Corporate form, amount of share capital, rights and obligations of shareholders

To form a French company, the corporate form of the company, the amount of its share capital, as well as the rights and obligations of the shareholders, should be first determined.

Under French law, a limited liability company may take the form of a SARL (“société à responsabilité limitée”), a SAS (“société par actions simplifiée”) or a SA (“société anonyme”).

Whereas a SAS and a SARL may be incorporated with as little as 1€ share capital, the share capital of a SA may not be less than 37.000€.

Both the SAS and the SARL may be formed with only one shareholder. A SA must have at least seven shareholders.

Most limited liability companies are currently incorporated in France under the form of a SAS.

Both the SAS and the SARL are private companies and their shares may not be listed on a stock exchange. They may, however, be subsequently transformed into a SA.

The material rights and obligations of the shareholders should be determined in the bylaws of the company and detailed, if and as necessary, in a shareholders agreement. For this purpose, the bylaws of a company frequently contain provisions relating to, inter alia, voting rights, transfers of shares, etc.

Company directors

To form a French company, the identity of the directors of the company and, if necessary, a mecanism allowing for a control of their functions, should be determined.

A SARL is managed by at least one director (“gérant”). The “gérant” is necessarily a natural person. A corporate body may not be gérant.

A SAS is managed by only one director (“président”). The “président” may be a natural person or a corporate body. If the president is a corporate body, such corporate body must appoint a permanent representative to represent it in its functions of president. The president of a SAS may be assisted by a director general (“directeur général”) who may have similar powers to those of the president.

A SA is generally managed by a board of directors (“conseil d’administration” or “directoire”).

Depending on the company form, the functions of the company directors may be supervised and controlled by a supervisory board or other corporate bodies having similar functions. The exercise, by the directors, of their duties is ultimately controlled by the shareholders, who have the authority to revoke the directors and are called upon to resolve on certain material decisions (such as, approval of financial statements, sale of material assets (“fonds de commerce”), share capital increases and reductions, etc.).

Bylaws and other constitutive documents

To form a French company, the bylaws of the company and other constitutive documents which are required by the commercial court to register the company, should be prepared.

The by-laws of a company typically include provisions relating to:

• The company’s purpose, legal form, address, name and duration;
• Capital contributions or contributions in kind, amount of the company’s share capital;
• Rights associated with the holding of shares (right to receive dividends, right to attend shareholders meetings and vote, etc.);
• Management of the company and control thereof by the shareholders and/or the statutory auditors of the company;
• Etc.

Certain provisions which must be included in the bylaws are mandatory by virtue of French law.