It’s essential to choose the most appropriate (and effective) business structure when setting up a company in France as this affects its legal ownership and operational flexibility. Here are the main business structures available.
Limited liability company
The limited liability company (Société à responsabilité limitée, or SARL) is a popular structure in France and is used by a variety of businesses, including foreign companies who want to set up a subsidiary or branch office. It has a minimum of two partners and a maximum of 100 and those partners’ liability is limited to the level of their contributions (with the exception of certain circumstances, such as mismanagement). Partners may be natural persons or legal persons (such as another business). There is no minimum share capital required.
A SARL de famille – for family businesses – possesses all the characteristics of a SARL but can enjoy certain specific tax benefits and allows free transfer of shares.
The public limited company (Société anonyme, or SA) is suitable for any type of activity (except for certain regulated sectors) and is typically used by larger companies looking to list on the stock exchange. It can be run by a board of directors with a CEO or by a supervisory board with an executive board. An SA must have a minimum of two shareholders (or seven if listed on a stock exchange) who may be natural persons or legal persons. There isn’t a limit on the maximum number of shareholders.
Simplified joint-stock business
The simplified joint-stock business (Société par actions simplifiée, or SAS) is the most common legal form in France. It is a popular choice among entrepreneurs and foreign businesses looking to establish a subsidiary in the country because it offers great flexibility. An SAS must have at least two partners, who can be either individuals or legal entities, and a president must be appointed to manage the company. SAS partners are free to establish the company’s bylaws, giving them considerable control of governance, organisation and operations.
Single-person simplified joint-stock business
A single-person simplified joint-stock business (Société par actions simplifiée unipersonnelle, or SASU) is essentially an SAS with only one single partner, who can be an individual or a legal person. The single partner in a SASU has the unilateral authority to make all decisions regarding the business’s management and operation. A SASU can be converted to a SAS (and vice versa) if required.
A limited partnership (Société en commandite simple, or SCS) requires at least two partners, one of which is a general partner and the other a limited partner. General partners are indefinitely, jointly and severally liable for the debts of the company; while the liability of limited partners applies only to their contributions. Unless the articles of association state otherwise, all general partners are managers of the company. Limited partners, on the other hand, are ‘passive’ and must not interfere with the management of the entity.
Partnership limited by shares
A partnership limited by shares (Société en commandite par actions, or SCA) is a hybrid legal structure that combines elements of a partnership (SCS) and a public limited company (SA). An SCA has two types of partners – general partners, who actively manage the company, and limited partners whose liability is capped. The share capital of an SCA must be at least €37,000, or €225,000 if the company lists itself publicly. The main difference between an SCA and an SCS is that the ownership shares of an SCA are freely transferable, while those of an SCS are not.
