What is the main source of law authorising this entity form?

French Commercial Code.

Give a brief summary of the entity form:

Does the entity possess separate legal personality?

The Share Limited Liability Company has its own legal personality.

(Maximum) period of existence

The maximum period of existence is 99 years. Prior to the expiry of this term, the shareholders may decide to extend the duration of the company.

Governing document(s)

The Share Limited Liability Company is governed by its Articles of Association (statuts) and by the French Commercial Code.

Liability of incorporators / shareholders

Shareholders’ liability for the debts of the company is limited to the amount of their respective capital contributions.

However, the corporate veil may be pierced in court if a shortfall in the company’s assets can be linked to prior mismanagement by legal representatives (who could be shareholders as well)

(Governing) bodies

• Board of Directors (Conseil d’Administration); and
• Supervisory Board and an Executive Board (Conseil de Surveillance et Directoire).

Other particularities

Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions and divestitures, equity acquisitions, conversions etc.)?

Under French Law, Share Limited Liability Companies can, like any other commercial companies, undertake or be part of international restructurings. More specifically, cross border mergers are governed by the French Commercial Code provisions related to the national mergers and some specific rules, deriving (i) from the transposition of the European Directive 2005/56 dated October 25, 2005 on cross border mergers of limited liability companies and (ii) from the application of the European Directive 2019/2021 dated November 27, 2019 on cross border mergers.

Can this type of entity be publicly listed or held, or its securities be issued to members of the public?

Yes, Share Limited Liability Companies can be listed or publicly held.

Can this type of entity be used for a non-profit or charitable organization?

Under French law, a commercial company’s legal purpose is to make profits. Therefore, it is not the appropriate form of entity for a non-profit or charitable organisation, although it is not forbidden in itself.

Give a brief summary of the process of incorporation, formation, or organization, including:

Main documents required

• The Articles of Association (statuts);
The Articles of Association (statuts);
• Declaration of non-conviction of the legal representative and of each Board member with a copy of his/her passport or ID (if an individual is appointed);
• Declaration of ultimate beneficial owner(s);
• Proof of address;
• Declaration of company creation: electronic form to be filed in online; and
• Bank/notary certificate for the share capital pay-out.

Involvement of notary, company register, governmental authorities

No involvement of a notary is required. However, for regulated activities, specific authorisations may be required.

Share Limited Liability Companies must be registered with the French Trade and Companies Register (Registre du Commerce et des Sociétés).

Timing (estimate)

The waiting period required for incorporating a company does not exceed one (1) week following the submission of the registration application to the French Trade and Companies Register.

Main costs, including registration and similar fees (excluding legal fees)

The main costs relate to (i) any payments made to agents in charge of the legal formalities with the French Trade and Companies Register, (ii) lawyers and (iii) the share transfer register.

Is a description of the anticipated business or purpose of the entity required for incorporation, formation or organization?

The corporate purpose must be stated in the Articles of Association of the company (Statuts) and summarised in the certificate of incorporation (K-bis).

Minimum number of incorporators / shareholders and residency requirements

There must be at least two (2) shareholders (seven (7) if the company is listed) upon incorporation. There are no residency requirements for shareholders, but any legal representative who is not a European Economic Area citizen must hold a residence document (“titre de séjour”: visa, temporary residence permit, multi-annual residence permit or residence permit) if he/she wishes to engage in a professional activity in France while establishing his/her residence there. If he/she remains resident abroad, he/she is exempt from all formalities.

Minimum number of directors (or other applicable officers) and residency requirements

Share Limited Liability Company with a Board of Directors (Conseil d’Administration)
In a Share Limited Liability Company with a Board of Directors, there must be at least three (3) Board members and a maximum of eighteen (18) Board members, appointed for six (6) years. There are no residency requirements.

Share Limited Liability Company with a Supervisory Board and an Executive Board (Conseil de Surveillance et Directoire)
In a Share Limited Liability Company with a Supervisory Board and an Executive Board,

• for the Supervisory Board, there must be at least three (3) Supervisory Board members and a maximum of eighteen (18) Supervisory Board members, appointed for a maximum term of six (6) years. There are no residency requirements.

• for the Executive Board, there must be at least two (2) Executive Board members and a maximum of five (5) Executive Board members if the company is unlisted and seven (7) Executive Board members if the company is listed, appointed by the Supervisory Board for a duration provided for by the Articles of Association comprised between two (2) and (six) years. The Supervisory Board will also appoint a President of the Executive Board who will represent the company vis-à-vis third parties and if the share capital is less than € 150,000, the Executive Board can have oly one (1) Executive Board member who will have the title of Sole General Manager (Directeur Général Unique) of the company. 

