What NOT to do when closing a company in France

How to close your French company

Unfortunately, when you’re setting up a company, there is a risk of your company failing, and having to be closed down. As such, it’s a good idea to know exactly how to close a company, so that you can limit the harm of a failing company as much as possible.

The difference between dissolution and liquidation

The first thing you should know is that “dissolution” and “liquidation” are very different terms with different legal implications, despite both having something to do with closing a company.

Indeed, dissolution refers to the moment when all the associates to the company decide to close the company, while liquidation refers to actually closing the company in practice. In a way, you could consider dissolution to be the beginning of the act of closing a company, while liquidation is the end.

Following the procedure for both dissolution and liquidation

For dissolution, four steps are required:

  • The associates must meet in a General Assembly (board meeting) to vote the closure of the company. They also have to vote for a liquidator.
  • The liquidator then has to file the transcript of the General assembly to the Tax Services
  • You also have to nominate the liquidator in a Legal Announcement Journal
  • Finally, you’ll have to file a complete report to the CFE (Companies Formalities Center)

Then, for liquidation:

  • The liquidator has to list the assets and liabilities of the company, make a plan for recovering debt and put a stop to the rights associates have on the company’s assets
  • Then, there’s another General Assembly to approve the so-called “liquidation accounts”. Again, a transcript has to be sent to the tax Services.
  • Finally, you have to publish a notice of the closure of the company in a Legal Announcement journal.

Stay in line with the tax administration

Of course, it’s very important that you continue to follow your obligations towards the tax administration during this process!