Types of Business Organisation

Principal forms of doing business

The company form most frequently used by large companies in France is the joint-stock company (société anonyme – SA); indeed, it is compulsory for companies in finance or insurance. Smaller firms, particularly sales subsidiaries, often use the limited-liability form (société à responsabilité limitée – SARL). An SARL with a sole shareholder is known as an entreprise unipersonnelle à responsabilité limitée (EURL). A subsidiary SA or an SARL is the usual form of business organisation for a foreign investment. There is no minimum capital requirement for an SARL or EURL.

Requirements of a joint-stock company (société anonyme – SA)

Capital. Minimum €225,000 if publicly owned; otherwise, €37,000. Only 50% needs to be fully paid up. If capital falls below the minimum, the company must restore it to that level within one year. Otherwise, it may be placed in liquidation. Capital must be fully paid up within five years. Companies must set aside 5% of annual distributable profits in a legal reserve until the reserve equals 10% of capital.

Contributions in kind (tangible or intangible assets) must be valuated by a court-appointed assessor and approved by a founders’ assembly for a publicly listed firm; for non-public firms, each founder must approve the valuation of the court-appointed assessor. Contributions in kind do not carry voting rights in listed companies but can in other companies.

The formalities of creating a privately owned company have been eased since January 2003. In particular, it is no longer necessary to deposit the byelaws with the commercial court or to publish them, but they must be deposited with the tax office, and publication of the fact of setting up the company is mandatory.

Founders, shareholders. Minimum seven. No restrictions on nationality or residence.

Board of directors, management. There are two approaches: a conventional board to which management reports; or a two-tiered structure of a supervisory board and a management committee. The board must have a minimum of three and a maximum of 18 members. At least three of the board members must be shareholders. There are no restrictions on nationality or residence. No more than one-third of the board may be older than age 70. No person may be a member of more than five boards. This does not apply (except for the chairman) to the boards of group companies not listed on the stock exchange.

For a conventional board structure, the board must elect a chairman and a general manager. It may also elect up to five general-manager delegates. A single general manager is sufficient if the company’s capital is less than €150,000. No one person may be the general manager of more than one company. The general manager has full powers to run day-to-day business and to represent the company.