Minimum share capital, or equivalent, and payment requirements (including opening a bank account)

The minimum share capital is €37,000.

Is the physical presence of incorporators/directors/shareholders required in the jurisdiction for incorporation, formation, or organisation?

No, the physical presence of the shareholders/board members is not required in the jurisdiction for incorporation or organisation of the company.  All documents can be executed electronically and all legal formalities can be carried out online by an agent.

Is a tax identification number, or equivalent, required? If so, how is it obtained?

Under French law, the tax identification number is the intracommunity VAT number. Each French company which owes VAT must have a tax identification number provided by the French Tax Administration, more specifically by the Corporate Tax Office (service des impôts des entreprises) at the date of incorporation.

What is the title of the applicable company registry?

French Trade and Companies Register (Registre du Commerce et des Sociétés).

What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.: Articles or other formation document, Articles or other formation document, Group structure, Share capital, Directors, Accounts, Insolvency, good-standing, liquidation, Liens and encumbrances on the shares, Liens and encumbrances on assets of the entity, Other (e.g. litigation, tax matters)

The information listed below must be filed with the French Trade and Companies Register and is publicly available:

• Articles of Association (Statuts);
• Certificate of incorporation (K-bis);
• Corporate name, head office, date of incorporation, duration of the company, registration number, corporate form;
• The activities of the company;
• Share capital (issued and paid-up) however, the identity of the shareholders are not publicly available;

• Identity of the corporate officers, including birth and personal address details

• Identity of the General Manager (and, if appointed, the Sole General Manager) and all Board members as well as the President of the Board of Directors, the President and the Vice-President of the Supervisory Board, and the President of the Executive Board (depending on the legal form of the company);
• Vice-President of the Supervisory Board, and the President of the Executive Board (depending on the legal form of the company);
• Identity of the company’s statutory auditors, if the company has to appoint one;
• Liens and encumbrances on certain assets of the entity (including for going concerns, assets derived through financial leasing);
• Information regarding insolvency and liquidation; and
• The annual accounts (however small-sized companies can request confidentiality for the information).

What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?

In a Share Limited Liability Company with a Board of Directors, the Executive Body is the General Manager (Directeur Général). His/her role is to manage the company and to represent the company vis-à-vis third parties.

In a Share Limited Liability Company with a Supervisory Board, the Executive Body is the Executive Board (Directoire). Its role is to manage the company and the President of the Executive Board represents the company vis-à-vis third parties. If the share capital of the company is less than €150,000, the Executive Board can have only one (1) Executive Board member who will have the title of Sole General Manager (Directeur Général Unique) of the company and will represent the company vis-à-vis third parties.

How are the members of the executive body appointed, dismissed and replaced?

Share Limited Liability Companies with a Board of Directors (Conseil d’Administration):

• Appointment:
• A member of the Board of Directors (Administrateur) is appointed by the Ordinary Shareholders’ General Meeting (subject to nomination rights and/or appointment rights for separate classes of shareholders, all as set out in the Articles of Association) as part of a voting process and after the review of his/her application. The Board of Directors then appoints its President among the Board’s members.
• The company’s General Manager (Directeur Général) is appointed by the Board of Directors as part of a voting process and after the review of his/her application.
• Dismissal:
• A member of the Board of Directors (administrateur) can be dismissed by the Ordinary Shareholders’ General Meeting at any time, and without any cause (ad nutum).
• The company’s General Manager (Directeur Général) can be dismissed by the Ordinary Shareholders’ General Meeting at any time. However, if the General Manager is dismissed without any cause, the company may be held liable and may be required to pay damages to the dismissed General Manager, unless the company's Articles of Association expressly provide otherwise.
• Replacement:
• If a member of the Board of Directors dies or resigns, a new member may be appointed for the remaining duration of the term of the office as long as the number of members is not less than the legal minimum number of members in a Board of Directors (i.e. three (3) members).
• There are no specific rules for replacement of the General Manager. Therefore, the current General Manager must first be dismissed in accordance with the principles aforementioned and a new one appointed in compliance with the rules applicable to appointment of the General Manager.

