COMPANY FORMATION FRANCE

SETTING UP BUSINESS IN FRANCE

Introduction
France has been slower than many of its EU counterparts to embrace a truly liberal business culture. At the same time, it has aggressively sought to attract foreign investment - and with considerable success. One result is that company formation in France is now very simple and straightforward, although local advice is essential in order to ensure compliance with legal and financial regulations – contact us to learn more about how we can help with company formation in France.

What is the best way to deal with French company formation?

There is no fixed pattern for company formation in France. Options range from opening a small representative office – a bureau de liaison – through to acquiring an existing company or setting up a new business from scratch.

Is a foreign-owned company at a disadvantage?

To some extent. Unless foreign identity is part of the marketing strategy, most foreign investors prefer to adopt a fairly low profile and project a French image. An easy way to do this is simply to acquire a French company.

What is the most common type of French company formation?

There are three main kinds of business entity:

	business corporation – Societé Anonyme (SA)
	limited company – SARL
	simplified stock corporation - SAS

What are the requirements for an SA company?

	the minimum share capital is €37,000, of which at least half must be paid up
	the company must have at least seven shareholders
	shareholders are liable up to the limit of their capital contribution
	accounts must be audited in line with statutory requirements
	top managers are treated as employees for tax and social security purposes

What are the requirements for a SARL company?

	the minimum share capital was recently reduced to €1.00
	the minimum number of shareholders is one
	shareholders are liable up to the limit of their capital contribution
	accounts must be audited in line with statutory requirements
	top managers have more onerous tax and security rules than SA managers

What is an SAS company? 

The Societé Par Actions Simplifieé (Simplified Stock Company) is a relatively new type of entity in France. It is a vehicle for creating a joint venture between a French company and a foreign partner. Previously, French companies had found it difficult to enter into joint-venture relationships with foreign companies because of the rigidity of French corporate law. However SAS companies are increasingly finding favour with foreign investors, particularly in the USA, who wish to set up French subsidiaries.

What are the requirements for an SAS company?

	the minimum share capital is €37,000 of which half must be paid up
	the company must have at least two shareholders and a chairman
	shareholders are liable up to the limit of their capital contribution
	there is no need for a board of directors

How easy is it to recruit staff?

Recruitment itself is reasonably straightforward but labour laws are very complex, much more so than in most other EU countries. Employment contracts for a fixed term are only permissible in a limited number of situations. Certain collective agreements negotiated at national level are automatically applicable to certain commercial and industrial sectors. In other sectors, such agreements are only applicable when agreed to by the employer. Collective agreements cover all workers, whether or not unionised. It is essential to take legal advice before offering or entering into any kind of employment contract. We have a carefully selected team of legal and recruitment specialists based in France. For more details, please contact us.

What is the regulatory environment like?

France has a well-developed legal and regulatory system broadly similar to that in other EU member states. There are few restrictions on setting up companies, except in certain areas such as banking and insurance and there is no restriction on imports or capital from abroad. However state ownership is still a significant feature of the French economy, particularly in infrastructure industries and some restrictions still apply. Furthermore, the legal system is slow and expensive, which underlines the importance of securing good legal advice from the outset. Our team of French legal specialists can help, so please contact us for more details.

Are there financial incentives available – and what about banking facilities?

A world-class international banking network exists, and there is a wide range of financial institutions with expertise in arranging financial transactions and transfers. The first step in setting up business in France should be to establish a local bank account – we can arrange this for you.

In addition to commercial bank loans, various types of assistance to new businesses may be available. These grants and loans from local authorities help with finding sites, shared cost access to support services, tax incentives and grants for innovative new companies.

How can I get more information?

Please contact us and we will be pleased to discuss the issues of company formation in France in greater detail.