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Company Act in France

Updated on Wednesday 30th September 2020

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The Commercial Code is the main Company Act in France. This law stipulates the most important requirements and rules for a company organization and structure. The Company Law in France also refers to some rules in the Civil Code and in the Monetary and Financial Code. As far as company registration in France is regarded, the Act of December 19, 2002, mentions the obligations of all companies set up in France to register with the French Registry of Commerce and Companies, also known as the Registre de commerce et des sociétés.

Our company formation agents in France explain how to start a business here in accordance with the provisions of the Company Act.

Below, our local consultant explain the main provisions of the French Company Law in relation to opening a company in this country. We can also help you register any type of company in France.

The main types of French companies

The French Company Act describes clearly the types of commercial companies and the difference between these types and civil companies. The main business structures recognized by the French Company Act are:

  • - the limited liability company or SARL, which is the most employed business form in France;
  • - the joint stock corporation or SA, which is suitable for completing large operations;
  • - the partnership or SNC, which not employed very often, as it does not offer many advantages;
  • - the simple joint corporation or SAS is one of the newest types of companies in France.

Civil companies are also mentioned in the Company Act in France as non-trading business structures, known as SC (societes civiles). All requirements for these types of companies are mentioned in the rules of the Company Law in France.

Mergers and acquisitions according to the Company Act in France

The French Commercial Code mentions the “fonds de commerce” which are involved in sales of businesses and acquisitions. As a matter of fact, “fonds of commerce” give security creditors when it comes to commercial companies in France. Agency and distribution are also mentioned in the French Company Act.

Contracts signed in France always mention articles of the French Civil Code and Commercial Code, therefore it is recommended that when signing agreements and setting up companies, entrepreneurs are aware of the content that the articles refer to.

Shareholders according to the French Company Law

The Company Law in France contains specific provisions on the participants in a business. In most types of companies, they are called shareholders or stockholders, and are considered the settlors and main contributors to the business. The only exception applies to sole proprietorships where the owner is called a sole trader.

According to the law, the shareholders have various rights resulting from their participation in the company, but also obligations towards it and those working in the French company.

The Company Act also provides for specific numbers of shareholders in various types of companies. The following shareholding requirements apply when opening a company in France:

  1.  in the case of a French sole trader, the business will require one founding member;
  2. in the case of a private limited liability company, the minimum number of shareholders is 2, while the maximum number is 100;
  3. there is also the single-member limited liability company which required a single shareholder;
  4. in the case of a public company, the minimum number of shareholders is 7, while there are no restrictions in the maximum number of participants;
  5. in the case of partnerships, the minimum number of members is set at 2, while there are no restrictions in the maximum number of partners.

As mentioned above, the shareholders of French companies have both rights and obligations towards the company. The main obligations are to participate in the company with the share capital, as required by the Company Law. In the case of partnerships, sole proprietorships there is no minimum amount of money to be deposited as a capital. In the case of SRLs, the minimum amount of money required as a share capital is 1 euro. The public company needs at least 37,000 euros as a minimum paid-up capital.

Other important obligations of shareholders are related to appointing the main officers in the company, which comprise the directors, managers and auditors and to hold the annual general meeting.

When it comes to the rights of shareholders, they are entitled to benefits under the form of dividend payments, the right to make all the important decisions in the company and to make amendments to it.

All the changes brought to a French company must be notified with the Trade Register and amended into the business’ Articles of Association.

The shareholders of SARLs and SAs can be natural persons or legal entities, according to the Company Act in France.

Our French company formation consultants can offer more information in the rights and obligations of shareholders, under the Company Law.

Company directors in France

The Company Law also contains special provisions related to the officers in the company. These can be directors or managers. Public companies must also have a board of directors elected by the shareholders. SAs must also have auditors appointed.

The French Company Law provides for the following requirements when appointing company directors:

  • - these must have clean criminal records and cannot be bankrupt at the moment of their appointment;
  • - persons with certain professions cannot be appointed as company directors, if they already have work in the company;
  • - foreign citizens from non-EU countries can be appointed as directors in French companies if they hold residence permits;
  • - in the case of public companies one-third of the board of directors can be comprised by employees;
  • - an individual cannot be a member of a board or a director in more than 5 companies;
  • - in the case of SARL companies, the manager or director must be natural person.

With respect to the board of directors of a public company, it can comprise between 3 and 18 members.

If you have any questions related to company directors, our French company formation representatives can answer them.

Company formation documents in France

The French Company Act provides for the following requirements for opening a company in France:

  • -       the future business owners must prepare the company’s incorporation documents;
  • -       the passports of the shareholders must also be filed when opening a company in France;
  • -       information about the company managers and directors must be provided;
  • -       the application forms issued by the Trade Register must also be filled out.

We can help you draft the company’s Articles of Association.

Steps in opening a French company

The following steps must be completed when opening a company in accordance with the Company Law in France:

  • -       choosing a company name and filing it for approval with the Trade Register;
  • -       filing the documents mentioned above with the local Companies Registrar;
  • -       registering with the tax authorities for taxation and social contributions;
  • -       applying for the necessary business licenses with the competent authorities.

If you need more information about the Company Act in France or how to open a company in France, you may contact our local agents.

Taxation of companies in France

Under the Company Law, all French companies have various obligations related to taxation. First of all, they must register with the tax authorities. Then, they are subject to several taxes, among which the business profits tax is the most important.

The French Company Act also provides for reduced tax rates for small and medium-sized entities. These must pay the corporate at a 28% rate for an annual income of 75,000 euros, compared to the standard rate of 33%.

French companies must also prepare annual income tax returns which be submitted with the Trade Register and the tax authorities. In most cases, companies must also have their accounts audited by an independent auditor.

CompanyFormationFrance.com is a part of Bridgewest.eu, an international network which has affiliate partners throughout the world, including our partner Polish law firm or our New Zealand company formation agents who can provide local legal assistance to foreign investors and our Asian partners who can help you with company incorporation in Malaysia.

 

Meet us in Paris

Call us now at +33 9 73 22 01 51 to set up an appointment with our lawyers in Paris, France. Alternatively you can incorporate your company without traveling to France.

As a BridgeWest client, you will beneficiate from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in France.

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Starting a company in France can be difficult since it involves such complex procedures. The team from CompanyFormationFrance is very qualified and benefits from extensive expertise in this area.
Mihai Cuc, Partner of
Enescu & Cuc Law Firm
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