Share Limited Liability Companies with a Supervisory Board (Conseil de Surveillance) and an Executive Board:

• Appointment:
• A member of the Supervisory Board is appointed by the Ordinary Shareholders’ General Meeting (subject to nomination rights and/or appointment rights for separate classes of shareholders, all as set out in the Articles of Association) as part of a voting process and after the review of his/her application.
• A member of the Executive Board (membre du Directoire) is appointed by the Supervisory Board as part of a voting process and after the review of his/her application.
• Dismissal:
• A member of the Supervisory Board may be dismissed by the Ordinary Shareholders’ General Meeting at any time, and without any cause (ad nutum).
• A member of the Executive Board (membre du Directoire) may be dismissed by the Ordinary Shareholders’ General Meeting at any time. Moreover, he/she may also be dismissed by the Supervisory Board if it is allowed to do so by the Articles of Association. If a member of the Executive Board (member du Directoire) is dismissed without any cause, the company may be held liable and may be required to pay damages to the dismissed member, unless the company's Articles of Association expressly provide otherwise.
• Replacement:
• If a member of the Supervisory Board dies or resigns, a new member may be co-opted for the remaining duration of the term as long as the number of members is not less than the legal minimum number of members in a Supervisory Board (i.e. three (3) members).
• There are no specific rules for replacement of a Supervisory Board’s member. Therefore, the new member is appointed in compliance with the rules applicable to appointment of Supervisory Board’s members.

Is it possible to appoint corporate directors or must all directors be natural persons?

Share Limited Liability Companies with a Board of Directors (Conseil d’Administration): the President of the Board of Directors must be a natural person, while the other members may either be natural persons or legal entities. The General Manager must also be a natural person.

Share Limited Liability Companies with a Supervisory Board (Conseil de Surveillance) and an Executive Board (Directoire):

• both the President and the Vice-President of the Supervisory Board must be natural persons, while the other members may either be natural persons or legal entities,
• all members of the Executive Board (and, if appointed, the Sole General Manager) must be natural persons.

Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?

The distinction between executive and non-executive directors only applies to listed companies and is divided as follows: 

		Share Limited Liability Companies with a Board ofDirectors (Conseil d’Administration)	Share Limited Liability Companies with a Supervisory Board (Conseil de Surveillance) and an Executive Board (Directoire)
Executive Directors	Executive Directors	President-General Manager General Manager	President of the Executive Board Member of the Executive Board Sole General Manager, if appointed
Non-Executive Directors	Non-executive Directors	President of the Board of Directors	President of the Supervisory Board Vice-President of the Supervisory Board
	Member of the Board of Directors (Conseil d’Administration) and of the Supervisory Board (Conseil de Surveillance)	Members of the Board of Directors	Members of the Supervisory Board

What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?

The body of shareholders is the Shareholders’ General Meeting (Assemblée Générale des Actionnaires). It is vested with all the rights and obligations provided for by French law and by the Articles of Association, with the exception of the rights and obligations reserved by French law and by the Articles of Association to the members of the various Boards and to the General Manager (Directeur Général).

Generally, the goal of the Shareholders’ General Meeting is to take corporate decisions which go beyond the powers of the legal officers appointed. They also decide to approve the annual accounts, to amend the Articles of Association, and to appoint the members of the Board of Directors (or of the members of the Supervisory Board, depending on the legal form of the company).

What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?

It depends on whether it is an Ordinary Shareholders’ General Meeting or an Extraordinary Shareholders’ General Meeting:  

• Ordinary Shareholders’ General Meeting: decisions are taken by shareholders with an absolute majority and with a quorum of one-fifth of shares entitled to vote (no quorum required in cases of a second convocation i.e. if the quorum is not reached at the first Ordinary Shareholders’ General Meeting, you will have to convene a second Ordinary Shareholders’ General Meeting, and in this case, no quorum is required to validly deliberate). 
• Extraordinary Shareholders’ General Meeting: decisions are taken by shareholders with an enhanced majority two-thirds of the shares entitled to vote and with a quorum of a quarter of shares entitled to vote (one-fifth in cases of a second convocation,  , i.e. if the quorum is not reached at the first Extraordinary Shareholders’ General Meeting, you will have to convene a second Extraordinary Shareholders’ General Meeting, and in this case, a quorum of one-fifth is required to validly deliberate).

Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?

Under French law, there are special governance regimes for Share Limited Liability Companies depending on the Company’s size and whether it is listed or not.

What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?

The Share Limited Liability Company must file financial accounts on an annual basis. The Shareholders’ General Meeting must approve annual accounts within the first six (6) months from the end of the fiscal year. Following the approval, the annual accounts must be filed with the Trade and Companies Register.

Is the entity permitted to determine its own financial year?

Yes.

Is the entity subject to any statutory (external) auditor obligations?

Share Limited Liability Companies are legally obliged to have their accounts externally audited each financial year, where at least 2 of the 3 following thresholds are met at the end of a given financial year:

• EUR 5,000,000 total balance sheet;
• EUR 10,000,000 turnover (taxes excluded);
• An average of 50employees or 50 employees or more during the financial year.

