Associated files

Incorporation on the Trade and Companies Register

Incorporation on the Trade and Companies Register is essential. Leading to attribution of a SIREN code issued by the INSEE and notably by the issue of a kbis (company registration certificate) by the registry office at the Commercial court, this is the condition for exercising the majority of rights and obligations of companies who should normally be subject thereunto and the legal performance of activities.

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The articles of association of a company

The articles of association constitute the company's founding charter. They give the company its individual character and materialise its main characteristics, especially its objectives and general operation with regard to partners, shareholders and the parties. They are mandatorily set in writing.

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Mothballing a company

Mothballing a company who is the voluntary suspension of a company's activity for a maximum period of two years; it is performed with no other reason for suspending operations. This is therefore a transitory suspension of the company's activity, without its dissolution being requested.

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The minutes of general meetings for approval of the annual accounts of commercial companies

Once a year, the annual accounts for the last financial year, i.e., the balance sheet, the profit and loss statement and the notes, must be approved of the Annual General Meeting. More specifically, in most commercial companies (SA, SAS, SNC, SCS, SA, SARL etc. ), the members of the executive bodies are liable to heavy criminal and civil sanctions for management error, if they breach the obligation to submit annual accounts for approval by the partners or shareholders. For this reason, the members of these executive bodies must demonstrate that they have indeed submitted the company's annual accounts for the preceding financial year for approval by the partners or shareholders, who generally meet in Annual General Meeting, by drawing up minutes of the general meeting. The approval of the annual accounts is therefore strictly regulated. By approving these annual accounts, these partners or shareholders implicitly demonstrate that the documents concerned contain data that has been prepared on a true and sincere basis. They also presume that, as of the closing date of each financial year, these annual accounts reflect a faithful picture of the assets, the financial position and the book profit (or loss) for the companies' business. More generally, the approval of the annual accounts represent the indispensable tool to provide a minimum of information on the main accounting parameters, financial management and operations of commercial companies. They are therefore an essential decision making tool aiding the diverse interests of any interested person (directors; shareholders; investors; government authorities; creditors, such as bankers, suppliers; customers; competitors; commercial courts and potentially other judicial authorities, responsible for preventing and dealing with companies in difficulty) near or far, through access to the company's business data as well as by their financial, accounting and management position. For all these reasons, it is vital that the annual accounts must be approved in strict compliance with the statutory requirements.

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File : Which articles of association for what business?

Part 2

What is the right legal forms for commercial activities?

The right legal forms for commercial activities

A commercial or trading activity can be broken down into three main legal forms: entreprise individuelle commerciale [sole trader], auto-entreprise commerciale [specific French legal form for a sole trader] and société commerciale [commercial company].

The sole trader business

The status of the entreprise individuelle commerciale [sole trader] is in fact that of the trader, i.e., a natural person who trades or provides commercial services.
This business is carried out on an independent basis. It must be registered with the Trades and Companies Register at the registry office of the Commercial court or the Chamber of commerce and industry. To this end, the person starting the commercial business must apply for registration by completing the 'P0 CMB' form.
Good to know: The commercial agent does not have a commercial activity. He/she exercises a 'civil' or non commercial activity.

 

The auto-entreprise commerciale [type of sole trader specific to France]

In reality, the self-employed commercial company corresponds to a sole trader who not only benefits from the tax and social systems of a micro-company, but, in addition, is not required to register in the Trades and Companies Register.
To begin it business, the self-employed entrepreneur must make a declaration by completing the form "P0 Auto-entrepreneur" and sending it digitally to URSSAF's company formality centre. But it may also choose to file the corresponding hard copy form with the chambers of commerce and industry.
Good to know: Only companies with a turnover under the threshold of €81,500 ex VAT for a full calendar year (for activities involving the sale of goods, objects, supplies, take away or to eat-in food or housing supply) are eligible to have the form of auto-entreprise commerciale (a type of sole trader specific to the French system).

 

View the auto-entrepreneurs portal

Commercial companies

The commercial activity can still take the form of a commercial or trading company.

These forms mainly include the following:
-The SARL (limited liability company) must include at least two partners and no more than one hundred. Its share capital, freely set by the articles of association, does not contain any minimum requirement, and the partners' liability on the company's liabilities is in principle limited to the amount of their contributions.
-The EURL (limited liability company under sole ownership) is composed of a single partner. Its share capital, freely set by the articles of association, does not contain any minimum requirement, and the shareholders' liability on the company's liabilities is in principle limited to the amount of his contributions. The sole shareholder is taxed directly (via income tax), except if he opts to pay corporation tax.
-The SAS (simplified joint stock company) must have at least two shareholders. Its share capital, freely set by the articles of association, does not contain any minimum requirement, and the shareholders' liability on the company's liabilities is in principle limited to the amount of their contributions.
-The SASU (simplified joint stock company under sole ownership) has only one shareholder. Its share capital, freely set by the articles of association, does not contain any minimum requirement, and the shareholders' liability on the company's liabilities is in principle limited to the amount of his contributions.
-The SNC (ordinary trading partnership) must have at least two shareholders. Its capital, freely fixed by the articles of association, has no minimum requirement. Unlike the SARL/EURL, SAS/SASU and the SA, the shareholders liability on the company's liabilities is jointly and severally unlimited on their entire personal property, and not limited to their contributions. Each shareholder is taxed personally under his income tax, except if an option for corporation tax has been exercised.
-The SA ( limited company) has at least seven shareholders. The liability of these shareholders on the company's liabilities is in principle limited to the amount of their contributions The minimum share capital for this company is of €37,000. It may be managed by a board of directors, which appoints a président [chairman], or an executive board whose président [chairman] or directeur général unique [sole managing director] is appointed by the supervisory board. The appointment of statutory auditors is mandatory.
-The SCS (limited partnership company) must have at least two shareholders, one a general partner, the other a limited partner. Like the shareholders of the SNC, the liability of the general partners of the SCS on the company's liabilities is jointly and severally unlimited on their entire personal property. In contrast, the limited partners are only liable for the company's liabilities up to the amount of their contributions. This company's capital, freely set by the articles of association, has no minimum requirement.
-The SCA (joint stock partnership) must have at least four shareholders, including one general partner and three limited partners. The liability of the SCA general partners is jointly and severally unlimited on their entire personal property. In contrast, the limited partners are only liable for the company's liabilities up to the amount of their contributions. The minimum share capital for this company is €37,000.
To begin trading as a company, the business owner must make a declaration at the Trades and Companies Register by filling out the "M0" form from the registry office of the commercial court or from the chambers of commerce and industry.