How to create a French simplified joint-stock company ?
There are different ways to create a company in France. The French simplified joint-stock company (Société par Actions Simplifiée) is one of the most popular one. How does it work ? What are the basics to know ? How to decide if it is appropriate for your project ?
The French simplified joint-stock company (« Société par Actions Simplifiée ») is based on common law principles rather than civil. It is similar to a limited liability company under States law and to the limited company in the British law.
I- How a French simplified joint-stock company works ?
The French simplified joint-stock company is used for small to medium sized businesses. It is one of the most common type of entities in France because of the flexibility that it offers in the bylaws.
The simplified joint-stock company is a commercial company. The liability of its shareholders is limited to the contributions made.
A French simplified joint-stock company can have just one shareholder. In this case, the sole proprietor shall exercise the powers conferred to the shareholders when collective decision-making are needed.
The structure of a simplified joint-stock company may be determined freely by the bylaws. The content of the bylaws is free but some references are needed according to the French Commercial Code. The only obligation is that the company must be represented by a President vis-à-vis third parties. He can be either an individual or a legal entity.
The capital of a French simplified joint-stock company is divided into shares. There is no minimum capital required. A simplified joint-stock company can issue preferred shares with multiple voting rights, preferential dividend rights and/or veto rights.
II- A flexible management structure
An SAS is managed by:
– A President (Chairman) who represents the company vis-à-vis third parties ;
– And if the bylaws provide for it :
- Director(s), who also have the power to represent the company;
- Corporate bodies such as: a Board of Directors, a management committee, a supervisory committee. The articles of association of the company will define the powers and rules of operation (quorum, majorities, notice periods, etc.) of such corporate bodies.
The bylaws freely set out :
– The conditions of appointment and removal of the Chairman and/or the managing Directors.
– Limitations of powers : The Chairman being vested with the widest powers to act on the company’s behalf in any circumstances, the bylaws may provide that certain decisions be subject to the prior approval of the shareholders or any other corporate body. However, these limitations of powers may not be opposed to third parties.
– The convocation rules of shareholders : The bylaws may provide the shareholders with a right to convene a General Meeting, either subject to a capital threshold or not.
Note that decisions on the following issues can only be taken by the shareholders :
– approval of financial statements;
– increase or reduction of capital;
– capital amortization;
– mergers;
– pin-offs;
– liquidation;
– appointment of statutory auditors (« commissaires aux comptes »);
– and amendment of the articles of association.
In a simplified joint-stock company with a sole shareholder, the annual report, annual accounts and, where applicable, consolidated financial statements shall be made up by the Chairman.
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