Setting up a company

Legal structure

Commercial companies and civil companies are the two main categories of companies in France.

Subject to certain exceptions, only commercial companies can carry on businesses - they may be formed as a: Société Anonyme (SA), Société à Responsabilité Limitée (SARL), Société par Actions Simplifiée (SAS), Société en Nom Collectif (SNC), Société en Participation (SP), Société en Commandite Simple (SCS), Société Européenne (SE), Société en Commandite par Actions (SCA).

The choice will have implications on the company’s legal status, tax position, assets and employment relations.

A company wishing to expand its business in France will usually form a subsidiary. The most common forms used by such businesses are the SAS and the SARL which are companies with a limited shareholder liability.

The SA and the SCA are the only companies that can make a public offering of their shares.

The SAS has the best flexibility as the shareholders may freely manage and operate the company. It can only have one shareholder and one president, but other directors can be elected.

Apart from the SP, any type of commercial companies will be able to own assets, employ workers and be subject to French taxation.

Liability of the members

The liability of the shareholders of a SA, SAS, SE, SCA and SARL is limited to the amount due to be paid to the company for their shares.

The shareholders of a SP and SNC are personally liable for the debts of the company.

A SCS and SCA have shareholders with limited and unlimited liability.

Key features

Articles of association: It sets out, amongst other matters, the internal rules of the company and its corporate purpose (i.e: business activities that it intends to carry on). Except for the SA, SAS and the SE, the articles of association must mention the names of all subscribing shareholders.
Registered office (not required for a SP): It may be the local of the company or a domiciliation in an agency. A lease, domiciliation agreement or title deed will be needed.
Bank account: It has to be opened in a French bank (established in France as a company or as a branch) for the deposit of the share capital (not required for a SNC, SP or SCS).
Effective beneficiaries: any person holding, directly or indirectly, at least 25% of the share capital of the company. They must be disclosed upon incorporation and thereafter in case of change.

Representatives

Any natural person (including Foreigners) may act as the legal representative of a French commercial company.

Each natural person appointed as a member of the company’s management must sign a certificate attesting to their parentage and absence of a criminal record.

In a SAS, the legal representative can also be a legal entity (i.e: a Foreign company) represented by its own legal representatives or by a proxy holder.

Legal representatives can, of course, be held liable if they breach the law, the articles of association of the company, or in the case of wrongdoing in the course of the business administration.

Public Information

The company’s incorporation notice must be published in a French journal of legal notices.

The company (other than a SP) must be registered with the Registry of Commerce and Companies.

The excerpt from this Registry, the so called Extrait Kbis (showing the company’s main particulars), the articles of association and the names of the company’s officers are made public.

My Items

D- Renting premises

C- Opening a branch

I- Intellectual property

H- Data protection

J- Business immigration

G- Employment

F- Business taxation

E- Contracting

A- Setting up a company

B- Financing a company