Associated files

Which articles of association for what business?

Identifying whether a company's business is commercial or 'civile' (non-commercial) in nature is a preliminary step that is essential when determining its legal form as well as its social security and tax regime. It is only after identifying this, that the business owner may choose the legal form most appropriate to his/her project.

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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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Formation

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Company history

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Legal proceedings

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File : Mothballing a company

Part 2

Operating during the mothballed phase

Why should a company be mothballed?

The company's activity is suspended; however the company is not dissolved.

Operating the company during the mothballed phase

During the mothballed period, the legal entity continues to exist and preserves its registration. It does not carry out its activities; however it continues to operate normally on the administrative level. Under this framework, the legal representative, after the end of each fiscal year, is among other things under obligation to draw up and close annual accounts, and should he not be competent himself, call in the duly authorised body to approve them.

Good to know: A company whose activities have been suspended may run the risk of having its commercial lease cancelled or not renewed should the latter contain a clause requiring that personal operation of the business be continuous. During the mothball period, the company may, among other things, be domiciled with a domiciliation company (with a signed domiciliation contract).

Operating the individual business during the mothballed phase

During the mothball period, the individual commercial business remains registered but does not carry out its activities. In the event of definitive closing down after commercial activity (especially in the case of sale of the goodwill without creating a new activity) during the first year of mothballing, the renewal for a new one-year mothballed period no longer applies.
An individual company whose activities have been suspended may run the risk of having its commercial lease cancelled or not renewed should the latter contain a clause requiring that personal operation of the business be continuous.
During the mothball period, the an individual business may, among other things, be domiciled with a domiciliation company (with a signed domiciliation contract) or at the trader's personal domicile.

Good to know: only physical persons registered with the RCS or in the directory of trades may draw up a domiciliary contract with a joint domiciliary company.