French Business Law

The exclusion of a shareholder is possible in an SAS (French société par actions simplifiée), provided however that it has been provided for in the company bylaws. Indeed, according to article L. 227-16 of the French Commercial Code, a shareholder may be obliged to sell its shares pursuant to the conditions set forth in the bylaws. The sale of shares of such a shareholder results in the departure, that is,…

The following documents must, inter alia, be submitted to the competent Commercial Court to file for the incorporation of a French company (SAS, SA or SARL): company bylaws signed by all shareholders decision of the shareholders appointing the directors and the statutory auditors of the company, if any a certificate issued by a bank ascertaining that the amount of initial share capital has been paid up by the shareholders regarding…

A non-French resident may serve as a director of a French company, provided however that he/she files a prior declaration to this effect with the competent préfet. According to article L. 122-1 of the French Commercial Code (“Code de commerce”) “a foreigner who, without residing in France, exercises on the territory of France a commercial, industrial or craft profession, under conditions which require that he/she be registered or mentioned on…

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…

The bylaws of a SAS (“société par actions simplifiée”) may provide for a prior approval clause. A prior approval clause (“clause d’agrément”) is a clause which subjects the transfer of shares by a shareholder to the prior approval of the shareholders’ assembly or another corporate body. In the event that the bylaws do not contain a prior approval clause, the sale of shares of the company will be free (subject…

The bylaws of a SAS (“société par actions simplifiée”) may provide for a prior approval clause. A prior approval clause (“clause d’agrément”) is a clause which subjects the transfer of shares by a shareholder to the prior approval of the shareholders’ assembly or another corporate body. In the event that the bylaws do not contain a prior approval clause, the sale of shares of the company will be free (subject…

The acquisition of a company is effected through a purchase of its share capital from the company’s existing shareholders. It therefore entails not only the purchase of the company’s assets, but also of its liabilities. The acquisition of a company should be distinguished from the acquisition of a company’s goodwill (“fonds de commerce”), which consists in the purchase of the company’s assets from the company itself. The standard process applied…

The bylaws (also called articles of association) are the constitutive documents of a French company. They are binding on all shareholders and directors of the company, both present and future. Any director or shareholder of the company acting in breach of the company bylaws may incur responsibility and be obliged to indemnify the company and, in certain cases, the remaining shareholders for damage suffered as a result of such breach….

French corporate law provides for several types of French companies. Commercial companies are ordinarly incorporated in France under the form of a French SAS (“société par actions simplifiée”), a French SARL (“société à responsabilité limitée”) or a French SA (“société anonyme”). When incorporating a French company, its legal form (SAS, SARL or SA) should be determined, by taking into account, inter alia: The amount of share capital of the French…

A drag-along right is the right for certain shareholders willing to sell their stake to force all other security holders to join the deal and therefore sell their own shares and securities. A drag-along right generally protects majority shareholders from minority shareholders who, by refusing to sell their own stake, may obstruct a deal. A drag-along right is generally required by all investment funds in all private equity and venture…