Framework of company law, by briefly setting out the procedures for setting up a company and by giving a brief overview of the possible legal forms of companies.

General information about company law

Company law designates all the rules of law governing this category of legal persons under private law (companies), proceeding to the pooling of goods or industry with a view to sharing the benefit or profiting from the economy that may result. The provisions of company law thus govern the life of the latter from their birth – creation of the company – to their death – liquidation of the company.

Company law is applicable to commercial companies (for example, public limited companies, limited liability companies or cooperative and participative companies) as well as to civil companies (real estate companies for example).

In doing so, company law covers a wide range of areas:

• The constitution of companies,
• The functioning of companies (the rules to respect in terms of management),
• Liquidation of companies,
• Capital increases,
• Mergers,
• Relations between shareholders and managers,
• Relations between companies and their third parties.

A lawyer specializing in company law therefore fulfills both advisory and litigation duties at all stages of the life of a company.

A corporate lawyer must therefore, for example, be able to advise, as to the most appropriate legal form, of natural persons wishing to associate with an intention of creating a company, just as they must be able to advise these same people in the event that they are in conflict with each other or with other participants in the life of the company.

Bélot Malan & Associés law firm Paris has expertise in corporate law, particularly with regard to the constitution and drafting of articles of association and their liquidation.

The following developments explain very briefly the methods of creating a company as well as the different forms of companies.

The creation of a company

The main legal basis for the creation of a company is article 1832 of the civil code which provides:

The company is established by two or more persons who agree by contract to allocate goods or their industry to a joint enterprise with a view to sharing the profit or profiting from the economy which may result therefrom.”

The company can be established, in the cases provided for by law, by the will of a single person.

The partners agree to contribute to the losses ”.

Thus, in most cases, the creation of a company presupposes the existence of a contract.

Four essential elements make up the company contract:

The existence of associates

The incorporation of a company generally requires the existence of at least two partners.
There is also no limit to the maximum number of partners in a company.
As an example for a public limited company, the partners are called shareholders. In a limited partnership, we talk about limited partners and general partners.

Bringing together the contributions

Contributions can consist of sums of money. In this case we are talking about cash contributions.
They can also consist of a building or a machine, in which case they will be contributions in kind.

Finally, they can be made up of know-how or even experience. This is the hypothesis of contributions to industry. These are nevertheless difficult to assess in accounting.

We classically distinguish the contribution in property – when the partner transfers ownership of the property to the company – from the contribution in enjoyment – hypothesis in which the partner makes his property available to the company while retaining the property of it.

Profit sharing

The associates receive shares or stocks. These give the right to share in the operating profit: profit sharing in the event of company profits (dividends), or loss sharing if necessary.
The level of profit and loss participation depends on the number of shares or shares held by each partner. It is proportional to the value of the contributions made.

Affectio societatis

The partnership contract concluded between the partners aims to embody the will of the latter to associate with each other in order to achieve a common objective.

In doing so, it is said that the partners are then linked to each other by an affectio societatis. The absence of the latter, in the event of disagreement between the partners, may be likely to cause the dissolution of the company.

Irregularities in the incorporation of a company may be such as to invalidate the company contract.

These irregularities can be constituted by the lack of contributions, absence of affectio societatis, or even the illicit nature of the corporate object of the created company. In the event of the nullity of the company contract subsequent to its creation, it must be wound up.

The different legal forms of companies

The legal forms of companies set out succinctly below constitute a non-exhaustive panorama of different possible companies under French law.

Forms of companies with a single partner

The one-person limited liability company (EURL)

The amount of share capital is freely set by the partner.

20% of the contributions must be released at the time of incorporation.

The EURL can be roughly considered as an LLC with a single partner.

The simplified joint stock company (SASU)

SASU is a simplified joint stock company with a single partner.

In this type of company, the amount of share capital is freely set by the shareholders.

In the case of contributions in kind, a contribution commissioner must necessarily be appointed. The shareholders’ liability is then limited to their contributions.

Forms of companies with several partners

The limited liability company (SARL)

Concerning this form of company, the shareholders’ liability is limited to the contributions of the latter.
The minimum share capital is set at one euro.

20% of the contributions in cash must necessarily be paid during the incorporation.

Finally, the manager of an LLC must be a natural person.

The public limited company (SA)

Its minimum share capital is set at 37,000 euros.

Half of the share capital of an SA must be paid up at the time of incorporation, and a statutory auditor must be appointed.

The simplified joint stock company (SAS)

For this form of company, no minimum share capital is required. However, an auditor must necessarily be appointed.

Finally, the shareholders’ liability is limited to their contributions.

As a corporate lawyer in Paris, Bélot Malan et Associés is therefore ready to provide assistance for all types of clients – natural and legal persons – in their project to create a company.