Changing the legal status of a French company: What consequences?

Consequences of changing your French company’s legal status

There are many ways French entrepreneurs can modify their company. Among these, one of the most drastic changes they can do is changing the legal status of a company. But what sort of consequences can such an action actually have?

Consequences on the social capital

In some cases, you might have to modify your social capital before you can change your legal status. In particular, if you want your company to be an SA, you need to have a capital superior to 37 000€. As such, if your current capital is lower than that, you’ll have to increase your social capital.

Consequences for managers and associates

Changing company types can have huge consequences on the powers of managers. Indeed, depending on the type of company, the role of the manager can be completely different. So much so, in fact, that if you transform an SARL or an SA in an SAS, the manager and executive automatically lose their functions.

Generally, there are no changes for associates, though. That is, unless the distribution of the social capital of the company also changes, in which case their exact powers within the company may change a bit.

Consequences for employees

Changing company types has no consequence on the job of employees. This means that you cannot use the change in legal status as a reason to stop their contract; you would have to properly fire them. In a similar fashion, employees can’t refuse to continue their employment contract; they would have to properly resign.

 Consequences on the existing contracts

What’s true for employees isn’t just restricted to the employment contract. The bottom line is that overall, changing company types has no consequence on any existing contract involving the company.