Setting up a Limited Liability Company (SARL) in France

If a foreign investor intends to set up a Limited Liability Company in France or a Societe a Responsabilite Limitee (SARL), it is necessary to know that this type of company is the best choice for small and medium-sized businesses. Although the French system is rather complex and you may need some guidance in the process of incorporation, establishing a SARL in France has simple rules.

Capital

An entrepreneur needs no more than 1 EUR in order to set up a Limited Liability Company in France. One may choose to contribute in either cash or assets, but no matter what form, 20% of the initial capital has to be paid prior to registration and the rest can be paid within five years. An expert (commissaire aux apports) has to evaluate the contributions and issue a report.

Shareholders

At least one partner and maximum 100 partners can establish a SARL in France. They can be either French or foreign citizens. Their voting rights and profit rights will be proportional to the amount of capital shares owned. Shares can be freely transferred between the shareholders. If there is only one shareholder, then the company is a EURL or Entreprise Unipersonelle à Responsabilité Limitée, also known as Private Limited Company under Sole Ownership.

Management

A French SARL usually has one or more managers (gerants), according to the articles of incorporation, regardless of their residence and nationality. The manager is appointed by the articles of incorporation and if it does not stipulate a different term, then the position can be occupied for lifetime. Otherwise, one or more shareholders holding more than half of the shares have to appoint another manager. He can be chosen from the shareholders, employees or he can be a third party. Anyway, a manager represents the corporation and takes all necessary decisions in the interest of the corporation. His authority may be limited by shareholders.

Control

If two of the following conditions are exceeded, then the French SARL needs a statutory auditor. It happens if the total assets exceed 1,550,000 EUR or sales are over 3.1 million EUR or there are more than 50 employees. The auditor needs to issue reports concerning the accounts and financial transactions performed by the company.

Other requirements

It is mandatory to inform the other shareholders about any transfer of shares. However, you are free to transfer share between partners or to members of the family.