In France you will find two popular company types:
- S.A.R.L (Société à Responsabilité Limitée, or limited liability company)
- S.A.S. (Société par Actions Simplifiée, or limited liability company by shares)
You can start both kinds with a share capital of one single euro.
Let’s breakdown the ins and outs of both of them.
Company Director(s):
S.A.R.L.: is managed by equally powered director(s) (can be one or two) called the “gérant(s)”. This can be extended to a management board called “collège de gérants”
S.A.S.: is managed by the President (only one person), that can be assisted by a General Director (directeur général) with similar power.
Corporate Governance
S.A.R.L.: is governed by the director (gérant) and the shareholders.
S.A.S.: can be governed by several entities defined in the bylaws such as corporate bodies, a board, a supervisory committee, and audit committee, and subject to the President and shareholders assembly powers.
Statutory auditor
S.A.R.L.: when two of three thresholds are met at the end of a fiscal year (€1.550.000 of total assets, €3.100.000 of turnover, 50 employees) an auditor must be appointed.
S.A.S.: when two of three thresholds are met at the end of a fiscal year (€1,000,000 of total assets, €2,000,000 of turnover, 20 employees) an auditor must be appointed. If the thresholds are not met, an S.A.S. still need to appoint an auditor if it’s controlled by a company or it controls one or more companies.
Capital shares payment
S.A.R.L.: requires 20% of the incorporation capital (the starting capital), the other 80% can be paid during the following 5 years.
S.A.S.: requires 50% of the incorporation capital (the starting capital), the other 50% can be paid during the following 5 years.
Corporate finance
S.A.R.L.: can issue bonds only when reaching the above thresholds and issued three balance sheets approved by the shareholders. The S.A.R.L. cannot issue preferred shares, warrants or convertible bonds.
S.A.S.: can issue bonds and a commissioner need to verify its assets and liabilities before two balance sheets have been approved by the shareholders. The S.A.S. can also issue preferred shares, warrants, convertible bonds.
Shareholders rights and obligations
S.A.R.L.: shareholders relationship is more regulated and mandatory with low room for customization.
S.A.S.: based on mandatory provisions, can be freely determined in the by-laws.
Transfer of shares
S.A.R.L.: mandatory approval by the remaining shareholders via a super-majority vote as per law.
S.A.S.: the by-laws can state whether the shares can be freely transferred or require approval by the President, the shareholders or any relevant corporate body.
