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Constitution in France of a Public limited company in 2022

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In France, a public limited company (called "société anonyme" or SA in French) is made for large companies and is a commercial company in form, whose capital is divided into shares (nominative or anonymous, listed or not on a stock market) constituted between partners who do not have the status of merchant and only bear losses up to the amount of their contributions:


  • it can make offers to the public of financial securities (OAP)

  • it can have an unlimited number of shareholders;

  • shares are tradable securities, on a regulated market, if the company is listed.

We distinguish in France:

  • the classic limited company: managed by a board of directors, a chairman of the board (CEO) and where applicable, a general manager, or several delegated general managers.


  • the modern limited company: composed of a supervisory board and a management board.

Constitution of an limited company in France


Basic conditions  / Shareholders

In France, the limited company requires at least 7 shareholders. In the event of non-compliance, this condition is punishable by a refusal of registration in the constitution and, during its corporate life, by the dissolution of the company.


The judge can grant a regularization period of 6 months.

The combination of contributions to the share capital The limited company is a capital company, the contribution to industry is therefore excluded. All contributions contribute to the formation of social capital.


Legal minimum: 37,000 euros.

The requirement for a reinforced minimum share capital (225,000 euros) has been removed for companies whose securities are admitted to trading on a regulated market or which make offers to the public.


Par value of shares

The nominal value of the share may or may not be determined: - if the statutes determine the nominal value of the share, it is impossible to issue shares below "par", that is to say for a amount less than the nominal value, without modifying the statutes.


Classes of shares may have different values, but all shares of the same class must have the same value, as determined in the articles of association.


If the par value of the share is not determined, the shares are equity securities. The theoretical value of the share is equal to the amount obtained by dividing the capital by the number of shares.

Contributions in kind / Control of the evaluation

In France, a contributions commissioner designated by the president of the commercial court must evaluate contributions in kind. A report from this commissioner must detail the valuation method used and the value given to the contribution in kind in order to avoid undervaluation or overvaluation of the contribution.


The shareholders must set the value attributed to the contribution. They do not incur any special civil liability as in the private limited company, but are likely to incur criminal liability for overvaluation of the contribution.


In companies that are formed with a public offering of securities, the assessment of the value of contributions in kind and special benefits, made by the commissioners, can only be reduced by a unanimous decision of the partners. Without the express approval of the providers or beneficiaries of the benefits, the company will not be incorporated. Contributions in kind must be released immediately.


Special benefits are subject to the same control procedure as contributions in kind. These are allocated to certain shareholders in return for services rendered during the formation of the company or during the life of the company, during a capital increase, a transformation or a merger.


No sanction is provided if the procedure for controlling special advantages has not been respected when the company is formed (except for the company formed by public offering). Control of the purchase by the company of property belonging to a shareholder within two years of its creation: there is an obligation of evaluation by an acquisition commissioner appointed by the commercial court at the request of the president of the board of directors (or management board) if the property has a value greater than or equal to 1/10 of the share capital. The sanction for non-compliance with the procedure is the nullity of the sale.      


Cash contributions / The subscribed funds are deposited with an approved depository before any registration

After registration, the funds are withdrawn by the company or by a shareholder if the company is not registered within 6 months of filing the draft statute with the registration office, or by an ad hoc agent . The release of contributions is half upon subscription; the remainder must be released within 5 years upon appeal by management.


Sanctions

There are no longer criminal sanctions for irregular subscriptions since the NRE law:

  • the rights attached to the shares are suspended (access to the AGM, voting rights, dividend rights, DPS);

  • the shareholder is sued for payment;

  • managers may be subject to a judicial injunction to be subject to penalty;

  • in listed companies, sanction of execution on the stock exchange (forced sale).


Formal conditions

The statutes must be signed by the shareholders. The first members of the administrative and control bodies must be designated in the statutes (the first administrators or members of the SC; the first CAC)


The General Manager (or the management board or the DGU) carries out the publicity formalities under his responsibility:

  • notice of creation published in a legal notice newspaper,

  • application for registration with the RCS which must first be presented to the Business Training Center,

  • filing of acts with the RCS (statutes, appointments of managers, certificate of the depositary of funds, report of the contribution commissioners)


Transformation into a limited company

In France, the transformation assumes that the company being transformed has at least 7 partners and that its share capital is not less than 37,000 euros. In addition, some conditions are specific to the transformation into a limited company. Control of equity, assets and special benefits .


The appointment of a transformation auditor, when a company transforms into a joint stock company (and therefore into a limited company), is mandatory, unless the company has an auditor who will carry out the control procedures. This commissioner is appointed unanimously by the partners or by the president of the commercial court ruling on request.


Its mission  is to evaluate, under its responsibility, the value of the assets making up the company's assets and the particular benefits, in a report which certifies that the amount of equity is at least equal to the capital social.


The General Meeting of Partners then decides on this report; it can only modify the evaluation unanimously. The sanction in the event of failure to approve the report is the nullity of the transformation.

Transformation of an SARL or SCA into an limited company:

  • the rule of unanimity required for the transformation of an SARL is reduced when it is transformed into a limited company and its equity is at least equal to 750,000 euros;

  • the transformation decision is then taken by a majority of the shares. If the company being transformed is an SCA, the transformation decision is taken by a majority of the general partners.



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