SIMPLIFIED FORM OF CORPORATIONS (“SAS”)
UNDER FRENCH LAW
May 2011
French law is particularly liberal as regards “simplified form of corporations”
(or “SAS”), to be organized in detail by the founders/shareholders. The general
features of this form of corporation can be described very briefly as follows.
SHAREHOLDING:
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Number of shareholders: One shareholder minimum (a single shareholder SAS is
known as a “SASU”). No maximum.
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Liability: The shareholders are liable within the limits of their contribution to the
share capital. The sole shareholder of a “SASU” may be held responsible for the
payment of the debts / undertakings of the SASU without limitation.
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Minimum required amount of capital: Except for specific activities, €37,000 until
31 December 2008 and no minimum afterwards (i.e. €0.01 minimum) in theory.
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Trading of the shares: The shares of an SAS may not be listed on a stock
exchange. The bylaws can contain specific provisions as regards a prior approval
of new shareholders, change of control clauses, the possibility to exclude
shareholders under specific circumstances, to suspend specific rights, to prohibit
transfers shares for a limited period of time, etc.
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Transfers of shares: The conditions for a transfer of shares are defined by the
bylaws. They can be completed with a stock transfer form (“ordre de movement”)
or a share purchase agreement. A specific tax return shall also be executed and
registration duties are payable to the tax administration (since 6 August 2008, the
registration tax is 3% capped at €5,000 per transfer instead of 1.1% capped at
€4,000 before) in addition to any tax on the profits made.
MANAGEMENT:
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Management bodies: as set out in the bylaws...
A President (a company or an individual) must be appointed and represent the
company vis-à-vis third parties.
The company may also be represented by (Deputy) General Managers
(Directeur(s) Général(aux), Directeur(s) Général(aux) Adjoint(s)).
This
possibility is often used by practitioners, in particular for subsidiaries of foreign
companies appointing one of their nationals as President but needing in fact a local
representative for day-to-day life/business.
It is also very common to limit the powers of the President and/or of the General
Manager(s) (e.g.: system of double signatures, authorisations, ratifications for
specific matters or when significant amounts are at hand).
Any type of additional management structure (boards of directors, advisory or
supervisory boards, technical or strategic committees…) may be freely fixed in the
bylaws, which must detail their role and the steps to be followed.
A manager dismissed without cause may be entitled to damages.
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Managers can have an employment contract, but their status may be challenged by
the social security (the consequence is that they may be excluded from the benefit
of specific advantages). The consequence is that a manager can receive payment
of a “remuneration” (for his functions as a manager) and “wages” (as an
employee). This is one of the reasons why managers are sometimes employed by
the parent company or must report to specific corporate bodies.
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Number of shares held by the managers: no specific obligation (unless it is
requested in the bylaws).
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Appointment of the managers: as set by the bylaws.
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Term of office of management: set by the bylaws.
DECISION MAKING PROCESS:
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Form, procedures, quorum for the decisions: Freely set in the bylaws apart from
certain decisions which must be collective. French law provides a list of decisions
for which unanimous vote of the shareholders is necessary (e.g.: in order to change
of the nationality of the company, an exclusion clause…). Written consultations
are possible.
ACCOUNTS:
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The accounts shall be approved within 6 months as from the end of the financial
year concerned. A Balance sheet, profit and loss statement and management report
shall be deposited with the clerk of the local Commercial Court.
Pierre Grenier
Avocat à la Cour
[email protected]
Mob.: +33 623 062 551
Direct line : +33 183 628 702
Fax. : +33 972 230 490
14 Bd Bineau, 92300 Levallois,
144 r de Courcelles - 75017 Paris,
France