investors, the company is created after the following formalities are completed:
Article R.210-3 of the French commercial code, requires the main details of the company to be published in a newspaper where its head office is situated. On average cost is 230 €.
Deposit of the file for registration of the company at the Centre of Formalities for Companies (CFE) cost is 41,50€. This formality is essential because it is only as from its registration that the company acquires legal personality.
Société par actions simplifiée - SAS
The SAS is the most flexible corporate legal entity in French law.
Characteristics of an SAS
- Share capital:
It has to have a share capital, the amount of which is freely fixed in the statutes. No minimum amount is required.
The SAS can be constituted between persons or companies and can include only one shareholder.
The functioning of the SAS is characterized by the will of his members and there is great flexibility. Clauses can be inserted into its statutes as required by the investors such as inalienability of the shares or the conditions to sell etc. The investors in the SAS decide freely in the statutes the way it is to be managed. Certain decisions must however be decided by shareholders such as any modification of the capital, a merger or dissolution.
In an SAS, an investor can bring his “industry” as an investment. He gives the company his knowledge, his work or his services in return for shares.
Solicitor-Advocate and Chartered Tax Adviser