How to set up a company in France

The recommended form for setting up a sole shareholder subsidiary in France is generally the SASU (société par actions simplifiée à associé unique – simplified limited liability company with a sole shareholder). The SASU is the most flexible corporate structure currently available under French law. Its structure and organisation are governed by the Articles of Association of the company: it may therefore be tailored to fit the day-to-day organisation of the company to the specific needs of the sole shareholder and be easily adapted to the growth and evolution of the company.

Shareholder liability is limited to its contribution to the share capital (unless it has placed its subsidiary in a relationship of complete subordination).

There is an attractive tax regime for share transfers of a SASU (0.1% duty / purchase price or market value if higher).

The legal minimum registered capital for a SASU is €1 (except for a few regulated activities where it is higher); however, groups rarely choose to have the minimum share capital for practical reasons (trust impact on third parties). Contributions in cash to the share capital must be paid-up for at least half of their par value at the time of incorporation of the SASU (the remainder needing to be paid within five years from incorporation).

It is possible to issue other types of shares in a SASU than just ordinary shares: preferred shares, convertible bonds, etc.

Finally, prior authorisation of the French Ministry of Economy and Finance is only required for foreign investments in France in specific sensitive or strategic sectors.

The President is the only mandatory governance “body” in a SASU. The President may be an individual or a corporate entity (in this case, the representatives of said entity are subject to the same conditions and obligations and incur the same liability as if they were President in their own name). General Directors, boards or committees can also be provided for in the Articles of Association and appointed when incorporating the SASU or thereafter. 

The President is vested with the largest powers to act on behalf of the company, within the limits of the corporate purpose. No legal provision limits the extent of the powers granted to the President, with the exception of those expressly reserved to the shareholder (e.g. approval of annual accounts, changes in the share capital, amendments to the Articles of Association, merger decisions, etc.).

The Articles of Association or a shareholder decision may limit the powers granted to the President or other legal representatives (however, these limitations are not enforceable against third parties).

There are no restrictions on the nationality or place of residence of legal representatives (individuals accepting a corporate mandate just need to certify that they have never had any criminal, civil or administrative convictions of a nature that would prevent them from managing a company or carrying out a commercial activity).

• Providing all the necessary documents relating to the incorporation of the SASU.
• Information on the ultimate beneficial owners also needs to be provided when incorporating a company: each ultimate individual holding directly or indirectly more than 25% of the share capital or voting rights of the SASU (or any individual exerting control by any other means on the SASU) must disclose their identity (names, date and place of birth, nationality and permanent home address). This information is only available to “interested parties” and administrations.
• Certain regulated sectors (e.g. banking, insurance, real estate, transport, telecom) will require specific authorisations from French regulatory bodies (and additional requirements, such as specific diplomas, French language, etc.).
• The appointment of a statutory auditor is only mandatory if the company exceeds certain thresholds (balance sheet, turnover and employees).

• The first step is to draw up draft (and tailored) Articles of Association of the SASU.
• The second step is to open a French bank account to deposit the share capital and obtain a certificate of deposit issued by the bank (this will require providing the draft Articles of Association). This step is generally the longest (3-4 weeks) and needs to be considered in advance to avoid timing issues (it is generally advised to go through your usual bank when they have a French counterpart). However, lawyers can open a temporary client account with their local Bar Association for the deposit of a client’s share capital; this also makes the opening of an account thereafter easier with a French bank (since they will require less KYC elements) and allows the incorporation of a subsidiary in a swift way.
• Determining where the place of business will be registered is also essential: a domiciliation service agreement needs to be put in place or a commercial lease needs to be executed if premises are immediately needed.
• Once all necessary documents are ready and signed (no notarisation is necessary, but translations of all document that are in foreign language are required), actual registration with the local Trade and Companies Registry (TCR) is rapid (e.g. 48 hours to register a SASU in Paris or its suburbs + approx. 4 days to obtain a definitive corporate extract with the registration numbers).
• The “one shop stop” system of registration (“Guichet Unique”) enables new companies to fulfil all the initial declarative formalities required to start their activity (TCR, tax authorities, social security authorities).

• Opening a bank account in France to deposit the share capital: it usually takes a few weeks for a foreign company (however, see aforementioned temporary solution with a lawyer’s client account).
• Checking the company name or trade name: companies new to the French market must ensure that their intended company name or trade name is not already used by a competitor or by a company having similar activities or services.
• Accountant: finding a French accountant speaking English to assist from the outset with bookkeeping and mandatory tax and social declarations.
• Complying with employment laws: companies planning on employing people in France must comply with the rather strict French labour law provisions regarding individual (employment contract, social security measures, etc.) and collective (e.g. appointment of a Social and Economic Committee if over 11 full-time employees over a 12-month period) employee rights: it is important to obtain specialised advice on these issues.
• Speaking French in certain regulated sectors (e.g. real estate activities): all corporate officers are required to speak French.
• Regular formalities: French companies must comply with legal provisions requiring them to carry out certain formalities on a regular basis (e.g. annual accounts to be approved by the shareholder and filed, monthly or quarterly VAT, tax and social declarations, etc.).