Capital Companies in France
Joint stock company (Société Anonyme - S.A. alebo Société par Actions Simplifiée - S.A.S.),
Company commandite with shares (Société en Commandite par Actions - S.C.A.),
Limited company (Société à Responsabilité Limitée - S.A.R.L.).
The legal forms S.A. or S.A.R.L. are obviously preferred.
S.A. (Société Anonyme)
Joint Stock Company
For small and medium-size companies in France is traditionally used the legal form of S.A. (Article L. 224-1 et seq. Commercial Code). The formation can be done with minimum 7 partners and minimum capital of 37.000 EUR (for listed companies 225.000 EUR). At least 50 per cent of deposits must be paid in cash (the rest within 5 years); according to memorandum the registration and payment of capital shall be done on blocked account, then follows the signature of memorandum of association; the notarial act is not necessary.
There are two types of S.A. differing by their bodies:
Prevailing "S.A. classique" consists of "Conseil d'administration" (Board of Directors with 3 to 18 members, Article L. 225-17 to 225-56 Commercial Code), which can be revoked anytime (révocation/démission) by the General Assembly. The chairman of the Board of Directors (président du conseil d’administration) controls and represents the Board of Directors.
Since the beginning as the economy law from May 15, 2001 became efficient, the Board of Directors is directed to determine the guidelines of company policy and to check the observance thereof. Besides the competencies exactly entrusted to the Board of Directors within the company business subject, the Board of Directors can act in any matters needed for properly functioning.
According to current legal situation, the general manager has the power of attorney to control the company (Article L. 225-51-1, 225-56 Commercial Code). He is authorized to, as it was already before the law has been changed and amended, coordinate the work of Board of Directors and to represent the company against third persons and stockholders.
PDG (=president) is already not responsible for operational management according to new legal situation, but „Directeur Général“; Directeur Général represented more the executive body of president up to now. The general director can have up to five assistants „directeur généraux délegués“ (Article L. 225-53 Commercial Code), who have the same competences. The president controls the Board of Directors and represents it at the General Assembly.
For big concerns of multi-national section, the "nouvelle S.A." has been introduced. The bodies thereof are the "Directoire" (comparable to our board of directors) and the "Conseil de Surveillance" (Supervisory Board). The Board of Directors consists of 2 to 5 persons, for the listed companies even up to 7 persons; the smaller „S.A. à directoire“ with basic capital below 150.000 EUR can have the own Board of Directors (directeur général unique, Article L. 225-58 par. 2 Commercial Code), as it is frequently in case of family companies. The Board of Directors is voted by the Administration Board. The mandate lasts, according to statute, between 2 and 6 years. If no stipulation exists, then the mandate lasts 4 years. The chairmen can be revoked by General Assembly at the suggestion of Administrative Board.
"Président du Directoire" and individual namely nominated members (Directeurs Généraux) have the right to act independently on behalf the company outside. The Supervisory Board consists of 3 to 18 stockholder; it receives the reports each quarter from the Board of Directors "Directoire", it has the right for revision anytime, or the right for consulting (not right to give orders) for "Catalogue" of trades with obligatory approval. Lands and shares can not be sold without its approval. The same is also valid for ordering the insurance by the company.
The audit of annual balance sheet is performed by "Commissaire aux Comptes" (=auditor) hired for 6 years and publishing thereof by presenting the balance sheet, the profit-and-loss statement and annexes at the Companies’ Register.
S.A.S. (Société par Actions Simplifiée)
Simplified Joint Stock Company
Along with the standard joint stock company, since the beginning of 1994 also its simplified form is being in existence (S.A.S. Article L. 227-1 et seq. Commercial Code). It should support the co-operation among companies and is free from strict requirements on protection of investors. The stockholders of S.A.S. can become the companies or private persons. The minimum company capital amounts 37.000 EUR; the structure - in respect to the repayment - responds to S.A. Two partners are sufficient for its formation; whereby the executive manager does not need to be absolutely the owner of capital; after the Law No. 99-587 from July 12, 1999 has become valid, this company can also be executed as the company with sole partner. A large freedom of organization arises in case of statute; the principal advantage consists in limited liability.
S.C.A. (Société en Commandite par Actions)
Company Commandite with Shares
At least one partner is the general partner, at least three of them are the limited partners. The basic capital amounts 37.000 EUR, excepting the companies with business in specific area (e.g. the basic capital 800.000 or 480.000 EUR for insurance companies, Article R. 322-5 Law on insurance system). Formalities for formation in principle respond to the S.A.
S.C.A. has one or more executive managers. The limited partners are not allowed to be executive managers. The Supervisory Board is compulsory, with minimum three members and in nominated by General Assembly of stockholders.
S.A.R.L. (Société à Responsabilité Limitée)
S.A.R.L. (Article L. 223-1 et seq. Commercial Code) can be understood as the French variant of Austrian GesmbH./Ltd. From the French point of view, it is represented as the certain intermediate form between the personal and the capital company, because the company capital is not divided into free-convertible shares (convertible only among partners) and in case of material investments upon special circumstances even the personal liability against third persons occurs. The company with sole partner is allowable.
The basic capital amounts 1 EUR and after August 6, 2003 it is determined by agreement among partners in the statute (Article L 223-2), the maximum number of partners is 100 (Article L 223-3 Commercial Code). Unless this number is not observed, the company must be changed to S.A. within two years, otherwise it will be cancelled according to law.
At the formation no notary act is required; the statute is determined and after repayment of investment the blocked account is executed (at a bank, at the notary, etc.)
The transfers of social shares during the living (cession des parts sociales, Article L. 223-17, 221-14, 223-13, 223-14 and 223-16 Commercial Code) to the persons not being the family dependants or partners require the approval. The law rule requires the absolute majority of votes of partners, however not more than three quarters. The “agrément” is valid according to distribution, when the partners do not take appeal against notification on sale within the period of three months. Providing they refuse the person acquiring this share to be a new partner, the business shares must be taken over for the exact, in case of disagreement, price determined by an expert (Article L. 223-14 Commercial Code). The memorandum of association can make also the transfers to the partners or family dependants to be liable to approval. The changes and amendments in statute, excepting otherwise wording of provisions in the memorandum of association, require the qualified majority, for decisions of partners only mere majority is enough.
The management of S.A.R.L. is done by one or more executive managers (gérant, Article L. 223-18 Commercial Code), who are authorized to exclusive representation and they also can be the partners. Their nomination and withdrawing can be done by mere majority, which represents at least the half of social capital.
All S.A.R.L. have the duty to present the balance sheet inter alia at the Companies’ Registry. "Bigger" S.A.R.L. (2 of 3 criterion must be completed: turnover > 3.05 mil. EUR; economic result > 1.5 mil. EUR, number of staff > 50) must order the auditor likewise the S.A.
E.U.R.L. (Entreprise Unipersonselle à Responsabilité Limitée)
Limited Sompany with Sole Partner
E.U.R.L. is the combined form between the free lanced businessman and the limited company, and by the law from July 11, 1985 it became a form of S.A.R.L.
The basic capital amounts 1 EUR (after August 1st, 2003) it is repayable in full amount. Typical for this form of a company is that the formation can be done by independent natural person or legal entity. However, the company with sole partner cannot become a partner of other E.U.R.L or to form another E.U.R.L. This company (unique associé) is liable only up to the amount of its investment. As to its taxation, selection can be made between natural person income tax and legal entity income tax. In principle, in other matters the provisions for S.A.R.L. are valid. This form is suitable also for the French daughter companies of foreign companies, also in a form of French intermediate-holding.
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