Controling entities (i.e. a legal entities controlling other entities within the meaning of Article L.233-3 of the French Commercial Code) are also obliged to appoint an auditor where together with the controlled entities, it exceeds 2 or the 3 above-mentioned thresholds at the end of a given financial year.

Controlled entities are obliged to appoint an auditor where it exceeds 2 or the 3 following thresholds at the end of a given financial year:

• EUR 2,500,000 total balance sheet;
• EUR 5,000,000 turnover (taxes excluded);
• An average of 25 employees or more during the financial year.

The appointment of the statutory auditors is decided by the Ordinary Shareholders’ General Meeting upon the proposal of the Board of Directors.

Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?

No.

What is the title designated for 'ownership interests' (e.g. shares, quota, interests, membership)?

Shares (actions).

Are different classes of ownership interests possible? If so, what are some examples of different classes?

Different classes of shares are possible, especially –

• ordinary shares; and
• preferred shares (there are no specific limitations to the negative or positive characteristics which can be put in place, except in case of leonine situations).

What documentation is required for the transfer of ownership interests?

The transfer of shares requires:

• Filling a share transfer instruction document (ordre de mouvement de titres) which must be kept in the share transfer register (registre de mouvements de titres);
• Potentially signing a share purchase agreement; Filling the cerfa form n°2759 (formulaire cerfa n°2759) and submitting it to the French Tax Administration for the purpose of paying the registration fees (droits d’enregistrement).; and
• Updating the share transfer register (registre de mouvement de titres) and the shareholders’ individual accounts (comptes d’actionnaire)

Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?

No.

Are there any applicable stamp duties imposed when transferring ownership interests?

Share transfers are subject to the payment of registration fees with the French Tax Administration, owed by the parties and usually paid by the transferee upon the submission of the form n°2759.

How are shares issued? (including information on payment obligations, registration requirements)

Shares are issued via share capital increase operations.

These operations are subject to the share capital being fully paid-up.

Moreover, any share issue must be adopted by the Extraordinary Shareholders General Meeting (Assemblée Générale Extraordinaire des Actionnaires). In order to avoid dilution of the current shareholders, they have a preferential subscription right (droit préférentiel de souscription) that they can exercise or waive.

In addition, the capital increase must be registered with the French Trade and Companies Register (Registre du Commerce et des Sociétés). In order to do so, the following documents must be submitted:

• A copy of the minutes of the Shareholders’ General Meeting allowing the capital increase;
• A certificate of deposit of the funds issued by the bank corresponding to the amount of the capital increase paid-up by the shareholders; and
• A copy of the updated Articles of Association.

Moreover, publication of this information must be made in a legal newspaper (journal d’annonces légales).

Finally, any share issue must be recorded in the share transfer register (registre de mouvement de titres) and the shareholders’ individual accounts (comptes d’actionnaire).

Further information on equity contributions, e.g., non-cash payments on shares, (share premium) contributions without issuances of shares, can partially paid shares/ownership interests be permitted and what are the restrictions on them?

Non-cash contributions are allowed for Share Limited Liability Companies under French law provided that they are assessed by one (1) or two (2) external contribution auditors (depending on the value of the contribution).     

Any requirements with respect to share cancellation, share repurchase and other capital reductions

Share cancellations justified by losses: Capital reductions are required when equity is less than half of the registered share capital. In such case, the company can :

• Reduce the nominal value of shares; and
• Reduce the numbers of shares.

Share repurchases not justified by losses: Shares repurchases are permitted when the equity is greater than the price of the shares to be repurchased. It is also subject to the absence of objection from third parties during the 20-day period provided for that purpose by Law.

Any requirements with respect to distributions to shareholders?

The distributable profit consists of the profit for the financial year, less previous losses and amounts to be transferred to reserves in accordance with the applicable law and the Articles of Association, plus any profit carried forward from prior financial years.

The shareholders can decide to distribute the profit as a dividend, as well as other sums, either to provide or supplement a dividend, or as an exceptional distribution, during the Ordinary Shareholders’ General Meeting approving the annual accounts.

The Management Board must approve any distribution, as part of which it must verify whether the company's equity (decreased by any reserves that must be kept by law or the Articles of Association of the company), is sufficient to make the distribution and whether the company will remain able to pay its due and payable debts.

Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?

Yes.

Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?

The company must maintain its business address and have a legal representative. The shareholders must each year hold their annual general meeting to approve the annual accounts and to file the annual accounts with the Trade and Companies Register.

What are the general corporate tax rates? (Specify if there is a national versus local distinction).

The company must maintain its business address and have a legal representative. The shareholders must each year hold their annual general meeting to approve the annual accounts and to file the annual accounts with the Trade and Companies Register.

Summary of any specific matters, e.g. recent or prospective major legal developments

No specific matters to be mentioned.